2016 AGM Handbook

HON HAI PRECISION INDUSTRY CO., LTD.

2016 Annual General Shareholders' Meeting

Meeting Handbook

June 22, 2016

THIS IS A TRANSLATION OF THE HANDBOOK FOR THE 2016 ANNUAL SHAREHOLDERS' MEETING (THE "HANDBOOK") OF HON HAI PRECISION INDUSTRY CO., LTD. (THE "COMPANY"). THIS TRANSLATION IS INTENDED FOR REFERENCE ONLY AND NOTHING ELSE, THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF THE HANDBOOK SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETATION OF THE SUBJECT MATTER STATED HEREIN.

Table of Contents

Meeting Procedure

Agenda

Discussion Items

Proposal 1: Amendments to the Articles of Incorporation.

Report Items

2015 Business Report

Statutory Auditors' review of 2015 audited financial statements

Report on the 2015 Employee Compensation Distributions

Status report of the Company' s new indirect investment in Mainland China.

Status report of domestic corporate bond issuance.

Ratification, Discussion, and Election Items

Proposal 1: Ratification of the 2015 Business Report and Audited Financial Statements.

Proposal 2: Ratification of 2015 earnings distribution plan.

Proposal 3: Discussion of the issuance of new shares through capitalization of earnings.

Proposal 4: Discussion of the amendments to the Company's "Procedures for Acquisition or Disposal of Assets."

Proposal 5: Discussion of the amendments to the Company's "Procedures for Lending Funds to Others."

Proposal 6: Discussion of the amendments to the Company's "Procedures for Endorsements & Guarantees."

Proposal 7: Discussion of the amendments to the Company's "Operational Procedures for Derivative Trading."

Proposal 8: Discussion of the amendments to the Company's "Regulations Governing the Election of Directors."

Proposal 9: Director Elections

Proposal 10: Discussion to approve the lifting of director of non-competition restrictions.

Attachments

Attachment 1: Articles of Incorporation Amendment Comparison Table

Attachment 2 Business Report

Attachment 3: Audit Report by Supervisors

Attachment 4: Financial Statements

Attachment 5: Comparison Table of Amendments to Procedures for Acquisition or Disposal of Assets

Attachment 6: Comparison Table of Amendments to Procedures for Lending Funds to Others

Attachment 7: Comparison Table of Amendments to Procedures for Endorsements & Guarantees

Attachment 8: Comparison Table of Amendments to Operational Procedures for Derivative Trading

Attachment 9: Comparison Table of Amendments to the Regulations Governing the Election of Directors

Attachment 10: Director (Including Independent Director) Nominees

Appendices

Appendix 1: Rules and Procedures of Shareholders' Meeting

Appendix 2: Articles of Incorporation

Appendix 3: Regulations Governing the Election of Directors

Appendix 4: Shareholdings of Directors and Supervisors

Appendix 5: Impact of Stock Dividend Issuance on the Company's Business Performance and Earnings per Share

Hon Hai Precision Industry Co., Ltd.

2016 Annual Shareholders' Meeting

Meeting Procedure

Time of Meeting: June 22, 2016 (Wednesday) at 9:00 am

Location of Meeting: No.2 Zihyou Street, 5th Floor

Tucheng Industrial Park,

Tucheng Dist., New Taipei City, Taiwan

I. Report the total number of shares represented at this AGM

II. Meeting Commencement Announced

III. Chairman's Address

IV. Discussion Items

V. Report Items

VI. Ratification, Discussion, and Election Items

VII. Extraordinary Motions

VIII. Meeting Adjournment

Hon Hai Precision Industry Co., Ltd.

2016 Annual Shareholders' Meeting

Agenda

I. Chairman to announce the commencement of meeting.

II. Discussion Items

(1) Amendments to the Articles of Incorporation.

III. Chairman's report.

(1) Report the business of 2015.

(2) Statutory Auditors' review of 2015 audited financial statements.

(3) Report on the 2015 Employee Compensation Distributions.

(4) Status report of Company's indirect investment in Mainland China.

(5) Status report of domestic corporate bond issuance.

IV. Ratification, Discussion, and Election Items:

(1) Ratification of the 2015 Business Report and Audited Financial Statements.

(2) Ratification of the proposal for distribution of 2015 profits.

(3) Discussion of the issuance of new shares through capitalization of earnings.

(4) Discussion of the amendments to the Company's "Procedures for Acquisition or Disposal of Assets."

(5) Discussion of the amendments to the Company's "Procedures for Lending Funds to Others."

(6) Discussion of the amendments to the Company's "Procedures for Endorsements & Guarantees."

(7) Discussion of the amendments to the Company's "Operational Procedures for Derivative Trading."

(8) Discussion of the amendments to the Company's "Regulations Governing the Election of Directors."

(9) Director elections.

(10) Discussion to approve the lifting of director of non-competition restrictions.

V. Extraordinary Motions

VI. Adjournment

Discussion Items

Proposal 1: Amendments to the Articles of Incorporation.

(Proposed by the Board of Directors)

Description:

1. Pursuant to Article 235 and Article 235-1 of the Company Act, the Articles of Incorporation is proposed to be amended.

2. The amendments are for the set-up of the Audit Committee.

3. Please refer to Attachment 1 (pages 22- 27) for the comparison table of the amendments.

Resolution:

Report Items

Item One:

2015 Business Report

Description:

1. Please refer to Attachment 2 (pages 28-30) for the Business Report.

2. Please refer to Attachment 4 (pages 33-43) for the Financial Statements.

Item Two:

Statutory Auditors' review of 2015 audited financial statements

Description:

Please refer to Attachment 3 (pages 31-32) and Attachment 4 (pages 33-43) for Supervisor's Review Report and Accountant's Audit Report, respectively.

Item Three:

Report on the 2015 Employee Compensation Distributions

Description:

1. According to the resolution regarding the new amendments to the Articles of Incorporation adopted by the Board, 5-7% of the company profit (if any) is to be set aside for employee remuneration.

2. The employee remuneration totaled NT$10,598,195,389 in 2015, distributed in stock, taking up 6% of the profit of the year.

3. NT$83.7, the closing price of the day before the resolution was made by the Board, was used to calculate the number of shares for the preceding employee stock compensation. The new issuance of the stock totals 126,621,211shares. When it's less than NT$28 per share, cash is to be distributed. There is no difference between the above resolution and the ratified cost for 2015.

4. The distribution of employee remuneration takes effect after the amendments to the Articles of Incorporation are approved by the shareholders' meeting and registered at the competent security authorities. The Company distributes the employee compensation according to the Company's employee bonus distribution plan. The rights and obligations of the newly issued shares are the same as the original outstanding shares.

5. The Chairman is authorized to handle any pending issues related to this item, or any changes needed due to fact changes or required by the competent authorities.

Item Four:

Status report of the Company's new indirect investment in Mainland China.

Description:

The 2015 new indirect investments in the Chinese mainland with the company's own capital via the Company itself or its overseas subsidiaries are as follows:

Item Five:

Status report of domestic corporate bond issuance.

Description:

In order to pay the short-term debt, the Company issued domestic unsecured ordinary corporate bonds, totaling NT$27 billion in 2015. Details as follows:

Unit: NT$'000

Unit: NT$'000

Unit: NT$'000

Ratification, Discussion, and Election Items

Proposal 1: Ratification of the 2015 Business Report and Audited Financial Statements.

(Proposed by the Board of Directors)

Description:

1. The 2015 Business Report and Financial Statements have been approved by the Board of Directors, and have been reviewed by the supervisors.

2. Please refer to Attachment 2 through Attachment 4 (pages 28-43) for the documents mentioned above.

Resolution:

Proposal 2: Ratification of 2015 earnings distribution plan.

(Proposed by the Board of Directors)

Description:

1. The 2015 Earnings Distribution Plan of the Company has been submitted by the Board of Directors, in accordance with the Company Act and the Company's Articles of Incorporation, as shown in the following table.

2. The Company's net profit after taxes totaled NT$146,866,977,369 in 2015. After deducting the set-aside legal reserve of NT$14,686,697,737, adding the accumulated unappropriated earning at the beginning of the period of NT$470,267,400,536, and deducting 2015 retained earnings adjustment of NT$906,666,371, the available earnings for distribution was NT$601,541,013,797 at the end of the period, and the Company plans to distribute dividends of NT$78,194,441,142. The above mentioned dividend will be distributed from 2015 earnings first.

3. The cash dividends will be calculated to the nearest NT dollar. The remainder will be transferred into the account of the Employee Welfare Committee.

4. Subject to the approval of the general shareholder's meeting, the Board of Directors is authorized to determine the ex-dividend date for the cash and stock dividend distribution and other related matters.

5. Prior to the ex-dividend date for the distribution, if the number of total shares outstanding has changed due to the repurchasing of shares by the Company, the transfer of treasury shares to employees, or the conversion of shares from domestic convertible bonds, etc., so that the ratios of the stock dividends and cash dividends are changed and need to be adjusted, the Board is authorized to make such adjustments.

Resolution:

Hon Hai Precision Industry Co., Ltd.

2015 Earnings Allocation Table

Unit: NT$

Proposal 3: Discussion of the issuance of new shares through capitalization of earnings.

(Proposed by the Board of Directors)

Description:

In order to expand manufacturing capacity, it is proposed to capitalize the retained earnings and issuing new shares.

1. Capitalization of the retained earnings: To meet the needs for future development, the Company plans to capitalize the retained earnings through new stock issuance. NT$15,638,288,230 of shareholders' bonus from the available appropriated earnings from 2015 is to set aside and be capitalized through issuance of 1,563,828,823 new shares.

2. The conditions of the new share issuance:

(1) According to the proposed capital increase plan, 100 common shares will be distributed for every 1,000 common shares. Allotment of fractional shares (less than one share) shall be paid in cash, and the Chairman or his designated representative may subscribe at par value. Actual placement and number of shares will depend on the number of registered shareholders on the ex-rights date.

(2) The new shares issued by the capital increase will carry the same rights and obligations as the current outstanding shares.

(3) The ex-dividend date will be decided by the Board of Directors meeting after approval by the competent authority.

(4) If the number of total shares outstanding, prior to the ex-dividend date for the distribution, has changed due to the repurchasing of shares by the Company, or the transfer of treasury shares to employees, or the conversion of shares from domestic convertible bonds, etc., such that the ratios of the stock dividends and cash dividends are affected and must be adjusted, the Board is authorized to make such adjustments.

Resolution:

Proposal 4: Discussion of the amendments to the Company's "Procedures for Acquisition or Disposal of Assets."

(Proposed by the Board of Directors)

Description:

In accordance with the requirements of Article 14 Item 5, the amendments to the Company's "Procedures for Acquisition or Disposal of Assets" are proposed. The amendments are for the set-up of the Audit Committee. The proposed amendments are shown in the comparison table on Attachment 5 (pages 44-50).

Resolution:

Proposal 5: Discussion of the amendments to the Company's "Procedures for Lending Funds to Others."

(Proposed by the Board of Directors)

Description:

In accordance with the requirements of Article 14 Item 5, the amendments to the Company's "Procedures for Lending Funds to Others" are proposed. The amendments are for the set-up of the Audit Committee. The proposed amendments are shown in the comparison table on Attachment 6 (pages 51-52).

Resolution:

Proposal 6: Discussion of the amendments to the Company's "Procedures for Endorsements & Guarantees."

(Proposed by the Board of Directors)

Description:

In accordance with the requirements of Article 14 Item 5, the amendments to the Company's "Procedures for Endorsements & Guarantees" are proposed. The amendments are for the set-up of the Audit Committee. The proposed amendments are shown in the comparison table on Attachment 7 (pages 53-54).

Resolution:

Proposal 7: Discussion of the amendments to the Company's "Operational Procedures for Derivative Trading."

(Proposed by the Board of Directors)

Description:

In accordance with the requirements of Article 14 Item 5, the amendments to the Company's "Operational Procedures for Derivative Trading" are proposed. The amendments are for the set-up of the Audit Committee. The proposed amendments are shown in the comparison table on Attachment 8 (pages 55-56).

Resolution:

Proposal 8: Discussion of the amendments to the Company's "Regulations Governing the Election of Directors."

(Proposed by the Board of Directors)

Description:

In order to meet the operational needs, the amendments to the Company's "Regulations Governing the Election of Directors" are proposed. The proposed amendments are shown in the comparison table on Attachment 9 (pages 57-58).

Resolution:

Proposal 9: Director Elections

(Proposed by the Board of Directors)

Description:

1. The term of the Company's current directors and supervisors will expire by June 30, 2016. In accordance with the Articles of Incorporation, a comprehensive re-election of directors and supervisors shall be conducted during this year's annual general shareholders' meeting.

2. There are nine seats of directors (including three independent directors) for this year. The office term is three years, from July 1, 2016 to June 30, 2019. The Audit Committee, composed of all independent directors, is to replace the supervisors.

3. The candidate nomination system is adopted for this year's election of directors. The list of the director nominees has been approved by the second Board meeting in 2016. Shareholders shall select and appoint directors from the candidate list. Their educations, experience, and other related information are shown in Attachment 10 (pages 59 to 62).

4. Please elect.

Election Results:

Proposal 10: Discussion to approve the lifting of director of non-competition restrictions.

(Proposed by the Board of Directors)

Description:

In accordance with the Article 209 of the Company Act, it is proposed to lift the non-competition restrictions to the following directors, so as to assist the company's business development.

Resolution:

Extraordinary Motions

Adjournment

Attachments

Hon Hai Precision Industry Co., Ltd.

Attachment 1: Articles of Incorporation Amendment Comparison Table

Hon Hai Precision Industry Co., Ltd.

Attachment 2 Business Report

The Company hereby reports its operation results from 2015 as follows:

1. 2015 Business Achievements:

The Company delivered another year of excellent results in 2015, setting new records in both revenue and net profit. The non-consolidated net revenue for 2015 was NT$3.637 trillion, compared with NT$3.403 trillion in 2014, an increase of NT$234.028 billion, and 6.87% in year-over-year growth. The consolidated net revenue for 2015 was NT$4.482 trillion, compared with NT$4.213 trillion in 2014, an increase of NT$268.973 billion, and 6.38% in year-over-year growth. The net profit was NT$146.866 billion in 2015, compared with NT$130.534 billion in 2014, a 12.51% year-over-year increase.

2. 2015 Review and 2016 Outlook

Over the past year, the global political and economic environment remained volatile and our global business operations faced numerous challenges. However, in the 43rd anniversary of the Hon Hai / Foxconn Technology Group, the efforts of our employees around the world contributed to our achieving new highs in consolidated revenue and profit in 2015.  That result was the basis for our company being ranked 31 in the Global 500 by Fortune Magazine. As part of our efforts to continue this strong growth, our Group continues our research and development initiatives in a wide range of science and technology areas, complemented by a comprehensive patent strategy. According to IFI CLAIMS Patent Services, we were awarded 1,083 US patents in 2015 ranking us 29th in the world.  In Taiwan, based on the 2015 Patent Application and Grant List published by the Intellectual Property Office of the Ministry of Economic Affairs, our Group had 659 new applications and we were granted 1,661 Taiwan patents in 2015 resulting in the thirteenth consecutive year we have been ranked first in patents granted in Taiwan. In this year of very strong results, we would like to thank all of our shareholders, customers, and suppliers for your full and seamless support of the Company.

The 2016 global economic environment remains uncertain, but, despite the daunting challenges we continue to invest in our successful "Step Forward," "Going Up," "Sell Outward" business strategy, in order to maintain growth momentum and create new opportunities for the next phase of our global expansion.

"Step Forward" represents a focus on design innovation, user experience, and technology development. "Going Up" refers to the integration of hardware and software, the combination of reality and virtualization, and cloud architecture. "Sell Outward" refers to the opening of markets, and the implementation of our e-Commerce and e-Business strategies.

In addition to the above, our group continues to maintain "Cloud, Mobile, the Internet of Things, Big Data, Smart Living, and Network + Robot" as key elements of our strategic direction. In the manufacturing segment, our goal is to push towards achievement of "Industry 4.0" (the fourth industrial revolution) and, with the help of big data analysis, to continue to leverage the advantages of precision manufacturing and sophisticated production efficiency, as well as to enhance the added value of the Production on Demand business model.

In the technology services segment, we continue to invest in the cloud and big data services, and we are actively moving into e-commerce. The Group's daily operations are centered around the "Three Virtuals," information flow, cash flow, and technology flow, and the "Three Realities," people flow, goods flow and process flow. Based on the big data generated by these six flows, we are moving closer to the smart society in which all things are connected by the internet.

The wide range of technology products and services associated with our Group are not only focused on obtaining big data, but also on performing further analyses and forecasts through the use of big data. Our Group"s mission is to utilize the concept of the internet plus eight different living styles, to integrate "intelligent information" applications, allowing users to enjoy a better work experience, increased access to education and entertainment, an enhanced family and social life, better safety and health, better access to e-procurement and e-transactions and an improved environmental and transportation situation. These are all designed to ensure an improved quality of life and achievement of a more convenient and friendly society. By the time we achieve these goals, our Group will have been transformed into a big data-centric "Six Flows Enterprise."

In the meantime, we are actively promoting the continued internationalization of the group, as we also focus on the development and use of new technologies. As part of our ongoing emphasis on internationalization, we will continue to invest in the Greater China region, in addition to seeking investment and cooperation opportunities in key markets around the world including India. Our emphasis on the development of new technologies means that we will keep pursuing technical and scientific innovation. In addition to the continued investment of resources in R&D, our Group will also invest in new areas that are in line with our vision and complementary to our operations. We are also committed to supporting "Rejuvenation" and we do this by encouraging our employees to pursue creativity, innovation and entrepreneurship ¨C as part of a "Three Creation Culture."

We would like to close this review by saying how honored we are to be able to expand our strategic alliance with the Sharp Corporation of Japan. The alliance is not only historically significant but will have tremendous synergies when our two world-class companies join forces. This is one way the Hon Hai/Foxconn Technology Group will capture the opportunities and face global competition and future challenges. As we do that we will continue to rely on the immense determination, perseverance and unity of everyone associated with our company to create long-term value for each and every shareholder.

President: Terry Gou (Gou Tai-ming) CEO: Terry Gou (Gou Tai-ming) Accounting Manager: Chou, Joung Kai

Attachment 3: Audit Report by Supervisors

The Board reports the financial statement, business report, and earnings distribution proposal of 2015. Of which, the financial statement have been audited by PricewaterhouseCoopers Taiwan. The financial statements, business report, and earnings distribution proposal have been audited by us as Supervisors of the Company. We deem no inappropriateness on these documents. Pursuant to Article 219 of the Company Act, we hereby present the audited report. Please review.

Submitted to:

2016 Regular Shareholders' Meeting of the Company

Hon Hai Precision Ind. Co., Ltd.

Supervisor: Wan, Jui-hsia

On the date of May 13, 2016

Audit Report by Supervisors

The Board reports the financial statement, business report, and earnings distribution proposal of 2015. Of which, the financial statement have been audited by PricewaterhouseCoopers Taiwan. The financial statements, business report, and earnings distribution proposal have been audited by us as Supervisors of the Company. We deem no inappropriateness on these documents. Pursuant to Article 219 of the Company Act, we hereby present the audited report. Please review.

Submitted to:

2016 Regular Shareholders' Meeting of the Company

Hon Hai Precision Ind. Co., Ltd.

Supervisor: Fu-Rui International Investment Co., Ltd.

Representative: Cho, Min-Chi

On the date of May 13, 2016

Attachment 4: Financial Statements

To The Board of Directors and Stockholders

Hon Hai Precision Industry Co., Ltd.

We have audited the accompanying consolidated balance sheets of Hon Hai Precision Industry Co., Ltd. and subsidiaries as of December 31, 2015 and 2014, and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the financial statements of certain consolidated subsidiaries, which statements reflect total assets of NT$184,681,006,000 and NT$206,004,889,000, constituting 8% and 8.36% of the consolidated total assets as of December 31, 2015 and 2014, respectively, and total operating revenues of NT$225,844,217,000 and NT$205,240,782,000, constituting 5.04% and 4.87% of the consolidated total operating revenues for the years then ended, respectively. Those financial statements and the information disclosed in Note 13 were audited by other independent accountants whose reports thereon have been furnished to us, and our opinion expressed herein is based solely on the audit reports of the other independent accountants.

We conducted our audits in accordance with the "Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants" and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other independent accountants provide a reasonable basis for our opinion.

In our opinion, based on our audits and the reports of other independent accountants, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Hon Hai Precision Industry Co., Ltd. and subsidiaries as of December 31, 2015 and 2014, and their financial performance and cash flows for the years then ended, in conformity with the "Regulations Governing the Preparation of Financial Reports by Securities Issuers" and the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

We have also audited the parent company only financial statements of Hon Hai Precision Industry Co., Ltd. as of and for the years ended December 31, 2015 and 2014, and have expressed a modified unqualified opinion on such financial statements.

PricewaterhouseCoopers, Taiwan

March 30, 2016

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