EMPLOYEE STOCK PURCHASE PLANS

EMPLOYEE STOCK PURCHASE PLANS: EMPLOYMENT

Labor Concerns

Employees should sign a written disclaimer acknowledging that the Plan is a discretionary benefit offered to employees outside of their normal salaries and can be terminated at any time.

Communications

All employee communications should be available in Chinese for employees who are not fluent in English. Government filings must be made in Chinese.

EMPLOYEE STOCK PURCHASE PLANS: REGULATORY

Securities Compliance

Offers under purchase plans will be exempt from local securities law requirements if the offers are not made to the public. It will not be considered a public offer if the offers are made to fewer than 35 persons, being specific employees, directors and/ or supervisors of the affiliated company.

Foreign Exchange

Approval from the Central Bank of China is required for any remittances which exceed, in each calendar year: (i) US$50m for a Taiwanese Subsidiary; and (ii) US$5m for each Taiwanese resident.

Data Protection

An employer is not required to obtain government approval or a license to collect and process the personal data of employees provided that prior consent is obtained from the employees. The employer should have regard to the rights and interests of employees when collecting or utilizing the personal data of employees. The use and handling of personal data should accord with principles of honesty and integrity and must not exceed the scope of the specific purpose as agreed between the employer and the employee.

EMPLOYEE STOCK PURCHASE PLANS: TAX

Employee Tax Treatment

An income tax charge is imposed on an employee when he exercises his employee stock purchase plan. The income tax is calculated based on the difference between the purchase price of the Stock and the market value of the shares at the time the Stock has been delivered to the employee. With effect from 1 January 2016, the sale of the Stock is not subject to capital gains tax.

Interest accruing on payroll deductions, which are held in a separate trust account onshore (i.e. with a bank in Taiwan) prior to the acquisition of Stock, may give rise to an income tax liability in Taiwan. However, interest accruing on payroll deductions which are held in an overseas account of the Issuer may not be subject to Taiwanese income tax.

The employee's income derived from offshore sources, including payroll and interest accrued, may be subject to Taiwan income tax due to the enforcement of new Taiwan income tax law if the aggregated amount of the employee's income (including the offshore income) for the accounting year has reached NT$ 6,700,000, unless the aggregate amount of the offshore income for the accounting year is less than NT$ 1,000,000.

Social Insurance Contributions

2% of the Stock dividends shall be contributed to the supplemental premium for second-generation National Health Insurance. The supplemental premium rate will be reviewed on a year to year basis.

Tax Favored Program

None.

Withholding and Reporting

The Subsidiary is not required to withhold income taxes from employees. However, the Subsidiary is required to file a non-withholding statement by January of each year.

Employer Tax Treatment

A deduction may be allowed if the Subsidiary (i) reimburses the Issuer for the cost of Plan benefits, and (ii) such costs are characterized as employee remuneration.

Withholding and reporting are required if the Subsidiary reimburses the Issuer for the costs of the Plan.

Tax Rates

Income tax is charged at rates of up to 45%.

RESTRICTED STOCK and RSUs

RESTRICTED STOCK and RSUs: EMPLOYMENT

Labor Concerns

Employees should sign a written disclaimer acknowledging that the Plan is a discretionary benefit that is offered to employees outside of their normal salaries and can be terminated at any time.

Communications

All employee communications should be available in Chinese for the employees who are not fluent in English. Government filings must be made in Chinese.

RESTRICTED STOCK and RSUs: REGULATORY

Securities Compliance

Offers under restricted stock or RSU plans will be exempt from local securities law requirements if the offers are not made to the public. It will not be considered a public offer if the offers are made to fewer than 35 persons, being specific employees, directors and/or supervisors of the affiliated company.

Foreign Exchange

Approval from the Central Bank of China is required for any remittances which exceed, in each calendar year: (i) US$50m for a Taiwanese Subsidiary; and (ii) US$5m for each Taiwanese resident.

Data Protection

The employer is not required to obtain a license or government approval to collect and process the personal data of employees provided that prior consent is obtained from the employees. The employer should have regard to the rights and interests of employees when collecting or utilizing personal data. The use and handling of personal data should accord with principles of honesty and integrity and must not exceed the scope of the specific purpose as agreed between the employer and the employee.

RESTRICTED STOCK and RSUs: TAX

Employee Tax Treatment

An income tax charge is imposed on an employee when he exercises his restricted stock or RSU plans. The income tax is calculated based on the market value of the shares at the time the restriction on the Stock is released (or, in the case of RSUs, on vesting) less the price paid, if any, for the Stock. With effect from 1 January 2016, the sale of the Stock is not subject to capital gains tax.

Social Insurance Contributions

2% of the Stock dividends shall be contributed to the supplemental premium for second-generation National Health Insurance. The supplemental premium rate will be reviewed on a year to year basis.

Tax Favored Program

None

Withholding and Reporting

The Subsidiary is not required to withhold income taxes from employees. However, the Subsidiary is required to file a non-withholding statement by January of each year.

Employer Tax Treatment

A tax deduction may be available if the Subsidiary: (i) reimburses the Issuer for the cost of Plan benefits, and (ii) such costs are characterized as employee remuneration.

Withholding and reporting are required if the Subsidiary reimburses the Issuer for the costs of the Plan.

Tax Rates

Income tax is charged at rates of up to 45%.

STOCK OPTIONS PLANS

STOCK OPTIONS PLANS: EMPLOYMENT

Labor Concerns

Employees should sign a written disclaimer acknowledging that the Plan is a discretionary benefit offered to employees outside of their normal salaries and can be terminated at any time.

Communications

All employee communications should be available in Chinese for employees who are not fluent in English. Government filings must be made in Chinese.

STOCK OPTIONS PLANS: REGULATORY

Securities Compliance

Offers under option plans will be exempt from local securities law requirements if the offers are not made to the public. It will not be considered a public offer if the offers are made to fewer than 35 persons, being specific employees, directors and/ or supervisors of the affiliated company.

Foreign Exchange

Approval from the Central Bank is required for any remittances which exceed, in each calendar year: (i) US$50m for a Taiwanese Subsidiary; and (ii) US$5m for each Taiwanese resident.

Data Protection

An employer is not required to obtain government approval or a license to collect and process the personal data of employees, provided that prior consent is obtained from the employees. The employer should have regard to the rights and interests of employees when collecting or utilizing the personal data of employees. The use and handling of personal data should also accord with principles of honesty and integrity and must not exceed the scope of the specific purpose as agreed between the employer and the employee.

STOCK OPTIONS PLANS: TAX

Employee Tax Treatment

An income tax charge is imposed on an employee when he exercises his stock option plan. The income tax is calculated based on the difference between the exercise price and the market value of the Stock at the time the Stock has been delivered to the employee. With effect from 1 January 2016, the sale of the Stock is not subject to capital gains tax.

Social Insurance Contributions

2% of the Stock dividends shall be contributed to the supplemental premium for second-generation National Health Insurance. The supplemental premium rate will be reviewed on a year to year basis.

Tax Favored Program

None.

Withholding and Reporting

The Subsidiary is not required to withhold income taxes from employees. However, the Subsidiary is required to file a non-withholding statement by January of each year.

Employer Tax Treatment

A deduction may be available if the Subsidiary: (i) reimburses the Issuer for the cost of Plan benefits; and (ii) such costs are characterized as employee remuneration.

Withholding and reporting are required if the Subsidiary reimburses the Issuer for the costs of the Plan.

Tax Rates

Income tax is charged at rates of up to 45%.