au optronics corp. au optronics corp.auo.com.tw/download.php?file=../upload/media/file... · vivien...

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TAIEX：2409

NYSE：AUO

AU OPTRONICS CORP. AU OPTRONICS CORP. AU OPTRONICS CORP. AU OPTRONICS CORP.

Meeting MinutesMeeting MinutesMeeting MinutesMeeting Minutes OfOfOfOf

2020202011117777 Annual General Shareholders Annual General Shareholders Annual General Shareholders Annual General Shareholders’’’’ Meeting Meeting Meeting Meeting

(Translation)

Time and date of the Meeting: June 15, 2017 at 9:30 A.M. (Local time) Venue of the Meeting: No. 2, Jhongke Rd., Situn District, Taichung City, Taiwan R.O.C. Total shares represented by shareholders present: 7,429,403,662 shares (including 4,481,046,572 shares casted electronically) Percentage of shares held by shareholders present: 77.19% of total outstanding shares (The translated document is prepared in accordance with the Chinese version and is for

reference only. In the event of any inconsistency between the English version and the

Chinese version, the Chinese version shall prevail.)

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Resolution NoticeResolution NoticeResolution NoticeResolution Notice

Dear Shareholders: We are pleased to inform you that the following items were approved or acted as proposed at our 2017 Annual General Shareholders’ Meeting held on June 15, 2017.

Truly yours,

Shuang-Lang (Paul) Peng, Chair

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AU Optronics Corp.AU Optronics Corp.AU Optronics Corp.AU Optronics Corp.

2020202011117777 Annual General ShareholdersAnnual General ShareholdersAnnual General ShareholdersAnnual General Shareholders’’’’ Meeting Meeting Meeting Meeting MinutesMinutesMinutesMinutes

Time: 9:30 a.m., June 15, 2017

Place: No. 2, Jhongke Rd., Situn District, Taichung City, Taiwan R.O.C. (Meeting Room in the Central Taiwan Science Park Administration)

Total AUO outstanding shares: 9,624,245,115 shares

Total shares represented by shareholders present in person or by proxy: 7,429,403,662 shares

(including 4,481,046,572 shares casted electronically)

Percentage of shares held by shareholders present in person or by proxy: 77.19 %

Attendees: Kuo-Hsin (Michael) Tsai, Director, President and Chief Operation Officer

Vivien Huey-Juan Hsieh, Independent Director and Chair of the Audit Committee

Ding-Yuan Yang, Independent Director and member of the Audit Committee

Chin-Bing (Philip) Peng, Independent Director and member of the Audit Committee

Wan Yuan, Yu, Certified Public Accountant of KPMG Taiwan

Kevin Hsiao, Attorney

Chair: Shuang-Lang (Paul) Peng, Chairman Recorder: Benjamin Tseng

1.1.1.1. Commencement (Commencement (Commencement (Commencement (The aggregate shareholding of the shareholders The aggregate shareholding of the shareholders The aggregate shareholding of the shareholders The aggregate shareholding of the shareholders present in person or by present in person or by present in person or by present in person or by

proxy constituted a quorum. The Chairproxy constituted a quorum. The Chairproxy constituted a quorum. The Chairproxy constituted a quorum. The Chair called the meeting to order.) called the meeting to order.) called the meeting to order.) called the meeting to order.)

2.2.2.2. Chair’s Address Chair’s Address Chair’s Address Chair’s Address (omitted)

3.3.3.3. Report ItemsReport ItemsReport ItemsReport Items

(1) To report the business of 2016 (omitted) (2) Audit Committee’s Review Report (omitted) (3) To report the distribution of employees’ and directors’ remuneration of 2016 (omitted) (4) To report the indirect investments in China in 2016 (omitted) (5) To report the issuance of securities in private placement (omitted) (6) To report the merger of Taiwan CFI Co., Ltd., a subsidiary of the Company (omitted)

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4.4.4.4. RecognitionRecognitionRecognitionRecognition Items Items Items Items

(1) (1) (1) (1) To accept 201To accept 201To accept 201To accept 2016666 Business Report and Financial Statements (proposed by the Board of Directors) Business Report and Financial Statements (proposed by the Board of Directors) Business Report and Financial Statements (proposed by the Board of Directors) Business Report and Financial Statements (proposed by the Board of Directors)

Explanation:

(1) The 2016 Financial Statements were audited by the independent auditors, Yu, Wan-Yuan and Tseng, Mei- Yu of KPMG.

(2) For the 2016 Business Report, Independent Auditors’ Report, and the 2016 Financial Statements, please refer to Attachments 1 and 3-4 (pages 10-11 and pages 13-28).

Voting Results: 7,340,085,972 shares were represented at the time of voting (including

4,391,730,882 shares casted electronically) Voting Condition Voting rights % of the total represented at the

time of voting Votes in favor 6,462,764,859 88.05% Votes against 5,089,025 0.07% Votes abstained 872,232,088 11.88% Votes invalid 0 0.00%

RESOLVED, that the above proposal be and hereby was accepted as proposed.

(2) (2) (2) (2) To To To To acceptacceptacceptaccept the pthe pthe pthe proposal for roposal for roposal for roposal for the the the the distribution of 20distribution of 20distribution of 20distribution of 2011116666 earningsearningsearningsearnings (proposed by the Board of (proposed by the Board of (proposed by the Board of (proposed by the Board of

Directors) Directors) Directors) Directors)

Explanation:

(1) The proposed distribution is allocated from the 2016 earnings available for distribution. For the Proposal for 2016 Earnings Distribution, please refer to Attachment 5 (page 29).

(2) If the dividend distribution ratio is adjusted due to change of the Company's total number of outstanding common shares it is proposed that the Chairman of Board of Directors is authorized to adjust the ratio of dividend to be distributed to each common share based on the total amount approved by the 2017 Annual General Shareholders’ Meeting to be distributed and the actual number of common shares outstanding on the record date for distribution.

(3) The calculation of dividends is based on the roster of shareholders and the number of shares held by each shareholder as recorded in the roster as of the record date for distribution. The cash dividend distribution to each shareholder will be paid to the rounded-down full NT dollar. Amounts less than one whole NT dollar are rounded-down to the nearest NT dollar. The aggregate unpaid cash dividend resulting from the above rounded-down, will be distributed to shareholders in the descending order of decimal point and the ascending order of shareholder account numbers, until the total amount of the approved cash dividend has been fully distributed.

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time of voting Votes in favor 6,528,639,138 88.94% Votes against 5,288,771 0.07% Votes abstained 806,158,063 10.98% Votes invalid 0 0.00%


5. 5. 5. 5. Discussion Discussion Discussion Discussion ItemsItemsItemsItems (1) (1) (1) (1) To approve the To approve the To approve the To approve the amendment amendment amendment amendment to Articles of Incorporationto Articles of Incorporationto Articles of Incorporationto Articles of Incorporation (pr (pr (pr (proposed by the Board of Directors)oposed by the Board of Directors)oposed by the Board of Directors)oposed by the Board of Directors)

Explanation: (1) To add new business items of the Company and to clarify the Company’s dividend policy, it is

proposed to amend the Articles of Incorporation. (2) A comparison table of the Articles of Incorporation before and after the amendment is

attached hereto as Attachment 6 (pages 30-32). Voting Results: 7,340,085,972 shares were represented at the time of voting (including


time of voting

Votes in favor 6,527,560,368 88.93% Votes against 5,548,014 0.08% Votes abstained 806,977,590 10.99% Votes invalid 0 0.00%


(2) (2) (2) (2) To approve the To approve the To approve the To approve the aaaamendment mendment mendment mendment to to to to Handling ProcedureHandling ProcedureHandling ProcedureHandling Procedures for Acquisition or Disposs for Acquisition or Disposs for Acquisition or Disposs for Acquisition or Disposalalalal of Assets of Assets of Assets of Assets

(proposed by the Board of Directors)(proposed by the Board of Directors)(proposed by the Board of Directors)(proposed by the Board of Directors)

Explanation: (1) To comply with the Regulations Governing the Acquisition and Disposal of Assets by Public

Companies, it is proposed to amend the Company’s Handling Procedures for Acquisition or Disposal of Assets.

(2) A comparison table of the Handling Procedures for Acquisition or Disposal of Assets before and after the amendment is attached hereto as Attachment 7 (pages 33-38).

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time of voting



(3) (3) (3) (3) To approve issuance To approve issuance To approve issuance To approve issuance of new common shares for cash to sponsor issuance of the overseas of new common shares for cash to sponsor issuance of the overseas of new common shares for cash to sponsor issuance of the overseas of new common shares for cash to sponsor issuance of the overseas

depositary shares (depositary shares (depositary shares (depositary shares (""""DR OfferingDR OfferingDR OfferingDR Offering"""") and/or) and/or) and/or) and/or issuance of new common shares issuance of new common shares issuance of new common shares issuance of new common shares forforforfor cash in public cash in public cash in public cash in public offering offering offering offering and/or issuance of new common shares and/or issuance of new common shares and/or issuance of new common shares and/or issuance of new common shares for cash for cash for cash for cash in private placement (in private placement (in private placement (in private placement (""""Private Private Private Private Placement SharPlacement SharPlacement SharPlacement Shareseseses"""") and/or issuance of o) and/or issuance of o) and/or issuance of o) and/or issuance of overseas or domestic convertible bonds in private verseas or domestic convertible bonds in private verseas or domestic convertible bonds in private verseas or domestic convertible bonds in private placement (placement (placement (placement (""""Private Placement CBPrivate Placement CBPrivate Placement CBPrivate Placement CB"""") ) ) ) (proposed by the Board of Directors)(proposed by the Board of Directors)(proposed by the Board of Directors)(proposed by the Board of Directors)

Explanation:

(1) Fund raising purpose and size:

In order to invest in equipment and technology of high-level products, enrich working capital, have sound financial structure and/or support the Company’s long term development funding needs, it is hereby proposed that the shareholders meeting to authorize the Board of

Directors ("Board"), within the limit of 950,000,000 common shares, depending on the market conditions and the Company’s capital needs, to choose appropriate timing and fund raising instrument(s), to issue new common shares for cash to sponsor DR Offering and/or issue new common shares for cash in public offering and/or issue Private Placement Shares and/or issue Private Placement CB, in accordance with the applicable laws and regulations and the following fund raising principles. For issuance of Private Placement CB, the number of common shares to be converted within the limit of 950,000,000 common shares shall be calculated in accordance with the conversion price determined at the time of issuance of Private Placement CB.

(2) Fund raising method(s) and handling principles:

I. Issuance of new common shares for cash to sponsor DR Offering:

(i) The issue price of the new common shares will be decided with reference to (a) the closing price of the Company’s common shares or American Depositary Shares (" ADSs") on the pricing date or (b) the average of the closing price of the Company’s common shares or ADSs for 1, 3 or 5 trading days prior to the pricing date (each of (a) and (b) is referred to hereinafter as the "reference price"). The Chairman of the Company is authorized to coordinate with the foreign lead-underwriter(s) of the DR Offering to determine the actual issue price in accordance with market conditions, provided that, the actual price shall not be less than 90% of the reference price after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends.

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The reference price and the actual price will be decided in accordance with market practice and applicable law and regulations. In addition, assuming that the Company issues 950,000,000 common shares which is approximately 9.87% of the Company’s total outstanding common shares on the record date for the Company’s 2017 annual shareholders meeting, as the actual price shall be no less than 90% of the reference price after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends, it is unlikely that such issuance will have a material dilutive effect on the holding of the current existing shareholders. Thus, determination of the issue price of the new common shares to be issued in connection with the DR Offering should be reasonable and should not have a material adverse effect on the rights and benefits of the current existing shareholders.

(ii) Except for 10% to 15% of the new common shares shall be allocated for the employees'

subscription in accordance with the applicable law, it is proposed for the shareholders meeting to approve the rights to subscribe to the remaining shares to be waived by the shareholders and such remaining shares should be offered to the public under Article 28-1 of the Securities and Exchange Act as the underlying shares of the global depositary shares to be sold in the DR Offering. Any new common shares not subscribed by employees of the Company shall be determined by the Chairman of the Company, depending on the market needs, to be allocated as underlying shares of the global depositary shares or to be subscribed by the designated person(s).

II. Issuance of new common shares for cash in public offering: (i) The par value of the new common shares to be issued per share is NT$10. It is

proposed to authorize the Chairman of the Company to coordinate with the underwriter(s) of the public offering to determine the actual issue price in accordance with the Taiwan Securities Association's Self-regulatory Rules Governing the Provision of Advisory Services by Underwriter Members to Issuing Companies for Offering and Issuing Securities and the market conditions and the issue price shall be reported to, and approved by the regulatory authority before issuance.

(ii) It is proposed to authorize the Board to choose either of the following methods to sell

the new shares in the public offering through the underwriter(s)：

(a) Except for 10% to 15% of the new shares must be offered to employees in accordance with Article 267, Paragraph I of the Company Act, it is proposed for the shareholders meeting to approve the pre-emptive rights to subscribe to the remaining shares to be waived by the shareholders in accordance with Article 28-1 of the Securities and Exchange Act and such remaining shares will be offered to the public via book building. It is proposed that any new common shares not subscribed by employees of the Company will be sold to the person(s) designated by the Chairman of the Company at the issue price.

(b) Except for 10% to 15% of the new shares must be offered to employees in

accordance with Article 267, Paragraph I of the Company Act, it is proposed that 10% of the new shares to be sold to the public through the underwriter(s) in accordance with Article 28-1, Paragraph 2 of the Securities and Exchange Act and the remaining shares will be subscribed to by the existing shareholders of the Company in accordance with their shareholding. It is proposed that any new common shares not subscribed by employees and shareholders of the Company will

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be sold to the person(s) designated by the Chairman of the Company at the issue price.

III. Issuance of Private Placement Shares and/or Private Placement CB:

(i) Basis and reasonableness for determination of the subscription price of the Private

Placement Shares:

(a) The higher of (x) the simple average closing price of the Company’s common shares for 1, 3 or 5 trading days prior to the pricing date, and (y) the simple average closing price of the Company’s common shares for 30 trading days prior to the pricing date, after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends, as the reference subscription price of the Private Placement Shares.

(b) The issue price of the Private Placement Shares shall be no less than 80% of the

reference price. It is proposed to authorize the Board to decide the actual issue price within the range approved by the shareholders meeting, depending on the status of finding specific investor(s) and market conditions. The issue price of the Private Placement CB shall be no less than 80% of the theoretical price.

(c) As aforementioned, subscription price of the Private Placement Shares and issue

price of Private Placement CB will be determined with reference to the price of the Company’s common shares and the theoretical price in accordance with the Regulations Governing Public Companies Issuing Securities in Private Placement, thus, the price should be reasonable.

(ii) The method, purpose, necessity and projected benefits to determine specific investor(s):

The investors to subscribe to the Private Placement Shares and/or Private Placement CB must meet the qualifications listed in Article 43-6 of the Securities and Exchange Act and are limited to strategic investor(s). Priority will be given to the investor(s) who could benefit the Company's long term development, competitiveness, and existing shareholders' rights. The Board is fully authorized to determine the specific investor(s). The purpose, necessity and projected benefits for choosing strategic investor(s) are to accommodate the Company’s operation and development needs to have the strategic investor(s) to assist the Company, directly or indirectly, in its finance, business, manufacturing, technology, procurement, management, and strategy development, etc. so to strengthen the Company’s competitiveness and enhance its operational efficiency and long term development.

(iii) The necessity of issuance of Private Placement Shares and/or Private Placement CB:

Considering the effectiveness and convenience for issuance of the Private Placement Shares/Private Placement CB and accommodating the Company’s development planning, including inviting the strategic investor(s), it would be necessary to issue the Private Placement Shares and/or Private Placement CB.

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(iv) For the Private Placement Shares and/or the new common shares to be issued upon conversion of Private Placement CB, after expiration of three years following delivery date of the Private Placement Shares/Private Placement CB, the Board is authorized to apply for approval from the Taiwan Stock Exchange ("TSE") acknowledging that the Private Placement Shares /new common shares to be issued upon conversion of Private Placement CB meet the requirements for TSE listing before the Company submitting application with the Financial Supervisory Commission for retroactive handling of public issuance of such shares and submitting application with TSE for listing such shares on TSE.

(v) The tentative terms and conditions of the Private Placement CB ("Offering Plan") are

shown in Attachment 8 (pages 39-41).

(3) Use of proceeds, the schedule and the projected benefits:

The Company plans to use the funds raised from the DR Offering and/or issuance of the new common shares in public offering and/or issuance of the Private Placement Shares and/or Private Placement CB to invest in equipment and technology of high-level product, enrich working capital, strengthen financial structure and/or support the Company’s long term development funding needs and plans to use such funds within three years after completing the fund raising and it is expected that use of such funds will strengthen the Company’s competition and improve operational efficiency.

(4) The new common shares to be issued to sponsor the DR Offering, the new common shares

to be issued in public offering, Private Placement Shares and the new common shares to be issued upon conversion of Private Placement CB will be issued in the scriptless form. Except that the Private Placement Shares and the new common shares to be issued upon conversion of Private Placement CB are subject to the selling restrictions within three years after the delivery date of the Private Placement Shares/Private Placement CB under Article 43-8 of the Securities and Exchange Act, the new common shares to be issued to sponsor the DR Offering, the new common shares to be issued in public offering, the Private Placement Shares and the new common shares to be issued upon conversion of Private Placement CB will have the same rights and obligations as the Company’s existing issued and outstanding common shares.

(5) The reason for the situation where the issue price of the new common shares to be issued to

sponsor the DR Offering, the new common shares to be issued in public offering, Private Placement Shares and the conversion price for the Private Placement CB is set as a price less than the par value due to change of the market change and the reason for the Company not adopt other fund raising method and the reasonableness for such determination:

This is mainly based on considerations of the sound operation of the Company and the security of its financial structure and issuing equity related securities for fund raising is more appropriate than pure debt financing. If the Company decides to use the fund raising methods, such as issuing new shares for cash to sponsor the DR Offering, issuing new shares for cash in public offering, and issuing Private Placement Shares, etc. the Company would not incur any interest of the debt in such case not only the Company's financial risk could be reduced, the Company's financial structure could be improved and the flexibility of the Company’s treasury management would also be increased. For issuance of Private Placement CB, if investor converts Private Placement CB into the common shares, such would improve the Company’s

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financial structure and would benefit the Company’s long term development. Thus, it should be reasonable for the Company to issue the equity related securities. If the issue price and the conversion price is less than the par value, such would be expected to cause decrease of the Company’s capital surplus and retained earnings in which case the Company will, depending on the actual operating conditions in the future, make up for the losses. As the issue price and the conversion price will be determined in accordance with the relevant regulations, thus, after realization of the benefits of the capital increase, the Company's financial structure will be effectively improved which would be favorable to the Company’s long-term development and would not have adverse impact on the rights and benefits of the shareholders.

(6) After the shareholders meeting approves issuance of new common shares to sponsor the DR

Offering, new common shares in public offering, the Private Placement Shares and the Private Placement CB, it is proposed for the shareholders meeting to authorize the Board to determine and amend, at the Board’s sole discretion, the terms and condition of the new common shares to be issued for the DR Offering and/or in public offering and/or terms and condition of the Private Placement Shares and/or Offering Plan of the Private Placement CB, the plan for the use of proceeds, the schedule and projected benefits and all matters in connection therewith, in accordance with the Company’s actual needs, market conditions and relevant regulations and if any amendment thereto is required due to any change of the regulations or as requested by the regulator’s order or based on the Company’s operation evaluation or change of the market conditions, the Board is authorized to make the required amendments at the Board’s sole discretion.

(7) To complete the fund raising, the Chairman or the Chairman's designee is authorized, on

behalf of the Company, to handle all matters relating to, and sign all agreements and documents in connection with, issuance of the new common shares to sponsor the DR Offering, issuance of new common shares in public offering and issuance of the Private Placement Shares and/or Private Placement CB.

(8) The Board is authorized to handle all matters at the Board’s sole discretion which are not

addressed herein in accordance with the applicable laws and regulations.

Voting Results: 7,340,085,972 shares were represented at the time of voting (including 4,391,730,882 shares casted electronically)

Voting Condition Voting rights % of the total represented at the time of voting



6. 6. 6. 6. Extraordinary MotionsExtraordinary MotionsExtraordinary MotionsExtraordinary Motions：：：：None.

7. 7. 7. 7. MeetingMeetingMeetingMeeting AdjournAdjournAdjournAdjourn：：：：The meeting was adjourned at 10:33 a.m.

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Attachment 1Attachment 1Attachment 1Attachment 1 2012012012016666 Business Report Business Report Business Report Business Report The display panel market recovered from a sluggish start in 2016. Beginning in the second half of 2016, growth in end-market demand became steady and the closure of production lines by some industry peers resulted in a tightening of supply which led to a rebound in the selling prices of display panels. The Company has been committed to value transformation in recent years. This has allowed us to take advantage of market opportunities as they arise. In 2016, the expanded capacity at our generation 8.5 TFT-LCD fab has already been running at full utilization, while our generation 6 LTPS TFT-LCD fab in Kunshan has set a new industry record as the fastest LTPS fab to have achieved equipment move in light up, and mass production. Although our consolidated net revenue decreased by 8.7% YoY to NT$329.09 billion in 2016, our net profit increased by 36.4% YoY to NT$6.61 billion in 2016. Profit attributable to shareholders of AUO was NT$7.82 billion, 58.5% higher than 2015, with basic earnings per share (EPS) of NT$0.81. In addition to delivering four consecutive years of profit, the Company has also been able to maintain the overall financial structure at a solid and healthy condition. Looking back on 2016, AUO's key products and technology developments include:

� Bezel-less ALCD (Advanced LCD) TV panels: We have continuously challenged the technical specifications of displays by integrating to our bezel-less LCD TV panels various leading technologies, such as UHD (Ultra HD) 4K ultra-high resolution, curved design, quantum dot wide color gamut, and HDR (High Dynamic Range). Our product strategy is to create product differentiation through technology stacking. In addition, with the exhibition of the world's first 65-inch 8K4K ultra-high resolution, golden curvature and bezel-less TV panels, we hope to set the display technology barriers even higher.

� LTPS notebook panels: AUO leads the industry in expanding the application of LTPS technologies to notebook panels. Theses panels feature ultra-high resolution, slim borders, and low power consumption. In recognition of our technology capability, our 13.3-inch UHD 4K LTPS notebook panel won the Outstanding Product Award at the 2016 Gold Panel Awards.

� Wearable devices display panels: Our wearable device offerings provide complete panel solutions including AMOLED, traditional TFT-LCD, and transflective TFT-LCD to meet the needs of wearable devices in stylish appearance, power savings, outdoor visibility, and other diverse needs. Working closely with customers, we have achieved steady shipments in wearable devices and we anticipate this to be an area for future growth.

� Car display panels: Our products showcase features such as ultra-high resolution, wide color gamut, wide viewing angle, high weather tolerance, free-form cutting, curved, etc. These qualities help in strengthening our entry into markets with high barriers. AUO's share of the car displays market is currently in the top three globally. Notably, our 25-inch ultra wide curved car displays that use high-end technologies such as free-form cutting and curved design have won the Excellence in Technology Awards in 2016, further demonstrating our competitiveness in high-end car display panels.

� High specification gaming display panel: We have the most complete gaming display panel product lines, and led the industry by developing a series of professional grade gaming monitor panels integrating high refresh rate, large-sized display, high resolution, bezel-less, and curved design. As the market leader, our market share is significantly larger than our competitors. AUO's products include the world's first* 27-inch gaming monitor panel with 144Hz refresh rate and UHD 4K ultra-high resolution. We are also the first to launch* a 25-inch 240Hz ultra high refresh rate gaming monitor panel. These products demonstrate our professional capability and leading position in gaming display panels.

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Development trends in the display panel industry:

� For TV panels, we expect to see the trend towards high-resolution, curved, quantum dot wide color gamut, and bezel-less to continue. As the major markets for TVs entering replacement cycle, it also drives the increase in the average size of TV panels.

� The continuous capacity expansion of Chinese display panel makers has an impact on the supply and demand balance of the display panel industry. With additional capacity coming into the market, technologies, operational management, and customers have become the key differentiating factors for the competitiveness of display panel makers.

� With applications for the Internet of Things and the Internet of Vehicles continuing to be developed, display panels remain the most important human-machine interface. Business opportunities can be expected in these new applications.

On the other hand, Bloomberg forecasted that 73-gigawatts of new solar photovoltaic power system will be installed worldwide in 2017. Taiwan government’s long-term green energy policy has also set a goal of achieving 20-gigawatts of new solar photovoltaic power system by 2025 and expected to install 900-megawatts of new solar photovoltaic power system in 2017. The demand from these developments will drive the growth momentum of the solar industry. We will continue to improve the competitiveness of our solar products, in terms of both cost and efficiency. In response to these trends in the industry and market, our business strategies in 2017 include: 1. Highly flexible management and mass-production capability: We have leading advantages in

various technologies and have complete production lines of different generations. We are able to make the most effective capacity allocation to cater to various products. Our solid mass-production foundation, supplemented by our complete upstream and downstream supply-chain management, places us in a highly cost-competitive position.

2. Continue to enhance customer relationships: We will continue to build our foundation based on solid technological strength and comprehensive patents strategy, provide customers with value-added solutions, and move from production to services oriented.

3. Build up high-quality and optimal production capacity: We will expand our high-quality production capacity at an appropriate pace and time based on market demands to enhance our leading position in the value-added and high-end products market, thereby safeguarding our profitability.

Looking forward, new display applications continue to expand. We will appropriately optimize our high-end production capacity, reinforce our growth momentum and provide the best total solution to customers with our professional skill and integrated services to position ourselves as the industry leader. We will work toward meeting the goal of creating value together with our customers and enhancing shareholder value.

Shuang-Lang (Paul) Peng, Chairman

Kuo-Hsin (Michael) Tsai, President

Benjamin Tseng, Chief Financial Officer and Chief Accounting Officer

* Note: Based on market information available to the company as at December 31, 2016.

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Attachment Attachment Attachment Attachment 2222::::

Audit CommitteeAudit CommitteeAudit CommitteeAudit Committee’’’’ssss Review Review Review Review ReportReportReportReport

The Board of Directors has prepared the Company’s Business Report, Financial Statements, and Earning Distribution Proposal for the year of 2016. Yu, Wan-Yuan and Tseng, Mei -Yu, Certified Public Accountants of KPMG, have audited the Financial Statements. The 2016 Business Report, Financial Statements, and Earning Distribution Proposal have been reviewed and determined to be correct and accurate by the Audit Committee of AU Optronics Corp. I, as the Chair of the Audit Committee, hereby submit this report according to Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Law. AU Optronics Corp.AU Optronics Corp.AU Optronics Corp.AU Optronics Corp. ChairChairChairChair of the Audit of the Audit of the Audit of the Audit Committee Committee Committee Committee

Vivien HueyVivien HueyVivien HueyVivien Huey----Juan HsiehJuan HsiehJuan HsiehJuan Hsieh MarchMarchMarchMarch 22222222, 201, 201, 201, 2017777

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English Translation of Financial Statements Originally Issued in Chinese

Independent Auditors’ Report To the Board of Directors of AU Optronics Corp.: Opinion

We have audited the parent-company-only financial statements of AU Optronics Corp. (“the Company”), which comprise the balance sheets as of December 31, 2016 and 2015, the statement of comprehensive income, statement of changes in equity, and statement of cash flows for the years ended December 31, 2016 and 2015, and notes to the parent-company-only statements including a summary of significant accounting policies.

In our opinion, the accompanying parent-company-only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and its financial performance and its cash flows for each of the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We 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 Parent-Company-Only Financial Statements section of our report. We are independent of the Company 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 for our opinion.

Key Audit Matters

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

Impairment of long-term non-financial assets (including goodwill)

Refer to Note 4(16) “Impairment – non-financial assets”, Note 5(2) and Note 5(3) “Critical accounting judgments and key sources of estimation and assumption uncertainty”, Note 6(7) “Property, plant and equipment”, and Note 6(9) “Intangible assets” to the parent-company-only financial statements.

Description of key audit matter:

The Company operates in an industry with high investment costs, has goodwill through the acquisition of subsidiaries, and may experience volatility in response to changes in the external market; hence, it is important to assess the impairment of its long-term non-financial assets (including goodwill). The impairment assessment includes identifying cash-generating units, determining a valuation model, determining significant assumptions, and computing recoverable amounts. With the complexity of the impairment assessment process and the involvement of significant management judgment regarding assumptions used, this is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding and testing the Company’s controls surrounding the impairment assessment and testing process; assessing whether there are impairment indications for the identified cash-generating units of the Company and its related assets;

- 14 -

understanding and assessing the appropriateness of the valuation model used by the management in the impairment assessment and the significant assumptions used to determine related assets’ future cash flows projection, useful lives, and weighted-average cost of capital; retrospectively reviewing the accuracy of assumptions used in prior-period estimates and performing a sensitivity analysis of key assumptions and results; in addition to the above audit procedures, appointing specialists to evaluate the appropriateness of the weighted-average cost of capital used and related assumptions; performing an inquiry of the management and identifying any event after the balance sheet date if able to affect the results of the impairment assessment; and assessing the adequacy of the Company’s disclosures of its policy on impairment of noncurrent non-financial assets and other related disclosures.

Recognition of deferred tax assets

Refer to Note 4(20) “Income taxes”, Note 5(5) “Critical accounting judgments and key sources of estimation and assumption uncertainty”, and Note 6(24) “Income taxes” to the parent-company-only financial statements.


The recognition of deferred tax assets for the related unused tax losses, unused tax credits, and deductible temporary differences is based on management estimates of its future available taxable profits and the probability that the related deferred tax assets will be realized. This is one of the key areas our audit focused on.


In relation to the key audit matter above, our principal audit procedures included understanding and testing the controls surrounding the Company’s assessment process for recognition of deferred tax assets; understanding the Company’s significant operating entities for which deferred tax assets are recognized and assessing the management estimates for assumptions used in the future cash flow projection and future taxable profits calculation; retrospectively reviewing the accuracy of assumptions used in prior-period estimates of future cash flow projection and assessing whether there are any other matters that will affect the recognition of deferred tax assets; and assessing the adequacy of the Company’s disclosures regarding its deferred tax asset recognition policy and other related disclosures.

Revenue recognition

Refer to Note 4(18) “Revenue recognition”, and Note 6(18) “Revenue” to the parent-company-only financial statements.


Revenue is recognized when the risks and rewards specified in each individual contract with customers are transferred. The Company recognizes revenue depending on the various sales terms in each individual contract with customers to ensure the significant risks and rewards of ownership have been transferred. In addition, the Company operates in an industry in which sales revenue is easily influenced by various external factors such as supply and demand of the market, and this may impact the recognition of revenue. Consequently, this is one of the key areas our audit focused on.

- 15 -


In relation to the key audit matter above, our principal audit procedures included testing the Company’s controls surrounding revenue recognition; assessing whether appropriate revenue recognition policies are applied through comparison with accounting standards and understanding the Company’s main revenue types, its related sales agreements, and sales terms; on a sample basis, inspecting contracts with customers or customers’ orders and assessing whether the accounting treatment of the related contracts (including sales terms) is applied appropriately; performing a test of details of sales revenue and understanding the rationale for any identified significant sales fluctuations and any significant reversals of revenue through sales discounts and sales returns which incurred within a certain period before or after the balance sheet date; and assessing the adequacy of the Company’s disclosures of its revenue recognition policy and other related disclosures.

Responsibilities of Management and Those Charged with Governance for the Parent-Company-Only Financial Statements

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

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

Those charged with governance (inclusive of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Parent-Company-Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent-company-only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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 parent-company-only financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercised professional judgment and maintained professional skepticism throughout the audit. We also:

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

2. Obtained 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 Company’s internal control.

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

4. Concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related

- 16 -

disclosures in the parent-company-only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

6. Obtained sufficient appropriate audit evidence regarding the financial information of equity-accounted investees to express an opinion on the parent-company-only financial statements. We are responsible for the direction, supervision and performance of the group audit.

We communicated 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 identified during our audit.

We also provided those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicated 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 determined those matters that were of most significance in the audit of the parent-company-only financial statements of the current period and are therefore the key audit matters. We describe these matters in our 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.

KPMG Yu, Wan Yuan Hsinchu, Taiwan (Republic of China) CPA of Republic of China February 13, 2017 KPMG Tseng, Mei Yu Hsinchu, Taiwan (Republic of China) CPA of Republic of China February 13, 2017

Note:

The auditors’ report and the accompanying parent-company-only financial statements were an

English translation of the original Chinese version prepared and used in the Republic of China. If

there is any conflict between the English version and the original Chinese version or any difference

in the interpretation of the two versions, the Chinese-language auditors’ report and parent-company-

only financial statements shall prevail.

- 17 -

- 18 -


AU OPTRONICS CORP.

Statements of Comprehensive Income

For the years ended December 31, 2016 and 2015 (Expressed in thousands of New Taiwan dollars, except for earnings per share)

2016 2015

Amount % Amount %

4110 Revenue $ 301,417,018 100 336,793,412 101 4190 Less: sales return and discount 688,338 - 2,913,587 1 Net revenue 300,728,680 100 333,879,825 100 5000 Cost of sales 272,658,594 91 300,174,791 90 Gross profit 28,070,086 9 33,705,034 10 Operating expenses: 6100 Selling and distribution expenses 2,977,151 1 3,151,773 1 6200 General and administrative expenses 4,205,932 1 4,772,773 1 6300 Research and development expenses 8,348,310 3 8,149,223 2 Total operating expenses 15,531,393 5 16,073,769 4 Profit from operations 12,538,693 4 17,631,265 6 Non-operating income and expenses: 7010 Other income 780,267 - 718,207 - 7020 Other gains and losses (443,247) - (4,281,009) (1) 7050 Finance costs (1,978,148) (1) (1,949,294) (1) 7070 Share of profit of equity-accounted investees (492,968) - (5,052,481) (2) Total non-operating income and expenses (2,134,096) (1) (10,564,577) (4) 7900 Profit before income tax 10,404,597 3 7,066,688 2 7950 Less: income tax expense 2,585,659 1 2,134,728 1 8200 Profit for the year 7,818,938 2 4,931,960 1 Other comprehensive income: 8310 Items that will never be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations (225,194) - (247,015) - 8330 Equity-accounted investees – share of other

comprehensive income (loss) 672 - (11,089) - 8349 Related tax 38,283 - 25,299 - (186,239) - (232,805) - 8360 Items that are or may be reclassified subsequently to

profit or loss 8361 Foreign operations – foreign currency translation

differences (1,427,407) - 2,819,164 - 8362 Net change in fair value of available-for-sale

financial assets 764,090 - (503,181) - 8363 Effective portion of changes in fair value of cash

flow hedges 7,199 - (3,646) - 8380 Equity-accounted investees – share of other

comprehensive loss (4,581,922) (1) (2,110,711) - 8399 Related tax 931,901 - (61,831) - (4,306,139) (1) 139,795 - 8300 Other comprehensive loss, net of tax (4,492,378) (1) (93,010) - 8500 Total comprehensive income for the year $ 3,326,560 1 4,838,950 1 Earnings per share

9750 Basic earnings per share $ 0.81 0.51

9850 Diluted earnings per share $ 0.80 0.46

- 19 -

- 20 -


AU OPTRONICS CORP.

Statements of Cash Flows

For the years ended December 31, 2016 and 2015 (Expressed in thousands of New Taiwan dollars)

2016 2015 Cash flows from operating activities:

Profit before income tax $ 10,404,597 7,066,688 Adjustments for:

Depreciation 27,525,078 33,468,799 Amortization 1,159,465 892,567 Interest expense 1,978,148 1,949,294 Interest income (43,570) (151,322) Dividend income (102,500) (111,818) Share of profit of equity-accounted investees 492,968 5,052,481 Losses (gains) on disposals of property, plant and equipment, net 16,931 (346,889) Losses on disposals of investments, net 36,100 81,959 Losses on purchase of convertible bonds payable - 87,984 Effect of exchange rates on purchase and redemption of convertible bonds payable - 576,167 Changes in fair values of financial instruments 374,854 78,733 Unrealized foreign currency exchange losses (gains) (1,136,070) 107,556 Others 34,047 741

Subtotal of income and expense items not affecting cash flows 30,335,451 41,686,252 Change in operating assets and liabilities: - accounts receivable (12,957,936) 21,850,861 - receivables from related parties (616,371) 1,558,830 - inventories 3,239,898 2,327,346 - other current assets (2,252,449) (135,634) - accounts payable 927,778 (526,225) - payables to related parties (2,976,357) (10,250,217) - net defined benefit liability (84,135) (84,313) - provisions (3,126,982) (3,818,541) - other current liabilities (2,660,963) (212,676) Subtotal of net changes in operating assets and liabilities (20,507,517) 10,709,431 Subtotal of adjustment items 9,827,934 52,395,683

Cash generated from operations 20,232,531 59,462,371 Cash received from interest income 42,855 152,870 Cash received from dividend income 718,949 795,284 Cash paid for interest (1,832,035) (1,846,470) Cash paid for income taxes (708,037) (7,326)

Net cash provided by operating activities 18,454,263 58,556,729 Cash flows from investing activities:

Proceeds from disposals of financial assets carried at cost - 35,726 Acquisitions of equity-accounted investees (218,300) (28,042,190) Proceeds from disposals of equity-accounted investees 11,750 - Proceeds from return of capital by equity-accounted investees - 3,300,000 Acquisitions of property, plant and equipment (16,565,254) (23,910,247) Proceeds from disposals of property, plant and equipment 12,667 908,001 Decrease (increase) in refundable deposits 5,023 (2,683) Increase in intangible assets (187,020) (303,282) Decrease in other financial assets 8,555 3,033 Net cash inflows resulting from acquisitions of subsidiaries 1,338,384 -

Net cash used in investing activities (15,594,195) (48,011,642) Cash flows from financing activities:

Increase (decrease) in short-term borrowings (1,500,000) 1,500,000 Purchase of convertible bonds payable - (14,799,715) Redemption of convertible bonds payable - (563,999) Proceeds from long-term borrowings 36,670,000 27,541,250 Repayments of long-term borrowings (38,408,791) (31,325,414) Increase in guarantee deposits 9,825 95,763 Cash dividends (3,368,486) (4,812,123)

Net cash used in financing activities (6,597,452) (22,364,238) Effect of exchange rate change on cash and cash equivalents 55,184 (25,863) Net decrease in cash and cash equivalents (3,682,200) (11,845,014) Cash and cash equivalents at January 1 42,089,471 53,934,485 Cash and cash equivalents at December 31 $ 38,407,271 42,089,471

- 21 -


Independent Auditors’ Report To the Board of Directors of AU Optronics Corp.: Opinion

We have audited the consolidated financial statements of AU Optronics Corp. and its subsidiaries (“the Company”), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, the consolidated statement of comprehensive income, consolidated statement of changes in equity, and consolidated statement 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 Company as of December 31, 2016 and 2015, and its consolidated financial performance and its consolidated cash flows for each of the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards, International Accounting Standards, interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We 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 Company 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 for our opinion.

Key Audit Matters

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

Impairment of long-term non-financial assets (including goodwill)

Refer to Note 4(17) “Impairment – non-financial assets”, Note 5(2) and Note 5(3) “Critical accounting judgments and key sources of estimation and assumption uncertainty”, Note 6(8) “Property, plant and equipment”, and Note 6(10) “Intangible assets” to the consolidated financial statements.


The Company operates in an industry with high investment costs, has goodwill through the acquisition of subsidiaries, and may experience volatility in response to changes in the external market; hence, it is important to assess the impairment of its long-term non-financial assets (including goodwill). The impairment assessment includes identifying cash-generating units, determining a valuation model, determining significant assumptions, and computing recoverable amounts. With the complexity of the impairment assessment process and the involvement of significant management judgment regarding assumptions used, this is one of the key areas our audit focused on.


In relation to the key audit matter above, our principal audit procedures included understanding and testing the Company’s controls surrounding the impairment assessment and testing process; assessing whether there are impairment indications for the identified cash-generating units of the Company and its related assets;

- 22 -

understanding and assessing the appropriateness of the valuation model used by the management in the impairment assessment and the significant assumptions used to determine related assets’ future cash flows projection, useful lives, and weighted-average cost of capital; retrospectively reviewing the accuracy of assumptions used in prior-period estimates and performing a sensitivity analysis of key assumptions and results; in addition to the above audit procedures, appointing specialists to evaluate the appropriateness of the weighted-average cost of capital used and related assumptions; performing an inquiry of the management and identifying any event after the balance sheet date if able to affect the results of the impairment assessment; and assessing the adequacy of the Company’s disclosures of its policy on impairment of noncurrent non-financial assets and other related disclosures.

Recognition of deferred tax assets

Refer to Note 4(22) “Income taxes”, Note 5(5) “Critical accounting judgments and key sources of estimation and assumption uncertainty”, and Note 6(26) “Income taxes” to the consolidated financial statements.


The recognition of deferred tax assets for the related unused tax losses, unused tax credits, and deductible temporary differences arising from operating entities located in other areas is based on management estimates of its future available taxable profits and the probability that the related deferred tax assets will be realized. This is one of the key areas our audit focused on.


In relation to the key audit matter above, our principal audit procedures included understanding and testing the controls surrounding the Company’s assessment process for recognition of deferred tax assets; understanding the Company’s significant operating entities for which deferred tax assets are recognized and assessing the management estimates for assumptions used in the future cash flow projection and future taxable profits calculation; retrospectively reviewing the accuracy of assumptions used in prior-period estimates of future cash flow projection and assessing whether there are any other matters that will affect the recognition of deferred tax assets; and assessing the adequacy of the Company’s disclosures regarding its deferred tax asset recognition policy and other related disclosures.

Revenue recognition

Refer to Note 4(19) “Revenue recognition”, and Note 6(20) “Revenue” to the consolidated financial statements.


Revenue is recognized when the risks and rewards specified in each individual contract with customers are transferred. The Company recognizes revenue depending on the various sales terms in each individual contract with customers to ensure the significant risks and rewards of ownership have been transferred. In addition, the Company operates in an industry in which sales revenue is easily influenced by various external factors such as supply and demand of the market, and this may impact the recognition of revenue. Consequently, this is one of the key areas our audit focused on.

- 23 -


In relation to the key audit matter above, our principal audit procedures included testing the Company’s controls surrounding revenue recognition; assessing whether appropriate revenue recognition policies are applied through comparison with accounting standards and understanding the Company’s main revenue types, its related sales agreements, and sales terms; on a sample basis, inspecting contracts with customers or customers’ orders and assessing whether the accounting treatment of the related contracts (including sales terms) is applied appropriately; performing a test of details of sales revenue and understanding the rationale for any identified significant sales fluctuations and any significant reversals of revenue through sales discounts and sales returns which incurred within a certain period before or after the balance sheet date; and assessing the adequacy of the Company’s disclosures of its revenue recognition policy and other related disclosures.

Other Matters

AU Optronics Corp. has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2016 and 2015, on which we have issued an unmodified opinion.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, 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 Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern, and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (inclusive of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue 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 exercised professional judgment and maintained professional skepticism throughout the audit. We also:

1. Identified and assessed 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. Obtained 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 Company’s internal control.

3. Evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates

- 24 -

and related disclosures made by management.

4. Concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our 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 Company to cease to continue as a going concern.

5. Evaluated 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. Obtained sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit.

We communicated 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 identified during our audit.

We also provided those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicated 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 determined those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our 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.

KPMG Yu, Wan Yuan Hsinchu, Taiwan (Republic of China) CPA of Republic of China February 13, 2017 KPMG Tseng, Mei Yu Hsinchu, Taiwan (Republic of China) CPA of Republic of China February 13, 2017

Note:

The auditors’ report and the accompanying consolidated financial statements were an English

translation of the original Chinese version prepared and used in the Republic of China. If there is

any conflict between the English version and the original Chinese version or any difference in the

interpretation of the two versions, the Chinese-language auditors’ report and consolidated financial

statements shall prevail.

- 25 -

- 26 -

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2016 and 2015 (Expressed in thousands of New Taiwan dollars, except for earnings per share)

2016 2015

Amount % Amount %

4110 Revenue $ 329,931,849 100 363,484,151 101 4190 Less: sales return and discount 842,813 - 3,137,657 1 Net revenue 329,089,036 100 360,346,494 100 5000 Cost of sales 294,598,017 90 320,509,439 89 Gross profit 34,491,019 10 39,837,055 11 Operating expenses: 6100 Selling and distribution expenses 3,895,089 1 4,206,101 1 6200 General and administrative expenses 9,176,683 3 9,205,987 3 6300 Research and development expenses 9,080,791 3 8,903,819 2 Total operating expenses 22,152,563 7 22,315,907 6 Profit from operations 12,338,456 3 17,521,148 5 Non-operating income and expenses: 7010 Other income 2,380,228 1 2,197,593 1 7020 Other gains and losses (925,673) - (9,978,320) (3) 7050 Finance costs (2,707,887) (1) (2,591,023) (1) 7060 Share of profit of equity-accounted investees 100,778 - 449,452 - Total non-operating income and expenses (1,152,554) - (9,922,298) (3) 7900 Profit before income tax 11,185,902 3 7,598,850 2 7950 Less: income tax expense 4,579,191 1 2,755,968 1 8200 Profit for the year 6,606,711 2 4,842,882 1 Other comprehensive income: 8310 Items that will never be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations (225,194) - (251,401) - 8320 Equity-accounted investees – share of other

comprehensive income (loss) 574 - (2,381) - 8349 Related tax 38,283 - 25,980 - (186,337) - (227,802) - 8360 Items that are or may be reclassified subsequently to

profit or loss 8361 Foreign operations – foreign currency translation

differences (7,500,071) (2) (294,749) - 8362 Net change in fair value of available-for-sale

financial assets 766,534 - (521,173) - 8363 Effective portion of changes in fair value of cash

flow hedges 7,199 - (3,646) - 8370 Equity-accounted investees – share of other

comprehensive income (loss) (609,071) - 324,928 - 8399 Related tax 1,162,102 - (45,783) - (6,173,307) (2) (540,423) - 8300 Other comprehensive loss, net of tax (6,359,644) (2) (768,225) - 8500 Total comprehensive income for the year $ 247,067 - 4,074,657 1 Profit (loss) attributable to: 8610 Shareholders of AU Optronics Corp. $ 7,818,938 2 4,931,960 1 8620 Non-controlling interests (1,212,227) - (89,078) -

$ 6,606,711 2 4,842,882 1 Total comprehensive income (loss) attributable to: 8710 Shareholders of AU Optronics Corp. $ 3,326,560 1 4,838,950 1 8720 Non-controlling interests (3,079,493) (1) (764,293) -

$ 247,067 - 4,074,657 1 Earnings per share

9750 Basic earnings per share $ 0.81 0.51

9850 Diluted earnings per share $ 0.80 0.46

- 28 -

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2016 and 2015 (Expressed in thousands of New Taiwan dollars)

2016 2015 Cash flows from operating activities:

Profit before income tax $ 11,185,902 7,598,850 Adjustments for:

Depreciation 38,533,775 46,851,487 Amortization 1,159,465 894,362 Interest expense 2,707,887 2,591,023 Interest income (494,542) (672,638) Dividend income (107,141) (112,661) Share of profit of equity-accounted investees (100,778) (449,452) Gains on disposals of property, plant and equipment, net (24,278) (585,196) Losses on disposals of investments and financial assets, net 333,858 10,618 Impairment losses on assets 34,733 7,026,226 Losses on purchase of convertible bonds payable - 87,984 Effect of exchange rates on purchase and redemption of convertible bonds payable - 576,167 Changes in fair values of financial instruments 491,860 240,002 Unrealized foreign currency exchange losses (gains) (1,386,370) 107,556 Others (37,295) 10,671

Subtotal of income and expense items not affecting cash flows 41,111,174 56,576,149 Change in operating assets and liabilities: - notes and accounts receivable (13,023,581) 22,073,800 - receivables from related parties (47,075) 1,150,032 - inventories 3,785,921 4,162,665 - other current assets 7,312,751 (7,567,250) - notes and accounts payable (601,488) (10,266,543) - payables to related parties (504,779) (2,165,658) - net defined benefit liability (57,382) (86,866) - provisions (3,125,053) (4,012,891) - other current liabilities (4,454,647) (2,967,282) Subtotal of net changes in operating assets and liabilities (10,715,333) 320,007 Subtotal of adjustment items 30,395,841 56,896,156

Cash generated from operations 41,581,743 64,495,006 Cash received from interest income 501,076 595,475 Cash received from dividend income 311,492 380,589 Cash paid for interest (2,105,285) (2,474,887) Cash paid for income taxes (3,593,180) (992,795)

Net cash provided by operating activities 36,695,846 62,003,388 Cash flows from investing activities:

Acquisitions of financial assets carried at cost (66,948) (33,593) Proceeds from disposals of financial assets carried at cost - 99,517 Proceeds from disposals of available-for-sale financial assets 9,917 - Proceeds from return of capital by available-for-sale financial assets - 1,497 Acquisitions of equity-accounted investees (240,500) (51,700) Proceeds from disposals of equity-accounted investees 3,522,610 - Net cash inflows resulting from disposals of subsidiaries 179,262 - Acquisitions of property, plant and equipment (46,220,129) (33,440,160) Proceeds from disposals of property, plant and equipment 789,682 1,762,401 Decrease (increase) in refundable deposits (16,955) 3,341 Increase in intangible assets (187,020) (303,282) Decrease (increase) in other financial assets (37,246) 227,320

Net cash used in investing activities (42,267,327) (31,734,659) Cash flows from financing activities:

Increase (decrease) in short-term borrowings (1,065,842) 1,212,392 Purchase of convertible bonds payable - (14,799,715) Redemption of convertible bonds payable - (563,999) Proceeds from long-term borrowings 61,799,594 30,633,963 Repayments of long-term borrowings (45,650,997) (50,849,749) Increase (decrease) in guarantee deposits (30,944) 156,994 Cash dividends (3,368,486) (4,812,123) Net change of non-controlling interests and others (962,106) 4,745,245

Net cash provided by (used in) financing activities 10,721,219 (34,276,992) Effect of exchange rate change on cash and cash equivalents (3,839,190) 923,630 Net increase (decrease) in cash and cash equivalents 1,310,548 (3,084,633) Cash and cash equivalents at January 1 78,880,700 81,965,333 Cash and cash equivalents at December 31 $ 80,191,248 78,880,700

- 29 -

Attachment Attachment Attachment Attachment 5555: : : :

2020202011116666 Earnings Distribution Earnings Distribution Earnings Distribution Earnings Distribution ProposalProposalProposalProposal

Amount in NT$

ItemsItemsItemsItems AmountAmountAmountAmount

NeNeNeNet income of 20t income of 20t income of 20t income of 2011116666 7,818,938,5207,818,938,5207,818,938,5207,818,938,520

Less:

Adjustments arising from investments in equity-accounted

investees in 2016 428,337,819

Change in remeasurement of defined benefit plan in 2016 186,239,539 10% provisioned as legal reserve 781,893,852

RetainedRetainedRetainedRetained earn earn earn earnings ings ings ings in 2016 in 2016 in 2016 in 2016 available for distributionavailable for distributionavailable for distributionavailable for distribution 6,422,467,3106,422,467,3106,422,467,3106,422,467,310

Plus:

Unappropriated retained earnings from previous years 14,380,999,133 RRRRetained earnings etained earnings etained earnings etained earnings available for distributionavailable for distributionavailable for distributionavailable for distribution as of as of as of as of DecDecDecDecemberemberemberember 31, 201 31, 201 31, 201 31, 2016666 20,803,466,44320,803,466,44320,803,466,44320,803,466,443 Distribution item:

Cash dividends to common shareholders (NT$0.56 per common share, i.e., NT$560 for every 1,000 common shares)

5,389,577,264

Unappropriated retained earnings after earnings distributionUnappropriated retained earnings after earnings distributionUnappropriated retained earnings after earnings distributionUnappropriated retained earnings after earnings distribution 15,413,889,17915,413,889,17915,413,889,17915,413,889,179

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Comparison Table Comparison Table Comparison Table Comparison Table ofofofof the the the the Articles of IncoArticles of IncoArticles of IncoArticles of Incorporationrporationrporationrporation Before and After AmendmentBefore and After AmendmentBefore and After AmendmentBefore and After Amendment

Before amendment After amendment

Number of Article

Text of Article Number of Article

Text of Article Reason of

amendment

Article 2 The scope of business of the Company shall be as follows: 1. CC01080 Electronic parts and

components manufacturing business

2. F119010 Electronic material wholesale business (for operations outside the Science Park only)

3. CC01030 Electronic appliances and AV electronics products manufacturing business

4. CC01010 Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing

5. CC01090 Batteries Manufacturing

6. IG03010 Energy Technical Services

7. CA02990 Other Fabricated Metal Products Manufacturing

8. C801990 Other Chemical Materials Manufacturing

To research, develop, produce, manufacture and sell the following products: (1) Plasma display and related systems (2) Liquid crystal display and related

systems (3) Organic light emitting diodes and

related systems (4) Amorphous silicon photo sensor

device parts and components (5) Thin film photo diode sensor

device parts and components (6) Thin film transistor photo sensor

device parts and components (7) Touch imaging sensors (8) Full color active matrix flat panel

displays (9) Field emission displays (10) Single crystal liquid crystal displays (11) Original equipment manufacturing

for amorphous silicon thin film transistor process and flat panel display modules

Article 2 The scope of business of the Company shall be as follows: 1. CC01080 Electronic parts and

components manufacturing business

2. F119010 Electronic material wholesale business (for operations outside the Science Park only)

3. CC01030 Electronic appliances and AV electronics products manufacturing business

4. CC01010 Electric Power Supply, Electric Transmission and Power Distribution Machinery Manufacturing

5. CC01090 Batteries Manufacturing

6. IG03010 Energy Technical Services

7. CA02990 Other Fabricated Metal Products Manufacturing

8. C801990 Other Chemical Materials Manufacturing

To research, develop, produce, manufacture and sell the following products: (1) Plasma display and related systems (2) Liquid crystal display and related

systems (3) Organic light emitting diodes and

related systems (4) Amorphous silicon photo sensor

device parts and components (5) Thin film photo diode sensor

device parts and components (6) Thin film transistor photo sensor

device parts and components (7) Touch imaging sensors (8) Full color active matrix flat panel

displays (9) Field emission displays (10) Single crystal liquid crystal displays (11) Original equipment manufacturing

for amorphous silicon thin film transistor process and flat panel display modules

To clarify business items

- 31 -

(12) Original design manufacturing and original equipment manufacturing business for flat panel display modules

(13) Solar Cell, modules, and related system and service

(14) New green energy related system and service (for operations outside the Science Park only)

(15) The simultaneous operation of a trade business relating to the Company's business

(16) The simultaneous operation of metals, Refuse Derived Fuel and chemical products from the Company’s manufacturing recycle processes

The operation of the businesses listed above shall be conducted in accordance with the relevant laws and regulations.

(12) Original design manufacturing and original equipment manufacturing business for flat panel display modules

(13) Solar Cell, modules, and related system and service

(14) New green energy related system and service (for operations outside the Science Park only)

(15)Color Filters (15)(16)The simultaneous operation of

a trade business relating to the Company's business

(16)(17)The simultaneous operation of metals, Refuse Derived Fuel and chemical products from the Company’s manufacturing recycle processes

The operation of the businesses listed above shall be conducted in accordance with the relevant laws and regulations.

Article 15-1

Where the Company has a profit at the end of each fiscal year, the Company shall first allocate the profit to pay taxes and cover accumulated losses, and then 10% of the remaining net earnings shall be allocated as the Company's legal reserve unless and until the accumulated legal reserve reaches the paid in capital. Certain amount shall be further allocated as special reserve or the special reserve shall be reversed in accordance with applicable laws and regulations or as requested by the competent authority. The balance (if any) together with accumulated unappropriated retained earnings can be distributed after the distribution plan proposed by the Board and approved by the shareholders’ meeting. The Company's dividend policy is to pay dividends from surplus considering factors such as the Company's current and future investment environment, cash requirements, domestic and overseas competitive conditions and capital budget requirements, and taking into account the shareholders' interest, maintenance of a balanced dividend and the Company's long term financial plan. The cash portion of the dividend shall not be less than 10% of the total dividend in the form of cash and stock.

Article 15-1

Where the Company has a profit at the end of each fiscal year, the Company shall first allocate the profit to pay taxes and cover accumulated losses, and then 10% of the remaining net earnings shall be allocated as the Company's legal reserve unless and until the accumulated legal reserve reaches the paid in capital. Certain amount shall be further allocated as special reserve or the special reserve shall be reversed in accordance with applicable laws and regulations or as requested by the competent authority. The balance (if any) together with accumulated unappropriated retained earnings can be distributed after the distribution plan proposed by the Board and approved by the shareholders’ meeting. The Company's dividend policy is to pay dividends from surplus considering factors such as the Company's current and future investment environment, cash requirements, domestic and overseas competitive conditions and capital budget requirements, and taking into account the shareholders' interest, maintenance of a balanced dividend and the Company's long term financial plan. If the retained earnings available for distribution of the current year reaches 2% of the paid in capital of the Company, no less than 20% of the retained earnings available for distribution of the current year shall be distributed as dividend. If the retained

To clarify the Company’s dividend policy

- 32 -

earnings available for distribution of the current year does not reach 2% of the paid in capital of the Company, the Company may distribute no dividend. The cash portion of the dividend shall not be less than 10% of the total dividend in the form of cash and stock. The dividend distribution ratio in the preceding paragraph could be adjusted by the shareholders’ meeting taking into consideration finance, business and operations, etc.

Article 17 These Articles of Incorporation were enacted by the incorporators in the incorporators meeting held on July 18, 1996 and were effectively approved by the competent authority. The first amendment was made on September 18, 1996. …. The nineteenth amendment was made on June 16, 2016.

Article 17 These Articles of Incorporation were enacted by the incorporators in the incorporators meeting held on July 18, 1996 and were effectively approved by the competent authority. The first amendment was made on September 18, 1996. …. The nineteenth amendment was made on June 16, 2016. The twentieth amendment was made on June 15, 2017.

To add the amendment date

- 33 -


Comparison Table Comparison Table Comparison Table Comparison Table ofofofof the the the the Handling ProcedureHandling ProcedureHandling ProcedureHandling Procedures for Acquisition or Disposs for Acquisition or Disposs for Acquisition or Disposs for Acquisition or Disposalalalal of Assets of Assets of Assets of Assets Before and After AmendmentBefore and After AmendmentBefore and After AmendmentBefore and After Amendment

Before amendment After amendment

Number of Article

Text of Article Number of Article

Text of Article Reason of

amendment

Article 4 Information Disclosure (1) If the Company or the Company’s

subsidiary acquires or disposes of the following assets, the Company shall make a public announcement and file the necessary report(s) in the format prescribed by the FSC within two days from occurrence of the relevant event:

(i) acquisition or disposal of real property from any related party or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20% or more of the Company’s paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except for trading in government bonds, bond trading with repurchase and/or reverse purchase arrangement, or subscription or repurchase of domestic money market funds;

(ii)conducting merger, spin-off, acquisition or share transfer;

(iii) except for any of those referred to in the preceding two subparagraphs or investing in Mainland China, where an asset transaction, the cumulative transaction amount of acquisitions or disposals, of the same type of underlying asset, with the same trading counterparty within one year, the accumulative transaction amount of real property acquisitions or disposals within the same development within one year, or the accumulative transaction amount of acquisitions or

Article 4 Information Disclosure (1) If the Company or the Company’s

subsidiary acquires or disposes of the following assets, the Company shall make a public announcement and file the necessary report(s) in the format prescribed by the FSC within two days from occurrence of the relevant event:

(i) acquisition or disposal of real property from any related party or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20% or more of the Company’s paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except for trading in government bonds, bond trading with repurchase and/or reverse purchase arrangement, or subscription or repurchase redemption of domestic money market funds issued by domestic securities investment trust enterprises;

(ii)conducting merger, spin-off, acquisition or share transfer;

(iii) the acquired and/or disposed assets are equipments which are for business use and the transaction counterparties are not related parties, and the transaction amounts reach any of the following,

(a) NT$500 million or more if the Company’s paid-in capital does not reach NT$10 billion,

(b) NT$1 billion or more if the Company’s paid-in capital reaches NT$10 billion or more.

(iv) the real property was acquired by ways of mandating others to

To comply with the amendments to the Regulations Governing the Acquisition and Disposal of Assets by Public Companies

- 34 -

disposals of the same security within one year reaches 20 % or more of the Company’s paid-in capital or NT$300 million or more; provided, this shall not apply to the following circumstances:

(a) trading in government bonds;

(b) bond trading with repurchase and/or reverse purchase arrangement, or subscription or repurchase of domestic money market funds;

(c) the acquired and/or disposed assets are equipments which are for business use, the transaction counterparties are not related parties, and the transaction amount is less than NT$500 million; and

(d) the real property was acquired by ways of mandating others to build on the Company’s own land, or mandating others to build on the rented land, joint construction with others to share the buildings, joint construction with others to acquire certain proportion of ownership of the buildings, or joint construction with others to separately sell the buildings, and the proposed investment amount to be contributed by the Company is less than NT$500 million.

(2) If any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the relevant rules, a public report of relevant information shall be made on the information reporting website designated by FSC within two days commencing from the day of occurrence of the fact:

(i) change, termination, or rescission of the contract

build on the Company’s own land, or mandating others to build on the rented land, joint construction with others to share the buildings, joint construction with others to acquire certain proportion of ownership of the buildings, or joint construction with others to separately sell the buildings, and the proposed investment amount to be contributed by the Company reaches NT$500 million or more.

(v)(iii) except for any of those referred to in the preceding two four subparagraphs or investing in Mainland China, where an asset transaction, the cumulative transaction amount of acquisitions or disposals, of the same type of underlying asset, with the same trading counterparty within one year, the accumulative transaction amount of real property acquisitions or disposals within the same development within one year, or the accumulative transaction the transaction amount of acquisitions or disposals of the same security within one year reaches 20 % or more of the Company’s paid-in capital or NT$300 million or more; provided, this shall not apply to the following circumstances:

(a) trading in government bonds;

(b) bond trading with repurchase and/or reverse purchase arrangement, or subscription or repurchase redemption of domestic money market funds issued by domestic securities investment trust enterprises.

(c) the acquired and/or disposed assets are equipments which are for business use, the transaction counterparties are not related parties, and the transaction amount is less than NT$500 million;

- 35 -

signed in regard to the original transaction; and

(ii) the merger, demerger, acquisition, or transfer of shares is not completed by scheduled date set forth in the contract; or

(iii) change of the originally publicly announced and reported information.

(3) Within one year as used in paragraph (1)(iii) refers to the year preceding the base date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not to be entered.

(4) The term "the date of occurrence of the relevant event" as used in the Handling Procedures, shall mean the earliest of contract execution date, the payment date, the consignment date, the transfer date, the date of resolution adopted by the board of directors and other date which can confirm the counterparty and the transaction amount, provided that if the relevant investment is subject to the competent authority’s approval, it shall mean the earlier of the respective above-mentioned date or the date of receiving the approval letter from the competent authority.

(5) If there is any mistake or omission in the required announced/reported items and the correction is required, the Company shall make public announcement and file necessary report(s) of all required items again.

and (d) the real property was

acquired by ways of mandating others to build on the Company’s own land, or mandating others to build on the rented land, joint construction with others to share the buildings, joint construction with others to acquire certain proportion of ownership of the buildings, or joint construction with others to separately sell the buildings, and the proposed investment amount to be contributed by the Company is less than NT$500 million.

(2) The transaction amounts in the preceding paragraph shall be calculated as follows, (i) the amount of any individual

transaction (ii)the cumulative transaction

amount of acquisitions or disposals, of the same type of underlying asset with the same trading counterparty within one year

(iii)the cumulative transaction amount of real property acquisitions or disposals (acquisitions and disposals are accumulated separately) within the same development plan within one year

(iv)the cumulative transaction amount of acquisitions or disposals (acquisitions and disposals are accumulated separately) of the same securities within one year

(2)(3) If any of the following

circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the relevant rules, a public report of relevant information shall be made on the information reporting website designated by FSC within two days commencing from the day of occurrence of the fact:

- 36 -

(i) change, termination, or rescission of the contract signed in regard to the original transaction; and

(ii) the merger, demerger, acquisition, or transfer of shares is not completed by scheduled date set forth in the contract; or

(iii) change of the originally publicly announced and reported information.

(3)(4) Within one year as used in paragraph (1)(iii) (2) refers to the year preceding the base date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not to be entered.

(4)(5) The term "the date of occurrence of the relevant event" as used in the Handling Procedures, shall mean the earliest of contract execution date, the payment date, the consignment date, the transfer date, the date of resolution adopted by the board of directors and other date which can confirm the counterparty and the transaction amount, provided that if the relevant investment is subject to the competent authority’s approval, it shall mean the earlier of the respective above-mentioned date or the date of receiving the approval letter from the competent authority.

(5)(6) If there is any mistake or omission in the required announced/reported items and the correction is required, the Company shall make public announcement and file necessary report(s) of all required items again within two days commencing from the day when the Company knows such mistake or omission.

Article 5 Evaluation Procedures

(1) Except for the assets which are dealing with a government institution or by ways of mandating others to build on the

Article 5 Evaluation Procedures (1) Except for the assets which are

dealing with a government institution authority or by ways of mandating others to build on

To comply with the amendments to the Regulations

- 37 -

Company’s own land or on the land rented by the Company or equipments which are to be acquired for business use, any acquisition or disposal of real property or equipment the transaction amount of which reaches 20% of the Company’s paid-in capital or NT$300,000,000 or more, shall be subject to obtaining the evaluation report issued by the professional appraisers prior to occurrence of the event and compliance with the following provisions:

(omitted) (3) If the transaction amount of any

acquisition or disposal of the certificate of membership or intangible asset reaches 20% of the Company’s paid-in capital or NT$300,000,000 or more, except for the assets which are dealing with a government institution, a certificated public accountant shall be retained to issue a fairness opinion on the transaction price prior to occurrence of the event. The certificated public accountant shall issue such fairness opinion in accordance with the Statements of Auditing Standards No. 20 issued by Accounting Research and Development Foundation of the Republic of China.

(omitted)

the Company’s own land or on the land rented by the Company or equipments which are to be acquired for business use, any acquisition or disposal of real property or equipment the transaction amount of which reaches 20% of the Company’s paid-in capital or NT$300,000,000 or more, shall be subject to obtaining the evaluation report issued by the professional appraisers prior to occurrence of the event and compliance with the following provisions:

(omitted) (3) If the transaction amount of any

acquisition or disposal of the certificate of membership or intangible asset reaches 20% of the Company’s paid-in capital or NT$300,000,000 or more, except for the assets which are dealing with a government institution authority, a certificated public accountant shall be retained to issue a fairness opinion on the transaction price prior to occurrence of the event. The certificated public accountant shall issue such fairness opinion in accordance with the Statements of Auditing Standards No. 20 issued by Accounting Research and Development Foundation of the Republic of China.

(omitted)

Governing the Acquisition and Disposal of Assets by Public Companies

Article 6 Related Party Transactions (omitted) (2) When the Company intends to

acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20% or more of the Company’s paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except for trading in government bonds, bond trading with repurchase

Article 6 Related Party Transactions (omitted) (2) When the Company intends to

acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20% or more of the Company’s paid-in capital, 10% or more of the Company's total assets, or NT$300 million or more, except for trading in government bonds, bond trading with repurchase


- 38 -

and/or reverse purchase arrangement, or subscription or repurchase of domestic money market funds, the Company may not proceed to enter into a transaction contract and make a payment until the following matters have been approved by the audit committee and the board of directors:

(omitted)

and/or reverse purchase arrangement, or subscription or repurchase redemption of domestic money market funds issued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract and make a payment until the following matters have been approved by the audit committee and the board of directors:

(omitted) Article 8 Merger, Spin-off, Acquisition, and

Share Transfer (1) The Company shall retain a

certified public accountant, lawyer or underwriter to issue the fairness opinion on share swap ratio, acquisition price or the amount of cash or other property distributed to shareholders prior to convening the relevant board of directors meeting to discuss the subject merger, spin-off, acquisition, or share transfer. Such fairness opinion should be submitted to the board of directors for discussion and approval.

(omitted)

Article 8 Merger, Spin-off, Acquisition, and Share Transfer (1) The Company shall retain a

certified public accountant, lawyer or underwriter to issue the fairness opinion on share swap ratio, acquisition price or the amount of cash or other property distributed to shareholders prior to convening the relevant board of directors meeting to discuss the subject merger, spin-off, acquisition, or share transfer. Such fairness opinion should be submitted to the board of directors for discussion and approval. It is not required to obtain the fairness opinion issued by the above-mentioned experts for mergers between the Company and its subsidiaries which are directly or indirectly 100% owned by the Company, or the mergers between the Company’s subsidiaries which are directly or indirectly 100% owned by the Company.

(omitted)


Article 14

The Handling Procedures were enacted on October 9, 1998; the first amendment was made on November 10, 1999; the second amendment was made on May 29, 2003; the third amendment was made on June 13, 2007, the fourth amendment was made on June 19, 2009, the fifth amendment was made on June 13, 2012, and the sixth amendment was made on June 6, 2014.

Article 14

The Handling Procedures were enacted on October 9, 1998; the first amendment was made on November 10, 1999; the second amendment was made on May 29, 2003; the third amendment was made on June 13, 2007, the fourth amendment was made on June 19, 2009, the fifth amendment was made on June 13, 2012, and the sixth amendment was made on June 6, 2014, and the seventh amendment was made on June 15, 2017.

To add the amendment date

- 39 -


AU Optronics Corp.AU Optronics Corp.AU Optronics Corp.AU Optronics Corp. Tentative Tentative Tentative Tentative Terms and Conditions Terms and Conditions Terms and Conditions Terms and Conditions for Issuance of for Issuance of for Issuance of for Issuance of Overseas or Overseas or Overseas or Overseas or

Domestic Domestic Domestic Domestic Convertible BondsConvertible BondsConvertible BondsConvertible Bonds in Private Placementin Private Placementin Private Placementin Private Placement

1.1.1.1. IssuerIssuerIssuerIssuer

AU Optronics Corp. (“Issuer” or “AUO”).

2.2.2.2. Issuance SizeIssuance SizeIssuance SizeIssuance Size

The Board of Directors (“Board”) is authorized, within the limit of 950,000,000 common shares, to issue new common shares for cash to sponsor issuance of the overseas depositary shares (“DRs”) and/or issue new common shares for cash in public offering and/or issue new common shares in private placement and/or issue overseas or domestic convertible bonds in private placement (“Private Placement CB”). For issuance of Private Placement CB, the number of common shares to be converted within the limit of 950,000,000 common shares shall be calculated in accordance with the conversion price determined at the time of issuance of Private Placement CB.

3.3.3.3. Issuance DateIssuance DateIssuance DateIssuance Date

The Private Placement CB will be issued within one year after the 2017 annual general shareholders’ meeting, provided that the Private Placement CB should be issued by the Company at one time.

4.4.4.4. IssuanceIssuanceIssuanceIssuance Method Method Method Method

The Private Placement CB will be issued in accordance with Article 43-6 of the Securities and Exchange Act and the regulations of the jurisdiction where the Private Placement CB is issued. The investors subscribing to the Private Placement CB must meet the qualifications listed in Article 43-6 of the Securities and Exchange Act and are limited to strategic investor(s). Priority will be given to the investor(s) who could benefit the Company's long term development, competitiveness, and existing shareholders' rights. The Board is fully authorized to determine the specific investor(s). The purpose, necessity and projected benefits for having strategic investor(s) are to accommodate the Company’s operation and development needs to have the strategic investor(s) to assist the Company, directly or indirectly, in its finance, business, manufacturing, technology, procurement, management, and strategy development, etc. so to strengthen the Company’s competitiveness and enhance its operational efficiency and long term development.

5.5.5.5. Form, Denomination and Issuance PriceForm, Denomination and Issuance PriceForm, Denomination and Issuance PriceForm, Denomination and Issuance Price

The Private Placement CB will be issued in registered form in denomination of US$10,000 or multiples thereof or NT$100,000 or multiples thereof and the issue price shall be no less than 80% of the theoretical price.

6.6.6.6. Coupon RateCoupon RateCoupon RateCoupon Rate

To be determined by the Board.

7.7.7.7. Term Term Term Term

The term of the Private Placement CB shall not be more than seven years.

- 40 -

8.8.8.8. RedemptionRedemptionRedemptionRedemption

Unless previously redeemed, converted, or purchased and cancelled, the Private Placement CB will be redeemed by the Issuer at the maturity date in cash at a price equal to the par value or the par value plus the interest.

9.9.9.9. Conversion SecuritiesConversion SecuritiesConversion SecuritiesConversion Securities

The Private Placement CB will be convertible into AUO’s common shares or the DRs representing AUO’s common shares.

10.10.10.10. ConversionConversionConversionConversion

(1) Conversion Period:

Unless previously redeemed, purchased, cancelled or converted, except during the closed period the holders are not permitted to convert under the Indenture, a holder of the Private Placement CB may request the Issuer to convert the Private Placement CB into AUO’s common shares or DRs at any time after a designated period of time following the issuance date of the Private Placement CB and until certain days prior to the maturity date in accordance with applicable rules and regulations and terms of the Indenture.

(2) Conversion Procedure:

To exercise the relevant conversion rights attached to the Private Placement CB, the holder thereof must deposit with the Issuer a notice of conversion together with the Private Placement CB and any other documents or certificates required by ROC laws.

(3) Conversion Price Determination:

The conversion price of the Private Placement CB shall be no less than 80% of (x) the simple average closing price of the Issuer’s common shares for 1, 3 or 5 trading days prior to the pricing date, after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends, or (y) the simple average closing price of the Issuer’s common shares for 30 trading days prior to the pricing date, after adjustment for shares issued as stock dividends, shares cancelled in connection with capital reduction and the cash dividends. It is proposed for the shareholders meeting to authorize the Board to determine the actual conversion price in accordance with applicable rules and regulations.

(4) Dividend Entitlement at Conversion

Prior to conversion of the Private Placement CB, holders are not entitled to receive any dividend distribution. Following the conversion of the Private Placement CB, the rights to receive dividend payments will be the same as the other common shareholders of the Issuer.

(5) Rights and Obligations after Conversion

Except that the Private Placement CB is subject to the selling restrictions within three years after the delivery date of the Private Placement CB under Article 43-8 of the Securities and Exchange Act, the new common shares to be issued upon conversion of Private Placement CB will have the same rights and obligations as the Company’s existing issued and outstanding common shares.

- 41 -

11.11.11.11. Early Redemption at the Option of the IssuerEarly Redemption at the Option of the IssuerEarly Redemption at the Option of the IssuerEarly Redemption at the Option of the Issuer

To be determined by the Board.

12.12.12.12. Holders’ Put OptionHolders’ Put OptionHolders’ Put OptionHolders’ Put Option

The Issuer may choose not to grant holders’ put option, or after expiry of a designated period following issuance of the Private Placement CB, holders may require the Issuer to redeem all or part of the Private Placement CB at a price that would result in certain annual yield on the Private Placement CB.

13.13.13.13. OthersOthersOthersOthers

The Board is authorized to determine and amend, at its sole discretion, the terms and conditions of the Private Placement CB and other matters which are not addressed herein.

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