U Ming Marine Transport : Corporate Governance Principles

U-Ming Marine Transportation Corporation

Corporate Governance Principles

Amended and approved by the board meeting on November 10, 2014

Chapter 1 General Provisions

Article 1

U-Ming Marine Transportation Corporation (hereinafter referred to as "this Corporation") has formulated these corporate governance principles to establish a sound corporate governance system in reference to the Corporate Governance Best Practice Principles for TWSE/GTSM Listed Companies jointly set forth by the Taiwan Stock Exchange Corporation (hereinafter referred to as the "Taiwan Stock Exchange") and GreTai Securities Market.

Article 2

The establishment of the corporate governance system shall be in compliance with the regulations set forth in relevant decrees and Articles of Incorporation and shall conform to the following principles:

1. Establishment of an effective corporate governance framework
2. Protection of shareholder rights and interests
3. Strengthening of the competency of the board of directors
4. Fulfillment of the functions of the supervisors
5. Respect for the rights and interests of shareholders
6. Enhancement of information transparency

Article 3

This Corporation has established an effective internal control system based on its overall operational activities and those of its subsidiaries in accordance with the Regulations Governing the Establishment of Internal Control Systems by Public Companies (hereinafter referred to as the "Regulations Governing the Establishment of Internal Control Systems"). This system shall be reviewed regularly to ensure the continued effectiveness of its design and implementation in response to changes of the internal and external environment.

The design or revision of the internal control system of this Corporation shall be ratified by resolution of the board.

This Corporation shall conduct independent assessmentsof the internal control system and the board of directors and the management level shall review the results of independent assessmentsperformed by all departments and the audit reports of auditing units at least on an annual basis. Supervisors shall monitor and supervise this process. Board directors and supervisors shall convene discussion meetings with internal auditing personnel to review shortcomings of the internal control system on an annual basis. Minutes of these meetings shall be recorded.

The management level of this Corporation shall pay special attention to the internal auditing units and their personnel, invest them with full authority, and urge them to conduct reliable audits, assess the shortcomings of the internal control system, and determine operational efficiency in order to ensure a continued and effective implementation of the system. This also facilitates the effective performance of duties by the board of directors and the management level and thereby the implementation of the corporate governance system.

This Corporation shall assign substitute staff for internal auditing personnel to ensure the

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implementation of the internal control system, strengthen the professional skills of substitute staff in order to enhance and maintain the quality and implementation effects of audits.

The qualifications of internal auditing personnel set forth in Article 11, Paragraph 3 of the "Regulations Governing the Establishment of Internal Control Systems" and the regulations prescribed in Article 16, 17, and 18 shall apply mutatis mutandis to substitute staff as defined in the preceding paragraph.

Chapter 2 Protection of shareholder rights and interests.

Section 1 Encourage shareholders to participate in corporate governance

Article 4

The protection of shareholder rights and interests represents the ultimate goal of the implementation of the corporate governance system. All shareholders shall be treated in a fair manner.

This Corporation shall establish a corporate governance system that safeguards basic shareholder rights including full knowledge and participation in the decision-making process with regard to important company matters.

Article 5

This Corporation shall convene shareholders' meetings in accordance with the Company Act and relevant decrees and formulate a comprehensive set of rules for such meetings. Resolutions of shareholders' meetings shall be implemented in a faithful manner in accordance with the rules for such meetings.

Resolutions of shareholders' meetings shall conform to relevant decrees and the regulations set forth in the Articles of Incorporation of this Corporation.

Article 6

The board of directors shall arrange the agenda and procedures for shareholders' meetings in an appropriate manner and grant reasonable discussion times for each issue on the agenda. Shareholders shall be given appropriate opportunities to make statements.

Shareholders' meetings convened by the board of directors shall be attended in person by a majority of the board directors.

Article 7

This Corporation shall encourage shareholders to participate in corporate governance and shareholders' meetings shall be convened based on the premises of legality, effectiveness, and safety. Attendance rates of shareholders' meetings shall be increased through different means and methods and full adoption of hi-techinformation disclosure methodsso as to guarantee the exercise of shareholders' rights at the shareholders' meetings in accordance with the law.

Motions submitted to shareholders' meetings shall be decided by vote on an item-by-item basis. Detailed results of approval, opposition, and abstention by shareholders shall be entered into the online information reporting system designated by the Taiwan Stock Exchange on the same day after conclusion of the shareholders' meeting.

Electronic voting shall be employed for shareholders' meetings and the submission of ad-hoc proposals and revision of original motions shall be avoided.

If souvenirs are handed out during shareholders' meetings, differential treatment or discrimination shall be prohibited.

Article 8

The date, location, name of the chair, the methods of adopting resolutions, the essentials of the proceedings, and the results shall be recorded in the meeting minutesin accordance

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with regulations set forth in the Company Act and relevant decrees. With regard to the election of board directors or supervisors, the adopted voting methods and total number of votes cast for elected board directors and supervisors shall be stated clearly.

Shareholders' meeting minutes shall be preserved permanently in the proper manner and fully disclosed on the official corporate website.

Article 9

The chairman of the shareholders' meeting shall be fully aware of and comply with the rules governing the proceedings of shareholders' meetings formulated by this Corporation, and maintain smooth proceedings as well as refrain from adjourning meetings at will.

If the chairman announces the adjournment of the meeting in violation of the rules governing the proceedings of shareholders' meetings, other members of the board of directors shall assist attending shareholders in the rapid appointment of a new chairman elected by a majority of the shareholders in attendance in accordance with legal procedures to safeguard the rights and interests of the majority of shareholders and continue with the proceedings.

Article 10

This Corporation shall highly value the right to know of shareholders and fully comply with information transparency regulations. Information pertaining to financial and business conditions, insider stockholding, and the corporate governance status of the Corporation shall be made public on the Market Observation Post System and the official corporate website in a frequent and timely manner for perusal by shareholders.

Article 11

Shareholders shall be entitled to a share of the company earnings. The shareholders' meeting is authorized to review lists and reports created by the board of directors in accordance with the regulations set forth in Article 184 of the Company Act as well as adopt resolutions regarding profit distribution and loss off-setting proposals. Shareholders' meetings may appoint examiners to conduct the aforementioned reviews.

Shareholders may also petition courts to appoint an examiner to review the business accounts and assets of the Corporation in accordance with the regulations set forth in Article 245 of the Company Act.

The board of directors, supervisors, and managers of this Corporation shall fully cooperate with the review operations conducted by the examiners referred to in the preceding two paragraphs and shall in no way obstruct, refuse, or evade such inspections.

Article 12

Material financial operations including acquisition and disposal of assets, lending of capital, and endorsements or guarantees shall be handled in accordance with relevant decrees and regulations and relevant operating procedures shall be formulated and submitted to shareholders' meetings for approval to protect the rights and interests of shareholders.

Management buyouts (MBO) shall be handled in accordance with relevant decrees and regulations and an objective and independent review committee shall be formed to determine the rationality of the acquisition price and acquisition plan while observing information transparency regulations.

The personnel in charge of the handling of the matters specified in the previous paragraph shall pay attention to conflicts of interest and avoidance hereof.

Article 13

Proposals, inquiries, and disputes pertaining to shareholders shall be handled by designated personnel of the Corporation in an appropriate manner to safeguard shareholder rights and interests.

If resolutions of shareholders' meetings or the board of directors of this Corporation are

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in violation of relevant decrees or the Articles of Incorporation of this Corporation or board directors, supervisors, and managers violate regulations set forth in said decrees or Articles of Incorporation of this Corporation in the performance of their duties, the Corporation shall handle legal action taken by shareholders in accordance with the law due to damage to their rights and interests in an appropriate manner.

Section 2 Corporate governance relationships between the Corporation and affiliated enterprises

Article 14

The authority and competency of the Corporation and affiliated enterprises with regard to the management of personnel, assets, and financial matters shall be clearly defined, risk assessments shall be conducted, and appropriate firewalls shall be established.

Article 15

If managers of this Corporation serve concurrently as managers of affiliated enterprises, approval is required by a majority of the board with an attendance of at least 50% in accordance with Article 29 and 32 of the Company Act.

If board directors conduct transactions on behalf of themselves or others within the operational scope of this Corporation, they shall inform shareholders' meetings of the main contents of such transactions and obtain the consent of shareholders.

Article 16

This Corporation shall establish a sound finance, business, and accounting management system in accordance with relevant decrees and regulations and conduct comprehensive risk assessments of the major banks it deals with as well as the clients and suppliers in cooperation with affiliated enterprises in an appropriate manner and implement necessary control and management mechanisms to reduce credit risks.

Article 17

Business transactions between the Corporation and affiliated enterprises shall be based on principles of fairness and reasonableness. Price terms and payment methods shall be clearly specified in written contracts and non-arm's length transactions shall be prohibited.

Transactions or contracts between this Corporation and involved parties or shareholders shall also be based on the aforementioned principles and profit tunneling shall be strictly prohibited.

Article 18

Corporate shareholders of this Corporation with control rights shall comply with the following provisions

1. They shall fulfill their fiduciary duty to other shareholders and shall not directly or indirectly cause the Corporation to engage in non-arm's length transactions or other non-profitable operations
2. Their representatives shall abide by the regulations governing exercise of rights and participation in the deliberation and resolution process formulated by the
   Corporation. When participating in shareholders' meetings they shall exercise their voting rights based on integrity principles in the best interest of all shareholders. They shall also fulfill their fiduciary duties and duty of care as board directors or supervisors.
3. When nominating board directors and supervisors of this Corporation, they shall abide by relevant decrees and the Articles of Incorporation of this Corporation and

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shall not exceed the bounds of authority granted by the shareholders' meeting or board of directors.

1. They shall not interfere with corporate decision-making in an inappropriate manner or obstruct business operations and activities.
2. They shall not restrict or obstruct production or management operations through methods of unfair competition such as monopolized procurement or closed sales channels

Article 19

This Corporation shall maintain a firm grasp of lists of major shareholders with higher shareholding ratios and actual control over the Corporation as well as the ultimate controllers of these shareholders.

This Corporation shall disclose pledges, increase, or decrease of company shares by major shareholders with shareholding ratios of over 10% and other major events that may trigger changes of the shareholder structure on a regular basis to facilitate monitoring by other shareholders.

The term "major shareholders" as used in Paragraph 1 shall refer to shareholders with shareholding ratios of over 5% or a ranking among the top 10 shareholders. The Corporation may set lower shareholding thresholds based on the actual shareholding and control conditions.

Chapter 3 Strengthening of the competence of the board of directors

Section 1 Structure of the board of directors

Article 20

The board of directors shall be responsible to the shareholders' meetings. The procedures and arrangements of the corporate governance system shall ensure that the board exercises its authority in accordance with relevant decrees, the regulations set forth in the Articles of Incorporation of this Corporation, and relevant resolutions of shareholders' meetings.

As for the structure of the board of directors, the Corporation shall determine an appropriate number of board members (a minimum of five members) based on actual operational requirements, the scope of business development, and shareholding ratios of major shareholders.

The composition of the board shall be basedon the principle of gender equality, andall members shall possess the necessary knowledge, skills, and cultivation required for the performance of their duties. To achieve the goal of optimal corporate governance, board members shall possess the following skills and abilities:

1. Ability to exercise operational judgment
2. Accounting and financial analysis skills
3. Business management skills
4. Crisis management skills
5. Industry knowledge
6. Global market vision
7. Leadership skills
8. Decision-makingskills

Article 21

This Corporation has formulated fair, just, and transparent procedures for the election of

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