On March 26, 2019, the Legislative Yuan passed amendments to Securities and Exchange Act (the "SEA") to retain talented employees, implement good corporate governance, and strengthen legal compliance.

Main points of the amendments are as follows:

1.Increase flexibility of employee incentives

In order to motivate employees as well as retain talented employees of companies whose stocks are listed on the Taiwan Stock Exchange or the Taipei Exchange, the time limit of reserving the treasury shares is extended from three years to five years. The shares a listing company bought back for transfer to its employees, or for equity conversion in coordination with the issuance of corporate bonds with warrants, preferred shares with warrants, convertible corporate bonds, convertible preferred shares, or share subscription warrants, can be transferred within five years from the date of buyback after the amendment.

2.Implement good corporate governance

a.In view of the fact that major shareholders also have considerable influence on the company's operations, the shares held by shareholders holding more than ten percent of the total shares of the listing company, their spouse, minor children, or shares held in the name of other persons are not permitted be sold during the period of the listing company buys back its shares.

b.In order to effectively implement the management of the shareholding of the major shares and the changes of their shareholding, in addition to filing a statement with the competent authority, any person who acquires shares exceeding a certain percentage of total issued shares of a listing company should also publicly disclose such fact.

c.The provision in the SEA that (i) a listing company may not impede, refuse, or evade the actions of the independent directors in the performance of their duties, and (ii) as the independent directors deem necessary for the performance of their duties, they may request the board of directors to appoint relevant personnel, or may at their own discretion hire professionals to provide assistance, and the related expenses will be borne by the company shall apply mutatis mutandis to the foreign issuers, including the foreign issuers listed on the Taiwan Stock Exchange and the Taipei Exchange or traded on the Emerging Stock Market. Furthermore, a foreign issuer is also required to establish a remuneration committee.

d.The maximum administrative fine imposed on a person who commits offenses stipulated by the SEA is raised from NT$2.4 million to NT$4.8 million.

3.Give the competent authority more flexible punishment measures

a.The competent authority may order issuer or securities firm that violates the SEA to take corrective action within a specified time period.

b.With respect to the offence violating Article 178 of the SEA, the following punishment alternatives are added: (i) fine for an offence may be remitted if the offence was committed in a trivial circumstance for which it is considered appropriate not to punish; and (ii) the competent authority may order the offender to take corrective action within a specified period of time and if the offender completes the corrective action within such period of time, the competent authority may exempt the offender from punishment.

4.Only second quarter financial report that is required to be audited and attested by a certified public accountant shall be reviewed and approved by audit committee.