Chailease Holding Company Limited · CONTENTS 06 Board Members 07 Address of Subsidiaries 08 I....

Chailease Holding Company Limited

CONTENTS06 Board Members

07 Address of Subsidiaries

08 I. Letter to Shareholders

10 II.Introduction of the Company(1)Date of establishment(2)History of the Company

12 III.Corporate Governance Report(1) Organization(2) Information regarding the board of

directors and management team, (3) Corporate governance practices(4) Information regarding the certified

public accountant (5) Information for top 10 shareholders

and related parties as defined under the Statement of Financial Accounting Standards No.6

(6) Continuing educational training of the directors and independent directors

(7) Certification details of employees whose jobs are related to the release of the company's financial information

(8) Working environment and employee safety protection

44 IV.Capital and Shares(1) Capitalization(2) Composition of Shareholders (3) Distribution profile of share

ownership (4) Major shareholders(5) Market price, net worth, earnings,

and dividends per share for the past two years

(6) Dividend policy and distribution of profit

(7) Employee profit sharing and directors' and supervisors' compensation

(8) Buyback of common stock(9) Issuance of corporate bonds(10) Issuance of global depositary

shares(11) Financing plan and implementation

52 V.Operational Highlights(1) Business Overview (2) Market and Sales Overview(3) Head count, average seniority,

average age and educational background of employees in recent two years and as of the publication date of the annual report

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

statements from the most recent year

(2) Financial Review

78 VII. Risk Management(1) Integrated Risk Management

Framework & Policy(2) Risk management policies

82 VIII.Special notes(1) Information about the affiliates(2) Major differences in the Company's

articles of association and ROC regulations on shareholder

protection

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

Chailease Holding Com

pany Limited

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Position Name Nationality Experience and Education

Executive Chairman

Beacon Hill Co., Ltd.'s representative:Fong-Long Chen

SamoaROC

Master of Science, Sloan School of Management, MIT, USAPresident of Chailease Holding Company Limited Chairman of Chailease Finance Co., Ltd.Chairman of Fina Finance & Trading Co., Ltd.Charman of Chailease Specialty Finance Co., Ltd.Chairman of Chailease Cloud Service Co., Ltd.Chairman of Chailease International Finance CorporationChairman of Chailease International Corp.Chairman of Chailease Finance International CorporationChairman of Jirong Real Estate Co., Ltd.Chairman of Chailease Finance (B.V.I.) Company Ltd.Director of My Leasing (B.V.I.) Corp.Director of Chailease International (B.V.I.) Corp.Director of Golden Bridge (B.V.I.) Corp.Director of My Leasing (Mauritius) Corp.Director of Asia Sermkij Leasing Public Co., Ltd.Director of Bangkok Grand Pacific Lease Public Co., Ltd.Director of Grand Pacific Holdings Corp.Director of Chailease International Financial Services Co., Ltd.Director of Chailease International Company (UK) LimitedDirector of CL Capital Management Company LimitedDirector of CLJ Investment Partners Company LimitedChairman of Chailease Energy Integration Company LimitedChairman of Innovation Energy Integration Co., Ltd.

Director Andre J.L. Koo ROC

MBA, Leonard N. Stern School of Business, NYU, USAChairman of the Management Committee of Chailease Holding Company LimitedChairman of Chailease GroupChairman of Chailease Enterprise Company LimitedChairman of Chun An Investment Co., Ltd.

Director Chee Wee Goh Singapore

Bachelor of Science ( First Class Honours ), University of SingaporeMaster of Science in Engineering, University of Wisconsin, USADiploma in Business Administration, University of SingaporeIndependent director of Beng Kuang Marine, LtdIndependent director of King Wan Corporation LtdIndependent director of Stamford Tyres Corporation LtdIndependent director of Sin Ghee Huat Corporation Ltd.

DirectorWiedner Co., Ltd.’srepresentative:’King Wai Alfred Wong

SamoaHong Kong

MBA, Leonard N. Stern School of Business, NYU, USADirector and managing director of CL Capital Management Co., Ltd.Director of CL Investment Partners Company LimitedDirector of Philippine Grain International CorporationDirector and President of ChaiCo Investment CorporationChairman of Chailease Biofund Company Limited

Independent Director Dar Yeh Hwang ROC

B.A., Department of Banking. National Chengchi University, TaiwanM.L. Program in Economics, National Taiwan University, TaiwanMaster in Political Science, National Taiwan University, TaiwanPh.D. Program in Finance Kellogg School, Northwestern University, USAM.S., and Ph.D. Program in Finance, Stern School, NYU, USAMBA and Ph.D. in Finance, Rutgers UniversityPh.D. Candidate in Journalism and Communication, Peking UniversityPh.D. Program in Law, Tsinghua University, ChinaDirector, Center for the Study of Banking and Finance, National Taiwan UniversityDeputy Chairman, Banking Education Association of TaiwanChairman, Turnaround Management Association of TaiwanChairman & Dean, Academy of Promoting Economic LegislationDirector of DBS, TaiwanDirector of McBorter AFMAConsultant of McBorter (Tianjin) Education CompanyDistinguished professor of Renmin University of China (Suzhou campus)

Independent Director

Steven Jeremy Goodman Australia

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

Independent Director Chin Fock Hong Singapore

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

Board Members

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

■ Fina Finance & Trading Co., Ltd. 3F., No.360, Ruiguang Rd., Neihu Dist., Taipei City 114,

Taiwan (R.O.C.) +886-2-8797-6168 www.finatrade.com.tw

■ Chailease Auto Rental Co., Ltd. 5F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114,

Taiwan (R.O.C.) +886-2-8752-6388 www.rentalcar.com.tw

■ Chailease Consumer Finance Co., Ltd. 6F., No.392, Sec. 1, Neihu Rd., Neihu Dist., Taipei City 114,

Taiwan (R.O.C.) +886-2-2798-6488 www.ezfund.com.tw

■ Apex Credit Solutions Inc. 6F., No.420, Fuxing N. Rd., Zhongshan Dist., Taipei City

104, Taiwan (R.O.C.) +886-2-2512-2866 www.apex-credit.com

■ Chailease Insurance Brokers Co., Ltd. 6F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114,

Taiwan (R.O.C.) +886-2-8752-6388 www.chailease.com.tw

■ Chailease Energy Integration Co., Ltd. 5F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114,

Taiwan (R.O.C.) +886-2-8752-6388 www.chailease.com.tw

China■ Chailease International Finance Corporation Building 1, Lane 631, Jinzhong Rd., Changning District,

Shanghai, PRC +86-21-5208-0101 www.chailease.com.cn ■ Chailease International Corp. Building 1, Lane 631, Jinzhong Rd., Changning District,

Shanghai, PRC +86-21-5208-0101

■ Chailease Finance International Corp. Airport Business Park W13-401, No.76, Huan He North

Road, Airport Industrial Area, Tianjin, PRC +86-22-8486-1168

■ Jirong Real Estate Co., Ltd. Building 1, Lane 631, Jinzhong Rd., Changning District,

Shanghai, PRC +86-21-5208-0101

Thailand■ Asia Sermkij Leasing Public Co., Ltd. 24F., Sathorn City Tower, 175 South Sathorn Road,

Tungmahamek, Sathorn, Bangkok 10120, Thailand +66-2-679-6226 www.ask.co.th

■ Bangkok Grand Pacific Lease Public Co., Ltd. 10/1F., Sathorn City Tower, 175 South Sathorn Road,

Tungmahamek, Sathorn, Bangkok 10120, Thailand +66-2-679-6226

Vietnam■ Chailease International Leasing Co., Limited Suite 2801-04, 28F., Saigon Trade Center, 37 Ton Duc

Thang St., Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam

(+84 28) 7301 6010 www.chailease.com.vn■ Chailease International Trading Company

Limited Suite 2809, 28F., Saigon Trade Centre, 37 Ton Duc Thang

St., Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam (+84 28) 3910 1518 www.chaileasetrade.com.vn

Malaysia■ Chailease Berjaya Credit Sdn. Bhd. A-11-01, Level 11, Block A, PJ8, No.23 Jalan Barat,

Seksyen 8, 46050 Petaling Jaya, Selangor, Malaysia +60-3-7969-1128

Cambodia■ Chailease Royal Leasing Plc. 3F, No.216B, Norodom Blvd(41), Sangkat Tonle Basak,

Khan Chamkar Mon, Phnom Penh, Cambodia +855-23-901-728 http://www.chaileaseholding.com/KH

United States■ Grand Pacific Financing Corporation 901 Corporate Center Drive, #300, Monterey Park, CA

91754, U.S.A. +1-323-780-8881 http://www.gpusa.com

Address of Subsidiaries

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Letter to ShareholdersI

Growth in Times of Uncertainty, Cultivating Local Markets in 2017Global economic growth remained lackluster in 2016, and international politics were anything but stable. Despite facing this difficult operating environment, Chailease Holding still generated positive growth and continues to maintain its position as an industry leader in terms of revenue and profitability.

Chailease's combined after-tax profit in 2016 was NT$7.25 billion and its EPS was NT$6.36, representing a 6% year-on-year growth. Sales revenue and profit reached record highs since Chailease went public. Growth was mainly driven by the continued expansion of income-producing assets. The two major geographical areas of Taiwan and China both experienced steady year-on-year growth, while keeping operating costs under control.

TaiwanThe Taiwan business enjoyed double-digit growth in revenue of 13% in 2016. Not only is Taiwan one of Chailease's main revenue contributors, it also serves as the base for R&D and an incubator for innovative products. After a period of fine-tuning these new products, they are replicated and introduced at overseas locations, adjusting where appropriate for local market conditions.

In the last few years, Chailease has proactively invested in energy efficiency and solar power services. Chailease Energy Integration Co., Ltd. was established in November 2015 to integrate all related internal capabilities, such as energy efficiency management and the design, procurement, contracting and construction of solar power plants. The new Chailease Energy Integration will develop external projects in energy efficiency management to elevate the unit's expertise in operations and management.

Since the amendment of the Electricity Act, the government is strongly advocating the development of the domestic solar power industry. Many levels of government have also published relevant policies to this effect. To showcase Chailease's total EPC (Engineering, Procurement, Construction) capability, a custom design was implemented at the Neihu headquarters that will save the company in excess of 50% in energy costs. In 2017, Chailease projects a steady income contribution from the new energy efficiency and solar power services.

CHINA2017 will be the twelfth year since the establishment of Chailease Holding's subsidiary in China, Chailease International Finance Corporation (CIFC). Last year, CIFC placed emphasis on elevating its employee retention rate and their level of expertise. It also made a significant advance in operational efficiency through initiatives such as improving credit quality, optimizing customer composition and developing employee capability in credit evaluation and collection. In the future, CIFC will continue to expand in China by investing in talent development and setting up new office locations.

ASEANWith over 600 million people, ASEAN is the second most populous market in the world after the EU. Its sizable consumer base and domestic consumption market, coupled with the rapid rise of the middle class, offers excellent business potential for the leasing industry.

Thailand – Affected by political turmoil, the growth of Chailease's subsidiary in Thailand backtracked slightly compared with the previous year. However, still focused on capitalizing the opportunities from an integrated ASEAN market, Chailease has proactively expanded its geographical coverage near the Thailand borders. Also, the Thailand subsidiary is looking to improve employee productivity by implementing a sales management system with the assistance of the parent company.

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Vietnam - Over the past few years, the State Bank of Vietnam has progressively loosened the restrictions imposed on financial institutions regarding the growth rate of their loan portfolios. This change will allow Chailease's subsidiary in the country to grow at a faster pace than before, while maintaining asset quality. In the near future, in addition to the existing offices in Ho Chi Minh City, Ha Noi, Can Tho and Hai phong, Chailease aims to continue to open new offices and expand its product portfolio.

Malaysia - Chailease Berjaya Credit Sdn. Bhd. was incorporated in Malaysia in August 2015 as the result of a joint venture agreement between Chailease Holding and Berjaya Capital Berhad. In the early stages of operation, the company will concentrate on offering hire purchase services for commercial vehicles. In just one year of operation, the Malaysia subsidiary achieved an impressive feat of turning a profit at the end of 2016. In the next few years, it aims to expand into Johor Bahru and Penang regions.

Cambodia - In February 2017, Chailease Royal Leasing PLC. was established as a joint-venture between Chailease and the Royal Group in Cambodia. Between 2005 and 2016 Cambodia's GDP grew rapidly at an average of 7.5% annually. Chailease aims to grow its presence in the market by tapping into its own 40 years of leasing experience and to capitalize on Royal Group's local sales channels.

Philippines - According to the 2016 IMF report, the Philippines was the fastest growing economy in ASEAN and has the largest demand for SME financing in the ASEAN region. Pursuant to a successful relationship with the Berjaya Group in Malaysia, Chailease aims to expand its presence further by signing another agreement with the Berjaya Group in the Philippines to create a joint-venture company called the Chailease Berjaya Finance Corporation.

To date, Chailease Holding has successfully set up operations in over half of the ASEAN countries. In the future, Chailease has high hopes for these new locations and will continue to build up its operations in the area with the goal of cultivating ASEAN as the third engine of growth after Taiwan and China.

2017 will be Chailease Holding's 40th anniversary year. We will continue to solidify existing foundations and focus on talent development to achieve increased productivity. Also, we continue to be on the lookout for potential additional geographical locations and business opportunities, all with the goal of maximizing long-term shareholder value.

Fong-Long Chen,

Chairman

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Introduction of the CompanyII

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

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

The Company has taken the lead in joining international organizations such as the American Leasing Association, Asian Leasing Association, International Finance and Leasing Association and Factors Chain International since its establishment to provide customers with international-quality professional service and continuously absorbs the latest knowledge and technology from financial related business in advanced countries, such as Europe, America and Japan to maintain our professional advantage among competitors. Meanwhile, we founded the Taipei Leasing Association to provide a platform for members to exchange ideas, knowledge, experience and information, all of which will be of mutual benefits to the parties concerned.

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

To integrate the operations in Asia, Chailease Holding Company Limited was incorporated under the laws of the Cayman Islands in 2009 and the project of reorganization was launched. Financial One Corp. was voluntarily delisted from the Singapore Stock Exchange on April 27, 2011 and transferred the shares of the Company to its shareholders on the same day. Upon the completion of the shares transfer, the former shareholders of Financial One Corp. came to hold shares of the Company directly. The Company's shares were traded in the over-the-counter stock market of the ROC since July 11, 2011. On December 13, 2011, the Company was successfully listed on the TWSE.

■ DiversificationUnder the guidance of multi-dimensional strategies, the subsidiaries that specialize in the niche market have been established in Taiwan continuously, including Fina Finance & Trading Co., Ltd., Chailease Consumer Finance Co., Ltd., Apex Credit Solutions Inc., Chailease Auto Rental Co., Ltd., Chailease Insurance Brokers Co., Ltd. and Chailease Cloud Service Co., Ltd. In 2014, Chailease Finance acquired 100% of Yun Tang Inc., a subsidiary of General Energy Solutions Co. Ltd. to further expand the solar power plant investment business. Currently, Chailease Finance become one of the top three solar power producers in Taiwan and bring long-term and stable non-interest revenue for the Company given the long-term contract with Taipower Company to provide electricity at stable prices. In 2015, Chailease Energy Integration Co., Ltd. was established for extending the value chain of green energy business. Based on the competitive advantage of leasing and installment sales business, the company aims to assist clients in implementing the energy saving and production projects by exploiting its green energy technology and expertise, and will continue the business of engineering, procurement, construction, operations and maintenance for solar power plants.

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Introduction of the Company

■ InternationalizationInternationalization has also become the Company's critical strategy for business development. In 1983, Grand Pacific Financing Corp. was formed to provide commercial real estate financing to small and medium sized businesses in United States.

In 1989, Bangkok Grand Pacific Lease Public Company Limited ("BGPL") was established in Thailand through a joint venture with the Bangkok Bank to offer leasing and installment sales for the Taiwan business community in Thailand to obtain manufacturing machinery and equipment. In 1992, BGPL acquired Asia Sermkij Leasing Public Company Limited ("ASK"), which specializes in installment sales for automobiles and personal loans. In 2004, the shareholding structure of ASK was reorganized and ASK became the parent company of BGPL. ASK went public in Thailand on August 25, 2005 and currently has 13 branches and 9 outlets.

In 2005, the Company received the first approval of foreign-owned leasing license from the PRC government to set up Chailease International Finance Corporation ( "CIFC") in Shanghai. At the beginning of the development, the goal is to provide equipment and manufacturing machinery leasing to SMEs located in the PRC as well as foreign-owned companies. After years of efforts, the business has expanded from the coastal areas to inland regions with 35 registered branches. The customer base is broadened to include local entities. CIFC continuously invested in specialized subsidiaries, including Chailease International Corporation, Chailease Finance International Corporation and Jirong Real Estate Company Limited.

In 2006, we received approval from the State Bank of Vietnam to establish Chailease International Leasing Company Limited ("CILC") in Ho Chi Minh City, an industrial and business center in Vietnam, and commenced operations in Vietnam in January 2007. Its main business is to provide leasing service of machinery equipment and automobiles for both Taiwanese and local companies. At present, CILC has set up four business offices in Ho Chi Minh City, Hanoi, Can Tho and Hai Phong. In 2016, Chailease International Trading Company Limited was established for importing and exporting services.

In 2015, Chailease International Company (UK) Limited was established in London, United Kingdom, primarily focusing on solar power plant investment, aircraft engine leasing business and market research and consultancy services. We expect that the UK subsidiary will become our hub to extend the network to the European market.

In 2015, Chailease Berjaya Credit Sdn. Bhd. was established through a joint venture with Berjaya Group Bhd. It mainly focuses on providing vehicle financing and relevant services in the initial stage and plans to gradually expand to other businesses, such as consumer goods financing and SMEs financing. At present, Chailease Berjaya Credit Sdn. Bhd has set up two business offices in Kuala Lumpur and Johor Bahru. Chailease Agency Sdn. Bhd. was established in 2017 for insurance brokerage services.

In 2016, Chailease Royal Leasing Plc. was established through a joint venture with Royal Group. It offers financial leasing services for vehicles, machinery and equipment.

With a view to demographic dividend, GDP growth and booming vehicle sales in Philippines, the Company plans to enter vehicle financing market in Philippines with Berjaya Group Bhd, strategic partner in Malaysia.

The Company will continue expanding the ASEAN market, making it became the third growth engine in the future.

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Corporate Governance ReportIII

(1)Organization

1. Organizational structure

Shareholders

Board

Audit Committee

Management CommitteeCSR Committee

Compensation CommitteeChief Secretary

Chairman

President

Chief Audit O

fficer

Chief Inform

ation O

fficer

Chief Strategy

Offi

cer

Chief Financial

Offi

cer

Investor Relations & Public Relations Departm

ent

IT Department

Administration Departm

ent

Audit Department

Think Tank Department

Business Managem

ent Departm

ent

Chief Risk O

fficer

Chief H

uman

Resource Offi

cer

Chief Legal O

fficer

Accounting and Financial Departm

ent

Risk Managem

ent Departm

ent

Hum

an Resource Departm

ent

Legal Department

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2. Business of departmentsA chairman and president are appointed in the Company and the president supervises the

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

Department Duties

Audit Comittee

1.Establish or modify the internal control system based on Article 14(1) of Securities and Exchange Act.

2.Audit the effectiveness of the internal control system. 3.Establish or modify the procedures related to acquisition or disposal of assets, financial

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

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

Compensation Committee1.Establish and regularly review the policies, systems, standards and structures for the

performance evaluation and compensation of Directors and managers. 2.Regularly evaluate and determine the compensation of Directors and managers.

Management Comittee

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

Corporate Governance & Ethical Management Committee

Unless otherwise provided in the applicable laws, articles of association or internal regulations of the Company or the Board of Directors decide by resolution, the term of reference of the Committee are as follows:1. Strengthen corporate governance

(1) To review and assess corporate governance framework and propose amendment thereto from time to time.

(2) To plan, implement, review and improve corporate governance.(3) To conduct research on the trend and issue of corporate governance.(4) To implement and improve corporate governance evaluation system.(5) To execute the Articles of incorporation, internal rules, the instructions of the Board and

Chairman.2. Implement ethical corporate management

(1) To assist in incorporating ethics and moral values into this Company's business strategy and adopting appropriate prevention measures against corruption and malfeasance to ensure ethical management in compliance with the requirements of laws and regulations.

(2) To adopt programs to prevent unethical conduct and setting out in each program the standard operating procedures and conduct guidelines with respect to the company's operations and business.

(3) To plan the internal organization, structure, and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business activities within the business scope which are possibly at a higher risk for unethical conduct.

(4) To promote and coordinating awareness and educational activities with respect to ethics policy.

(5) To develop a whistle-blowing system and ensuring its operating effectiveness.(6) To assist the chairman and management in auditing and assessing whether the prevention

measures taken for the purpose of implementing ethical management are effectively operating, and preparing reports on the regular assessment of compliance with ethical management in operating procedures.

3. Implement corporate social responsibility (CSR)(1) To formulate the strategy and execution of CSR programs.(2) To formulate annual goal and execution of CSR programs.(3) To review and assess the adequacy of CSR and recommend changes.(4) To disclose sustainability performance and finalize CSR report.

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Department Duties

Think Tank Department

1. Strategy related to corporate development(1) Conduct analyses and research on financial related or potential market and industry,

and on the specific topics designated by the chairman, president or top management as the basis for developing medium-term and long-term strategies.

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

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

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

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

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

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

(3) Be responsible for the preparation of the resolutions for Board and shareholder meetings.

4. Other tasks(1) Prepare and arrange Board meetings and functional committee meetings of the Holding

Company.

Business Management Department

1. Assist in planning and integrating the strategies for each subsidiary to improve operational performance.

2. Supervise the performance of subsidiaries of the Holding Company and provide operational suggestions.

3. Follow up on the execution of annual operational plans of the subsidiaries4. Assist the subsidiaries of the Holding company in the improvement of the operating and

management systems. 5. Mediate conflicts among subsidiaries of the Holding Company and coordinate the

distribution of resources. 6. Maintain and update the authorities of subsidiary matters reserved for the Holding

Company.7. Study and establish new overseas subsidiary or conduct the feasibility of new business.8. Organize and conduct the important operational meetings of the Holding Company, and

follow up on the meeting resolutions and management instructions.9. Research, plan and implement projects related to subsidiaries' operation or assigned by

top management.

Investor Relations and Pub-lic Relations Department

1. Establish, update and implement the spokesman system and information disclosure system.

2. Matters related to (irregular, regular and continuous) information disclosure. 3. Maintain media relations.4. Media promotion, planning and execution of advertising strategies and preparation of

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

and arrange meetings. 8. Matters related to Road Show. 9. Maintain the website.10. Compile annual reports.

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Department Duties

Accounting and Financial Department

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

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

Company with the financial institutions. (4) Assist the subsidiaries in developing multiple ways to raise funds. (5) Examine the financial management of the subsidiaries and offer improvement

suggestions. (6) Regularly convene the capital meetings of the Holding Company. (7) Develop multiple channels to raise funds in response to the capital requirements of the

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

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

requirements of the authorities and effectively supervise the implementation of the subsidiaries.

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

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

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

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

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

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

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

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

subsidiaries in part.3. Others

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

policy.

Human Resources Department

Human Resources Department1. Development of the group human resources

(1) Plan and develop the medium-term and long-term strategies of training and retention for the group.

(2) Supervise the distribution of human resources, the control of labor cost, the productivity of employees and other management indices of the subsidiaries.

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

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

3. Manage the list of Directors and supervisors.

Risk Management Department

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

2. Assist the subsidiaries in the risk assessment system.3. Be in charge of analyzing the risk assessment quality of significant projects of the Holding

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

Committee and the Board."

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Department Duties

Legal Department

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

2. Law abidance(1) Regularly examine and modify the internal and external rules.(2) Regularly notify the law-abiding units on the latest legal information.(3) Confirm that the corporate operations and product design conform to the laws.(4) Plan, implement and check for legal compliance annually. (5) Plan and implement the law compliance training of the middle and high-level managers. (6) Deal with the matters related to the information disclosure of the listed company. (7) Serve as the contact window of Taiwan Stock Exchange (TWSE).

Audit Department

1. Assist the Board in assessing the reliability, adequacy and effectiveness of the internal controls.

2. Examine whether the internal control system can quickly generate accurate transaction records and reliable financial reports and ensure adequate protection of assistance.

3. Check whether the external laws and internal policies are observed.

IT Department

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

2. Participate in formulating the information safety policies of the Holding Company.3. Be in charge of discussing and assessing the main information investments of the Holding

Company.4. Deal with and offer consultation on information-related business to the subsidiaries. 5. Assist the Holding Company in policymaking of IT applications and supervise the

implementation of improvement engineering. 6. Direct the implementation and promotion of information integration in the Holding

Company.7. Assist the Holding Company in planning the standard operating procedures.8. Supervise the promotion and implementation of information safety in the Holding

Company.

Administrative Department

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

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

2. Be in charge of the business registration of the holding company and subsidiaries.3. Property and general matters Be in charge of management, documents, business and commerce, general service,

cleaning, safety and other instructions from the superiors.

17


pany Limited

(2)Information regarding the Board of Directors and management team:

1. Directors and supervisors:(1) Directors

March 28, 2017 Unit: share

Position

Nam

e

Gender

Nationality

Date First E

lected

Date E

lected

Tenure

Shareholding when Elected

currently Shareholding

Spouse & Minor

shareholding

Shares held under the name of others

Experience and education

Position(s) held concurrently in

the company and/or in any other com

pany

Other managers, Directors

and super-visors with a spouse

and relative within the

second degree of kinship

Shares

Percentage

Shares

Percentage

Shares

Percentage

Shares

Percentage

Position

Nam

e

Relations

Ch

airm

an

Fong-Long Chen(authorized represen-tative of Beacon Hill Co., Ltd.)

Male ROC 2014/05/30 2014/05/30 2,249,319 0.23% 2,573,220 0.23% 190,018 0.02% – –■Master of Science, Sloan

School of Management, MIT, USA

Note1– – – –

Beacon Hill Co., Ltd. Samoa 2011/06/27 2014/05/30 3

years 11,000,000 1.10% 12,584,000 1.10% －－ – – – – – – –

Dire

cto

r

Andre J.L. Koo Male ROC 2010/05/17 2014/05/30 3

years 48,599,593, 4.88% 56,606,561 4.97% 29,813 0.00% 2,000,000 0.18%■MBA, Leonard N. Stern

School of Business, NYU, USA

Note 2 －－－

Dire

cto

r

King Wai Alfred Wong (authorized represen-tative of Wiedner Co., Ltd.)

Male HK 2017/01/01 2017/01/01 3 years – – – – – – – –

▓MBA, Leonard N. Stern School of Business, NYU, USA

Note 3 – – –

Wiedner Co., Ltd Samoa 2011/06/27 2014/05/30 3

years 7,238,875 0.73% 8,281,272 0.73% －－ – – – – – – –D

irecto

r

Chee WeeGoh Male Singapore 2011/03/21 2014/05/30 3

years – – – – – – – –

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

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

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

Note 4 – – –

Ind

ep

en

den

t Dire

cto

r

Steven Jeremy Goodman

Male Australia 2011/03/21 2014/05/30 3 years – – – – – – – –

■MBA from Nanyang Technological University, Singapore

■ Law Degree LLB from Manchester University, England

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

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

Note 5 －－－

18

Position

Nam

e

Gender

Nationality

Date First E

lected

Date E

lected

Tenure

Shareholding when Elected

currently Shareholding

Spouse & Minor

shareholding

Shares held under the name of others


Position(s) held concurrently in

the company and/or in any other com

pany

Other managers, Directors

and super-visors with a spouse

and relative within the

second degree of kinship

Shares

Percentage

Shares

Percentage

Shares

Percentage

Shares

Percentage

Position

Nam

e

Relations

Ind

ep

en

den

t Dire

cto

r

Dar Yeh Hwang Male ROC 2011/03/21 2014/05/30 3

years – – – – – – – –

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

■ M.A. Program in Eco-nomics/ political Science, National Taiwan University

■ Ph.D. Program in Finance Kellogg School, North-western University

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

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

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

■ PhD program of Tsinghua University School of Law

Note 5 －－－

Ind

ep

en

den

t Dire

cto

r

Chin Fock Hong Male Singapore 2011/03/21 2014/05/30 3

years – – – – – – – –

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

■ Attended an International Tax Program at Harvard Law School

Note 6 －－－

Note 1: The President of Chailease Holding Company Limited; Chairman of Chailease Finance Co., LTD.; Chairman of Fina Finance & Trading Co., Ltd.; Chairman of Chailease Specialty Finance Co. Ltd. Chairman of Chailease Cloud Service CO., LTD.; Chairman of Chailease International Finance Corp.; Chairman of Chailease International Corp.; Chairman of Chailease Finance International Corp.; Chairman of Jirong Real Estate Co., Ltd.; Chairman of Chailease Finance (B.V.I.) Company Ltd.; Director of My Leasing (B.V.I.) Corp.; Director of Chailease International (B.V.I.) Corp.; Director of Golden Bridge (B.V.I.) Corp.; Director of My Leasing (Mauritius) Corp.; Director of Asia Sermkij Leasing Public Co., Ltd.; Director of Bangkok Grand Pacific Lease Public Co., Ltd.; Director of Grand Pacific Holdings Corp.; Director of Chailease International Financial Services Co., Ltd.; Director of Chailease International Company (UK) Limited; Director of CL Capital Management Company Limited; Director of CLJ Investment Partners Company Limited; Chairman of Chailease Energy Integration Co., Ltd. Chairman of Innovation Energy Integration Co., Ltd. (He holds positions in 23 companies in total.)

Note 2: Chairman of the Management Committee of Chailease Holding Company Limited; Chairman of Chailease Group; Chairman of Chailease Enterprise Company Limited; Chairman of Chun An Investment Co., Ltd. (He holds positions in 4 companies in total.)

Note 3: Director and managing director of CL Capital Management Co., Ltd.; Director of CL Investment Partners Company Limited.; Director of Philippine Grain International Corporation.; Director and President of ChaiCo Investment Corporation.; Chairman of Chailease Biofund Company Limited.(He holds positions in 5 companies in total.)

Note 4: Independent director of Beng Kuang Marine Ltd.; Independent director of King Wan Corporation Ltd.; Independent director of Stamford Tyres Corporation Ltd.; Independent director of Sin Ghee Huat Corporation Ltd. (He holds positions in 4 companies in total.)

Note 5: Director of Center for the Study of Banking and Finance, National Taiwan University; Deputy Chairman, Banking Education Association of Taiwan; Chairman of Turnaround Management Association of Taiwan; Chairman & Dean of Academy of Promoting Economic Legislation; Independent Director of DBS, Taiwan; Director of McBorter AFMA; Consultant of McBorter (Tianjin) Education Company; Distinguished professor of Renmin University of China (Suzhou campus) (He holds positions in 8 companies in total.)

Note 6: Director of Shared Services for Charities Ltd.; Director of Binjaitree; Independent director of Riverstone Holdings Ltd.; Non-Executive Director of Prima Ltd.; Independent director of Gigamedia Ltd. (He holds positions in 5 companies in total.)

19


pany Limited

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

(3) Main shareholders of the corporate directorMarch 28, 2017

Name of corporate shareholder Main shareholders of the corporate shareholder

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

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

(4) Main shareholders of the corporate director as a juridical person

March 28, 2017

Name of corporate shareholder Main shareholders of corporate shareholder

First Asia Co., Ltd. Claire Chung（100%）

Julius (Asia) Co., Ltd. Claire Chung（100%）

(5) Directors'(including independent Directors) Professional Knowledge and Independent Information

March 28, 2017

Qualifications

Name (Note1)

Professional qualification requirements, together with at least five years work

experience Independent Status (Note)

Concurrent post of independent director in other public release company

An instructor or high-er in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private ju-nior college, college, or university

A judge, publicprosecutor,attorney,certified publicaccountant, orotherprofessional ortechnicalspecialist whohas passed anationalexaminationand beenawarded acertificate in aprofessionnecessary forthe business ofthe company

Work expe-rience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company

1 2 3 4 5 6 7 8 9 10

Fong-Long Chen (authorized repre-sentative of Beacon Hill Co., Ltd.)

V V V V V V V -

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

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

King Wai Alfred Wong (authorized representative of Wiedner Co., Ltd.)

V V V V V V V V V -

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

Steven JeremyGoodman V V V V V V V V V V V -

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

20

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

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

names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-

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

that holds shares ranking in the top five in holdings. (6) Not a director, supervisor, officer or shareholder holding five percent or more of the shares of a specified company or institution that has a financial or business

relationship with the company. (7) Not a professional individual or an owner, partner, director, supervisor or officer of a sole proprietorship, partnership, company or institution that provides

commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company or a spouse thereof. The member in the compensation committee performs the duties according to the Article 7 of Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is listed on the Stock Exchange or Traded Over the Counter is excluded.

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

2. Presidents, executive vice presidents, vice presidents and heads of departments and branches:

March 28, 2017 Unit:share

Po

sitio

n

Name

Ge

nd

er

ROCPosition

held since (Note1)

Shares heldShares currently held by

spouse and underage children

Shares held under the name

of others


Po

sitio

n(s

) held

co

ncu

rren

tly in

an

y o

ther c

om

pan

y

Managers, Direc-tors or supervisors who are spouse or within 2 degrees of consanguinity to

each Other

Em

plo

ye

e s

toc

k o

ptio

n c

ertifi

-

ca

te a

cq

uire

d

Share Percentage Share Percentage

Sh

are

Perc

en

tag

e

Po

sitio

n

Na

me

Re

latio

ns

President Fong-Long Chen Male ROC 2011/02/11 2,573,220 0.23% 190,018 0.02% – – ■ Master of Science, Sloan School of Management, MIT,

USA Note2 – – – –

Chief financial officer

Chia-Jeang Liu Male ROC 2011/02/11 630,000 0.06% – – – – ■ Master of Business Administration, Sloan School of

Management, MIT, USA Note3 – – – –

Senior Executive Vice President

Jung-Tao Lee Male ROC 2009/01/01 1,109,007 0.10% 38,270 0.00% – – ■ Bachelor of Statistics, National Cheng Kung University Note4 – – – –


Hsiu-Tze Cheng Female ROC 2004/01/01 540,775 0.05% 54,111 0.00% – – ■ EMBA, National Taiwan University Note5 – – – –


Ying-Chih Liao Male ROC 2006/07/03 – – 625,108 0.05% – – ■ Ph.D. Program, Harvard University, USA Note6 – – – –


Shi-Ren Shen Male ROC 2012/01/01 173,316 0.02% – – – – ■ Bachelor of Law, Soochow University Note7 – – – –

ExecutiveVice President

Ming-Hung Hsieh Male ROC 2016/1/25 76,648 0.01% – – – – ■ MBA, University of Wales, United Kingdom Note8

ExecutiveVice President Hsing-Jen Liu Male ROC 2016/3/1 145,263 0.01% – – – – ■ Finance, Insurance and Real Estate, University of Mem-

phis , USA Note9 – – – –

Audit Officer Chung-Chiang Yang Male ROC 2016/3/3 943 0.00% – – – – ■ MBA, Kansas State University ,USA Note10

ExecutiveVice President Mei-Fang Fan Female ROC 2012/04/09 – – – – – – ■ MBA, University of Washington, USA Note11 – – – –

Senior Vice President Chih-Ho Wei Male ROC 2010/04/01 43,020 0.00% – – – – ■ MBA major in International Finance, City University of

New York, USA Note 12 – – – –

Senior Vice President Yu-Ting Weng Male ROC 2010/03/01 154,352 0.01% – – – – ■ Vice bachelor of National University of Technology Note 13 – – – –

21


pany Limited

Po

sitio

n

Name

Ge

nd

er

ROCPosition

held since (Note1)

Shares heldShares currently held by

spouse and underage children

Shares held under the name

of others


Po

sitio

n(s

) held

co

ncu

rren

tly in

an

y o

ther c

om

pan

y

Managers, Direc-tors or supervisors who are spouse or within 2 degrees of consanguinity to

each Other

Em

plo

ye

e s

toc

k o

ptio

n c

ertifi

-

ca

te a

cq

uire

d

Share Percentage Share Percentage

Sh

are

Perc

en

tag

e

Po

sitio

n

Na

me

Re

latio

ns

Senior Vice President Chin-Tse Liu Male ROC 2005/09/26 69,108 0.01% – – – – ■ EMBA, National Cheng-Chi University Note 14 – – – –

Senior Vice President

Shih-Wei Chien Male ROC 2003/03/01 105,595 0.01% – – – – ■ Vice bachelor of business administration, Aletheia Note 15 – – – –

Senior Vice President Jing-Ying Sun Female ROC 2013/01/01 78,020 0.01% 10,674 0.00% – – ■ MBA, The George Washington University, USA Note 16 – – – –

ASEAN Chief financial officer

Yeu-Horng Jeng Female ROC 2014/09/01 – – – – – – ■ Master of Accounting, Long Island University, USA Note 17 – – – –

Vice President Kun-Huang Chan Male ROC 2015/01/01 54,111 0.00% – – – – ■ MBA, National Taiwan University of Science and Tech-

nology Note 18 – – – –

Accounting officer

Wen-Cheng Chen Male ROC 2016/08/09 0 0.00% 104,976 0.01% - - ■ National Chung Hsing University Note 19

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

Cloud Service CO., LTD.; Chairman of Chailease International Finance Corp.; Chairman of Chailease International Corp.; Chairman of Chailease Finance International Corp.; Chairman of Jirong Real Estate Co., Ltd.; Chairman of Chailease Finance (B.V.I.) Company Ltd.; Director of My Leasing (B.V.I.) Corp.; Director of Chailease International (B.V.I.) Corp.; Director of Golden Bridge (B.V.I.) Corp.; Director of My Leasing (Mauritius) Corp.; Director of Asia Sermkij Leasing Public Co., Ltd.; Director of Bangkok Grand Pacific Lease Public Co., Ltd.; Director of Grand Pacific Holdings Corp.; Director of Chailease International Financial Services Co., Ltd.; Director of Chailease International Company (UK) Limited; Director of CL Capital Management Company Limited; Director of CLJ Investment Partners Company Limited; Chairman of Chailease Energy Integration Co., Ltd. ; Chairman of Innovation Energy Integration Co., Ltd. (He holds positions in 22 companies in total.)

Note 3: Director and Senior Executive Vice President of Chailease Finance Co., Ltd.; Directors of Chailease International Company (Malaysia) Limited; Chairman of Chailease Credit Service Co., Ltd.; Chairman of Chailease Insurance Brokers Co., Ltd.; Chairman and President of Chailease Consumer Finance Co.,Ltd.; Chairman of Chailease International Leasing Co., Ltd.; Director of Grand Pacific Holdings Corp.; Chairman and president of Chailease International Trading Company Limited.; Director of Finex Co. Ltd. (He holds positions in 9 other companies in total.)

Note4: Director, chief risk officer and chief information officer of Chailease Finance Co., LTD; Director of Fina Finance & Trading Co., Ltd.; Director of Chailease Specialty Finance Co.,Ltd.; Director of Chailease Credit Service Co., Ltd.; Director of Yun Tang Inc.; Supervisors of Chailease Energy Integration Co., Ltd. Director of Asia Sermkij Leasing Public Company Limited; Supervisor of Innovation Energy Integration Co., Ltd. (He holds positions in 8 other companies in total.)

Note5: Director and chief human resource officer of Chailease Finance Co., LTD; Chief human resource officer of Chailease International Leasing Co., Ltd. Director of Chailease Enterprise Company Limited; Chairman of ChaiCo Investment Corp.; Director of Fina Finance & Trading Co., Ltd. (She holds positions in 5 other companies in total.)

Note6: Senior Executive Vice President of Chailease Finance Co., Ltd.; Director of Asia Sermkij Leasing Public Co., Ltd.; Director of Chailease International Company (UK) Limited; Director of Body Organ Biomedical Corp.; Director of CL Capital Management Company Limited; Director of CLJ Investment Partners Company Limited; Director of Chailease Enterprise Company Limited; Director of ChaiCo Investment Corp.; Director of Chailease Berjaya Credit Sdn. Bhd. (He holds positions in 9 other companies in total.)

Note7: Director and Executive Vice President of legal Dept. of Chailease Finance Company Limited; Supervisor of Chailease Credit Service Co., Ltd. (He holds positions in 2 other companies in total.)

Note8: Executive Vice President of Planning Dept. of Chailease Finance Company Limited; Director of Chailease Insurance Brokers Co., Ltd. (He holds positions in 2 other companies in total.)

Note9: Executive Vice President of Chailease Finance Co. Ltd.; Supervisor of Chailease Consumer Finance Co. Ltd. (He holds positions in 2 other companies in total.)Note10: Supervisor and Senior Executive Vice president of Chailease Finance Co. Ltd.; Supervisor of Fina Finance & Trading Co., Ltd., Chailease Specialty Finance Co.,

Ltd. (He holds 3 positions in other companies in total.)Note11: Executive Vice President of Chailease Finance Co. Ltd. (She holds one position in another company.)Note12: Senior Vice President of Chailease Finance Company Limited; Director of Apex Credit Solutions Inc.( He holds positions in 2 other companies in total.)Note13: Senior Vice President of Chailease Finance Company Limited (He holds one position in another company.)Note14: Senior Vice President of Chailease Finance Company Limited; Senior Vice President of Chailease International Finance Corporation.( He holds positions in 2 other

companies in total.)

22

Note15: Senior Vice President of Chailease Finance Company Limited; Senior Vice President of Chailease International Finance Corporation.( He holds positions in 2 other companies in total.)

Note16: Senior Vice President of Chailease Finance Company Limited (She holds one position in another company.)Note17: Chief Financial Officer of Chailease Finance Company Limited; Committee member of Taipei American School Audit Committee; Director of Finex Co. Limited (She

holds positions in 3 other companies in total.)Note18: Vice President of Chailease Finance Company Limited; Senior Vice President of Chailease International Finance Corporation.( He holds positions in 2 other

companies.)Note19: Senior Executive Vice President of Chailease Finance Company Limited; Director of Chailease International Corp.; Senior Executive Vice President of Chailease

International Finance Corp; Director of Chairman of Jirong Real Estate Co., Ltd.( He holds positions in 4 other companies in total.)

3. Directors, presidents and executive vice presidents remuneration in the latest year:(1)Directors (including independent Directors) remuneration

Unit: NT$ thousands

Positio

n

Nam

e

Remuneration to Directors4 items com-bined to net income (%)

Employee remuneration7 items com-bined to net income (%)

Rem

unera

tion o

f rein

vestm

ent b

usin

ess

Honoranium Retirement pay DirectorEarning

Business expenses

Bonus and special

remunerationRetirement pay Employee earning

Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ments

Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ments

Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ments

Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ments

Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ments

Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ment

Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ments

Chailease Holding

Companies in the consolidat-

ed financial statements

(Note 8) Chaile

ase

Hold

ing

Com

panie

s in th

e c

onso

lidate

d fin

ancia

l state

ments

Cash

Sto

ck

Cash

Sto

ck

Chairm

an

Fong-Long Chen (authorized repre-sentative of Beacon Hill Co., Ltd.) Fong-Long Chen*

52,232 54,780 5,216 5,216 642 642 0.80% 0.84% 27,317 33,702 0 108 555 　 555 　 1.19% 1.31%

Dire

cto

r

Andre J.L. Koo

Dire

cto

r

Chi Ching Chen (authorized represen-tative of Wiedner Co., Ltd.)

Dire

cto

r

Chee Wee Goh

Ind

ep

end

net

dire

cto

r

Dar Yeh Hwang

Ind

ep

end

net

dire

cto

r

StevenJeremyGoodman

Ind

ep

end

ne

t d

irecto

r

Chin Fock Hong

Note:The remuneration to drivers of Directors who are also employees totals NT$1,852,000.

23


pany Limited

Range of Remunerations

Range of remunerations

Name of Directors

4 items combined 7 items combined

Chailease HoldingCompanies in the

consolidated financial statements

Chailease HoldingCompanies in the

consolidated financial statements

< 2 millionFong-Long Chen, Chi-Ching Chen, Chee Wee Goh

Fong-Long Chen, Chi-Ching Chen, Chee Wee Goh

Chi-Ching Chen, Chee Wee Goh

Chi-Ching Chen, Chee Wee Goh

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

Dar Yeh Hwang, Steven Jeremy Goodman, Chin Fock Hong



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

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

30 million (incl.)~50 million (excl.) Andre J.L. Koo Andre J.L. Koo Andre J.L. Koo Fong-Long Chen, Andre J.L. Koo

50 million (incl.)~100 million (excl.)Total 7 people 7 people 7 people 7 people

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

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

Po

sition

Nam

eRemuneration Retirement

payBonus and

special remuneration

Employee's bonus4 items

combined to net income

(%)

Rem

un

eration

of rein

vestmen

t b

usin

ess

Ch

ailease Ho

ldin

g

Co

mp

anies in

the co

nso

li -d

ated fi

nan

cial statemen

ts

Ch

ailease Ho

ldin

g

Co

mp

anies in

the co

nso

li-d

ated fi

nan

cial statemen

ts

Ch

ailease Ho

ldin

g

Co

mp

anies in

the co

nso

li-d

ated fi

nan

cial statemen

ts

Chailease Holding

Companies in the consolidated

financial statements

Ch

ailease Ho

ldin

g

Co

mp

anies in

the co

nso

li-d

ated fi

nan

cial statemen

ts

Cash Stock Cash Stock

President Fong-Long Chen

12,321 38,408 195 1,830 46,763 68,618 1,087 　 1,743 　 0.83% 1.53%

Chief Financial Officer Chia-Jeang LiuChief Audit Officer Tzu-Ting YangAudit Officer Chung-Chiang YangAccounting Officer Wen-Cheng ChenChief Risk Officer Jung-Tao LeeChief Human Resource Officer Hsiu-Tze Cheng

Chief Strategy Officer Ying-Chih LiaoChief Legal Officer Shi-Ren ShenExecutive Vice President Ming-Hung Hsieh Executive Vice President Hsing-Jen LiuExecutive Vice President Mei-Fang FanASEAN Chief Financial Officer Yeu-Horng Jeng

(Note) The remuneration to drivers of managers totals NT$2,403,000.(Note) Tzu-Ting Yang transferred to affiliated company starting 2016/03/03.(Note) Chung-Chiang Yang has served as Audit Officer since 2016/03/03.(Note) Wen-Cheng Chen has served as Accounting Officer since 2016/08/09.

24

Range of Remuneration

Range of remunerationName of presidents and executive vice presidents

Chailease Holding Companies in the consolidated financial statements

< 2 million Wen-Cheng Chen,Tzu -Ting Yang, Chung-Chiang Yang, Hsing-Jen Liu, Mei-Fang Fan, Ming-Hung Hsieh

Tzu-Ting Yang

2 million (incl.)~5 million (excl.) Shi-Ren Shen, Yeu-Horng Jeng Wen-Cheng Chen, Chung-Chiang Yang, Hsing-

Jen Liu, Ming-Hung Hsieh,Mei-Fang Fan


Chia-Jeang Liu, Jung-Tao Lee, Hsiu-Tze Cheng, Ying-Chih Liao

Chia-Jeang Liu, Jung-Tao Lee, Hsiu-Tze Cheng, Shi-Ren Shen, Yeu-Horng Jeng

10 millions (incl.)~15 million (excl.) Ying-Chih Liao

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

30 million (incl.)~50 million (excl.) Fong-Long Chen


Total 13 people 13 people

(3) Name of managers and distribution details:

Position Name Stock dividends Cash dividends Total Total to net income

(%)

President Fong-Long Chen

1,087 1,087 0.02%

Chief Financial Officer Chia-Jeang Liu

Audit Officer C h u n g - C h i a n g Yang

Accounting Officer Wen-Cheng Chen

Chief Risk Officer Jung-Tao Lee

Chief Human Resource Officer Hsiu-Tze Cheng

Chief Strategy Officer Ying-Chih Liao

Chief Legal Officer Shi-Ren Shen

Executive Vice President Ming-Hung Hsieh

Executive Vice President Shi-Ren Shen

Executive Vice President Mei-Fang Fan

ASEAN Chief Financial Officer Yeu-Horng Jeng

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

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

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pany Limited

Unit:NT$ thousand

Year 2015 2016

Item

Amount Percentage of net income Amount Percentage in the net income

Chailease Holding



Chailease Holding



Chailease Holding



Chailease Holding



Director 100,298 109,048 1.46% 1.59% 85,962 95,003 1.19% 1.31%President and executive vice president 61,521 99,281 0.90% 1.45% 60,366 110,599 0.83% 1.53%

Total 132,929 173,237 1.94% 2.52% 116,956 170,106 1.61% 2.35%

(2) The correlation between the remuneration payment policy, standard and structure, setting procedure and operational performance as well as future risks.

The remuneration policy of the Company is determined based on the corporate management strategy, personnel policy and payment capability. The remuneration of key managers via the approval of Compensation Committee, and submitted to the Board resolution.

The leadership, strategy planning and execution ability of managers play fundamental roles in the delivery of vision, realization of long-term and short-term operational goals and improvement of operational performance. In order to closely link the performance of managers to the corporate profits and interests of shareholders, the Company regularly authorizes a professional management consulting company to conduct research on the compensation of financial competitors and examine the compensation level of the Company based on the survey results to offer competitive compensation. We offer bonuses based on the overall operation and individual performance to practically realize the performance bonus system.

The company's future risk depends on the asset quality of credit loss situation, the company has set up the Risk Management Department which is in charge of managing and supervising the financial asset's quality and will be adjusted the normal ratio of allowance for bad debts based on the product quality; while the bad debt losses increases, the personal performance and remuneration of Directors, presidents and executive vice presidents will be reduced relatively.

The Company also offers a retirement superior to the legally regulated one with an expectation that managers can devote their best efforts and strength to the Company. (The retirement plan is applicable to general employees as well).

(3) Corporate governance practices

1. The state of operations of the Board of Directors 7 Board meetings were held in 2016. The attendance record of each Director is as follows:

Position Name Actual attendance

Proxy attendance

Actual attendance (%) Remarks

ChairmanFong-Long Chen (authorized representative of Beacon Hill Co., Ltd.)

7 0 100.00%

Director Andre J. L. Koo 6 1 85.71%

Director Chee Wee Goh 6 1 85.71%

DirectorChi-Ching Chen (authorized representative of Wiedner Co., Ltd.)

7 0 100.00%

Independent Director Dar-Yeh Hwang 7 0 100.00%

26

Position Name Actual attendance

Proxy attendance

Actual attendance (%) Remarks

Independent Director Steven Jeremy Goodman 7 0 100.00%

Independent Director Chin Fock Hong 7 0 100.00%

Other matters that require reporting:(1) If any of the following circumstances applies during the operation of the Board of

Directors, the Company shall indicate the date, the period, the contents, the opinions of all Independent Directors, and the responses of the Company to the opinions of the Independent Directors: None① Any matters listed in Article 14-3 of "Securities and Exchange Act".② In addition to the aforementioned matters, if there is any written or otherwise recorded

resolutions on which an Independent Director has a dissenting opinion or qualified opinion.

(2) There were no recusals of Directors due to conflicts of interests in 2016.(3) Measures taken to strengthen the functionality of the Board: The Company's Board of

Directors has established an Audit Committee and a Compensation Committee to assist the Board in carrying out its various duties. For further information regarding the operations of the Audit Committee and Compensation Committee please refer to page 26 to page 31.

(4) The Financial Officer, Accounting Officer and Head of Internal Audit have attended the Board meetings, presented the results of financial statements and the findings of all audit reports in the quarterly Board meetings, and maintained functional communication with the Board of Directors.

2. The state of operations of the Audit Committee: 7 Audit Committee meetings were held in 2016. The attendance record of each Independent

Director is as follows:

Position Name Actual attendance Proxy attendance Actual

attendance (%) Remarks


Dar-Yeh Hwang 7 0 100.00%


Steven Jeremy Goodman 7 0 100.00%


Chin Fock Hong 7 0 100.00%

Other matters that require reporting:(1) If any of the following circumstances applies during the operation of the Audit Committee,

the Company shall indicate the date, the period, the contents, the resolution of the Audit Committee, and the responses of the Company to the resolution of the Audit Committee: None① Any matters listed in Article 14-5 of "Securities and Exchange Act".② In addition to the aforementioned matters, if there is any resolution which was not

approved by the Audit Committee but was approved by two-thirds or more of all Directors.

(2) There were no recusals of Independent Directors due to conflicts of interests in 2016.(3) Descriptions of the communications between the Independent Directors, the Internal

Auditors, and the Independent Auditors in 2016 (shall include the channels, major issues and/or results of the audits on the corporate finance and/or operations):① The Internal Auditors have sent the audit reports to the members of the Audit Committee

27


pany Limited

periodically, and presented the findings of all audit reports in the quarterly meetings of the Audit Committee. The Head of Internal Audit will immediately report to the members of the Audit Committee any material matters. During 2016, the Head of Internal Audit did not report any such material matters. The communication channel between the Audit Committee and the Internal Auditors functioned well.

② The Company's Independent Auditors have attended the Audit Committee meeting periodically and presented the findings of their quarterly review or audits on the Company's financial results. Under applicable laws and regulations, the Independent Auditors are also required to immediately communicate to the Audit Committee any material matters that they have discovered. During 2016, the Company's Independent Auditors did not report any irregularity. The communication channel between the Audit Committee and the Independent Auditors functioned well.

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

Evaluation Item Yes No Status Deficiency and reasons

i. Provision and disclosure the 「Corporate Governance Best-Practice Principles」of the company comply with the 「Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies」

V

The Company has provided the 「Corporate Governance Best-Practice Principles」comply with the 「Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies」and disclosed the principles on company's website and MOPS.

No

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

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

shareholders and the list of ultimate owners of these major shareholders

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

(4) Internal regulations to avoid the insider of a public company use the non-public information to buy or sell stocks or other equity-type securities of the company.

V

V

V

V

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

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

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

(4) The Company has established the "Ethical Conduct Best Practice Principles" and " Operating Procedures for Handing Internal Material Information and preventing Insider trading" to regular the insider person who acquires knowledge of the company's internal material information due to that person's capacity or position, occupation, or controlling relationship be bound by and observe the applicable provisions of this Operational Procedure.

(1)No(2)No(3)No(4)No

28


iii. Formation and responsibilities of the Board of Directors (1) Any diversified policy and execution for the

members of the Board?(2) Any functional committees set up voluntarily

except the audit and compensation committees?

(3) Any evaluation mode set up for Board's performance and made evaluation annually?

(4) Regular evaluation of CPAs' independence

V

V

V

V

(1) According to Article 20 of the Company's Principles of Corporate Governance, the composition of the Company's board of directors shall take into account its diversity, and there shall be a diversified guideline as to its operation and development including, but not limited to: (1) gender, age, nationality, and cultural background; and (2) expertise, skills, and experience. Moreover, According to the "Rules Governing the Election of moreover, Directors and Supervisors" of the Company, the Directors shall be elected, based on the seats stipulated in the MAA, among those with capacity to make juridical acts in the shareholders' meeting.

The composition of the Board, whose members has the specific implementation in the field of encompass diverse business and management, science and technology, law, etc. The company is also planning to complete the corresponding revision in the near future to enhance the implementation of the concept of corporate governance in complying with the "oo Limited elective program Directors and supervisors," a reference example released by Taiwan Stock Exchange Corp. in January this year.

(2) No.(3) The compensation committee of the Company reviews

the Directors and managers' performance regularly and revised the salary remuneration policies, systems, standards and structure in accordance with evaluation result. We are planning to formulate rules and procedures for Board of Directors performance assessments. We conduct regularly scheduled performance assessments of the Board of Directors each year and may engage outside professional institutions to conduct such performance assessments for every three years. The performance assessments will be conducted upon the Board of Directors and individual Directors through self-assessment. The results of performance assessments will be submitted to the Board of Directors and disclosed in the annual report and corporate website as the case may be appropriate.

(4) We choose a professional and creditable accounting firm whose CPA is not involved in any interest of the Company. The appointment, dismissal and compensation of the CPA should be evaluated by Audit Committee and approved by the Board of Directors.

(1)No(2)No(3)No(4)No

iv. Does the Company appoint a unit or personnel responsible for corporate governance related affairs, including furnishing materials for carrying out the duties of Directors and corporate auditors, overseeing matters related to conducting the meetings of the Board of Directors and shareholders, applying for corporate registration and its updates, compiling the minutes of the meetings of the Board of Directors and shareholders.

V

With a view to improve corporate governance and meet its social and corporate ethics responsibilities, the Company established the Corporate Governance and Ethics Committee ("the Committee")under the helm of the chairman of the Board of Directors as a committee devoted mainly to the furtherance of corporate governance and ethics. Through the implementation by the Legal Division, the Committee has adopted the following measures:(1) The Review and Proposal for the Corporate Governance

Structure(2) The Planning, Performance, Examination, and

Improvement on Corporate Governance Related Matters(3) The Research on the Trends and Issues of Corporate

Governance(4) The Performance and Improvement on Corporate

Governance Evaluation(5) Other Projects Implemented According to the Company

Charter, By-laws, Resolutions of the Board of Directors or the Chairman of the Board.

The Committee is scheduled to deliver a report on its performance to the Company's Board of directors in March on an annual basis. The most recent report was given to the Board of Directors Meeting in March of 2017, including: (1) the result of the corporate governance evaluation administered by the Taiwan Stock Exchange; (2) the result of the evaluation on the performance of the Company's Board of Directors; and (3) the completed projects related to corporate governance in 2016.

No

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pany Limited


v. Appointment the professional Registrar agent as the institution to handle the related affairs of shareholders' meeting

VThe Company has 「Capital Securities Corp., Registrar Agency Department」as the institution to handle the related affairs of shareholders' meeting.

No

vi. Information Disclosure(1) Establishment of a website where information

on financial operations and corporate governance is disclosed

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

V

V

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

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

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

(1)No(2)No

vii. Other important information, helpful to understand corporate governance ( such as the employees' rights and care, relations with investors, suppliers and stakeholders, advanced education of Directors and supervisors, execution of the risk management policies, risk measurement standards and customer policies as well as the purchase of liability insurance for Directors and supervisors):

V

(1) The Directors of the Company are well equipped with professional knowledge and continue to advance their knowledge according to the corporate governance principle. The courses they have taken will be published on the Market Observation Post System.

(2) Our website has an "Investor Area" to provide shareholders with the business information about the Company. We expect to offer timely and effective consulting services to shareholders and investors to build a communication bridge between the Company and investors.

(3) The Employee Welfare Committee is founded to take care of employees, foster the harmonious relationship between labor and capital, build teamwork among employees and attend to employees' welfare, such as subsidies of staff club activities, joyful events, death and childbirth, health examinations and group tours to ensure fluent communications and safeguard the right of employees.

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

No

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

V

We continue to strive toward our goal of realizing Best Corporate Governance and to become listed among the top 20% of listed companies in terms of Corporate Governance Evaluation in 2016. Meanwhile, Chailease remains included in TWSE Corporate Governance 100 Index.

No

ix.. Describe the situations after improvement and the measures adopted for improvement concerning the indexes on which the Company was unsuccessful to score in the most recent Corporate Governance Evaluation administered by the Corporate Governance Center of the Taiwan Stock Exchange.

(1) Situations after Improvement:1. Index 3.28 (outside evaluation on the performance of

the Board of Directors every three years): The Company has formulated the Regulation Governing Evaluation of the Performance of the Board of Directors ("Performance Regulations") in 2016.

2. Index 3.31 (evaluation on the performance of the Board of Directors at least once a year and disclosure of result in the Company's webpage): According to the Performance Regulation, the Company shall conduct the evaluation on the performance of the Board of Directors in November each year. The most recent result has been disclosed in the Company's webpage (available at: http://www.chaileaseholding.com.tw/ugC_AboutUs02-02.asp).

(2) Measures Adopted for Improvement:1. Index 3.32 (at least one member of the Board of

Directors be female): The Company will consider including female director in the Board of Directors taking into account Company policy and development.

2. Index 3.35 (at least 1/3 of the Directors be male and female): The Company will consider including female director on the Board of Directors taking into account Company policy and development.

30

4.Operations of the Compensation Committee(1) Authority and duties of the Committee:① Determine and regularly review the policies, mechanism, standards, and elements in

respect of the performance and remuneration of Directors and managers. ② Regularly assess and determine the remuneration of Directors and managers.

(2) By May 31, 2016, there are 3 members of the Compensation Committee, namely the independent director, Steven Jeremy Goodman, Chin Fock Hong and Dar Yeh Hwang. Refer to our website for Compensation Committee Charter of Chailease Holding Company Limited.

(3) Information on the Compensation Committee members

Position(Note 1)

Qualification

Name

Professional qualification requirements, together with at least five years work experience Independent status(Note 2) C

on

cu

rren

t po

st o

f me

mb

er o

f

Co

mp

en

sa

tion

Co

mm

ittee

in

an

oth

er p

ub

lic re

lea

se

co

mp

an

y

Re

ma

rks

(No

te 3

)

An instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university

A judge, public prosecutor, attorney, certified public accountant, or other professional or technical specialist who has passed a national examination and been awarded a certificate in a profession necessary for the business of the company

Work experience in the area of commerce, law, finance, or accounting, or otherwise necessary for the business of the company

1 2 3 4 5 6 7 8

Independent director

Steven Jeremy Goodman V V V V V V V V V V V 0

Independent director Chin Fock Hong V V V V V V V V V V 0

Independent director Dar Yeh Hwang V V V V V V V V V 0

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

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

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

names, in an aggregate amount of one percent or more of the total number of issued shares of the company or ranking in the top 10 in holdings. (4) Not a spouse, relative within the second degree of kinship, or lineal relative within the third degree of kinship, of any of the persons in the preceding three sub-

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

that holds shares ranking in the top five in holdings.(6) Not a director, supervisor, officer or shareholder holding five percent or more of the shares, of a specified company or institution that has a financial or business

relationship with the company. (7) Not a professional individual or an owner, partner, director, supervisor or officer of a sole proprietorship, partnership, company or institution that provides

commercial, legal, financial, accounting services or consultation to the company or to any affiliate of the company, or a spouse thereof. (8) Not any of the circumstances in the sub-paragraphs of Article 30 of the Company Act.

Note 3: Explain whether it conforms to Item 5 of Article 6 in "Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is listed on the Stock Exchange or Traded over the Counter" if the committee member is a director.

31


pany Limited

(4) Information about the operations of the Compensation Committee:1. There are 3 members of the Compensation Committee of the Company.2. Tenure of current committee members: May 30, 2014 to May 29, 2017. 2 committee

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

Position Name Actual attendance(B)

Proxy Attendance

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

Convenor Steven Jeremy Goodman 2 0 100%Committee member Chin Fock Hong 2 0 100%Committee member Dar Yeh Hwang 2 0 100%

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

Item Status Deficiency and reasons

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

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

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

(1) In order to fulfill corporate social responsibility and to strike a balance between economic, social and environmental and sustainable development, the company promulgated this corporate social responsibility best practice principles in 2011 and the corporate governance and ethical corporate management committee memorandum in 2015. The principles will be reviewed each year to ensure that the company will achieve its goal as planned.

(2) To manage the corporate social responsibility initiatives, the company organized the corporate governance and ethical corporate management committee supervised by chairman of business administration committee and chairman of the company. The committee comprised 5 sections. Specifically, 25 employees from eleven different divisions are included in this committee. Corporate Governance and Ethical Management Committee held two (2) meetings in 2016. The related departments provided reports and had discussions relating to the corporate social responsibility issues, which were resolved by the Committee and executed by the related departments accordingly.

No

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

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

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

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

(1) We endeavored to utilize recycled box to reduce the use of plastic bags. It is estimated that up to 40,000 plastic bags will be saved annually. Regarding the use of 4,000,000 paper product in household and toilet paper at the corporate headquarters, we began to use recycled products.

(2) We received ISO 50001 energy management system and ISO 14001 environment management system certification and organized an environment committee. Having this committee can assist us continuously promote the idea of environmental protection and the information on energy saving. In the long run, this committee can help result in reducing the negative effects on environments.

(3) In response to greenhouse effect and climate change, the company launched its energy saving company (ESCO) service and acquired solar power plants to implement energy conservation and carbon reduction projects. In our offices, we continue to collect information regarding energy conservation and carbon reduction. This act can help us examine the impacts on the company's business operations.

No

iii. Reinforce information revelation The measures of disclosing

relevant and reliable information on corporate social responsibility

Please refer to our website for our corporate social responsibility implementation status: http://www.chaileaseholding.com/ugC_CR.asp No

32


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

None

No

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

Please refer to our website for our corporate social responsibility report: http://www.chaileaseholding.com/ugC_CR-01-05.asp

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

The Chailease CSR Report had been externally assured by British Standards Institution (BSI) and based on AA1000 Assurance Standard (2008) consistent with the GRI G4.0 Guidelines.

6.The Status of Implementation of Corporate Ethics and the Adopted Measures


I. Promulgation of Corporate Ethics Policy and Plan(1) Does the Company specify

its policy and action plans governing corporate ethics and the commitment of its board of directors and management to vigorously implement such policy through its internal regulation and public documents?

(2) Does the Company promulgate its action plans in connection with how to prevent unethical conducts? Does the Company have in place procedures, guidelines, punishments and grievance-filing systems and fully implement them?

(3) Does the Company take precautionary actions to refrain from engaging in activities involving high risk of the unethical conducts, including those defined at Paragraph 2 of Article 7 of the Principles of Corporate Ethics for TWSE/GTSM Listed Companies?

(1) The Company's Corporate Social Responsibility Report describes the corporate ethics policy from the viewpoints of the management and what actions have been taken by the Company to implement such policy.

(2) The Company has established a precautionary action plan based on its Principles of Corporate Ethics. According to the action plan, every staff is required to sign on an undertaking letter, promising to observe the action plan. In addition, the Company promulgated the Procedure and Behavior Guidelines of Corporate Ethics (the "Ethics Guidelines") in 2014, defining the types of unethical conducts and establishing the reward and punishment system. The Ethics Guidelines also provides how the employees of the Company are required to engage in business activities, and requires the responsible unit to ensure the compliance and implementation of the Ethics Guidelines.

(3) The Company has formulated the Rule on the Reporting of Unethical Conducts and Violations of the Ethics Guidelines (the "Reporting Rule"). The Reporting Rule provides that any person, either a staff or an external person, may report any conduct which is improper, unethical, illegal or violates the Ethics Guidelines. If the alleged violation is proven to be true, the violator shall be subject to punishment. Moreover, the Company takes measures to raise the employees' awareness of the requirement of observing the internal disciplinary and work rules of the Company.

The Company purchased a fiduciary liability insurance covering the material loss of assets and trust properties of the Company due to breach of fiduciary duty and unethical conducts by its employees, especially those at the legal, finance and marketing departments. With the fiduciary liability insurance, the insurer bears partly the risk of loss esulting form employee infidelity, with a view to safeguard the benefits of the Company's shareholders.

No

33


pany Limited


II. Implementation of Corporate Ethics(1) Does the Company

check and evaluate the business records of its counterparties to find out whether they have engaged in any unethical conduct in the past, and incorporate corporate ethics clause in the agreements entering into with such counterparties?

(2) Does the Company establish any unit responsible for promoting corporate ethics under the board of directors? Does the unit responsible for the implementation of corporate ethics report to the board of directors periodically?

(3) Does the Company promulgate any policy to prevent conflicts of interest, provide an effective reporting system and fully implement related policies?

(4) In order to fully implement corporate ethics, does the Company establish a well-functioning accounting system and internal control system, and conduct periodical check through its internal audit team or outside accountants?

(5) Does the Company hold internal and external corporate ethics trainings periodically?

(1) According to the Procedure and Behavior Guidelines of Corporate Ethics, the Company must have full knowledge of the status of the corporate ethics of a counterparty prior to entering into any agreement with such counterparty. The Company shall ensure that clauses related to corporate ethics are incorporated into the agreement.

(2) The Legal Department was formerly the unit responsible for matters related to corporate ethics. In order to complying with the amendment to the applicable government laws and regulations, the Company amended its Rules on the Organization of Corporate Governance and Ethics Committee in 2015, providing that the Company must establish the Corporate Governance and Ethics Committee (the "Committee") in place of the Legal Department for handling corporate ethics matters. This Committee is entrusted with broad authority of implementing measures relating to corporate ethics and monitoring the implementation process; and it must report to the board of directors the implementation progress. For such implementation, the Committee held 2 meetings in 2016. In the meetings, all responsible departments provided suggestions, reports and engaged in discussions, related to the annual planning, training and execution of corporate ethics; and they were later adopted and implemented by the Committee through resolution. The 2016 Corporate Governance and Ethics Committee Annual Report was submitted to the board of directors in March 2017, and would be distributed in the shareholders' meeting in May 2017.

(3) According to the internal regulations of the Company, if any director of the Company or its subsidiaries is an interested party with respect to any proposal of the board meeting, such director may not participate in discussion or voting on such proposal, and must refrain from participating in and voting on such proposal. When employees of the Company discover that the carrying-out of their duties may lead to conflicts of interest between the Company and them or the entity which they represent, they shall report such conflicts of interest to their direct supervisors and the responsible unit of the Company.

(4) The audit unit under the board of directors shall review the internal control system in order to improving the management and ensure the corporate system in proper function. Furthermore, the audit unit must promulgate audit principles and require all corporate units to run self-checks with internal control system on a periodic basis pursuant to the Regulation Governing Self-Check on Internal Control System of the Company in order to fully implement the self-monitoring system, lower operational risk and prevent unethical conducts.

(5) The Company has arranged the trainings for new employees, including but not limited to, the subjects of corporate ethics and code of conducts.

No

34


III. The Operation of the Internal Reporting System(1) Does the Company

establish a clear reporting system, reward policy and convenient reporting channel? Does the Company designate a relevant staff for receiving reporting of alleged violations based on the alleged violators?

(2) Does the Company establish an investigation SOP and related confidential system concerning the receipt of the reporting?

(3) Does the Company take any action to protect persons reporting violations from retaliation or improper treatment related to their reporting?.

(1) The Company promulgated the Regulation Governing Reporting of Unethical Conducts and Code of Conduct Violations, which provides that any Company staff and external person may report unethical conducts to the chief audit executive and the violations of the Procedures and Code of Conducts to the chief human resources officer through the hotline, mail and email etc.

(2) According to the Regulation Governing Reporting of Unethical Conducts and Code of Conduct Violations, it is required to file a written report, stating the details of the alleged unethical conducts and/or violations and the names of the alleged violators, accompanied by related evidence, for receiving such report by the responsible unit and initiating the investigation. After the report is received, the receiving window will determine and designate an appropriate unit in charge of investigation according to the severity of the violations. All personal information such as the names, positions and addresses of the persons reporting the violations will be kept confidential for their protection. In addition, the Company promulgated the Regulation Governing Protection of Unethical Conducts Whistleblower and Code of Conduct Violations in 2015, which safeguards the whistleblower's personal information. The identity of the whistleblower shall be represented as a code. The related information shall be kept strictly confidential, and is highly managed with regard to its transferring, archiving, accessing and safekeeping.

(3) According to the Regulation Governing Reporting of Unethical Conducts and Code of Conduct Violations, all investigators and the persons participating in the investigation must keep the facts of violations, investigation progress and other related information confidential. Any disclosure without permission is forbidden. Failure to comply with the confidentiality causing the disclosure of the information may lead to disciplinary actions. In addition, we promulgated the Regulation Governing Protection of Whistleblower in 2015, which enhances the protection of the whistleblowers' personal information. The whistleblowers will not sustain any unfavorable treatment on their positions, salaries, promotions and other working conditions for the reporting. Furthermore, the Company will protect the whistleblowers from any violence, duress, and harassment.

No

IV. Enhancement of Information Disclosure(1) Does the Company

disclose its Principles of Corporate Ethics and its implementation progress on its webpage and the TSEC Market Observation Post System?

(1) The Company has established a Corporate Governance section on our official website, which publicizes the Principles of Corporate Ethics and other related information.

No

V. If the Company promulgated its Principles of Corporate Ethics according to Principles of Corporate Ethics for TWSE/GTSM Listed Companies, please specify the discrepancy between its status of implementation and the Principles? No Discrepancy.

VI. Other information material to the understanding of corporate ethics (e.g. revisions and amendments to the Company's Principles of Corporate Ethics ):1. There is a corporate governance section in the Company's webpage, which is updated from time to time to reflect the

newest revisions and amendments made to rules related to corporate ethics.2. Please refer to the following link for the 2014 Corporate Social Responsibility Report of Chailease Holding Company at

http://www.chaileaseholding.com.tw/ugC_CR-01-05.asp

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pany Limited

7. Disclosure of the corporate governance regulations and related rules. In June of 2011, the Company established the regulations related corporate governance

including the Best-Practice Principles of Corporate Governance, Principles of Corporate Ethics, Best-Practice Principles of Corporate Social Responsibility, and Ethics Principles of Corporate Behaviors. Moreover, in November of 2014, with a view to implement corporate ethics, the Company promulgated the Procedure and Behavior Guidelines of Corporate Ethics. In order to comply with the latest applicable laws and regulations, we have also commenced the amendment to the Ethical Corporate Management Best-Practice Procedure and Code of Conduct, Ethical Corporate Management Principles, Ethical Conduct Principles, Corporate Governance Best-Practice Principles and Corporate Social Responsibility Best Practice Principles in 2015. Ethical Corporate Management Best-Practice Principles and Code of Conduct, Ethical Corporate Management Principles and Ethical Conduct Principles were amended with the resolution of Board which promote and implement the corporate governance of the Company.

In addition, the Organic Regulations of the Corporate Governance and Ethical Management Committee was formulated in 2015, specifying that the Corporate Governance and Ethical Management Committee shall be established as the exclusive unit in charge of implementing the ethical corporate management. In addition, we have also formulated Regulation Governing the Protection of Whistleblower, which enhances the protection of the whistleblower's personal information and working interests.

The regulations described above have been promulgated to all employees. The investors may search for these regulations on Corporate Governance section of the website of the Company.

Based on the rules and regulations mentioned above, the Company adopted the following measures: (1) Pursuant to the Best Practice Principles of Corporate Governance mentioned above, the

Company Enacted "The Rules on Whistleblower Protection" on January 26, 2016, for the purpose of encouraging report on conducts violating the Company rules or government laws and regulations;

(2) Pursuant to the Best-Practice Principles of Corporate Governance mentioned abvoe, the Company enacted " The Work Procedure of Chailease Finance Company（a wholly-owned subsidiary of Chailease Holding Company), " embodying Corporate Ethics in Human Resources Policies and Establishing a Clear and Effective system for Rewards, Penalties and Complaint Filing Procedure;

(3) Pursuant to the Best-Practice Principles of Corporate Social Responsibility mentioned above, in the 2016 shareholders' meeting, the Company passed a resolution of amending the Rules and Procedure on the Agenda of Shareholders Meeting, advising the Board of Directors to include a shareholder's proposal in the agenda of the shareholders meeting except that it considers the proposal improper;

(4) Pursuant the Ethics Principles of Corporate Behaviors mentioned above, in December of 2015, the Company Passed a resolution of amending the Rules and Procedure of the Board of Directors' Meeting, adding a clause requiring any exemption of Directors, members of the audit committee, and managerial officers from complying with the ethics principles of the Company shall be approved by a resolution adopted by the Board of Directors;

(5) Pursuant to the Ethics Principles of Corporate Behaviors mentioned above, the Company passed a resolution in December of 2015, of amending the Rules and Procedure of the Board of Directors' Meeting, adding a clause requiring any exemption of Directors, members of the audit committee, and managerial officers from complying with the ethics principles of the Company shall be approved by a resolution adopted by the Board of Directors;

36

(6) Pursuant to the Best-Practice Principles of Corporate Governance mentioned above, in September of 2016, the Company published the Rules and Procedure on the Evaluation of the Performance of the Board of Directors, pursuant to which the Board of Directors shall be subject to both an evaluation of its performance on an annual basis through internal evaluation of the Board's performance and each director's self–evaluation of his/her performance and outside evaluation once every three years; and

(7) Pursuant to the Procedure and Behavior Guidelines of Corporate Ethics mentioned above, during 2016, the Company has conducted 22 education training sessions relating to corporate ethics given to various divisions and branches of the Company.

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

9. Execution of Internal Control System:

37


pany Limited

Statement of Internal Controls

38

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

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

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

Personnel involved Major defects Action

Sales staff in the Micro-Enterprises Financing Department of office of central Taiwan Chailease Finance Co., Ltd.

Charged the client for fee in cash privately, gained unjustifiable enrichment.

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

2. Reiterated the importance of conforming to regulations.

Former junior manager of Sales Department of Xiamen office of Chailease Internation Finance Co.

Willfully copied clients' date for personal use without the Company's permission before resignment. The Company found out and stopped him immediately. This behavior violated IT security and IP protection policies.

1. Retroactively dismissed the employee according to the regulation of the Company.

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


Former employees of Exam Department of Chongqiong office of Chailease International Finance Co.

Willfully copied clients' date for personal use without the Company's permission before resignment. The Company found out and stopped him immediately. This behavior violated IT security and IP protection policies.

1. Retroactively dismissed the employee according the the regulation of the Company.

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


Employee of Tainan Beimen Station of Chailease Auto Rental Co. Ltd.

Willfully misappropriated corporate property.

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


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

Date Proposal Resolution Execution status

May 27, 2016

1. Ratified the proposal regarding the 2015 Business Report and Financial Statements

Proposal was approved after voting.For: 732,283,583 shares; 87.1218%; Against: 51,748 shares; 0.0061% ;Invalidly: 0 share; 0%; Abstained: 108,192,319 shares; 12.8721%

The Financial Statements were disclosed on the company's website.

2. Ratified the proposal for distribution of 2015 profits (cash dividend per share of NT$3.1)

Proposal was approved after voting.For: 734,179,813 shares; 87.3474%;Against: 76,935 shares; 0.0091%;Invalidly: 0 share; 0%;Abstained: 106,270,902 shares; 12.6435%

The record date of the dividend was set on August 8 2016; cash dividend were distributed on August 31 2016

3. Resolved the amendment to the "Memorandum & Articles of Association"

Proposal was approved after votingFor: 731,571,830 shares; 87.0536%;Against: 2,616,751 shares; 0.3113%;Invalidly: 0 share ; 0%;Abstained: 106,180,029 shares; 12.6351%

The revised Memorandum & Art icles of Associat ion was filed in Cayman Island on June 8 2016 and disclosed on the company's website.

4. Resolved the Amendment to the "Rules and Procedures of Shareholders' Meeting"

Proposal was approved after votingFor: 734,164,747 shares; 87.3426%;Against: 50,751 shares; 0.0060%;Invalidly: 0 share; 0%;Abstained: 106,341,120 shares; 12.6514%

T h e r e v i s e d " R u l e s a n d Procedures of Shareholders' Meeting" was disclosed on the company's website.

5. Resolved the Amendment to the "Rules Governing the Election of Directors and supervisors"

Proposal was approved after votingFor: 723,800,707 shares ; 86.1096%;Against: 51,751 shares ; 0.0061%;Invalidly: 0 share ; 0% ;Abstained: 116,704,160 shares; 13.8843%

The revised "Rules Governing the Election of Directors " was disclosed on the company's website.

39


pany Limited

(2) Major resolutions in the Board meetings

Date The resolutions

2016.3.3

Approved the 2015 Business Report of the Company.Amended the Memorandum & Articles of Association of the Company.Amended the "Rules and Procedures of Shareholders Meeting" of the Company.Approved the change of Internal Audit Officer effective from March 3rd, 2016.Approved the Date, Venue and its close period of Register of Members for the Annual General Meeting of 2016.

2016.3.17

Approved the Company's audited consolidated financial statements and the Independent Auditor's report for the financial year ended December 31, 2015.Approved the total compensation of Directors and key managers (including employees' compensation and Directors' compensation) for year 2015.Established the Company's "Merge and Acquisition Special Committee Charter".Approved the distribution of annual net profits and dividend payment from the operating performance of year 2015.Approved the revised matters for the Annual General Meeting of 2016.

2016.5.12 Noted the Company's consolidated financial statements and the Independent Auditor's Review Report for the first quarter ended March 31, 2016.

2016.6.2 Approved to authorize the Chairman of the Board to determine the ex-dividend record date and the dividend payment date.

2016.8.9

Noted the Company's consolidated financial statements and the Independent Auditor's Review Report for the first half year ended June 30, 2016.Approved to change the Accounting Officer from August 9, 2016.Approved the capital injection into Chailease International Financial Service Co., Ltd. in a total amount of USD32,000,000.

2016.11.10

Noted the Company's consolidated financial statements and the Independent Auditor's Review Report for the nine months ended September 30, 2016.Approved the Performance Evaluation and Compensation Package of Directors and Key Managers for year 2016.

2016.12.8Noted the Company's Board Performance Evaluation Report of 2016.Approved the appoint Messrs. Chiang, Chung-Yi and Chen, Yi-Chun, the partners of KPMG, Taipei, as the auditors of the Company for the financial year of 2017.

2017.2.23

Approved the Company's nominated candidates of the 3rd session of the Board of Directors (including Independent Directors).Approved the 2016 Business Report of the Company.

Approved the Date, Venue and its close period of Register of Members for the Annual General Meeting of 2017.

2017.3.16

Approved the Company's audited consolidated financial statements and the Independent Auditor's report for the financial year ended December 31, 2016.Approved the distribution of the annual net profits and dividend payment from the operating performance of the year 2016.Approved to amend the Company's "Processing Procedure for the Acquisition and Disposal of Assets".Approved the election of the 3rd session of the Board of Directors (7 Directors in total including Independent Directors).Approved to release the non-complete duty of the nominated candidates of the 3rd session of the Board of Directors (including Independent Directors).Approved the total compensation of Directors and Key Managers for year 2016, which includes Employees' Compensation and Directors' Compensation.Approved the issuance of new common shares for cash capital increase in Taiwan or issuance of Global Depositary Receipts ("GDRs") through the issuance of new common shares by capital increase.Approved the revised matters for the Annual General Meeting of 2017.

12. Major issues of record or written statements made by any Director or Supervisor dissenting to important resolutions passed by the Board of Directors: None.

40

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

Job Title Name Date ofAppointment

Date ofResignation Cause of Resignation

Audit Officer Tzu-Ting Yang 2009/01/01 2016/03/03 Reassignment to Affiliates

Chief of Financial Officer Yeu-Horng Jeng 2013/10/01 2016/08/09 Adjustment of responsibility

(4) Information regarding certified public accountant Unit：NTD'000

Accounting Firm Name of CPA Audit fee

Non-Audit Fee Whether the CPA's Audit Period Covers an Entire Fiscal Year

Note System Design

Company Registration

Human Resource Others Subtotal Yes No Audit Period

KPMG Chung-Yi Chiang

Yi-ChunChen 6,630 0 0 0 0 0 V 2016/1/1~

2016/12/31

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

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

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

4. Information on the change in CPA: Due to relevant regulatory requirements on rotation, KPMG changed audit partners for the financial statements of 2016.

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

41


pany Limited

(5) Information for top 10 shareholders and related parties as defined under the Statement of

March 28, 2017 Unit : share

NameShareholding Spouse & minor

shareholding Shareholding entitled other

name

10 largest shareholders and related parties

as defined under the Statement of Name

Financial Accounting Standards No. 6

Remarks

Share % Share % Share % Position(name) Relations

Andre J.L. Koo 56,606,561 4.97% 29,813 0.00% 2,000,000 0.18% – – –MITSUBISHI UFJ LEASE & FINANCE COMPANY LIMITED

45,302,400 3.98% 0- 0- 0- 0- – – –

GRAND PACIFIC INVESTMENT & DEVELOPMENT CO., LTD.

44,727,790 3.93% 0- 0- 0- 0- – – –

CHAIRMAN: HUANG, PING-CHANG

0- 0- 10,296 0.00% 0- 0- – – –

TFO GLOBAL MARKET FUND 44,044,000 3.87% 0- 0- 0- 0- – – –

LONG TERM STRATEGIC INVESTMENT FUND

37,752,000 3.31% 0- 0- 0- 0- – – –

PACIFIC GROWTH PRIVATE EQUITY FUND

35,796,446 3.14% 0- 0- 0- 0- – – –

EASTERN DRAGON INVESTMENT FUND

31,692,488 2.78% 0- 0- 0- 0- – – –

LTG CAPITAL PARTNERS FUND 31,460,000 2.76% 0- 0- 0- 0- – – –

MCKALLY GLOBAL INVESTORS FUND 31,460,000 2.76% 0- 0- 0- 0- – – –

STAR INTERNATIONAL PACIFIC LTD

27,997,008 2.46% 0- 0- 0- 0- – – –

REPRESENTATIVE: NOT AVAILABLE – – – – – – – – –

(6) Continuing educational training of the directors and independent directors:

The details of their continuing professional development in 2016 is described as follows:

Position Name Organizer Name of the course Hour

ChairmanFong-Long Chen (authorized representative of beacon Hill Co., Ltd.)

KPMG Annual Training of Directors and Supervisors 6.0

Taiwan Corporate Governance Association

Enterprise Fraud Risk Deduction and Prevention/ Fraud Incident Response and Investigation

6.0

Director Andre J.L. Koo Taiwan Corporate Governance Association


6.0

Director Chee Wee Goh Taiwan Corporate Governance Association


6.0

42

Position Name Organizer Name of the course Hour

DirectorChi-Ching Chen (authorized representative of Wiedner Co., Ltd.

Taiwan Corporate Governance Association


6.0

Independet director Steven Jeremy Goodman Taiwan Corporate

Governance Association


6.0

Independet director Dar Yeh Hwang Taiwan Corporate



6.0

Independet director Chin Fock Hong Taiwan Corporate



6.0

(7) Certification details of employees whose jobs are related to the release of the company's financial information:

The certificate that the financial transparency related personnel received is described as follows:

Related personnel Certificate & lisence People

Financial and accounting personnel

Certified Public Accountant in Taiwan 6

Certified Public Accountant 1

Professional certification of Principal Accounting Officers of Issuers, Securities Firms and Securities Exchanges 4

Certified Internal Auditor 2

Internal auditor

Certified Internal Auditor 2

Certified Information Systems Auditor 1

Certified Information Systems Security Professional 1

Certified Public Accountant 1

43


pany Limited

(8) Working environment and employee safety protection

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

Items Description

Entrances controlling24 hours entrance guard systemSecurity service person set up with regularly patrols in building and parking lot entrances to secure the safety of the office.

Equipment and facilities Maintenance

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

Physical/psychological health care

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

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

Employee Welfare

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

Employee retirementTo reward employees, stable staff working or living after retirement, the company set the man-agement regulations to employee retirement according to the Labor Standards Act and its associated regulations

44

Capital and SharesIV

(1) CapitalizationUnit: NT$ Thousands

YearMonth Price

Authorized Capital Paid-up capital Remarks

Shares Amount Shares Amount Sources of Capital Non-Cash. Payments Other

2009.12.24 NTD10 per share

10 (shares)

NTD100 (dollars)

2 (shares)

NTD20 (dollars)

Initial issuance of shares No No


10 (shares)

NTD100 (dollars)

2 (shares)

NTD20 (dollars)

New shares to the shareholder of Financial One Corp.

No No


10 (shares)

NTD100 (dollars)

10 (shares)

NTD100 (dollars)

New shares to the shareholder of Financial One Corp.

No No

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

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

No No

2010.07.01 Note 3 1,500,000 USD450,000 691,068 USD207,321 Cancellation of repurchased shares No No

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

No No

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

No No

2011.05.31 Note 6 1,500,000 NTD15,000,000 755,300 NTD7,553,004 Issuance of shares for capital increase No No



2013.10.05 NTD10 per share 1,500,000 NTD15,000,000 995,830 NTD9,958,304 capitalization of

retained earnings No No

2014.09.01 NTD10 per share 1,500,000 NTD15,000,000 1,095,413 NTD10,954,134 capitalization of


2015.09.02 NTD10per share 1,500,000 NTD15,000,000 1,139,230 NTD11,392,300 capitalization of


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

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

45


pany Limited

Type of StockAuthorized Capital

Issued sharesUnissued shares

TotalListed Non-listed Total

Common stock 1,139,229,994 0 1,139,229,994 360,770,006 1,500,000,000

(2) Composition of Shareholders(Par value per share: NT$10)

March 28, 2017

StructureVoulme

Government agencies

Fianacial institutions

Other legal entities

Domestic individuals

Foreign institutions and individuals

Mainland China institutions and

individualsTotal

Number of shareholders 2 113 184 36,359 1,069 0 37,727 Shareholdings (shares) 2,908,945 70,754,597 75,063,727 284,403,985 706,098,740 0 1,139,229,994 Holdings percentage 0.26% 6.21% 6.59% 24.96% 61.98% 0.00% 100.00%

(3) Distribution profile of share ownership(Par value per share: NT$10)

March 28, 2017

Classof shareholdings Number of shareholders Total shares owned Ownership percentage

1~999 8,679 1,963,758 0.17%

1,000 ~ 5,000 20,229 41,765,506 3.67%

5,001 ~10,000 3,908 28,623,517 2.51%

10,001 ~15,000 1,573 19,122,918 1.68%

15,001 ~ 20,000 764 13,660,241 1.20%

20,001 ~ 30,000 787 19,366,198 1.70%

30,001 ~ 50,000 657 25,529,827 2.24%

50,001 ~ 100,000 488 34,196,466 3.00%

100,001 ~ 200,000 291 40,244,208 3.53%

200,001 ~ 400,000 150 42,164,941 3.70%

400,001 ~ 600,000 50 24,488,119 2.15%

600,001 ~ 800,000 25 17,755,605 1.56%

800,001 ~1,000,000 13 12,076,191 1.06%

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

113 818,272,499 71.83%

Total 37,727 1,139,229,994 100.00%

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

46

(4) Major shareholdersMarch 28, 2017

Shares Major shareholders Total shares owned Ownership percentage

Andre J.L. Koo 56,606,561 4.97%

MITSUBISHI UFJ LEASE & FINANCE COMPANY LIMITED 45,302,400 3.98%

GRAND PACIFIC INVESTMENT & DEVELOPMENT CO., LTD. 44,727,790 3.93%

TFO GLOBAL MARKET FUND 44,044,000 3.87%

LONG TERM STRATEGIC INVESTMENT FUND 37,752,000 3.31%

PACIFIC GROWTH PRIVATE EQUITY FUND 35,796,446 3.14%

EASTERN DRAGON INVESTMENT FUND 31,692,488 2.78%

LTG CAPITAL PARTNERS FUND 31,460,000 2.76%

MCKALLY GLOBAL INVESTORS FUND 31,460,000 2.76%

STAR INTERNATIONAL PACIFIC LTD 27,997,008 2.46%

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

YearItem 2015 2016 At the end of March

31, 2017

Market price per share

Highest (NTD,Note 1) 86.9 58.8 73

Lowest (NTD,Note 1) 44.50 48.6 54.7

Average (NTD,Note 1) 68.14 53.77 65.59

Net worth per share

Before distribution (NTD) 33.25 34.51 -

After distribution (NTD) 30.16 Note 2 -

Earnings Per Share

Weighted Average Common Shares Outstanding('000 Shares) 1,139,230 1,139,230 -

Earnings Per Share(NTD)

Before adjustment 6.02 6.36 -

After adjustment 6.02 Note 2

Dividends per share

Cash dividends(NTD) 3.1 3.4 -

Stock Dividends

Retained Earnings - - -

Capital Surplus - - -

Accumulated unpaid dividends (NTD'000) - - -

Analysis of return on investment

Price/Earnings Ratio (Note 3) 11.31 8.45 -

Price/Dividends Ratio (Note 4) 21.98 Note 2 -

Cash Dividends Yield Rate (Note 5) 4.55% Noter 2 -

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

47


pany Limited

(6) Dividend policy and distribution of profit

1. Dividend policy in Articles of Association According to the Articles of Association, which was revised through a resolution approved

by the stockholders during their meeting on May 27, 2016, the Company is required to appropriate earnings every accounting year.

The proposal will be presented to the shareholder meeting for resolution. Since the Company is an investment and holding company where the invested companies vary in terms of background and development, the Company does not fall within any distinct development stage. Accordingly, the profit distribution of the Company may vary in view of the capital expenditure required by the Company for each financial year. Upon the final settlement of the Company's annual accounts, if there are profits, the Company shall set aside out of the profits for each financial year: (i) a reserve for payment of tax for the relevant financial year; (ii) an amount to offset losses incurred in previous years; and (iii) a special surplus reserve as required by the applicable securities authority under the Applicable Public Company Rules. If there are profits of each financial year after combining accumulated undistributed earnings in the previous years and setting aside a certain amount of remaining profits of such financial year as a reserve for development purposes as the Directors may from time to time deem proper pursuant to Article 121 ("Annual Profits"), to the extent permitted by the Companies Law, at least 25% of such Annual Profits shall be distributed as dividends, of which at least 30% shall be paid in cash, as proposed by the Board of Directors and subject to approval of the Members by Ordinary Resolution in a general meeting.

2. The resolved appropriation of dividends this year The 2016 earning appropriation plan was approved in the Board meeting on March 16, 2017

to pay the cash dividend of NT$3.4 per share to shareholders (NT$3,873,381,980 in total). The proposal will be presented to the shareholder meeting for resolution.

(7) Employee profit sharing and Directors' and supervisors' compensation

1. The percentage or coverage of employees' bonuses and remunerations to Directors and supervisors(1) Employees bonuses:

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

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

(2) Remuneration to Directors: The remuneration to the Directors shall be paid in cash only. The amount of such

remuneration is authorized to be decided upon by the Board of Directors by reference to the suggestion made by the compensation committee, the standards generally adopted by other enterprises in the same industry, and shall be paid regardless of whether the Company has profits or suffers losses.

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

2. The basis for estimating the amount of employees' bonuses and remunerations of Directors/supervisors, the basis for calculating the distribution of stock dividends and the accounting treatment of the discrepancies, if any, between the actual distributed amount and the estimated amount will follow the principle described below:

Pursuant to the Articles of Association, the Company estimates the proposed distribution of employees' bonuses and remunerations for Directors and supervisors. If there are differences

48

between the proposed and the actual distribution, the difference will be estimated and listed in the coming income statement.

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

for Directors and supervisors are different from the estimated amount in the year when the expense should be recognized, the difference, reason and solution should be disclosed. The Board on March 16, 2017 proposed to pay cash dividends to employees of NT$1,086,826 and the remunerations to Directors of NT$5,215,939.

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

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

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

(8) Buyback of common stock: N/A

(9) Issuance of corporate bonds for 2016: N/A

49


pany Limited

(10) Issuance of global depositary shares Issuance Date

Item October 15, 2012

Issuance and transaction location Bourse de Luxembourg

Total Amount US$ 206,160,000

Issuance price per unit US$ 8.59 per unit

Total of units 24,000,000 units

Source of securities Common stocks issued for capital increase by cash

Amount of securities 120,000,000 shares

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

Consigner Not Applicable

Depositary Bank JPMorgan Chase and Co.

Custodian Taipei Branch of JPMorgan Chase and Co.

Remaining sum (March 15, 2017) 38,028 unitsApportionment of expenses during issuance and existence The Company

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

Market price per unit (US$)

Jan. 1, 2016 to Dec. 31, 2016

Highest 9.093

Lowest 7.35

Average 8.334

Jan. 1, 2017 to Mar. 15, 2017

Highest 11.62

Lowest 8.523

Average 9.855

(11) Financing plan and implementation

1. With respect to each uncompleted public issue or private placement of securities and such issues and placements that were completed in the most recent three years but have not yet fully yielded the proposed benefits: None.

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


Wholehearted serviceBeing active on the Asian financial stage


pany Limited

52

Operational HighlightsV

(I) Business Overview

1. Business Scope(1) Core Business In addition to traditional leasing, installment sales and factoring services, the Company

successfully developed new financial products to cope with SMEs' funding needs for their diverse business development, including heavy vehicle and automobile financing, construction equipment financing, fishery inventory financing, micro-enterprises financing, non-performing assets auction, real estate financing, office equipment leasing, medical equipment financing, car rentals, ESCO financing and services, solar power plant financing and investment, inventory financing (including cross-border), aircraft and ship financing, gasoline wholesale business, and insurance brokerage. The Company aims to provide professional and a full range of financial solutions to SMEs, achieving the enterprise mission of "Becoming A Supporting Partner of Our Customers; A Driving Force of Economic Success."

(2) Proportion of BusinessUnit: NT$ (thousand)

Year FY2016 FY2015Item Amount Percentage Amount Percentage

Sales revenue 7,541,644 20% 8,536,111 23%Interest revenue - installment sales 7,281,132 19% 6,818,922 19%Interest revenue – capital leases 8,890,413 23% 8,803,788 24%Rental revenue – operating leases 2,883,217 8% 2,454,131 7%Interest revenue – loans 3,000,990 8% 2,629,435 7%Other interest revenue 2,857,605 8% 2,649,382 7%Other operating revenue 5,552,775 14% 4,936,211 13%Total operating revenue 38,007,776 100% 36,827,980 100%

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(3) Current products /servicesA. Leasing The purpose of the leasing service is to support SMEs to acquire the right to use

equipment through leasing and thus relieve their burden of purchasing equipment with equity funds, satisfying their needs of operating growth and improving the financial structure.

The leasing can be divided into capital leases and operating leases. Generally, any fixed depreciable assets, including domestically purchased or imported, can be the subject matter of leases, including but not limited to machinery, medical equipment, airplanes, boats and office equipment.

B. Installment Sales The purpose of the installment sales business is to help SMEs' strong working capital

needs. The Company purchases the goods or equipment needed on behalf of customers and then customers can purchase them by installment, rather than lump sum payment, to achieve the purpose of optimized funding allocation and financial leverage.

The subject matter of "installment sales" includes raw materials, semi-finished and finished products, furniture and fixtures, and production equipment. We deliver the customized services of installment sales to customers across various sectors & industries with flexibility and speed based on the characteristics and needs of each industry.

C. Factoring The factoring business is a type of debtor finance in which a supplier of goods (seller)

assigns its receivables arising from "sales and purchase agreement" to a factor (the Company), who performs the function of financing, account management, collection of receivables and protection against defaults in payment. The purpose of factoring is to assist SMEs to convert long-term receivables into cash to meet their present and immediate funding needs.

D. Loans We provide direct financing services to SMEs, micro-enterprises and large

corporations. E. Others Other services include life and property insurance brokerage, financing and

investments of solar power plant, non-performing assets auction and collection of overdue receivables, and gasoline wholesale business.

(4) New products /services planned for developmentA. Utilize the product expertise in Taiwan and the overseas networks to develop a cross-

border platform which integrates information, transaction, storage and financial services, and thus promote cross-regional collaboration and construct cross-organizational moving strategies.

B. Broaden the scale of solar power plants in Taiwan through deploying ground–mounted and floating PV Systems and developing sites at industrial zones. Integrate agriculture or leisure & tourism activities to extend the economic benefits of Green Industry. Enter ESCO and environmental protection services in China, and seize business opportunities of overseas solar power plants.

C. Grasp the market pulse of FinTech and establish a SMEs' financing platform. Exploit internet technology to integrate and develop diversified marketing channels and platforms in order to broaden customer base and deal sources.

D. Seek valuable partners and extend value chain of existing products through investment & finance, investment or joint venture to promote diversified products.

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

A. The development history of leasing industry Financial leasing emerged in the 1950s from the USA, officially providing customers

with a financial channel besides banks to obtain production funds. This new type of economic activity expanded to Germany and Japan and thrived in the 1960s. In the early 1970s, the business started to develop in Taiwan, followed by China in 1980s.

The leasing industry is a part of financial auxiliary industry which aims to complement the deficiency of capital markets and banks. The capital markets and banks primarily obtain funds from the investments and deposits of the general public; therefore, the financing risk is limited in order to pursue the financial and economic stability. As a result, the enterprises which can obtain funds from the capital markets and banks tend to be large-sized and have financial integrity. In terms of Taiwan and China, where SMEs constitute the backbone of the economy (i.e. SMEs account for over 97% of total enterprises), most SMEs have a relatively short history and weaker guarantee ability, and they are smaller in size; consequently, they cannot enter the capital market and have difficulties in obtaining bank loans. According to the statistics, the SMEs financing obtained from Taiwan and China banking institutions accounts for 25% and 15% of total financing respectively. Since the current service cannot satisfy SMEs and the financial auxiliary companies operate using their own funds which is less legally restricted, they can bear higher risks to provide SMEs with flexible financing to complement the deficiency of the capital markets and banks. That is the main reason why the financial auxiliary industry developed vigorously in the US, Europe and Japan, and has played a critical role in their financial system.

B. The market scale of global leasing industries According to the World Leasing Yearbook 2017, the global leasing industry maintained

a stable growth trend during 2010 to 2015, after the global economic crisis. The global leasing volume reached US$1,005.3 billion in 2015, representing 6.5% growth compared to 2014 mainly due to the steady growth of US and China - the top two countries on global leasing volume ranking. The leasing volume of US increased by 11.1% due to the usage of diversified financial instruments. The leasing volume of China increased by 25.6%. This rapid growth was contributed by numerous leasing opportunities and diversification of funding source which was expected to bring advantages to the leasing market and increase demand. Meanwhile, China government's open-minded attitude toward the establishment of foreign invested leasing company also contributed to the growth.

Trend of global leasing volume

2011 2012 2013 2014 2015

34.0%

8.9% 1.8% 6.8%6.5%

Global Leasing Volume (US$bn) Annual growth rate

796.7 868 884 944.3 1,005.3

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In 2015, most of the top 10 countries in terms of leasing volume were developed countries with mature capital markets and well-established financial systems. This indicates that the leasing business can provide complementary financial services and further promote SMEs' strong growth.

Top 10 countries by leasing volume in 2015

Ranking Country Annual volume(US$bn)

%Growth 2014-15

%Market penetration

1 US 374.35 11.1% 22.0%

2 China 136.45 25.6% 4.0%

3 UK 87.13 14.0% 31.1%

4 Germany 63.82 8.4% 16.7%

5 Japan 60.84 8.9% 9.6%

6 France 30.92 9.9% 14.2%

7 Australia 30.85 0.01% 40.4%

8 Canada 26.21 3.4% 32.0%

9 Sweden 18.22 12.1% 22.9%

10 Italy 17.67 12.5% 13.0%

...

14 Taiwan 10.62 9.8% 9.3%

In 2015, the leasing volume of North America, Europe and Asia was US$407.8 billion, US$322.8 billion and US$223.0 billion, representing 40.6%, 32.1% and 22.2% of the global volume respectively. China contributed volume of US$136.45billion, accounting for 61.2% of the total volume in Asia and taking the second position in the global ranking. The leasing volume in Taiwan reached US$10.62 billion, accounting for 4.8% in Asia and ranked the 14th in terms of global leasing volume.

Leasing volume by region in 2015

Ranking Region Annual volume(US$bn)

%Growth 2014-15 Percentage

1 N. America 407.8 10.7% 40.6%

2 Europe 322.8 -1.5% 32.1%

3 Asia 223.0 14.4% 22.2%

4 Aus/NZ 31.2 -12.4% 3.1%

5 S. America 13.8 28.9% 1.4%

6 Africa 6.7 -0.7% 0.7%

Total 1,005.3 6.5%

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C. The market scale of leasing in Taiwan According to the information provided by the Taipei Leasing Association ("TLA"), the

total leasing and installment sales contracts entered into by members of TLA in 2016 was NT$325.1 billion, representing a 0.9% growth compared to 2015. Leasing and installment sales are two major products offered by leasing companies in Taiwan, which accounted for 21% and 79% of the total contract value in 2016 respectively.

Vehicle/transportation equipment and raw materials were major subject matters for the leasing and installment sales business, accounting for 51% and 25% of the contract amounts respectively. SMEs with share capital less than NT$20 million were the major customers (59%) and most of those are engaged in manufacturing, transportation and warehousing, wholesale and retail industries.

D. The market scale of leasing in China According to the World Leasing Yearbook 2017, the total leasing contract volume in

2015 was approximately CNY$886.25 billion, representing a growth of 25.5% compared to 2014.

(2) The interrelationships between the upstream, midstream and downstream segments of the industry supply chain

Leasing is an assets-based financing. Lessors purchase the equipment from vendors and then grant the lessee the right to use equipment via leasing agreement. Lessee can pay the rental by installment, instead of lump sum payment, during the lease term. Generally, the upstream, midstream and downstream segments of the leasing industry can be illustrated in the following chart:

A. Upstream players: capital and equipment providers Apart from the equity fund of shareholders, the capital source of the lessors mostly

comes from bank loans or issuances of commercial papers and corporate bonds. A large-sized company with a healthy financial structure has its assets securitized or plans to go public in order to directly raise funds in the capital market. Overall, the leasing industry mainly obtains funds from financial institutions.

Equipment vendors are the other players, from whom the lessors purchase the designated equipment on behalf of the lessees and rent such equipment to the lessees for their business operation.

B. Midstream players: lessors The leasing company provides assets-based financing services, and can be

categorized by the structure of shareholders or managers. More details can be referred to the section of competition in this chapter.

C. Downstream players: capital demander (lessees) The leasing company provides assets-based financing services to capital demanders,

e.g. individuals, micro-enterprises, SMEs and even large corporations, meaning that

Capital Provider

Capital Demander

Equipment Provider

Upstream Midstream Downstream

Delivery of equipment+after-sales services

Providing capital

Cash Flow Logistics Flow

Payment for purchase【sales and purchase agreement】

Rental payment+buy back (when expired)【leasing agreement】

Shareholders

Capital Markets

Financial Institutions(e.g.Banks) Lessors Lessees

Vendors

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customers of leasing companies and financial institutions somewhat overlap. However, the leasing company specializes in different markets and mainly serves SMEs in a flexible way to provide customers underserved by banks with key capital in a timely manner and assist them in operational growth. Therefore, the relationship between the leasing companies and financial institutions is a kind of "coopetition" - competitive and cooperative in terms of the industrial structure.

(3) Development trend of products In the early stages of development, the Taiwan leasing industry was relatively restricted

and only provided the machinery and equipment for production, transportation, utilities, sanitation, education and public administration sectors. As the economy developed and regulations changed, diverse new products have been offered to solve the capital shortage of SMEs, including the installment sales of raw materials, semi-finished, finished products and inventories, chattel secured transactions of automobiles and construction machinery and equipment, factoring, and leases of aircrafts, boats and automobiles.

Future prospects: Taiwan currently promotes the legislation on finance companies to transform the leasing company which provides leasing services and installment sales to a finance company which is allowed to offer guarantees business in addition to offering loans, discounted notes, notes and valuable securities. The finance company act will be helpful in promoting the diversification of the financing business and providing enterprises and the public with an alternative source to obtain funds.

(4) CompetitionA. The competition in Taiwan According to the information provided by the Taipei Leasing Association ("TLA"), as of

March, 2017, there were 36 members in TLA, which can be divided into four different categories in terms of the structure of shareholders or managers:

Category(No. of members) Characteristics of business

Bank affiliate(15)

Sufficient funding source supported by the parent company. Heavily rely on the customer list for marketing provided by the banking parent companies and often focus on large-scale equipment leasing.Members:FCB Leasing Co., Ltd., Hua Nan International Leasing Co., Ltd., SinoPac Leasing Corp., CDC Finance & Leasing Corp., IBT Leasing Co., Ltd., Waterland Financial Holding Co., Ltd., Taichung Bank Leasing Co., Ltd., Sunny International Leasing Co., Ltd., Taiwan Business International Leasing Co., Ltd., CTBC Asset Management Co., Ltd., Yuanta International Leasing Co., Ltd., Panhsin International Leasing Co., Ltd , Co-operative Asset Management Corp., Taishin Dah An Leasing Co., Ltd., and TLG Capital Co., Ltd.

Captive finance company(8)

Mainly established by automobile manufacturers. Provides financing services via the expertise of leasing assets, but the customer base is also constrained.Members: Taiwan Acceptance Corporation, Hotai Finance Corporation, CMI Credit Ltd, Shinshin Credit Corporation, Mercedes-Benz Financial Services Taiwan Ltd., Ho-Hsin Car Leasing Co., Ltd. , Mercedes-Benz Leasing Taiwan Ltd., and Fortune Motor Co., Ltd.

Foreign finance company(5)

Mainly established by foreign equipment vendors or leasing companies to develop the Taiwan market.Members: ORIX Taiwan Corporation, President Tokyo Corporation, MUL Taiwan Co., Ltd. IBM Global Financing, and Scania Credit Taiwan Ltd.

Enterprise group subsidiaries (8)

Independent business operation. Provide diverse and customized products with flexibility and efficiency.Members: Chailease Finance Co., Ltd., Robina Finance & Leasing Corporation, Fina Finance and Trading Co., Ltd., Far Trust International Financial Co., Ltd., Cosmos Leasing Corporation, Jih Sun International Leasing & Finance Co., Ltd., Far Eastern International Leasing Corp., and Konew Capital International Ltd.

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

Unit :NT$

Paid-in capital Number of members Member list

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

2~5 billion 9Far Eastern International Leasing Corp., SinoPac Leasing Corp., Taiwan Acceptance Corporation, FCB Leasing Co., Ltd., Hotai Finance Corporation, IBT Leasing Co., Ltd., Co-operative Asset Management Corp., Fina Finance and Trading Co., Ltd., and Fortune Motor Co., Ltd.

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

0.5~1 billion 7CDC Finance & Leasing Corp., Sunny International Leasing Co., Ltd., Yuanta International leasing Co., Ltd., President Tokyo Corporation, Shinshin Credit Corporation, Taishin Dah An Leasing Co., Ltd., and TLG Capital Co., Ltd.

0.1~0.5 billion 13

Mercedes-Benz Financial Services Taiwan Ltd., Robina Finance & Leasing Corporation, CMI Credit Ltd., ORIX Taiwan Corporation, Cosmos Leasing Corporation, Far Trust International Financial Co., Ltd., Ho-Hsin Car Leasing Co., Ltd., IBM Global Financing, MUL Taiwan Co., Ltd., Panhsin International Leasing Co., Ltd., Mercedes-Benz Leasing Taiwan Ltd., Konew Capital International Ltd., and Scania Credit Taiwan Ltd.

Source: Department of Commerce, MOEA and Taipei Leasing Association

In summary, the members of TLA are large-sized companies in Taiwan. Chailease Finance Co., Ltd., the subsidiary of the Company, delivered the new contract amount of NT$148.6 billion in 2016 and has been maintaining the leading position in Taiwan lease and installment sales industry.

B. The competition in China According to the China Financial Leasing Industry Development Overview 2016, the

total number of various types of financial leasing companies in China was 7,136 at the end of 2016, marked a growth of 58.3% compared to 2015. Among these financial leasing companies, the numbers of lessors as NBFIs, domestic pilot lessors and foreign invested lessors were 59, 205 and 6,872 respectively.

The registered capital for these financial leasing companies at 2016 year end was CNY$2,556.9 billion, increasing by 68.6% compared to the previous year. The registered capital of lessors as NBFIs, domestic pilot lessors and foreign invested lessors was CNY$168.6 billion, CNY$142.0 billion and CNY$2,246.3 billion respectively.

The total contract balance of all lessors in 2016 was approximately CNY$5,330 billion, representing growth of 20% compared to 2015. The total contract balance of lessors as NBFIs, domestic pilot lessors and foreign invested lessors was CNY$2,040 billion, CNY$1,620 billion and CNY$1,670 billion respectively.

The total contract balance of Chailease International Finance Corporation, the subsidiary of the Company in China, amounted to CNY$16.6 billion in 2016, representing 0.5% and 1% of total contract balance of the non-NBFIs and foreign invested lessors respectively.

The statistics of lessors in China under different administrations in 2016

Category Regulatorysystem

Number of lessors

Registered capital

(CNY$bn)Contract Balance

(CNY$bn)

Lessors as NBFIs CBRC 59 168.6 2,040

Lessors as Non-NBFIsDomestic pilot lessors MOFCOM and

SAT 205 142.0 1,620

Foreign invested lessors MOFCOM 6,872 2,246.3 1,670

Total in aggregate 7,136 2,556.9 5,330

Source: China Financial Leasing Industry Development Overview 2016

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According to China Financial Leasing Industry Development Overview 2016, the statistics of registered capital of top 50 lessors in China is stated in the table below. The registered capital of the top 20 leasing companies constituted 9.70% of the total.

The registered capital of Chailease International Finance Corporation, the subsidiary of the Company in China, amounted to CNY$2.03 billion in 2016, representing 0.1% of registered capital of the foreign invested lessors.

Registered Capital Number of lessorsOver 10 billion 6

5~10 billion 242.5~5 billion 48

Below 2.5 billion 5Source: China Financial Leasing Industry Development Overview 2016

Lessors' allocation of Top 5 administrative areas in China in 2016 Unit: number

Ranking Administrative area Lessors as NBFIs Domestic pilot lessor

Foreign invested lessors

Ratio of total in aggregate

1 Guangdong 4 10 2,343 33.03%2 Shanghai 10 18 1,939 27.56%3 Tianjin 9 30 1,545 16.72%4 Fujian 1 10 269 3.92%5 Jiangsu 5 15 211 3.24%

Source: China Financial Leasing Industry Development Overview 2016

By the end of 2016, financial leasing companies are located in 31 Administrative areas in China, among which most are based in the Southeast coast. And 93% of the total financial leasing companies are located in Shanghai, Tianjin, Guangdong, Beijing, Fujian, Jiangsu, Zhejiang, and Shandong.

Chailease International Finance Corporation, the subsidiary of the Company in China, is located in Changning District, Shanghai, where is a highly competitive area for financial leasing business.

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

annual report Planning department in the Company is responsible for new products /or market planning

and development through support and collaboration with relevant departments if required, to provide total solution to clients. The Company's R&D expenditure is NT 167 million in 2016 and the expected amount is NT 183 million in 2017.

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

need of our clients, a breakthrough for SMEs financing.B. PV-ESCO and investments of solar power plants: in addition to financing services

provided to solar power manufacturers, the Company has also engaged in the investments of solar power plant business, a technically advanced new product, and ranked as the top three power plants operator in Taiwan. Besides, the Company has entered into the ESCO financing and services market in China through the joint venture with Chinese and Japanese partnership.

C. Aircraft financing: the Company collaborates with Bombardier, the leader in Canada's navigation industry, to facilitate the trading and financing activities of corporate and private jet markets in Asia Pacific. The Company has entered into a new joint venture with ELFC (a group company of the Mitsubishi UFJ Lease & Finance Company Limited

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group ("MUL")), providing spare engine support packages under operating lease to penetrate the engine leasing business in Asia.

D. Research and development on patents: the Company has been devoted in the credit risk management and successfully developed credit risk assessment model and techniques based on the credit information of SMEs accumulated over 35 years in Taiwan. Accordingly, we have obtained 2 business method patents related to credit risk assessment from Intellectual Property Office in the past few years. Besides, the Company has been promoting the innovation of new financial products and digital financial services by exploiting the leading-edge technologies, and has obtained 5 financial product patents. In 2015, we further obtained from Intellectual Property Office in Taiwan the patent of "Loan Management Method Implemented with Mobile Telecommunication System" which can be applied to mobile-device related financial products.

4. Long-term and short-term business development plan The Company has been devoted to the development of the SMEs credit business, established

the risk assessment mechanism for SMEs, avoided the price-oriented large corporations, established the professional, efficient and flexible pricing differentiation strategy based on different risk coefficients of customers and chose SMEs which have higher risks but are willing to pay higher risk premiums as the main niche market based on the reasonable risk-taking ability. Therefore, our management strategy centers on the unique SMEs finance model as core competitiveness, and focuses on the expansion of regional markets, the development of niche markets and diversification of funding sources.■ Regional market expansion: the Company is Taiwan-based and our success is built on

providing SMEs finance services. We follow the trend of overseas investment to gain footholds in the US, Thailand, China, Vietnam, Malaysia, and Cambodia and now are studying on and planning the expansion to Japan, ASEAN and European markets.

■ Development of niche markets: the Company gradually enlarged the customer base from SMEs to consumer financing, truck and automobile financing, construction equipment financing, fishery inventory financing, micro-enterprises financing, non-performing assets auction, real estate finance, office equipment leasing, medical equipment financing, car rentals, ESCO financing and services, solar power plant financing and investment, inventory financing (including cross-border), aircraft and ship financing, gasoline wholesale business, and insurance brokerage.

■ Diversification of funding sources: with respect to the capital strategy, we purely relied on bank loans initially; however, the source of capital has become more in tune with the development of business, including asset securitization, corporate bonds and fund-raising in the capital market.

Long-term and short-term business development plans of the Company are as follows:(1) Short-term business development plans

A. Pursue diversified revenues by implementing customer segmentation, developing niche markets, searching for overseas business opportunities, continuing the strategies of extending value chain of existing products, seeking valuable partners, and planning new products and new business. Moreover, exploit internet technology to integrate resources and further develop diversified marketing channels and platforms in order to broaden customer base and deal sources. Streamline organizational workflow and implement mobile office through information technology to enhance efficiency and market competitiveness.

B. Enhance credit risk management by strengthening risk assessment skills for new products, offshore transactions and industry forecasts, speed up credit approval process and decision-making efficiency, enhance credit evaluation ability as well as

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asset quality, and optimize legal collection process.C. Improve the collection methods and the professional competence of staff to enhance

the collection performance and lower down the loss.D. Plan and execute the optimal allocation of long-term and short-term funding to support

the existing business growth as well as new business development; enhance long-term and stable fundraising capacity, and diversify funding sources to reduce the cost.

E. Accelerate the talent recruitment, training and retention and effectively enhance productivity to accommodate the organization development and support the Company's overseas expansion.

F. Continuously utilize information security technology and implement discipline requirement to maintain proper information security, personal information and trade secrets protection and implement corporate governance.

G. Continuously promote ISO14001 environmental management system to implement energy saving and fulfill the social responsibility.

(2) Long-term business development plansA. Continue to cultivate domestic markets and expand overseas markets to pursue sales

growth without compromising asset quality, develop new products and business, and aim to become an outstanding finance company in Asia Pacific.

B. Currently, we have completed the preparations for the transformation into a finance company in Taiwan. To expand products and business scopes, and accelerate the profit growth, we continue the strategies of extending value chain of existing products through investment and joint venture, exploiting internet technology to develop products, and further developing diversified marketing channels and platforms to broaden customer base and deal sources.

C. Continue the strategy of our three main growth engines- Taiwan, China and ASEAN, to promote the cooperation and replication of cross-border products and businesses, and apply internet technology to stimulate value revolution for existing products and business models in order to deal with the changing environment and pave the way for long-term development.

D. Continue with our medium and long-term strategies for overseas market development, including setting up branches and committing to product innovation in China, and actively seeking local partners or merger and acquisition opportunities to develop new markets in ASEAN.

(2) Market and sales overview

1. Market analysis(1) Services provided in each geographic area

Area Services SubsidiariesTaiwan ■ Finance lease

■ Operating lease■ Installment sales■ Factoring■ Direct lending■ Life and property insurance broker■ Overdue receivables management■ Energy saving services■ Engineering, procurement, construction,

operations and maintenance on solar power plants

■ Chailease Finance Co., Ltd.■ Fina Finance & Trading Co., Ltd.■ Chailease Consumer Finance Co., Ltd.■ Apex Credit Solutions Inc.■ China Leasing Co., Ltd.■ Chailease Auto Rental Co., Ltd.■ Chailease Insurance Brokers Co., Ltd.■ Yun Tang Inc.■ Chailease Energy Integration Co.,Ltd.■ Innovation Energy Integration Co., Ltd.■ Chailease Finance (B.V.I.) Company Ltd.■ Chailease International Financial Services Co., Ltd.■ Chailease International Financial Services (Liberia) Corp.

China ■ Finance lease■ Operating lease■ Importing and exporting■ Factoring■ Leasing of self-owned buildings■ Property management

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

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Area Services SubsidiariesThailand ■ Installment sales of vehicles

■ Finance lease■ Factoring■ Non-Life insurance broker

■ Asia Sermkij Leasing Public Company Limited■ Bangkok Grand Pacific Lease Public Company Limited■ SK Insurance Broker Co., Ltd.

Vietnam ■ Finance lease ■ Importing and exporting

■ Chailease International Leasing Company Limited■ Chailease International Trading Company Limited

Malaysia ■ Hire purchase of vehicles ■ Insurance agency

■ Chailease Berjaya Credit Sdn. Bhd.■ Chailease Agency Sdn. Bhd.

Cambodia ■ Finance lease of vehicle and machinery ■ Chailease Royal Leasing Plc.United States ■ Commercial real estate finance ■ Grand Pacific Financing CorporationUnited Kingdom ■ Investment

■ Market survey and consultancy services■ Chailease International Company (UK) Limited.

(2) Sales /or services contribution in each geographic areaUnit: NT$ (thousand)

Year FY2016 FY2015

Area Revenue from external customers1 Percentage Revenue from

external customers1 Percentage

Taiwan 18,027,403 47% 15,997,140 43%

China 16,602,299 44% 17,505,907 48%

Thailand 2,585,032 7% 2,533,347 7%

Others2 793,042 2% 791,586 2%

Total 38,007,776 100% 36,827,980 100%

Note 1: The information comes from the consolidated financial statements audited by the CPA.Note 2: Others include the subsidiaries in Vietnam, Malaysia and USA.

(3) Market shareA. Market share in Taiwan According to the statistics from TLA, the overall new contract amount of Chailease

Finance Co., Ltd., the Company's subsidiary, reached NT$148.6 billion in 2016 and has been maintaining the leading position in Taiwan lease and installment sales industry.

B. Market share in China As China has a vast territory, the census report for market share is unavailable.

According to China Financial Leasing Industry Development Overview 2016, the total contract balance of lessors approached CNY$5,330 billion in 2016, among which CNY$2,040 billion was contributed by NBFIs, CNY$1,620 billion by domestic pilot lessors and CNY$1,670 billion by foreign invested lessors. The total contract balance of Chailease International Finance Corporation, the China subsidiary of the Company, amounted to CNY$16.6 billion, representing 0.5% and 1% of total contract balance of the non-NBFIs and foreign invested lessors respectively.

(4) Future outlook of supply and demand as well as growth potentialA. The expected economic growth in 2017 is 1.78% in Taiwan. Due to gradual growth of global economy and trade volume, and stabilization of global

oil and raw material price, the Taiwan economy is expected to improve progressively in 2017 with a better economic growth rate than the rate in 2016. The Taiwan Institute of Economic Research (TIER) and Directorate-General of Budget, Accounting and Statics, Executive Yuan projected a GDP growth rate of 1.78% and 1.92% in 2017 respectively.

B. The fixed investment in Taiwan is estimated to increase by 2.10% in 2017. Regarding the fixed capital formation, the growth of private investment in 2017 is

forecasted to be 2.08%, 0.28% higher than that in 2016. TIER forecasted the growth rate for fixed investment in 2017 will be around 2.10%.

C. The expected economic growth in 2016 is 5.6% in emerging and developing Asia. Asian Development Bank (ADB) estimated a GDP growth rate of 5.6% and 6.4% for

both emerging and developing Asia and China in 2016 respectively.

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D. The penetration rates of leasing in China and Taiwan are comparatively low. According to the statistics from World Leasing Yearbook 2017, the penetration rate of

leasing (i.e. the leasing as a proportion of all fixed investment in plant and equipment) in China and Taiwan are 4.0% and 9.3%, comparatively lower than mature markets such as the United States and UK whose penetration rates are 22.0% and 31.1% respectively, implying that there is still huge growth potential in the Taiwan and China leasing markets.

(5) Competitive nicheA. The Company has been in the leading position in the Taiwan leasing industry and

its success can be attributed to the unique financing model for SMEs and core competitiveness to ensure the long-term high and stable profits of the Company.

A leader in the Taiwan lease and installment sales business With more than 35 years' experiences in serving SMEs, the Company has accumulated

a huge customer database and built an interlaced network in the industry, taking a leading position in the SMEs finance market in Taiwan. The statistics from TLA indicates that the Company's subsidiary, Chailease Finance Co., Ltd. delivered the new contract amount of NT$148.6 billion in 2016 and has been maintaining the leading position in Taiwan lease and installment sales industry.

B. Diverse product line and high value-added financing services In comparison with other leasing companies, in addition to the traditional leasing,

installments and factoring services, the Company introduced new products in truck and automobile financing, construction equipment financing, fishery inventory financing, micro-enterprises financing, non-performing assets auction, real estate finance, office equipment leasing, medical equipment financing, car rentals, ESCO financing and services, solar power plant financing and investment, inventory financing (including cross-border), aircraft and ship financing, gasoline wholesale business, and insurance brokerage in response to the diverse needs of SMEs' corporate development. To provide high value-added financing services, the Company can also customize the deal structure and payment terms based on the clients' operational plans and cash flows.

C. Advanced credit risk assessment model and outstanding credit risk management system:

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

D. The diversified client base in different industries can efficiently lower the risks of market change.

E. Outstanding financial risk management The subsidiaries of the Company in Taiwan, Chailease Finance Co., Ltd. and Fina

Finance and Trading Co., Ltd. have obtained the long-term A (twn) and A(twn) ratings respectively from Fitch Ratings, and the subsidiary in Thailand, Asia Sermkij Leasing Public Company Limited has also been granted the BBB+ rating from TRIS Rating. With such credit ratings, these subsidiaries are able to issue unsecured corporate bonds. Accordingly, multiple sources of capital can meet the needs for future business growth.

F. Highly efficient collection ability The Company has devoted itself to developing the most appropriate collection model

for each product and continued to improve the professional ability and collection efficiency of legal personnel so as to increase the collection performance.

64

(5) Positive and negative factors for future development and responses to such factors

Taiwan

(A) Positive factors:a. The clear sign of economic recovery and continuous growth of investments in equipment will be beneficial to

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

development.c. More diverse products would be provided to satisfy customers if finance company is allowed to be

incorporated. (B) Negative factors:

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

Responsive strategy:(a) Expand certain niche industries to ensure the growth of overall business volume and profits.(b) Adopt the pricing differentiation strategy to increase competitiveness.(c) Continue to research and develop new products and create new business models.

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

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

(eg. Chailease Talent Development Program)(b) Continue to implement cultivation program for expatriates (eg. Chailease Asia MA Program) in response

to new market/region expansion.(c) Recruit outstanding and capable employees at different levels to support the Company's rapid

development.

China

(A) Positive factors:a. The government highly supports the development of leasing industry.b. The leasing market in China has great potential to develop. c. Continue to grow with sound business operation and management.d. Supports of management techniques and professional personnel would be provided by the parent company. e. Continue to set up new branches nationwided. Ability to rapidly recruit and train local talents.

(B) Negative factors:a. There is uncertainty derived from the adjustment of China economic structure and industry transformation. Responsive strategy:

(a) Strengthen interaction with the government institutions in China to understand the trends in policies and regulations in a timely manner.

(b) Enhance industry control and review, and adjust marketing direction periodically.b. Due to the limitation of equity funds, the main funding source for business development is still provided by

banks. Responsive strategy:

(a) Maintain the strategy of medium and long-term funding as the major to provide the capital for stable business development, and collaborate with strategic alliance banks to achieve a "win-win" synergy. .

(b) Diversify funding sources by searching for other financial instruments in the capital market, after issuance of a mid-term note in 2015.

(c) Take advantage of foreign-debt quota to deploy the offshore funding at an appropriate level in order to lower down the funding cost and reduce the risk of short supply of domestic capital.

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

(a) Build up unique corporate culture and competitive reward policy to attract local outstanding employees. (b) Establish good relationship with local schools, and provide scholarship and internship opportunity,

business site visit, and campus sponsorship to secure the source of talents from schools.(c) Design a structured training program to cultivate talents in a faster way.(d) Motivate local outstanding talents with better promotion system and management skill training program.(e) Offer expatriate opportunities to facilitate employees' careers.

65


pany Limited

2. Usage and manufacturing process of main products(1) Usage of main products The Company provides asset-based financing services to SMEs, offering critical financial

support for their business development. (2) Manufacturing process of main products3. Supply situation of major raw materials There are no major raw materials as the Company engages in the non-production

business.

Business promotion Contract signing

Credit evaluation Loan disbursement Financial institutions

Loan application acceptance

Loan document verification Equity capital

Customermanagement

Money and capital markets

．Credit review．Make site visit．Reference checking from buyers, suppliers．Prepare credit report．Credit scoring and rating

Capital

Loan approval

3. Supply situation of major raw materialsThere are no major raw materials as the Company engages in the non-production business.

4. Major suppliers and clientsA. Suppliers accounting for at least 10% of annual order volume in the 2 most recent fiscal

years: Not applicable as the Company doesn't engage in the production business.B. Clients accounting for at least 10% of annual total revenues in the last two fiscal years: None.

5. Production volume for the most recent two fiscal years: Not applicable.6. Volume of units sold for the most recent two fiscal years: Not applicable.

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

March 31, 2017Year 2015 2016 On March 31,2017

Number of employeesManagement personnel 451 471 504Non-Management personnel 3,478 3,768 3,837Total 3,929 4,239 4,341

Average age 32.6 32.9 32.9Average senority 4.7 5.2 5.2

Educational background

PhD 0.03% 0.05% 0.05%Master's degree 17.61% 16.94% 16.10%Bachelor's degree 78.01% 78.86% 79.22%High school graduate 4.28% 4.13% 4.17%Below high school 0.08% 0.02% 0.02%

Note : The information for the current year before the publishing date of the annual report should be filled in. Management personnel: Title manager (or above)Non- Management personnel: Others staff.


Value, GrowthHonesty and Discipline


pany Limited

68

Financial HighlightsVI

(1) Audit committee's report on financial statements from the most recent year

Chailease Holding Company LimitedAudit Committee's Report

The Board of Directors has prepared the Company's 2016 Business Report, Financial Statements, and proposal for allocation of profits. The CPAs of KPMG, Mr. Chung-Yi, Chiang and Ms.Yi-Chun, Chen were retained to audit Chailease Holding Company Limited's Financial Statements and have issued an audit report relating to the Financial Statements.

The Business Report, Financial Statements, and profit allocation proposal have been reviewed and determined to be correct and accurate by the Audit committee members of Chailease Holding Company Limited.According to Article 14-4 of the Securities and Exchange Act, we hereby submit this report.


Chairman of the Audit Committee: Dar-Yeh HwangMarch 16, 2017

69


pany Limited

(2) Financial review

Independent Auditors' Report

To the Board of Directors of Chailease Holding Company Limited:OpinionWe have audited the consolidated financial statements of Chailease Holding Company Limited and its subsidiaries ("the Group"), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the related consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated statements of cash flows for the years ended December 31, 2016 and 2015, and notes to the consolidated financial statements, including a summary of significant accounting policies.In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2016 and 2015 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs"), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.Basis for OpinionWe conducted our audit in accordance with the "Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants" and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China ("the Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.Key Audit MattersKey audit matters are those matters that, in our professional judgment, were significant 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 taken as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters individually. Based on our judgment, the key audit matters that should be disclosed in this audit report are as follows:1. Impairment assessment of accounts receivable Refer to Note (4) (g) "Financial instruments" and Note (5) "Significant accounting assumptions and judgments, and major

sources of estimation uncertainty" and Note (6) (d) "accounts receivable, net" to the consolidated financial statements for the details of the information about impairment assessment on accounts receivable.

Description of key audit matter:The Group is engaged primarily in providing various services of leasing and financing, in which accounts receivable is a significant account of the Group. impairment allowances are provided on accounts receivable based on management's best estimate of the potential losses in the accounts receivable portfolios at the balance sheet date. Management exercise judgment in making assumptions and estimations when calculating for impairment allowances on both individually and collectively assessed accounts receivables.How the matter was addressed in our audit:In relation to the key audit matter above, we have performed certain key audit procedures that included evaluating the adequacy of the Group's impairment policy on financial assets; testing to check compliance with the internal control on the process of evaluating impairment losses on loans and receivable; evaluating the assumptions and data used in the calculation; recalculating impairment allowances and rechecking it with the assumptions and data used by management; and evaluating the adequacy of the Group's disclosure for Impairment allowances on loans and receivables. 2. Impairment of operating lease assets Refer to Note (4) (m) "Impairment of non financial assets" and Note (5) "Significant accounting assumptions and judgments,

and major sources of estimation uncertainty" and Note (6) (g) "Property, plant and equipment" to the consolidated financial statements for the details of the information about impairment of operating lease assets.

70

Description of key audit matter:The Group is engaged primarily in providing various services of leasing and financial instruments, in which impairment of operating lease assets is another a significant account of the Group.At each reporting date, the Group performs impairment test of the assets particularly those used for operating leases to determine any indication of impairment. Such test considers the value in use to evaluate the asset's recoverable amount. The value in use is calculated on present value of future rental revenue and value of disposal of operating lease assets less overheads and duties. The capital cost rate on reporting date is used as the discounting rate.Impairment of operating lease assets is one of the key audit matters for our audit, as it requires management to make estimates and assumptions that can materially affect the financial statements.How the matter was addressed in our audit:In relation to the key audit matter above, we have performed certain key audit procedures that included evaluating the reasonableness of the discount rate used by the Group to estimate the recoverable amount and the residual value of the leased asset; testing compliance with the policy of appraising leased asset is consistent with the Group's policy; recalculating Impairment losses based on the assumptions and data used by management; and evaluating the adequacy of the Group's disclosure on impairment of operating lease assets.3. Contract classification of finance lease or operating lease contracts Refer to Note (4) (k) "Leases" and Note (4) (n)"Revenue recognition" to the consolidated financial statements for the details

of the information about classification of finance lease or operating lease contracts.Description of key audit matter:The revenue from providing leasing service is one of the important revenue of the Group. Based on the Group's policy, each lease contract is classified either as finance lease or operating lease. Contract classification between finance lease or operating lease is one of the key audit matters for our audit, as it causes differences in the accounting treatment from the revenue recognition perspective.How the matter was addressed in our audit:In relation to the key audit matter above, we have performed key audit procedures that included evaluating the adequacy of the Group's policy for determining whether a lease contract is a finance leases or an operating lease; testing compliance with the internal control on contract classification; selecting new contract, for testing, reviewing the contract period, amount and classification; and evaluating the adequacy of the Group's disclosure for finance lease and operating lease.Responsibilities of Management and Those Charged with Governance for the Consolidated Financial StatementsManagement is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China, 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 are responsible for overseeing the Group's financial reporting process.Auditor's Responsibilities for the Audit of the Consolidated Financial StatementsOur 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 an auditor's 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 the auditing standards generally accepted in the Republic of China 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.As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

71


pany Limited

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 control.

2. Obtain an understanding of internal control 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 control.

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

4. Conclude on the propriety 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 auditor's 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 auditor's 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 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 communicate with those charged with governance regarding, among other matters, 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.From the matters communicated with those charged with governance, we determine those matters significant in our audit of the consolidated financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditor's 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.The engagement partners on the audit resulting in this independent auditors' report are Chung Yi Chiang and Yi Chun Chen.

KPMGCPA： Chung-Yi, Chiang Yi-Chun, ChenTaipei, Taiwan (Republic of China)March 16, 2017

72

CHAILEASE HOLDING COMPANY LIMITEDAND ITS SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31, 2016, December 31, 2015(Amounts Expressed in Thousands of New Taiwan Dollars)

2016.12.31 2015.12.31

　Assets Amount % Amount %

Current assets：

1100 　Cash and cash equivalents (Notes (6)(a) and (7)) $ 12,936,615 5 11,097,812 4

1110 　Current financial assets at fair value through profit or loss (Note (6)(b)) 113,057 - 235,545 -

1130 　Current held-to-maturity financial assets (Note (6)(b)) 5,824,814 2 7,658,388 3

1135 　Current derivative financial assets for hedging (Notes (6)(b)) - - 163,416 -

1170 　Accounts receivable, net (Notes (6)(d), (7) and (8)) 194,395,682 68 185,606,083 69

1320 　Inventories 207 - 207 -

1476 　Other current financial assets (Notes (7) and (8)) 3,315,724 1 3,513,245 1

1479 　Other current assets-others (Notes (6)(e) and (7)) 3,653,924 1 2,720,371 1

　　 220,240,023 77 210,995,067 78

Non-current assets：

1510 　Non-current financial assets at fair value through profit or loss (Notes (6)(b) and (6)(c)) - - 693,713 -

1523 　Non-current available-for-sale financial assets (Note (6)(b)) 1,815,310 1 1,704,727 1

1528 　Non-current held-to-maturity financial assets (Note (6)(b)) 997,270 - 2,317,394 1

1550 　Investments accounted for using equity method (Notes (6)(f) and (8)) 889,608 - 365,278 -

1600 　Property, plant and equipment (Notes (6)(g) and (8)) 10,336,214 4 9,932,658 4

1780 　Intangible assets (Note (6)(h)) 77,901 - 45,507 -

1840 　Deferred tax assets (Note (6)(m)) 3,755,363 1 2,949,052 1

1930 　Long-term notes and accounts receivable, net (Notes (6)(d) , (7) and (8)) 46,786,877 16 37,073,556 14

1995 　Other non-current assets-others (Notes (7) and (8)) 1,184,892 1 1,492,870 1

65,843,435 23 56,574,755 22

TOTAL ASSETS $ 286,083,458 100 267,569,822 100

73


pany Limited

2016.12.31 2015.12.31

　LIABILITIES AND EQUITY Amount % Amount %

Current Liabilities：

2100 　Short-term borrowings (Notes (6)(i), (7) and (8)) $ 79,283,044 28 78,844,180 29

2150 　Account and notes payable 3,205,667 1 3,235,819 1

2230 　Current tax liabilities 1,860,322 1 1,295,601 -

2305 　Other current financial liabilities (Note (7)) 26,620,973 9 26,274,248 10

2320 　Long-term liabilities, current portion (Notes (6)(i), (6)(j), (7) and (8)) 77,542,923 27 74,456,126 28

2399 　Other current liabilities-others 1,299,666 - 1,017,178 -

　　 189,812,595 66 185,123,152 68

Non-current Liabilities：

2530 　Bonds payable (Notes (6)(j) and (7)) 9,701,649 3 9,440,820 4

2540 　Long-term borrowings (Notes (6)(i), (7) and (8)) 39,363,927 14 28,891,972 11

2570 　Deferred tax liabilities (Note 6(m)) 1,632,086 1 1,771,018 1

2600 　Other non-current liabilities (Note (6)(l)) 4,064,973 1 2,312,321 1

54,762,635 19 42,416,131 17

　　Total Liabilities 244,575,230 85 227,539,283 85

Equity attributable to owners of parent：(Note (6)(n))

3100 　Share Capital 11,392,300 4 11,392,300 4

3200 　Capital surplus 9,391,481 3 9,407,395 4

3350 　Unappropriated retained earnings 19,201,441 7 15,497,081 6

3400 　Other equity items (674,779 ) - 1,590,265 -

　　Total equity attributable to owners of parent 39,310,443 14 37,887,041 14

36XX 　Non-controlling interests 2,197,785 1 2,143,498 1

　　Total equity 41,508,228 15 40,030,539 15

TOTAL LIABILITIES AND EQUITY $ 286,083,458 100 267,569,822 100

74

CHAILEASE HOLDING COMPANY LIMITEDAND ITS SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFor the Years Ended December 31, 2016 and 2015(Amounts Expressed in Thousands of New Taiwan Dollars)

For the years ended December 31, 2016 2015

Amount % Amount % Operating revenues: (Note (7))4111 　Sales revenue $ 7,541,644 20 8,536,111 23 4810 　Interest revenue - installment sales 7,281,132 19 6,818,922 19 4820 　Interest revenue - capital leases 8,890,413 23 8,803,788 24 4300 　Rental revenue - operating leases 2,883,217 8 2,454,131 7 4230 　Interest revenue - loans 3,000,990 8 2,629,435 7 4240 　Other interest revenue 2,857,605 8 2,649,382 7 4881 　Other operating revenue 5,552,775 14 4,936,211 13 38,007,776 100 36,827,980 100 Operating costs: (Note (7))5111 Cost of sales 6,603,726 17 7,526,825 20 5240 Interest expense 4,646,899 12 4,777,085 13 5300 Cost of rental revenue 2,042,567 5 1,752,057 5 5800 Other operating costs 1,038,805 3 826,628 2 14,331,997 37 14,882,595 40 Gross profit from operation 23,675,779 63 21,945,385 60 6000 Operating expenses (Note (7)) 14,989,235 39 13,181,740 36 6500 Net other income and expenses (Note (6)(q)) 147,953 - 115,758 - Operating profit 8,834,497 24 8,879,403 24 Non-operating income and expenses:7100 Interest income 62,690 - 84,281 - 7130 Dividend revenue 90,112 - 69,116 - 7020 Other gains and losses (Note (6)(r)) 1,071,102 3 573,701 2 7060 Share of (loss) profit of associates and joint ventures accounted for using equity

method(Note (6)(f)) (1,747 ) - 28,309 - 1,222,157 3 755,407 2 7900 Profit before income tax 10,056,654 27 9,634,810 26 7950 Less: Income tax expense (Note (6)(m)) 2,472,335 7 2,440,877 6 Profit for the year 7,584,319 20 7,193,933 20 8300 Other comprehensive income (loss): 8310 Items that will not be reclassified subsequently to profit or loss 8311 Remeasurement of defined benefit liabilities 37,458 - 7,635 - 8349 Income tax related to items that will not be reclassified subsequently (6,349 ) - (1,298 ) -

　Total items that will not be reclassified subsequently to profit or loss 31,109 - 6,337 - 8360 Items that may be reclassified subsequently to profit or loss8361 Exchange differences on translation of foreign financial statements (2,267,947 ) (6 ) (302,151 ) (1 )8362 Unrealized gains (losses) on available-for-sale financial assets 43,120 - (32,055 ) - 8363 Gains (losses) of effective portion of cash flow hedges (163,416 ) - 128,477 - 8364 Gains (losses) of effective portion of hedges of net investment in foreign

operations 28,123 - (77,281) -

8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss

(4,727 ) - - -

8399 Income tax relating to items that are or may be reclassified subsequently to profit or loss 43,510 - (27,992 ) -

　Total other items that maybe reclassified subsequently to profit or loss (2,321,337 ) (6 ) (311,002 ) (1 )8300 Other comprehensive income (loss) for the period, net of tax (2,290,228 ) (6 ) (304,665 ) (1 )8500 Total comprehensive income for the year $ 5,294,091 14 6,889,268 19

Profit attributable to:8610 Owners of parent $ 7,243,268 19 6,863,272 19 8620 Non-controlling interests 341,051 1 330,661 1 $ 7,584,319 20 7,193,933 20

Comprehensive income attributable to:8710 Owners of parent $ 5,009,587 13 6,615,550 18 8720 Non-controlling interests 284,504 1 273,718 1 $ 5,294,091 14 6,889,268 19 9750 Basic earnings per share (NT dollars) (Note (6)(o)) $ 6.36 6.02

75


pany Limited

CH

AILE

ASE

HO

LDIN

G C

OM

PAN

Y LI

MIT

EDAN

D IT

S SU

BSID

IARI

ES

CO

NSO

LID

ATED

STA

TEM

ENTS

OF

CH

ANG

ES IN

EQ

UIT

Y Fo

r the

Yea

rs E

nded

Dec

embe

r 31,

201

6 an

d 20

15

(Am

ount

s Ex

pres

sed

in T

hous

ands

of N

ew T

aiw

an D

olla

rs)

Equit

y attr

ibutab

le to

owne

rs of

paren

t

Non c

ontro

lling

intere

sts

To

tal eq

uity

Capit

al

surp

lus

Unap

prop

riated

ret

ained

ea

rning

s

Othe

r equ

ity ite

ms

Equit

y attr

ibutab

le to

owne

rs of

paren

t

Stoc

kEx

chan

ge

differe

nces

on

trans

lation

of

foreig

n fina

ncial

sta

temen

ts

Unrea

lized

gains

(loss

es) o

n av

ailab

le-for

-sale

fin

ancia

l ass

ets

Gains

(loss

es) o

feff

ectiv

e por

tion

of ca

sh flo

w he

dges

Gains

(loss

es) o

f eff

ectiv

e por

tion o

f he

dge o

f net

inves

tmen

t in

foreig

n ope

ration

s

Sh

are

capit

alBa

lance

as of

Janu

ary 1,

2015

$

10,95

4,134

9,407

,459

12

,132,8

18

1,8

18,24

0

152,3

25

34

,939

(16

1,203

)

34,33

8,712

2,090

,369

36

,429,0

81

Profi

t for

the y

ear

-

-

6,8

63,27

2

-

-

-

-

6,863

,272

33

0,661

7,193

,933

Othe

r com

preh

ensiv

e inc

ome (

loss)

for th

e yea

r

-

-

6,314

(273,1

77 )

(32

,055 )

12

8,477

(77,28

1 )

(247,7

22 )

(56

,943 )

(30

4,665

)

Total

comp

rehen

sive i

ncom

e (los

s) for

the y

ear

-

-

6,8

69,58

6

(273,1

77 )

(32

,055 )

12

8,477

(77,28

1 )

6,615

,550

27

3,718

6,889

,268

Earn

ings d

istrib

ution

and a

ppro

priat

ion:

　Ca

sh di

viden

ds to

ordin

ary sh

areho

lders

-

-

(3,

067,1

57 )

-

-

-

-

(3,

067,1

57 )

-

(3,

067,1

57 )

　St

ock d

ivide

nds o

f ord

inary

share

holde

rs

438,1

66

-

(43

8,166

)

-

-

-

-

-

-

-

Chan

ges i

n own

ership

inter

ests

in su

bsidi

aries

-

(64

)

-

-

-

-

-

(64 )

-

(64

)

Chan

ges i

n non

-con

trollin

g inte

rests

-

-

-

-

-

-

-

-

(22

0,589

)

(220,5

89 )

Balan

ce as

of D

ecem

ber 3

1, 20

15

11,39

2,300

9,407

,395

15

,497,0

81

1,5

45,06

3

120,2

70

16

3,416

(238,4

84 )

37

,887,0

41

2,1

43,49

8

40,03

0,539

Profi

t for

the y

ear

-

-

7,2

43,26

8

-

-

-

-

7,243

,268

34

1,051

7,584

,319

Othe

r com

preh

ensiv

e inc

ome (

loss)

for th

e yea

r

-

-

31,36

3

(2,17

2,871

)

43,12

0

(163,4

16 )

28

,123

(2,

233,6

81 )

(56

,547 )

(2,

290,2

28 )

Total

comp

rehen

sive i

ncom

e (los

s) for

the y

ear

-

-

7,2

74,63

1

(2,17

2,871

)

43,12

0

(163,4

16 )

28

,123

5,0

09,58

7

284,5

04

5,2

94,09

1

Earn

ings d

istrib

ution

and a

ppro

priat

ion:

　Ca

sh di

viden

ds to

ordin

ary sh

areho

lders

-

-

(3,

531,6

13 )

-

-

-

-

(3,

531,6

13 )

-

(3,

531,6

13 )

Othe

r cha

nges

in ca

pital

surp

lus:

　Ch

ange

s in e

quitie

s of a

ssoc

iates

and j

oint v

entur

es

-

4,012

-

-

-

-

-

4,012

-

4,012

Chan

ges i

n own

ership

inter

ests

in su

bsidi

aries

-

(19

,926 )

(38

,658 )

-

-

-

-

(58

,584 )

-

(58

,584 )

Chan

ges i

n non

-con

trollin

g inte

rests

-

-

-

-

-

-

-

-

(23

0,217

)

(230,2

17 )

Balan

ce as

of D

ecem

ber 3

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11,39

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9,391

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(21

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)

39,31

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2,197

,785

41

,508,2

28

76

CHAILEASE HOLDING COMPANY LIMITEDAND ITS SUBSIDIARIES

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2016 and 2015 (Amounts Expressed in Thousands of New Taiwan Dollars)


Cash flows from operating activities:

　Profit before income tax $ 10,056,654 9,634,810

　Adjustments:

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

　　　Depreciation expense 1,866,849 1,611,411

　　　Amortization expense 170,664 142,602

　　　Gain (loss) on financial assets and liabilities at fair value through profit or loss (48,300 ) 39,057

　　　Interest expense 4,646,899 4,777,085

　　　Interest income (22,092,830 ) (20,985,808 )

　　　Dividend income (90,112 ) (69,116 )

　　　Share of loss (profit) of associates and joint ventures accounted for using equity method 1,747 (28,309 )

　　　Gain on disposal of property, plant and equipment (30,328 ) (4,535 )

　　　Loss on disposal of foreclosed assets 67,679 80,258

　　　Gain on disposal of investments (17,245 ) (123,081 )

　　　Impairment loss on financial assets 6,214,612 4,947,876

　　　Impairment loss on non financial assets 339,987 269,495

　　　　Total adjustments to reconcile (profit) loss (8,970,378 ) (9,343,065 )

　　Change in operating assets and liabilities:

　　　Change in operating assets:

　　　　Decrease (increase) in financial assets held for trading 120,484 (53,527 )

　　　　Decrease in non-current financial assets at fair value through profit or loss 721,807 -

　　　　Increase in accounts receivable (31,310,488 ) (30,986,582 )

　　　　(Increase) decrease in other current financial assets (1,059,708 ) 131,770

　　　　Decrease in other current assets 105,106 597,886

　　　　Proceeds from sales of operating lease assets 1,062,488 693,188

　　　　Purchase of operating lease assets (3,732,549 ) (3,385,906 )

　　　　Decrease (Increase) in other non current assets – others 67,224 (559,926 )

　　　　　Total changes in operating assets (34,025,636 ) (33,563,097 )

　　　Changes in operating liabilities:

　　　　Increase in accounts and notes payable 1,250,440 928,119

　　　　Increase in long term and short term debts 170,632,503 156,767,451

　　　　Repayment of long term and short term debts (152,292,373 ) (133,755,334 )

　　　　Increase in other current financial liabilities 1,765,386 3,378,672

　　　　Increase in accrued pension liabilities 9,863 17,027

　　　　Increase in other current liabilities others 308,597 116,464

　　　　Increase in non current liabilities others 711,587 12,407

　　　　Total changes in operating liabilities 22,386,003 27,464,806

　　　　　Total changes in operating assets and liabilities (11,639,633 ) (6,098,291 )

　　　Total adjustments (20,610,011 ) (15,441,356 )

77


pany Limited


Cash generated from operation (10,553,357 ) (5,806,546 )

　　Interest received 22,082,181 20,978,162

　　Dividend received 90,212 69,216

　　Interest paid (4,629,050 ) (4,966,118 )

　　Income taxes paid (2,916,301 ) (2,998,161 )

　　Net cash provided by operating activities 4,073,685 7,276,553

Cash flows from investing activities:

　Acquisition of available-for-sale financial assets (111,617 ) (193,928 )

　Proceeds from disposal of available-for-sale financial assets 56,074 151,669

　Proceeds from capital reduction of available-for-sale financial assets 3,233 -

　Acquisition of held-to-maturity financial assets (4,813,750 ) (5,662,910 )

　Disposal of held-to-maturity financial assets 7,963,949 4,758,138

　Acquisition of investments accounted for using equity method (587,374 ) -

　Proceeds from capital reduction of investments accounted for using equity method 37,301 -

　Acquisition of property, plant and equipment (96,211 ) (143,316 )

　Disposal of property, plant and equipment 2,294 2,650

　Acquisition of intangible assets (38,324 ) (11,941 )

　　Net cash provided by (used in) investing activities 2,415,575 (1,099,638 )

Cash flows from financing activities:

　Distribution of cash dividend (3,531,613 ) (3,067,157 )

　Changes in non-controlling interests (230,217 ) (220,653 )

　　Net cash used in financing activities (3,761,830 ) (3,287,810 )

Effect of exchange rate changes on cash and cash equivalents (885,352 ) (126,045 )

Net increase in cash and cash equivalents 1,842,078 2,763,060

Cash and cash equivalents, net of bank overdraft, beginning of year 11,093,264 8,330,204

Cash and cash equivalents, net of bank overdraft, end of year (Note (6)(a)) $ 12,935,342 11,093,264

78

Risk ManagementVII

(1) Integrated Risk Management Framework & Policy

1. Chailease Risk Management Organizational Structure Chailease's Risk Management Committee is responsible for the company's risk management

structure and ensuring the implementation of risk management activities. Subsidiaries also have internal risk management planning departments, credit services division, and credit services departments and branches responsible for implementing and overseeing risk management mechanisms.

Credit Services Division

Chairman

Board

President

Chief Risk officer

Subsidiaries

Corporate Planning Division

Risk Management and Planning Department

Credit Services of Departments and Branches

Risk Management Committee

Management Committee


79


pany Limited

(1) Organizations with Risk Management Responsibilities

Organization Functions

Board

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

Risk Management Committee

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


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

Risk Management and Planning Department

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

Subsidiaries

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

Credit Services of Departments and Branches

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

80

(2) Risk management policies

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

or incorrect actions taken internally in the areas of operations, finances, systems, or personnel, as well as from external changes related to customers, the economy, the law, and so forth, that make it impossible for customers to carry out their responsibility to pay back loans, resulting in losses to Chailease. Credit risk policies are formulated based on risk management policies to effectively advance operations, enhance asset quality, and ensure asset security. The use of consistent policies to bolster credit risk assessment and management mechanisms allows Chailease to avoid and reduce credit risk and losses. It regularly reviews the effectiveness of its credit risk management, offering suitable feedback for the management process.

The credit risk management process includes operational strategies and planning, marketing and promotion, performance evaluation, risk disclosure, and risk monitoring. The area of systems includes:

Implementation of operations, credit services division of labor allows the risk assessment work to be independent of business operations to effectively balance performance and credit risk management.

Approval procedures employ level-skipping approval method and implements detailed rules based on review management guidelines, so that upper management and lower level management are all responsible for the quality of and following up on risk assessment cases.

Credit limits. Credit limit caps are to be limited to the maximum amounts of guaranteed credit limits and are not to exceed amounts stipulated for uncovered loans.

The rating and grade model stresses employing some quantitative technologies to mitigate differences in understanding between operation and review personnel regarding risk management operations by measuring the company's overall credit and operation risk levels.

Collateral is guaranteed to reduce the risks of unexpected changes or uncertain factors with value being determined using a collateral assessment process.

Collection policies divide collection activities into different method types and manage and implement them to increase the amount of loan money that customers in arrears pay back.

Reserves for bad debts. Procedures for setting aside reserves for uncollectable accounts are set up by employing an appropriate mechanism, so that they meet with financial and tax regulations.

81


pany Limited

(2) Financial risk The objective of Chailease's financial risk management, primarily by managing liquidity,

interest rate, and currency rate risks, is to control losses and the goal of each risk management area is to realize that objective. The Board, which has the highest level of authority, authorizes the Risk Management Committee to draw up risk management strategies, while the Financial Department is responsible for implementing financial risk management in accordance with decisions made by the Risk Management Committee.

The Board and Risk Management Committee are to oversee and manage financial risk in accordance with such principles as obtaining quarterly financial risk assessment reports (balance sheets) compiled by the Financial Department, determining whether current risks lie within set risk limits, evaluating the suitability of risk management tools being employed on a regular basis, submitting appropriate measures whenever necessary to counter risks arising from substantial changes, whether internal or external, and regularly reviewing hedging efficacy and making timely adjustments when needed.

82

Special notesVIII

(1) Information about the affiliates:

1. Organizational chart of affiliateAs of December 31, 2016

Note 1: The initial equity capital has not been injected.Note 2: 【Chailease Finance Securitization Trust 2014】and

【Chailease Finance Securitization Trust 2016】 ,which are consolidated in Chailease Holding consolidated financial statements, are not included in the organization chart.

｛

｛｛

｛

｛


Chailease International Company (Malaysia) Limited (100%)

Grand Pacific Holdings Corp.

My Leasing (Mauritius) Corp.

(100%)

Chailease International Corp.

(100%)

Chailease Finance International Corp.

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

Chailease International

Finance Corporation

(100%)

Chailease Consumer Finance Co., Ltd.

(100%)

Grand Pacific Warehouse Funding

Corp. (100%)

Grand Pacific Financing Corp.

(100%)

Grand Pacific Warehouse Funding

LLC (100%)

Asia Sermkij Leasing Public

Company Limited

Chailease International Investment Corp.(100%) (Note1)

Chailease International (B.V.I.) Corp.

(100%)

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

(100%)

Grand Pacific Business Loan LLC

2005-1

Bangkok Grand Pacific Lease Public Company Limited

(99.99%)


Financial Services Co., Ltd. (100%)


Financial Services (Liberia) Corp.

(100%)


Financial Services (Labuan) Co., Ltd.

(100%)


Financial Services(Hong Kong)

Company Limited (100%) (Note1)


Leasing Company Limited (100%)


Trading Company Limited. (100%)

Chailease International Company (UK) Limited (100%)

Grand Pacific Business Loan Trust 2005-1

Chailease Finance Co., Ltd. (100%)

11.57%

51.00%

49.00% 36.61%

25.00%75.00%

｛

Chailease Berjaya Credit Sdn. Bhd.

(70%)

Grand Pacific Main Street Development

Inc. (100%) PRC

Malaysia

Fina Finance & Trading Co., Ltd.(99.55%)

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

Innovation Energy Integration Co., Ltd.

(100%)

Chailease Specialty Finance Co., Ltd.

(100%)

Apex Credit Solutions Inc.

(100%)

Chailease Credit Services Co., Ltd.

(100%)

Chailease Finance (B.V.I.) Company

Ltd. (100%)

Chailease Auto Rental Co., Ltd.(100%)

Chailease Insurance Brokers Co., Ltd.

(100%)

Chailease Cloud Service Co., Ltd.

(100%)

Yun Tang Inc.(100%)

Chailease Energy Integration Co., Ltd.

(100%)

Taiwan

Thailand Vietnam

USA

83


pany Limited

2. Basic information about the affiliates Unit: Thousand

Name of the company Establishment date Address Paid-in capital Major business or

products

Chailease International Company (Malaysia) Limited

20091103 Tiara Labuan, Jalan Tanjung Batu, 87000 F.T. Labuan, Malaysia USD 395,299 Investment

Chailease International Financial Services Co., Ltd.

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

USD 37,000 Installment sales, overseas financing and financial consultation

Grand Pacific Holdings Corp. 19870925 901 Corporate Center Drive, #300,

Monterey Park, CA 91754, U.S.A. USD 7,701 Commercial real estate finance

Golden Bridge (B.V.I.) Corp. 20080409 Palm Grove House, P.O. Box 438, Road

Town, Tortola, British Virgin Islands USD 337,150 Investment

Chailease International (B.V.I.) Corp. 20071224 Palm Grove House, P.O. Box 438, Road


Chailease Finance Co., Ltd. 19800623 8-12F., No.362, Ruiguang Rd., Neihu

Dist., Taipei City 114, Taiwan (R.O.C.) NTD 11,360,000 Installment sales, leases and factoring

Asia Sermkij Leasing Public Company Limited

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

THB 1,759,478 Installment on minibus

Bangkok Grand Pacific Lease Public Company Limited

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

THB 438,500 Leases and financial consultation

Chailease International Company (UK) Limited. 20150326 36 Whitefriars London United Kingdom,

EC4Y 8BQ GBP 341,272Investment, market survey and consultang services

Chailease Berjaya Credit Sdn. Bhd. 20150909

Lot 6.08, 6th floor, Plaza First Nationwide, No. 161, Jalan Tun H.S. Lee, 50000 Kuala Lumper

MYR 25,000Hire purchase of vehicles and consumer goods

Fina Finance & Trading Co., Ltd. 19870313 5F., No.362, Ruiguang Rd., Neihu Dist.,

Taipei City 114, Taiwan (R.O.C.) NTD 2,960,857 Installment sales, import and export and factoring

China Leasing Co., Ltd. 19910123 8F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.) NTD 2,015,607 Installment sales

My Leasing (B.V.I.) Corp. 20040401 Plam Grove House P.O. Box 438, Road


Chailease Finance (B.V.I.) Company Ltd. 19950508 Palm Grove House P.O. Box 438, Road

Town, Tortola, British Virgin Islands USD 40,910 Installment sales, overseas financing and financial consultation

Apex Credit Solutions Inc. 20010925 6F., No.420, Fuxing N. Rd., Zhongshan

Dist., Taipei City 104, Taiwan (R.O.C.) NTD 100,000

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

Chailease International Leasing Company Limited

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

VND 580,697,313 Lease

Chailease International Trading Company Limited

2016070628th Floor, Saigon Trade Centre, No.37 Ton Duc Thang, Ben Nghe Ward, District 1, Ho Chi Minh City, Vietnam

VND 110,000,000 Import and export

Chailease Auto Rental Co., Ltd. 20060220 6F., No.420, Fuxing N. Rd., Zhongshan

Dist., Taipei City 104, Taiwan (R.O.C.) NTD 950,000 Leases

Chailease Credit Services Co., Ltd. 20080526 8F., No.362, Ruiguang Rd., Neihu Dist.,

Taipei City 114, Taiwan (R.O.C.) NTD 10,000 Installment sales, leases, and third-party payment

84


products

Chailease Insurance Brokers Co., Ltd. 20110623 8F., No.362, Ruiguang Rd., Neihu Dist.,

Taipei City 114, Taiwan (R.O.C.) NTD 8,000 Personal insurance broker and property insurance broker

Chailease Cloud Service Co., Ltd. 20130129 8F., No.362, Ruiguang Rd., Neihu Dist.,

Taipei City 114, Taiwan (R.O.C.) NTD 10,000 Lease of cloud software and hardware

Yun Tang Inc. 20120328 8F., No.362, Ruiguang Rd., Neihu Dist., Taipei City 114, Taiwan (R.O.C.) NTD 430,000 Energy Services

Company industry

Chailease Energy Integration Co.,Ltd. 20151104 8F., No.362, Ruiguang Rd., Neihu Dist.,

Taipei City 114, Taiwan (R.O.C.) NTD 50,000

Energy saving services, engineering, procurement, construction, operations and maintenance on solar power plants

Innovation Energy Integration Co., Ltd. 20160629 8F., No.362, Ruiguang Rd., Neihu Dist.,

Taipei City 114, Taiwan (R.O.C.) NTD25,000Trading and development on Solar Power Plants

Chailease Consumer Finance Co., Ltd. 20000603 6F., No.392, Sec. 1, Neihu Rd., Neihu

Dist., Taipei City 114, Taiwan (R.O.C.) NTD 963,100 Leases, installment sales and factoring

Chailease International Financial Services (Liberia) Corp.

20141124 80 Broad Street, City of Monrovia, County of Montserrado, Republic of Liberia USD 10 Ship leasing business

Chailease International Financial Services (Labuan) Corp.

20160119 Tiara Labuan, Jalan Tanjung Batu, 87000 F.T. Labuan, Malaysia USD 30 Airplane leasing

Grand Pacific Financing Corporation 19830824 901 Corporate Center Drive, #300,

Monterey Park, CA 91754, U.S.A. USD 4,750 Commercial real estate finance

Grand Pacific Main Street Development Inc.

19900307 901 Corporate Center Drive, #300, Monterey Park, CA 91754, U.S.A. USD 0.5 Commercial real estate

finance

Grand Pacific Warehouse Funding Corp.

20030506 901 Corporate Center Drive, #300, Monterey Park, CA 91754, U.S.A. USD - Commercial real estate

finance

Grand Pacific Business Loan LLC. 2005-1 20050608 901 Corporate Center Drive, #300,

Monterey Park, CA 91754, U.S.A. USD - Commercial real estate finance

Grand Pacific Business Loan Trust 2005-1 20050627 901 Corporate Center Drive, #300,

Monterey Park, CA 91754, U.S.A. USD - Commercial real estate finance

Grand Pacific Warehouse Funding LLC.

20040413 901 Corporate Center Drive, #300, Monterey Park, CA 91754, U.S.A. USD - Commercial real estate

finance

My Leasing (Mauritius) Corp. 20040603 10th Floor, Raffles Tower, 19 Cybercity,

Ebene, Mauritius USD 89,655 Investment

Chailease International Finance Corporation 20050412

Hongqiao Shanghai Building B, 2683-15 unit, No.100, Zunyi Road, Changning District, Shanghai, PRC

USD 310,000 Leases

Chailease International Corp. 20080717 Room 408, No.228, Jiangchang third

road, Zhabei District, Shanghai, PRC CNY 200,000

Wholesale of construction materials, chemical materials and products, mechanical machinery and automobile parts

Chailease Finance International Corp. 20110127

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

USD 40,000 Leases and factoring

85


pany Limited


products

Jirong Real Estate Co., Ltd. 20121112 Building 1, Lane 631, Jinzhong Rd.,

Changning District, Shanghai, PRC CNY 170,000 Leasing of self-owned buildings and property management

Chailease International Financial Services (Hong Kong) Company Limited

20131122 36/F Tower Two Times Square 1 Matheson ST Causeway Bay Hong Kong USD - Investment

Chailease International Investment Corp. 20150430

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

USD 1 Investment

3. Shareholders representing both the holding company and affiliates: None.4. The industry covered in the operation of affiliates: Please refer to the above section of "Basic

information about the affiliates" for details.5. Information on the director, supervisor and president of affiliates

December 31, 2016 Unit: 1000 shares (%)

Name of the company Position Name Representing

Shares held

Shares Percentage


Director Chia-Jeang Liu994,747 100.00%


Director Fong-Long Chen

37,000 100.00%

Chailease Finance Co., LTD. Chairman Fong-Long

ChenChailease International Company (UK) Limited

1,136,000 100.00%

President/Director Ming-Ching Hou Chailease International Company (UK)

Limited

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

Director Kun-Ming Chen Chailease International Company (UK) Limited

Director Jung-Tao Lee Chailease International Company (UK) Limited

Director Hsiu-Tze Cheng Chailease International Company (UK) Limited

Director Shi- Ren Shen Chailease International Company (UK) Limited

Supervisor Tzu-Ting Yang Chailease International Company (UK) Limited

Supervisor Shin-Yi Lin Chailease International Company (UK) Limited

86


Shares held

Shares Percentage

Fina Finance & Trading Co., Ltd. Chairman Fong-Long

Chen Chailease Finance Co., Ltd. 296,086 100%

Director /President Ming-Ching Hou Chailease Finance Co., Ltd.

Director Jung-Tao Lee Chailease Finance Co., Ltd.

Director Hsiu-Tze Cheng Chailease Finance Co., Ltd.

Director Shi-Cha Lai Chailease Finance Co., Ltd.

Supervisor Tze-Ting Yang Chailease Finance Co., Ltd.

Chailease Consumer Finance Co., Ltd.

Chairman/President Chia-Jeang Liu Fina Finance & Trading Co. 96,310 100.00%

Director Chen-Yuan Liu Fina Finance & Trading Co.

Director Ming-Tsung Chang Fina Finance & Trading Co.

Supervisor Hsing-Jen Liu Fina Finance & Trading Co.

Chailease Specialty Finance Co., Ltd

Chairman Fong-Long Chen Chailease Finance Co., Ltd. 201,561 100.00%

President/Director Ming-Ching Hou Chailease Finance Co., Ltd.


Supervisor Chung-Chiang Yang Chailease Finance Co., Ltd.

Apex Credit Solutions Inc.

Chairman/President Chia-Jeang Liu Chailease Finance Co., Ltd. 10,000 100.00%

Director Tian-Fu Yu Chailease Finance Co., Ltd.

Director Chih-Ho Wei Chailease Finance Co., Ltd.

Supervisor Chung-Chiang Yang Chailease Finance Co., Ltd.

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

Chairman Fong-Long Chen Chailease Finance Co., Ltd.

40,910 100.00%

Chailease Auto Rental Co., Ltd.

Chairman/President Chia-Jeang Liu Chailease Finance Co., Ltd. 95,000 100.00%

Director Guang-Shian Dai Chailease Finance Co., Ltd.

Director Kai-Ming Li Chailease Finance Co., Ltd.

Supervisor Shih-Ming Sun Chailease Finance Co., Ltd.

Chailease Credit Services Co.,Ltd.

Chairman Chia-Jeang Liu Chailease Finance Co., Ltd. 1,000 100.00%

Director Ming-Tsung Chang Chailease Finance Co., Ltd.


Supervisor Shi- Ren Shen Chailease Finance Co., Ltd.

87


pany Limited


Shares held

Shares Percentage

Chailease Insurance Brokers Co., Ltd.

Chairman Chia-Jeang Liu Chailease Finance Co., Ltd. 800 100.00%

Director De-Long Sheng Chailease Finance Co., Ltd.

Director Ming-Hung Hsieh Chailease Finance Co., Ltd.

Director Ming-Cong Chang

Chailease Finance Co., Ltd.

Director Ming-Ching Hou Chailease Finance Co., Ltd.

Supervisor Yu-Hua Bai Chailease Finance Co., Ltd.

Chailease International Leasing Company Limited (Vietnam).

Chairman Chia-Jeang Liu - 100.00%

Director/President Chi-Chang Wu

Director Lai-Wang Tang

Director Huei-Yeu Yang

Director Yi-Cheng Chen

Chairman of Control Committee

Huei-Jung Chao

Member of Control Committee

Nguyen Hoang Tan

Member of Control Committee

Quach Ngoc My

My Leasing (B.V.I.) Corp. Director Fong-Long

Chen17,000 100.00%

Asia Sermkij Leasing Public Co., Ltd.

Chairman/President Chun-Lang Lu 　

172,459 49.01%

Director Mr. Amnuay Viravan 　

Director Che-Chih Chen 　

Director Fong-Long Chen 　

Director Ying-Chih Liao 　

Director Jung-Tao Lee 　

Director Mr. Tientavee Saraton 　

Director Ms. Patima Chavalit 　


Mr. Pradit Sawattananond 　


Mr. Anant Savattananon 　


Dr. Supriya Kuandachakupt 　


Mr. Kasem Akanesuwan 　

88


Shares held

Shares Percentage

Bangkok Grand Pacific Lease Public Co., Ltd.

Chairman/President Chun-Lang Lu 43,846 99.99%

Director Mr. Amnuay Viravan


Director Jui-Tsung Hung

Director Yuan-I Li

Director Lai-Wang Tang

Director Mr. Tientavee Saraton

Director Ms. Patima Chavalit

Grand Pacific Holdings Corp.

Chairman Che-Chih Chen 　 7,700 100.00%

Director Fong-Long Chen 　

Director Chia-Jeang Liu 　

Director Richard Tao 　

Director Christina Wang 　

Grand Pacific Financing Corp.

Chairman Che-Chih Chen 4,750 100.00%

Director Christina Wang

Director Richard Tao

GP Main St. Development Corp., Inc

Chairman Che-Chih Chen - 100.00%


Director Anni Lee

GP Warehouse Funding Corp.




Director Anni Lee

Director Michael Tang

Grand Pacific Business Loan LLC. 2005-1

Chairman Che-Chih Chen - -



Director Anni Lee


89


pany Limited


Shares held

Shares Percentage

Grand Pacific Business Loan Trust 2005-1

Chairman Che-Chih Chen - -



Director Anni Lee


GP Warehouse Funding LLC.




Director Anni Lee


My Leasing (Mauritius) Corp. Director Fong-Long

Chen 　89,655 100.00%

Director Ming-Ching Hou 　

Director Kuen-Ming Chen 　

Chailease International Finance Corporation

Chairman Fong-Long Chen 　

- 100.00%

Director/President

Kuen-Ming Chen 　

Director Kuo-Teng Qiu 　

Supervisor Ming-Ching Hou 　

Chailease International Corp. Chairman Fong-Long

Chen 　- 100.00%

Director/President

Kuen-Ming Chen 　

Director Wen-Cheng Chen 　


Chailease Finance International Corp Chairman Fong-Long

Chen 　- 100.00%

Director/President Dao-Ming Wang

Vice Chairman

Kuen-Ming Chen 　


Jirong Real Estate Co., Ltd. Chairman Fong-Long

Chen 　- 100.00%

Director/President

Kuen-Ming Chen 　

Director Wen-Cheng Chen 　


90


Shares held

Shares Percentage

Golden Bridge (B.V.I.) Corp. Director Fong-Long

Chen 　337,150 100.00%

Chailease International (B.V.I.) Corp.


22,550 100.00%

Chailease Cloud Service Co., Ltd. Chairman Fong-Long

Chen Chailease Finance Co. , Ltd. 1,000 100.00%

Director/President Ming-Ching Hou Chailease Finance Co. , Ltd.

Director Guo-Ruei Zeng Chailease Finance Co. , Ltd.

Supervisor Shi-Min Sun Chailease Finance Co. , Ltd.


Director Ming-Ching Hou- 100.00%

Yong Tang Limited Company

Chairman Ming-Ching Hou Chailease Finance Co., Ltd. - 100.00%


Director Rui-Xing Chen Chailease Finance Co., Ltd.

Chailease Energy Integration Co., Ltd.

Chairman Fong-Long Chen Chailease Finance Co., Ltd. 5,000 100.00%

Director/President Ming-Ching Hou Chailease Finance Co., Ltd.


Supervisor Jung-Tao Lee Chailease Finance Co., Ltd.

Chailease International Company (UK) Limited.


341,272 100.00%

Director Ming-Ching Hou

Director Ying-Chih Liao

Chailease Berjaya Credit Sdn. Bhd. Chairman Ming-Ching Hou Chailease International Company

(Malaysia) Limited- 70.00%

Director/President Lai-Wang Tang Chailease International Company

(Malaysia) Limited

Director Ying-Chih Liao Chailease International Company (Malaysia) Limited

Director Lee Kok Chuan Berjaya Group

Director Vivienne Cheng Berjaya GroupChailease International Financial Services (Labuan) Co., Ltd.

Director Ming-Ching Hou30 100%

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Shares held

Shares Percentage

Innovation Energy Integration Co., Ltd. Chairman Fong-Long

Chen Chailease Finance Co., Ltd. 25,000 100.00%

Director/President Ming-Ching Hou Chailease Finance Co., Ltd.


Supervisor Jung-Tao Lee Chailease Finance Co., Ltd. Chailease International Trading Company Limited.

Director/President Chia-Jeang Liu Chailease Finance Co., Ltd.

- 100%

Director Chi-Chang Wu Chailease Finance Co., Ltd.

Director Xi-Yuan Huang Chailease Finance Co., Ltd.

6.Operational statuses of affiliates

Name of affiliates Paid-incapital

Total assets

Total liabilities Net value Operating

revenuesOperating

income

Net income or

loss(after tax)

EPS(after tax)

(NT$)


12,748,398 26,099,916 510,547 25,589,369 11,373 (385) 4,507,702 4.54

Chailease Finance Co., Ltd. 11,360,000 96,127,200 72,532,028 23,595,172 9,462,519 2,831,487 4,559,541 4.18

Fina Finance & Trading Co., Ltd. 2,960,857 42,526,946 35,527,348 6,999,598 4,044,534 1,273,433 1,150,584 3.89

Chailease Consumer Finance Co., Ltd. 963,100 6,236,329 4,808,070 1,428,259 549,706 113,698 128,692 1.34

China Leasing Co.,Ltd. 2,015,607 5,407,117 176,445 5,230,672 236,249 221,988 185,479 0.92

Apex Credit Solutions Inc. 100,000 171,790 21,763 150,027 200,822 32,991 27,222 2.72

Bangkok Grand Pacific Lease Plc. 396,843 4,187,136 3,640,052 547,084 382,779 52,302 54,482 1.24

Chailease Finance (B.V.I) Company Ltd. 1,319,348 5,448,744 700,809 4,747,935 206,707 80,216 80,158 1.96

Asia Sermkij Leasing Public Company Ltd. 1,592,328 26,532,220 22,530,918 4,001,302 2,335,876 843,942 694,949 1.97

Grand Pacific Holdings Corp. 248,341 945,479 330,391 615,088 42,665 20,245 18,108 2.35

Grand Pacific Financing Corp. 153,188 3,157,709 1,972,022 1,185,687 305,260 106,830 94,365 19.87

GP Main St. Development Inc 16 144,753 142 144,611 6,123 6,123 6,081 12,162

GP Warehouse Funding Corp. 0 7,173 824 6,349 - - (356) 0

My Leasing (B.V.I.) Corp. 548,250 1,833,511 64,575 1,768,936 40,264 (63,812) (63,812) (3.75)

92


Total assets


revenuesOperating

income

Net income or

loss(after tax)

EPS(after tax)

(NT$)

My Leasing (Mauritius) Corp. 2,891,369 19,637,268 339,825 19,297,443 32,571 1,056 2,114,548 23.59

Grand Pacific Business Loan Trust 2005-1 0 289,266 48,687 240,579 39,896 85,060 84,655 SPT

Chailease International Finance Corporation 9,388,367 70,056,669 51,135,547 18,921,122 8,782,898 1,797,203 2,150,457 Note1

Chailease International Leasing Company Ltd. 749,100 4,315,750 3,323,301 992,449 378,537 129,726 104,883 Note1

Golden Bridge (B.V.I.) Corp. 10,873,088 19,430,586 2,590,510 16,840,076 47,461 (70,098) 2,055,346 6.10

Chailease International (B.V.I.) Corp. 727,238 810,019 13,545 796,474 135 (13,662) (13,845) (0.62)

Chailease International Corp. 923,400 7,534,773 5,295,473 2,239,300 6,980,146 218,696 205,604 Note1

Chailease Auto Rental Co.,Ltd. 950,000 3,863,214 2,917,267 945,947 1,218,903 (15,786) (6,147) (0.06)

Chailease Credit Services Co.,Ltd. 10,000 19,207 9,653 9,554 3,156 1 84 0.08

Chailease Insurance Brokers Co., Ltd. 8,000 45,393 6,018 39,375 68,402 30,930 25,702 32.13

Grand Pacific Business Loan LLC. 2005-1 0 0 0 0 0 0 0 SPT

GP Warehouse Funding LLC. 0 0 0 0 0 0 0 SPT

Chailease Finance International Corp. 1,179,305 6,352,048 4,057,224 2,294,824 846,403 237,336 260,532 Note1

Jirong Real Estate Co., Ltd. 784,890 1,355,677 542,072 813,605 8,474 870 898 Note1

Chailease Cloud Service Co., Ltd. 10,000 6,268 150 6,118 43 (136) (128) (0.13)


1,193,250 23,177,739 21,077,408 2,100,331 1,533,983 853,705 886,416 23.96

Chailease International Financial Services (Hong Kong) Co. Ltd.

0 0 0 0 0 0 0 Note2


323 1,082,864 993,210 89,654 208,192 30,242 30,319 3,032

Yun Tang Inc. 430,000 1,473,004 944,416 528,588 139,157 94,041 65,521 Note1

Chailease International Investment Corp. 0 0 0 0 0 0 0 Note2

Chailease International Company (UK) Limited 13,517,772 24,228,769 862,332 23,336,437 9,010 7,363 2,835,748 8.31

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Total assets


revenuesOperating

income

Net income or

loss(after tax)

EPS(after tax)

(NT$)

Chailease Berjaya Credit Sdn. Bhd. 172,625 816,397 647,476 168,921 52,132 101 2,956 Note1

Chailease Energy Integration Co., Ltd 50,000 854,239 602,001 252,238 308,163 244,454 202,331 40.47

Innovation Energy Integration Co., Ltd. 25,000 24,965 40 24,925 0 (85) (75) (0.03)

Chailease International Trading Company Limited

143,577 145,017 190 144,827 0 (1,187) 129 Note1

Chailease International Financial Services (Labuan) Corp.

968 674,509 670,326 4,183 3,372 3,350 3,214 107.13

Note1 : It is a limited company without issuing stocks.Note2 : The inital equity capital has not been in jected.

(2) Major differences in the Company's articles of association and R.O.C. regulations on shareholders protection

The rights of shareholders Articles of Association Reasons

Influence on the rights of shareholders

1. Convention procedure and the method of adopting resolutions for the shareholders' meeting1. The general meetings shall be held

in Taiwan. For general meetings to be held outside Taiwan, the shareholders shall propose it for resolution in the Board meeting or report to TWSE for approval 2 days after the shareholders obtain an approval of convention from the authorities.

2. Any or plural number of shareholder(s) of a company who has (have) continuously held three percent (3%) or more of the total number of outstanding shares of the company for a period of one year or longer may, by filing a written proposal setting forth therein the subjects for discussion and the reasons, request the Board of Directors to convene a special shareholders' meeting. If the Board of Directors fails to give a notice for convening a special shareholders' meeting within fifteen (15) days after the filing of the request under the preceding paragraph, the proposing shareholder(s) may, after obtaining an approval from the competent authority, convene a special shareholders' meeting on his/their own.

Article 43 in the Articles of Association was revised according to the rights of shareholders except that it is not necessary to obtain an approval from the competent authorities before the shareholders convene a special shareholder's meeting on his/their own as stated in the left column.

With respect to convening a special shareholder's meeting on his/their own, it is not necessary to obtain an approval from the competent authorities under the Company Law of Cayman Islands; therefore, the article is not amended to "after obtaining an approval from the competent authority.

According to the description 2.(3) in Letter Tai-ZhengShang -Zi No. 0991701319 filed on April 13, 2010 by TWSE, the rights for the minority of shareholder to request for convening the special shareholders' meeting shall be established in the Articles of Association for foreign-owned published companies on the condition of no violation of local regulations on the registered place. The part of the approval for convention from the authorities shall be deleted. Therefore, the part of Articles has limited influence of the rights of shareholders.

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If the proposal involves significant interest of shareholders as below, in the case of a company limited by shares: a resolution adopted, at a shareholders' meeting, by a majority of the shareholders present who represent two-thirds or more of the total number of its outstanding shares. If the total number of shares represented by the shareholders present at shareholders' meeting is not sufficient to meet the criteria specified in the preceding paragraph, the resolution to be made thereto may be adopted by two-thirds or more of the attending shareholders who represent a majority of the totalnumber of its outstanding shares : 1. Enter into, amending, or terminating

any contract for lease of the company's business in whole, or for entrusted business, or for regular joint operation with others. Transferring the whole or any essential part of its business or assets. Accepting the transfer of another's whole business or assets, which has great bearing on the business operation of the company

2. Alteration of the Articles of Corporation of the company

3. Any modifications or alterations in the Articles of Incorporation prejudicial to the privileges of special shareholders shall also be adopted by a meeting of special shareholders

4. Having the whole or a part of the surplus profit distributable as dividends and bonuses distributed in the form of new shares to be issued by the company

5. Resolution of dissolution, merger and split-up

6. Private placement of valuable securities

Article 64 and 66(b) in the Articles of Association with respect to the alternation of Articles of Association and the resolution threshold adopts the special resolution of Cayman Islands.

1. As to the method of adopting resolutions in the shareholders' meeting, the special resolution (special resolution for the Laws of Cayman Islands hereinafter) is established in Article 1 of the Articles of Association in addition to the ordinary resolutions and special(supermajority) resolutions under the Laws of R.O.C. The Company Laws under Cayman Islands define that the special resolution refers to the adoption of a resolution by at least two thirds of the votes of the shareholders present at a meeting of shareholders (including both personal attendance and proxy attendance, if allowed) if the meeting notice has clear notes that the special resolution will be adopted to make resolutions. However, the higher percentage of attendance can be designated according to the Articles of Association and the listed matters applicable to special resolutions can be passed at different percentages of attendance(but not lower than two thirds). The difference between the Articles of Association and the Rights of Shareholders is that the matters of special (supermajority) resolutions in the Rights of Shareholders shall be regulated by the special (supermajority) resolution and the special resolution under the Laws of Cayman Islands.

Since the difference is generated from the laws of Cayman Islands and the "Special Resolution" in rights of shareholders has been listed in the "Special Resolution for Cayman Laws "or "Special Resolutions", the Articles of Association should have limited influence on the rights of shareholders.


pany Limited



2. Under the Laws of Cayman Islands, (1) alternation of the Articles of Association shall be implemented in accordance with the special resolution in the Laws of Cayman Islands. Therefore, the resolution threshold for alternation of Articles of Association is not amended to the special (supermajority) resolution in the Laws of R.O.C. in accordance with the "Rights of Shareholders". Moreover, according to Article 16 in the Articles of Association, any modification or alternation in the Articles of Incorporation prejudicial to the privilege of special shareholders, it shall be adopted by the meeting of special shareholders under the Laws of Cayman Islands. (2) Dissolution shall be implemented in compliance with the Laws of Cayman Islands. According to the Laws of Cayman, the Company shall pass an Ordinary Resolution, if the Company resolves that it be wound up voluntarily because it is unable to pay its debts as they fall due. The Company shall abide by the special resolution under Laws of Cayman Islands, if the Company resolves that it be wound up voluntarily for reasons other than the reason stated above. Therefore, the resolution threshold of voluntary dissolution for the reason of unable to pay its debts has altered to supermajority resolution in the Laws of R.O.C. in accordance with the "Rights of Shareholders" in Article 66(a). As to the Article 66(b), the resolution threshold of voluntary dissolution for reasons other than the reason stated above, it shall abide by the special resolution under the Laws of Cayman Islands.

95

96



2. The rights and responsibilities of supervisors1. Supervisors of a company shall

be elected by the meeting of shareholders, among them at least one supervisor shall have a domicile within the territory of the Republic of China.

2. The term of office of a supervisor shall not exceed three years, but he may be eligible for re-election.

3. In case all supervisors of a company are discharged, the Board of Directors shall, within 30 days, convene a special meeting of shareholders to elect new supervisors.

4. Supervisors shall supervise the execution of business operations of the company and may at any time or from time to time investigate the business and financial conditions of the company, examine the accounting books and documents, and request the Board of Directors or managerial personnel to make reports thereon.

5. Supervisors shall audit the various statements and records prepared for submission to the shareholders' meeting by the Board of Directors, and shall make a report of their findings and opinions at the meeting of shareholders.

6. The supervisors may appoint, on behalf of the company, a practicing lawyer and a certified public accountant to conduct the examination.

7. Supervisors of a company may attend the meeting of the Board of Directors to their opinions. In case the Board of Directors or any director commits any act, in carrying out the business operations of the company, in a manner in violation of the laws, regulations, the Articles of Incorporation or the resolutions of the shareholders' meeting, the supervisors shall forthwith advise, by a notice, to the Board of Directors or the director, as the case may be, to cease such act.

8. Supervisor may each exercise the supervision power individually.

9. A supervisor shall not be concurrently a director, a managerial officer or other staff/employee of the company.

There is no regulation related to supervisors in the Articles of Association.

Since there is no definition and regulation of supervisors under the Laws of Cayman Islands, the Articles of Association does not have regulations related to supervisors.

The rights of shareholders regulates that a company that has issued stock shall establish either an audit committee or a supervisor. Under the Article 131 of Articles of Association, the Audit Committee which is composed of all independent Directors is established and has equivalent authorities and functions to supervisors; as a result, there should be limited influence on the rights of shareholders.

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3. Discharge of DirectorsIn case any director has transferred, during the term of office as a director, more than one half of the Company's shares being held by such director at the time of being elected, the director shall, ipso facto, be discharged from the office of director. If any director of the Company, after having been elected and before the inauguration of the office of director, has transferred more than one half of the total number of shares of the Company such director holds at the time of the election as such; or had transferred more than one half of the total number of shares such director held within the share transfer prohibition period fixed prior to the convention of a shareholders' meeting, then the election of the aforesaid director shall become invalid.

There is no regulation related to supervisors in the Articles of Association.

Since there is no identical or similar provisions regarding the discharge of Directors under the Laws of Cayman Islands, the Articles of Association does not have such rules.

Due to the discrepancy between the Laws of Cayman Islands and the Company Act of R.O.C., the Articles of Association of the Company is amended to include the provision specifying that any director transferring more than one half of the Company's shares shall be either discharged ipso facto or removed from the office as director of the Company retroactively since the election of such director in order to enhance the protection of the shareholders' benefits. This amendment is to be discussed and approved by the shareholders' meeting convened in 2015.

2. Statement of Company Operating Procedures for Handling Internal Material Information The Company formulated "Guidelines Governing the Handling of Internal Material Information

and Prevention against Insider Trading" in March, 2011, in order to establish solid mechanisms relating to the handling and disclosure of internal material information by the Company so as to prevent improper disclosure of information, ensure the consistency and accuracy of information released by the Company to the public, and enhance the prevention against insider trading.This Guideline has been promulgated to all employees, officers, and Directors. The relevant divisions in charge shall provide training to Directors, officers or other newly-appointed insiders.

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Chailease Holding Company Limited · CONTENTS 06 Board Members 07 Address of Subsidiaries 08 I....

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