Taichung Commercial Bank Co., Ltd.
The 2019 Annual Meeting of
Shareholders
Annual meeting handbook
Time: 9:00 a.m. on June 28, 2019
Address: 10F, No. 87, Minquan Rd., W. District,
Taichung City
Stock No: 2812
1
Contents
I. Shareholders Agenda ........................................................................ 2
II. Management Presentation (Company Reports) ............................... .4
III. Proposals ....................................................................................... 28
IV. Discussions ................................................................................... 32
V. Questions and Motions
VI. Appendix
1. Independent Auditor’s Report and financial statements .... 132
2. Rules of Procedure for Shareholder Meetings .................... 1583. Company Corporate Charter (Articles of Incorporation) ... 1644. Shareholdings of Directors ................................................. 174
2
Taichung Commercial Bank Co., Ltd. The 2019 Annual Meeting of Shareholders Agenda
1. Report the number of shares represented by the attending shareholders
and call the Meeting to Order
2. Chairperson Remarks
3. Management Presentation (Company Reports):
(1) The 2018 Business Reports
(2) Audit Committee’s Review Report on the 2018 Financial
Statements
(3) The 2018 distribution of remuneration to employees and directors
(4) The 2018 authorized offering and issuance of perpetual non-
cumulative subordinated financial debentures
(5) Report on the issuance of new shares of cash capital increase in
2018.
(6) Report on the advocacy for Article 25 of the Bank Act of The
Republic of China.
4. Proposals:
(1) The proposal of the 2018 Business Report and financial statements
(2) The 2018 proposed Earnings Distribution
5. Discussions:
(1) The issuance of new shares for capitalization for earnings in 2018.
(2) Amendments to partial provisions of Procedure for Handling
Acquisition or Disposal of Assets.
(3) Amendments to Company Corporate Charter
(4) Amendments to the Regulations Governing Selection of Directors.
(5) Amendments to the Rules of Procedure for Shareholders Meeting.
6. Questions and Motions:
7. Adjournment
3
(The above proposals were presented by the Company’s relevant units
to the Board for consideration)
4
Management Presentation
(Company Reports)
5
Management Presentation (Company Reports) No. 1
The 2018 Business Reports (Please refer to Page 6~10 of the
Annual Meeting Handbook)
6
The 2018 Business Report 1. 2018 Operation Performance
(1) Domestic and International Financial Environment
In 2018, the US consumer spending and corporate investment were strong, driving the
economy to grow and the US dollar to go up. This caused depreciation of major currencies against
the US dollar. Although the US economy was up, the economy of Europe and Japan was down due
to uncertainties of Brexit and trade conflicts. . In 2018, the global stock markets were down mostly,
mainly due to the US-China trade disputes, the US interest rate hikes, and financial turmoil in
emerging markets.
According to the data of the Directorate-General of Budget, Accounting and Statistics,
Executive Yuan, the annual economic growth rate of Taiwan in 2018 was 2.63% (3.08% in 2017),
the GDP per capita was USD25,004 (USD24,408 in 2017), and the annual growth rate of the
consumer price index was 1.35% (0.62% in 2017). According to the statistics of the National
Development Council, the total score of the economy monitoring indicator in December 2018 was
16 points, flashing a blue light (the total score of the economy monitoring indicator in December
2017 was 22 points, flashing a yellow-blue light). These results showed that the economy of Taiwan
in general has slowed down.
(2) Change of Organization
1. To ensure that loans are released according to the approved credit terms and relevant
regulations, and to reduce the risk of crediting operations, the “Credit Business Centralized
Loan Release Operation (Division)” was established under the regional center to handle
credit business centralized loan release operations.
2. To implement the “Principle for Financial Service Industries to Treat Clients Fairly” and protect
the right and interests of financial consumers, the "Complaint Resolution Team" was
established under the Consumer Finance Department to handle customer complaints.
3. To expand the consumer finance market of Taichung Commercial Bank, the “Taipei District
Consumer Finance Business Promotion Center”, the “Taoyuan-Hsinchu District Consumer
Finance Business Promotion Center”, the “Central District Consumer Finance Business
Promotion Center” and the “Southern District Consumer Finance Business Promotion
Center” were established under the Consumer Finance Department. These Centers are
responsible for handling the development of consumer finance credit business as well as
promoting the steady growth of consumer finance credit business, allowing the operation of
consumer finance credit business to be distributed evenly throughout all regions.
4. In order to meet the updated corporate governance blueprint of the Financial Supervisory
Commission and refer to the Corporate Governance Best Practice Principles for
TWSE/TPEx Listed Companies, the “Corporate Governance Section” was established under
the Board of Directors Office to take charge of corporate governance related affairs.
5. In order to expand the financial business of customers’ trading chain, the "Trade Receivable
Financing Section" under Corporate Finance Department was renamed the "Global Finance
Section" to provide customers with diverse and more comprehensive services.
(3) Operational Plan and Business Strategy Implementation Results
1. In terms of profit, net profit after tax reached NTD4.008 billion (NTD3.633 billion in 2017),
ROA was 0.59% (0.56% in 2017), and ROE was 8.79% (8.57% in 2017), all of which grew
comparing with those in 2017. In terms of the operational scale, total assets amounted to
NTD690.8 billion, an increase of NTD27.8 billion comparing with that in 2017. The overall
operation results have grown steadily.
7
2. In terms of capital structure, in order to enrich the operation capital of Taichung
Commercial Bank in response to business development, capital increased by cash was
implemented in 2018 through the issuing of 150 million shares of common stock, reaching
a total of NTD1.53 billion, and the issuing of subordinated debenture with value of NTD2.5
billion to effectively increase the capital adequacy ratio. The capital adequacy ratio at the
end of 2018 was 13.01%.
3. With regards to operation quality, the non-performing loans ratio and the NPL coverage
ratio of Taichung Commercial Bank was 0.45% and 317.95%, respectively at the end of
2018. The overall capital level and asset quality remained stable.
4. In order to develop business opportunities in emerging countries in Southeast Asia and go
in line the government's New Southbound Policy, the first overseas branch in Malaysia-the
Labuan Branch, and the Service Office in Kuala Lumpur were officially opened in October
2018 to provide financial services and related consultations to Taiwan businesses,
strengthening the local financial market.
5. In response to the financial development trends in various regions, Xindian Branch was
established in Xindian District of New Taipei City and Zuoying Branch was established in
Zuoying District of Kaohsiung City to improve the operational efficiency of channels and
strengthen the competitiveness of regional development.
6. Since December 2018, Taichung Commercial Bank has collaborated with "JKOPAY" to
offer account-link payment service, providing diverse, convenient and safe mobile payment
services for our customers.
7. Two financial technology patents, the "Double Verification System for Financial Counter
Transaction" and the "Verification System for Bankbook-free Over-the-Counter
Transaction", were acquired to continue strengthening the competitive advantage in the field
of innovative finance and optimizing consumers’ financial service environment.
8. Awards
(1) Taichung Commercial Bank was awarded the Group B Excellent Bank for “Rewarding
Domestic Bank in Implementing Innovative Key Industry Project-Phase I” by the Financial
Supervisory Commission.
(2) Taichung Commercial Bank was awarded the "Golden Security Award" (for four consecutive
years from 2015 to 2018) for its outstanding performance in implementing credit information
security management in 2018 and the "Golden Inquiry Award" for the first time to excellent
credit information inquiry institute by the Joint Credit Information Center.
(3) Taichung Commercial Bank was awarded the 2018 wealth management big awards- the "Best
Digital Wealth Management" and the "Best Video Marketing" awards, from the Wealth
Magazine.
(4) Taichung Commercial Bank won the "Best Service Award" in the 2018 Excellent Banking
Survey.
(5) Taichung Commercial Bank won the "Corporate Sustainable Practice Award" at the BSI
International Sustainability Standards Management Conference.
(6) Taichung Commercial Bank won the "Silver Award" from the TCSA Taiwan Corporate
Sustainability Forum Report Award.
(4) 2018 Budget Performance
1. The average balance of deposits (including foreign currency) was NTD583.537 billion, and the
budget target achievement rate was 100.27%, an increase of NTD22.827 billion or 4.07%
8
comparing with that in 2017.
2. The average balance of loan (including foreign currency, excluding guaranteed acceptance and non-
accrual loan) was NTD457.207 billion, and the budget target achievement rate was 100.33%, an
increase of NTD25.135 billion or 5.82% comparing with that in 2017.
3. The average balance of foreign exchange deposit was USD1.736 billion, an increase of USD17
million or 1.02% comparing with that in 2017.
4. The amount of foreign exchange business was USD18.137 billion, and the budget target
achievement rate was 112.65%, an increase of USD27 million or 0.15% comparing with that in
2017.
5. The wealth management fee income was NTD1.420 billion, and the budget target achievement rate
was 130.19%, an increase of NTD90 million or 6.77% comparing with that in 2017.
(5) Financial Income and Expenditure and Profitability Analysis
1. The net profit before taxation of 2018 was NTD4.76 billion. The net profit after tax was NTD4.008
billion, and the after-tax earnings per share (EPS) were NTD1.18. The EPS remained above NTD1
for seven consecutive years.
2. Key Performance Indicator (KPI)
Indicators 2018 (consolidated)
Capital adequacy ratio (BIS) 13.01%
Return on Assets (ROA) 0.59%
Return on Equity (ROE) 8.79%
Earnings Per Share (EPS) NTD1.18
NPL ratio 0.45%
NPL Coverage ratio 317.95%
3. Most Recent Credit Rating
Rating agency Date of rating Credit rating
Long-term Short-term Outlook
Fitch Rating Taiwan Company
Limited Branch in Taiwan 2018.6.5 A-(twn) F1(twn) Stable
(6) Status of Research and Development
In response to digital finance development, the "Financial Technology Development
Strategy Conference" was organized to propose short-, medium- and long-term strategies for the
financial technology development of Taichung Commercial Bank, providing customers with
innovative and diversified financial services.
9
Goal Strategy
Short-term
goal
Offering convenient digital process, providing digitalized over-the-
counter operation, strengthening the features of mobile device APP,
adding mobile payment, and providing customers with new services.
Medium-
term plan
O2O real and virtual channel integration to create a digital financial
environment.
Long-term
development
Innovative customer experience, providing smart and legal-
compliance services.
2. Impact of external competitive environment, regulatory environment and overall business environment
(1) Actively Implement the Financial Supervision Requirements
In response to the changes in domestic and international financial situation and supervision
requirements in recent years, the competent authorities plan and promote various measures,
including carrying out international cooperation to fight against money laundering and financing
of terrorism, and implementing joint reporting, careful review and information exchange
mechanism on financial accounts, etc. While actively improving and strengthening risk control,
the banking industry also carries out internal organizational and personnel structure adjustment,
information system input and update, staff training reinforcement, identification system
adjustment for customer information and transaction classification to promote the development of
money laundering prevention, legal compliance and information safety, which in turn fulfills the
supervision requirements.
(2) To go in line with the development of financial technology, the policy will be based on gradually
opening up the establishment of pure online banking.
In recent years, the Financial Supervisory Commission actively promoted the "Building
Digital Financial Environment 3.0" Project. With the development of financial technology, the
Financial Supervisory Commission in 2018 has proposed policies for guiding the open up of pure
online banking in Taiwan. In response to the establishment of pure online banking, the Financial
Supervisory Commission also revised the "Standards Governing the Establishment of
Commercial Banks" and the "Regulations Governing Investments in Other Enterprises by
Commercial Banks". Considering the fact that the difference between pure online banking and
traditional banking is the channel for providing services, pure online banking is required to follow
the same regulatory and supervisory requirements as in traditional banking. Although no pure
online banking has officially entered the market in 2018, it is expected that the introduction of
such a new type of banking service will help banks to actively learn new business experiences,
improve industrial upgrading, and accelerate the development of financial innovation and
popularization, providing customers with better financial services.
3. Future Development Strategies
In the face of rapidly changing markets and fierce competition challenges, Taichung Commercial
Bank will continue to implement financial governance to comply with laws and regulations, and
improve capital efficiency. At the same time, we will continue to adjust our business structure, increase
interest rate spreads, strengthen digital financial competitiveness, and improve operation growth.
Moreover, we will improve our wealth management services, and increase our profit to promote our
businesses.
4. 2019 Operation Plan Summary
(1) In order to establish a legal compliance system that is in line with international standards, Taichung
Commercial Bank actively implements the laws and regulations in business management to improve
the internal control system, fully enhancing the money laundering prevention system of Taichung
Commercial Bank. We also implement the capital utilization management mechanism, and continue
10
to include risk reduction efficiency in branch operation performance evaluation, strengthening the
capital structure and enhancing the overall return on capital.
(2) Ensuring a stable growth in operation scale, optimizing the quality of credit assets, adjusting the
structure of credit industry, monitoring the changes of credit risk, strictly control the non-performing
loan ratios, and accelerating the removal of non-performing loans to achieve above the average level
of asset quality for domestic banks, becoming the bank with excellent quality.
(3) Combining the advantages of local branch offices, focusing on the value of wealth management
customers, strengthening the services of high-asset customers, improving the competitiveness of
financial management products; strengthening the services of consumer finance business, forming
strategic alliances with other industries, expanding the scale of consumer loan market to increase the
scope of business and the depth of profitability.
(4) Expanding the territory of international financial business, increasing foreign exchange deposits, and
actively developing trading-based financing business to increase international financial business
demand; continue to strengthen the loans for small and medium businesses, making good use of the
guarantee mechanism of credit guarantee fund, and adjusting the pricing gain suitable for crediting,
to balance both risks and profits.
(5) Enhancing digital financial services, with customer experience as the core, optimizing the features of
online banking and mobile online banking; improving financial service efficiency and quality, and
promoting operation process simplification based on system upgrade, technology application,
process improvement and service integration to achieve the goal of "Convenient Digital Service,
Smart Operation Process".
(6) Expected Operational Goals
Scope of business Objective by the end of 2019
Deposits (including
foreign currencies) As of the end of December: NTD 540.5 billion
Lending (including
foreign currencies) As of the end of December: NTD 444.961 billion
Foreign Exchanges
Operations Annual amount USD17.00 billion
In 2019, the year full of opportunities and challenges, Taichung Commercial Bank will continue to
strive for growth in corporate revenue and benefits, and bring the greatest benefits to our shareholders
based on our business philosophy of “We Do Our Best For You” and in compliance with laws and
regulations, performance management, information safety and risk management. At the same time, we
are committed to make our contribution in corporate social responsibility, and give our achievements
back to the society, fulfilling the vision of “The Forefront of Taiwan’s Bank, The Most Expected Bank
In Society, The Most Trusted Bank By customers”.
Wishing all shareholders to continue enjoying your good health, success and happiness
President Chairman
11
Management Presentation (Company Reports) No. 2
Audit Committee’s Review Report on the 2018 Financial
Statements (Please refer to Page 12 of the Annual Meeting
Handbook)
12
Taichung Commercial Bank Co., Ltd.
Audit Committee’ Review Report
The financial statements of the individual and consolidated financial statements
in 2018 of the Bank have been audited by the certified public accountants of Deloitte
Taiwan with the issuance of auditors’ reports, which were released together with the
Business Report and proposal for Earnings Distribution. The Auditing Committee has
review the aforementioned reports and statements and determined that they are
presented fairly. Pursuant to Article 14-4 of the Securities and Exchange Act and
Article 219 of the Company Act, we hereby present the report for your reference.
To:
2019 Shareholders' annual meeting, Taichung Commercial Bank Co. Ltd.
Chairman of Audit Committee
Hsin-Chang Tsai
March 13, 2019
13
Management Presentation (Company Reports) No. 3
The 2018 distribution of remuneration to employees and directors
Explanation:
I. According to the Article 35 of the Company’s Articles of
Incorporation, “If there is a profit, the Bank shall appropriate
0.5% to 3% as remuneration to the employees. The Board shall
determine if stock or cash shall be released for such purpose. In
addition, the Bank may allocate no more than 1.5% of the
aforementioned amount as remuneration to the Directors. The
distribution of remuneration to employees and directors should
be reported in the shareholders’ meeting. If the Bank has
accumulated deficit, an equivalent amount should be reserved
for making up such loss, then the remuneration to employees
and directors can be appropriated in accordance with the ratio
stated in the preceding paragraph thereafter”.
II. As audited, the Bank did not appropriate remuneration to the
employees and the Directors and income tax expense in 2018.
The earnings in this year amounted to NTD4,742,507,478. The
Bank planned to appropriate 0.7% and 1.5% of the
aforementioned amount as remuneration to the employees and
the Directors, which amounted to NTD33,197,552 and
NTD71,137,612, respectively. All payments were effected in
cash.
14
Management Presentation (Company Reports) No. 4
The 2018 authorized offering and issuance of perpetual non-
cumulative subordinated financial debentures. (Please refer to Page
15~22 of the Annual Meeting Handbook)
15
Perpetual Non-Cumulative Unsecured Subordinated Financial
Debentures Issued of 2018
1. Reasons for issuance:
(1) To replenish working capital and make sound capital of the Bank, the first non-
cumulative perpetual subordinate financial bond of 2018 was issued on April 25,
2018 in the amount of NTD1 billion. It is also listed on Taipei Exchange
(TPEx). The amount of this issuance was approved by the Financial
Supervisory Commission on September 22, 2017 by the approval letter Jin-
Guan-Yin-Piao-Zi No. 10600229120.
(2) On December 18, 2018, the Bank also issued the second non-accumulative
perpetual subordinate financial bond of 2018 in the amount of NTD1.5 billion,
and is listed on Taipei Exchange (TPEx). The amount of this issuance was
approved by the Financial Supervisory Commission on August 23, 2018, by the
approval letter Jin-Guan-Yin-Piao-Zi No. 10702156550.
2. Bond Information:
2018
Bond issues 1st term 2018 2
nd term 2018
Bond code G13019 G13020
Issue Date 2018/4/25 2018/12/18
Duration No maturity date
Maturity date No maturity date
Placement Underwriters are not commissioned for public offering
Bond listing OTC
Listing / issuing location Taiwan R.O.C.
Issuing currency NTD
Total Issued NTD 1 billion NTD 1.5 billion
Listing Date 2018/4/25 2018/12/18
Bond abbreviation P07 Taichung Commercial Bank
1
P07 Taichung Commercial
Bank 2
Coupon rate Floating annual rate: 4.14%
Interest bearing and
payment method
Annual interest is accrued at a simple interest rate and paid
once a year.
The total annual interest
payment NTD41,400 thousand NTD62,100 thousand
16
3. Subscription object:
The debenture is offered for the professional investors meeting the requirements of
the “Regulations Governing Offshore Structured Products”.
4. Fund utilization efficiency:
The Bank issued the 1st to the 2
nd terms of perpetual non-cumulative unsecured
subordinated financial debentures in 2018 and listed the debentures for trading at
TPEx. The purpose is to raise working capital and vitalize the capital structure, and
upgrade the capital adequacy ratio and tier I capital ratio and common stock equity
ratio, which will help to upgrade the capital structure of the Bank substantially.
17
Taichung Commercial Bank Co., Ltd.
Regulations Governing the Offering of 1st term of the perpetual non-cumulative
unsecured subordinated financial debentures in 2018
Taichung Commercial Bank (hereinafter referred to as “the Bank”) acted in compliance with FSC Letter Jin-
Guan-Yin-Piao-Zi No. 10600229120 dated September 22, 2017 for the offering of perpetual non-cumulative
unsecured subordinated financial debentures specified as follows:
1. Bond Name:
Taichung Commercial Bank 1st term of perpetual non-cumulative unsecured subordinated financial
debentures in 2018 (hereinafter referred to as “the debenture”)
2. Credit rating on the issuer:
The Bank commissioned Fitch Ratings Taiwan as the credit rating institution to assess the credit
standing of the Bank on: September 20, 2017; Subject of rating: the issuer. Credit rating result: A-(twn)
for domestic long-term credit standing. The debenture will not be rated by other credit rating institutions.
3. Priority of creditor rights and investment risk:
(1) The priority (including principal and interest) of the bearers of the debenture in the entitlement of
compensation is senior to the shareholders and junior to the bearers of tier 2 capital instruments,
deposit account bearers and other creditors of the Bank. However, the priority of the bearers of the
debenture for compensation will be the same as the shareholders of common stock in the event of
the takeover of the Bank by the competent authority, order for discontinuation of operation and
liquidation.
(2) The Bank or its affiliates have not provided guarantees, collateral or other arrangements to enhance
the priority of compensation for the holders of this bond.
(3) The debenture is a form of unsecured debenture.
(4) The debenture is not a deposit and not protected by CDIC.
(5) The bearers of the debenture shall pay attention to the risk inherent to the underlying instrument.
4. Total Issued:
The debenture was offered at NTD1,000 million.
5. Book value:
The face value of each lot amounted to NTD10 million.
6. Issuing price:
The debenture is issued at par value as of the offering day.
7. Duration:
The debenture was offered on Apr. 25, 2018 with no maturity date.
8. Coupon rate:
Coupon rate is index interest rate plus 3.08%. The indicator rate is the adjustable interest rate posted by
Chunghua Post Co., Ltd offered for time deposit (not large sum) of 1-year term. The day for resetting of
the coupon rate shall be the second business day prior to each value date
9. Interest bearing and payment method:
(1) The debentures shall accrued simple interest on a daily basis (act/act) at the coupon rate by the
exact days of holding and payable annually on July 1 of each subsequent year. The calculation of
the interest amount by the Bank shall be final.
(2) The interest payment from the debenture will be rounded to the nearest NT Dollar for each lot. The
calculation of interest by the Bank shall prevail. If the day for principal repayment and interest
18
payment is a day on which the Bank is not open for business, move forward to the next business
day for payment without additional interest accrued. Those who claim principal and interest beyond
the value date will receive no additional accrued interest.
(3) The Bank will withhold applicable income tax and supplementary premiums of the National Health
Insurance Administration on the interest of the debenture at the time of disbursement.
10. Condition of interest payment:
(1) No interest will be paid if the Bank has no earnings in the previous fiscal year and no payment of
dividends (including cash dividends and stock dividends).If the accumulated undistributed earnings
net of the unamortized loss from the disposal of non-performing loans exceeds the amount of
interest payments, and the payment does not cause a change to the original condition agreed on
interest payment, this provision will not be applicable. Interest not being paid due to the
aforementioned reasons cannot be accumulated or deferred.
(2) If the ratio between the equity capital and risk assets of the Bank on the interest payment day falls
below the minimum ratio set forth in Article 5, Paragraph 1 of the “Regulations Governing the
Capital Adequacy and Capital Category of Banks”, principal and interest payment shall be deferred.
The accrued interests from the debenture will not yield further interest.
11. Early redemption rights:
If the ratio of regulatory capital to risk-weighted assets of the Bank after being redeemed shall meet the
minimum rate stated of the competent authority after five years of issuance, and, at the approval of the
competent authority, the Bank may proceed to early redemption with 30 days of notice in advance.
Redemption will be made in whole at face value amount of the instruments plus all coupon yields.
12. Definitions
(1) “Ratio of regulatory capital to risk-weighted assets” as referred to in Paragraph 2, Article 10 and
Article 11 shall be based on the definition of Article 44 of The Banking Act of The Republic of
China and the “Regulations Governing the Capital Adequacy and Capital Category of Banks”
announced by the Financial Supervisory Commission, and the annual financial reports or the
interim reports audited by certified public accountants, as well as the ratio declared by the Bank by
the end of March and August of each year with the Financial Supervisory Commission after review
by certified public accountants.
(2) “Earnings” as referred to in Article 10 of These Regulations are the net profit after tax as stated in
the comprehensive income statement covering the most recent year recognized by the Annual
meeting of shareholders.
13. The form of debenture:
The debenture will be issued in digital form and registered with the Taiwan Depository and Clearing
Corporation.
14. Agent of principal and interest payment:
The Taipei Branch of the Bank will be responsible for handling principal and interest payment through
remittance to bearers of the debenture as stated in the roster available from TDCC.
15. Other requirements:
(1) The debenture can be circulated, freely transferred, pledged under lien or as collateral freely but
cannot be pledged as collateral for loans from the Bank.
(2) According to the Civil Code, any portion of principal not being claimed within a period of 15 years
and interest not being claimed within a period of 5 years from the first day of payment shall be not
be redeemed by the Bank.
(3) Subscribers of bearers of the debentures cannot claim for early redemption.
(4) In case the Bank proceeds to liquidation procedures or declaration of bankruptcy, no interest will
be accrued for calculation from the day on which liquidation procedure starts or the day of
bankruptcy declaration. Both the principal and interest shall be deemed immediately due. The
bearers or the creditors of the debenture should waive the right of set-off.
19
(5) The debenture may be subject to transferred, succession, donation, repayment of principal and
payment of interest and any other form of book transfer in accordance with the requirements of
TDCC and other applicable legal rules. The applicants shall bear the expenses incurred thereof.
(6) In the event of the extinction of prescriptions, the Civil Code or applicable laws of the Republic of
China effective at the time of offering shall be applicable.
16. Prospective investors of the debenture:
The debenture is offered for the professional investors meeting the requirements of the “Regulations
Governing Offshore Structured Products”.
17. Notification:
Notification to the bearers or creditors of the debenture shall be made by announcement through the
MOPS site of the Taiwan Stock Exchange Corporation.
18. Others not covered by These Regulations shall be governed by the “Regulations Governing Issuance of
Bank Debentures by Banks” and other applicable legal rules, or related requirements of the competent
authority.
20
Taichung Commercial Bank Co., Ltd.
Regulations Governing the Offering of 2nd
term of the perpetual non-cumulative
unsecured subordinated financial debentures in 2018
Taichung Commercial Bank (hereinafter referred to as “the Bank”) acted in compliance with FSC Letter Jin-
Guan-Yin-Piao-Zi No. 10702156550 dated August 23, 2018 for the offering of perpetual non-cumulative
unsecured subordinated financial debentures specified as follows:
1. Bond Name:
Taichung Commercial Bank 2nd
term of perpetual non-cumulative unsecured subordinated financial
debentures in 2018 (hereinafter referred to as “the debenture”)
2. Credit rating on the issuer:
The Bank commissioned Fitch Ratings Taiwan as the credit rating institution to assess the credit
standing of the Bank on: June 5, 2018; Subject of rating: the issuer. Credit rating result: A-(twn) for
domestic long-term credit standing. The debenture will not be rated by other credit rating institutions.
3. Priority of creditor rights and investment risk:
(1) The priority (including principal and interest) of the bearers of the debenture in the entitlement of
compensation is senior to the shareholders and junior to the bearers of tier 2 capital instruments,
deposit account bearers and other creditors of the Bank. However, the priority of the bearers of
the debenture for compensation will be the same as the shareholders of common stock in the
event of the takeover of the Bank by the competent authority, order for discontinuation of
operation and liquidation.
(2) The Bank or its affiliates have not provided guarantees, collateral or other arrangements to
enhance the priority of compensation for the holders of this bond.
(3) The debenture is a form of unsecured debenture.
(4) The debenture is not a deposit and not protected by CDIC.
(5) The bearers of the debenture shall pay attention to the risk inherent to the underlying instrument.
4. Total Issued:
The debenture was offered at NTD 1.5 billion.
5. Book value:
The face value of each lot amounted to NTD10 million.
6. Issuing price:
The debenture is issued at par value as of the offering day.
7. Duration:
The debenture was offered on December 18, 2018 with no maturity date.
8. Coupon rate:
Coupon rate is index interest rate plus 3.08%. The indicator rate is the adjustable interest rate posted by
Chunghua Post Co., Ltd offered for time deposit (not large sum) of 1-year term. The day for resetting of
the coupon rate shall be the second business day prior to each value date
9. Interest bearing and payment method:
(1) The debentures shall accrued simple interest on a daily basis (act/act) at the coupon rate by the
exact days of holding and payable annually. The calculation of the interest amount by the Bank
shall be final.
(2) The interest payment from the debenture will be rounded to the nearest NT Dollar for each lot. The
calculation of interest by the Bank shall prevail. If the day for principal repayment and interest
payment is a day on which the Bank is not open for business, move forward to the next business
day for payment without additional interest accrued. Those who claim principal and interest beyond
21
the value date will receive no additional accrued interest.
(3) The Bank will withhold applicable income tax and supplementary premiums of the National Health
Insurance Administration on the interest of the debenture at the time of disbursement.
10. Condition of interest payment:
(1) No interest will be paid if the Bank has no earnings in the previous fiscal year and no payment of
dividends (including cash dividends and stock dividends).If the accumulated undistributed earnings
net of the unamortized loss from the disposal of non-performing loans exceeds the amount of
interest payments, and the payment does not cause a change to the original condition agreed on
interest payment, this provision will not be applicable. Interest not being paid due to the
aforementioned reasons cannot be accumulated or deferred.
(2) If the ratio between the equity capital and risk assets of the Bank on the interest payment day falls
below the minimum ratio set forth in Article 5, Paragraph 1 of the “Regulations Governing the
Capital Adequacy and Capital Category of Banks”, principal and interest payment shall be deferred.
The accrued interests from the debenture will not yield further interest.
11. Early redemption rights:
If the ratio of regulatory capital to risk-weighted assets of the Bank after being redeemed shall meet the
minimum rate stated of the competent authority after five years of issuance, and, at the approval of the
competent authority, the Bank may proceed to early redemption with 30 days of notice in advance.
Redemption will be made in whole at face value amount of the instruments plus all coupon yields.
12. Definitions
(1) “Ratio of regulatory capital to risk-weighted assets” as referred to in Paragraph 2, Article 10 and
Article 11 shall be based on the definition of Article 44 of The Banking Act of The Republic of
China and the “Regulations Governing the Capital Adequacy and Capital Category of Banks”
announced by the Financial Supervisory Commission, and the annual financial reports or the
interim reports audited by certified public accountants, as well as the ratio declared by the Bank by
the end of March and August of each year with the Financial Supervisory Commission after review
by certified public accountants.
(2) “Earnings” as referred to in Article 10 of These Regulations are the net profit after tax as stated in
the comprehensive income statement covering the most recent year recognized by the Annual
meeting of shareholders.
13. The form of debenture:
The debenture will be issued in digital form and registered with the Taiwan Depository and Clearing
Corporation.
14. Agent of principal and interest payment:
The Taipei Branch of the Bank will be responsible for handling principal and interest payment through
remittance to bearers of the debenture as stated in the roster available from TDCC.
15. Other requirements:
(1) The debenture can be circulated, freely transferred, pledged under lien or as collateral freely but
cannot be pledged as collateral for loans from the Bank.
(2) According to the Civil Code, any portion of principal not being claimed within a period of 15 years
and interest not being claimed within a period of 5 years from the first day of payment shall be not
be redeemed by the Bank.
(3) Subscribers of bearers of the debentures cannot claim for early redemption.
(4) In case the Bank proceeds to liquidation procedures or declaration of bankruptcy, no interest will
be accrued for calculation from the day on which liquidation procedure starts or the day of
bankruptcy declaration. Both the principal and interest shall be deemed immediately due. The
bearers or the creditors of the debenture should waive the right of set-off.
(5) The debenture may be subject to transferred, succession, donation, repayment of principal and
payment of interest and any other form of book transfer in accordance with the requirements of
22
TDCC and other applicable legal rules. The applicants shall bear the expenses incurred thereof.
(6) The prescription of the debentures shall be governed by Civil Code and the law of the Republic of
China or applicable legal rules at the time of issuance.
16. Prospective investors of the debenture:
The debenture is offered for the professional investors meeting the requirements of the “Regulations
Governing Offshore Structured Products”.
17. Notification:
Notification to the bearers or creditors of the debenture shall be made by announcement through the
MOPS site of the Taiwan Stock Exchange Corporation.
18. Others not covered by These Regulations shall be governed by the “Regulations Governing Issuance of
Bank Debentures by Banks” and other applicable legal rules, or related requirements of the competent
authority.
23
Management Presentation (Company Reports) No. 5
Report on the issuance of new shares of cash capital increase
in 2018 (Please refer to Page 24~25 of the Annual Meeting Handbook)
24
Taichung Commercial Bank Co. Ltd.
Report on the issuance of new shares of cash capital increase in 2018
The Company issued 150,000,000 shares of common stock of cash capital increase in
2018, which was filed to the Financial Supervisory Commission and became effective
on September 21, 2018 by the official letter Jin-guan-zheng-fa No. 1070334491.
1. Share allocation:
According to the resolution of the 10th meeting of the 23rd Board of Directors on
July 12, 2018, a total of 150,000,000 shares of common stock to be issued for cash
capital increase. According to Article 267 of the Company Act, 15% of such shares,
namely 22,500,000 shares, is to be reserved for subscription by the employees of
the Company; Further according to Article 28-1 of the Securities and Exchange Act,
10% of the such shares, namely 15,000,000 shares, is to be offered to the public for
public subscription; the remaining 75% of such shares, namely 112,500,000 shares,
is to be offered to the original shareholders according to the shareholding ratio
recorded on the shareholders register on the base date for subscription. If the
original shareholder holds a proportion of shares that are not adequately recognized
as a new share, more than one of such subscriptions may be merged as joint
subscriptions or as one subscription of one person. In case of subscription with less
than one share and the portion whose priority subscription is waved by the original
shareholder and employees, the chairman is authorized to locate specified persons
for the subscription.
2. Pricing of new shares:
The pricing of this issue was determined according to the 12th meeting of the 23rd
Board of Directors on October 2, 2018, with the issue price per share set at
NTD10.2. According to Article 6 (1) of the “Self-Regulatory Rules Governing the
Offering and Issuance of Securities for underwriters by Taiwan Securities
Association”, the price of the new shares shall not be lower than 70% of the
average share price based on the closing price of the common stock of any of the
previous 1, 3 or 5 business days. The afore-mentioned closing price shall be
calculated with the simple arithmetic mean deducting the bonus share allotment, ex-
rights (or capital reduction, ex-rights) and after ex-dividend. The ex-rights trading
date of this case is October 18, 2018, which makes October 11, 2018 the base date
for the issue price (5 business days prior to the ex-rights date). According to such
regulations, the Bank set the issue price as NTD10.2 per share.
3. Subscription briefing:
The issuance was fully paid on November 30, 2018, and was listed on December 5,
2018.
Funding utilization plan and items, progress and benefits:
(1) Funding utilization plan and items:
This cash capital increase is to replenish the working capital so to support the
needs of various loans and to strengthen the financial structure of the Bank and
25
increase the capital adequacy ratio.
(2) Progress of the use of funds:
The offering was completed at the fourth quarter of 2018 and the funds are to
be used to replenish the working capital to meet the needs of various loans.
(3) Benefits of fund utilization:
This cash capital increase was for the purpose of replenishing the working
capital and improve the capital soundness, enhance the regulatory capital
adequacy ratio, the tier 1 capital ratio and the common equity ratio, and
substantially strengthen and enhance the capital structure of the Company.
26
Management Presentation (Company Reports) No. 6
Report on Propaganda for Article 25 of the Banking Act
Descriptions:
1. In order to effectively implement the enforcement of Article 25 of the Banking Act, and to enhance the propaganda for the relevant laws and regulations to the shareholders, the Financial Supervisory Commission issued an official letter Jin-guan-yin-kung No. 10060005191 on January 31, 2012 to urge the shareholders to pay attention to the relevant regulations.
2. In the event that bank shareholders hold shares in violation of Paragraph 2, 3 or 5 of Article 25 of the Banking Act and fail to file a report to or obtain approval from the Financial Supervisory Commission to hold the outstanding voting shares issued by a bank, the excess shares held by such shareholders shall have no voting rights and shall be disposed of within the given period prescribed by the Financial Supervisory Commission. And the Financial Supervisory Commission may further impose a fine of NTD2 million or more and less than NTD10 million in accordance with Paragraph 3, Article 128 of the Banking Law.
3. Articles 25 of the Banking Act (Please refer to Page 27 of the Annual Meeting Handbook)
27
Articles 25 of the Banking Act
I. The shares issued by a Bank shall be registered shares.
II. The same person or same concerned party who singly, jointly or collectively acquires more
than five percent (5%) of a Bank’s outstanding voting shares shall report such fact to the
Competent Authority within ten (10) days from the day of acquisition; the preceding
provision applies to each cumulative increase or decrease in the shares of the same person or
same concerned party by more than one percent (1%) thereafter.
III. The same person or same concerned party who intends to singly, jointly or collectively
acquire more than ten percent (10%), twenty-five percent (25%) or fifty percent (50%) of a
Bank’s outstanding voting shares shall apply for prior approval of the Competent Authority.
IV. A third party who holds shares of the Bank on behalf of the same person or same concerned
party in trust, by mandate or through other types of contract, agreement or authorization
shall fall within the purview of a concerned party.
V. The same person or same concerned party who singly, jointly or collectively holds shares of
the Bank representing more than five percent (5%) but less than fifteen percent (15%) of a
Bank’s outstanding voting shares prior to the implementation of the amendment to the Act
on December 9, 2008 shall report such fact to the Competent Authority within six (6)
months from the implementation date of the said amendment. Those who report to the
Competent Authority within the said prescribed period may maintain their shareholding at
the time of reporting. However, those whose original shareholding exceeds ten percent
(10%) shall apply for the prior approval of the Competent Authority when they intend to
increase their shareholding for the first time thereafter.
VI. The regulations governing the qualifications and requirements for the same person or same
concerned party who applies for approval pursuant to Paragraph 3 hereof or the proviso of
the preceding paragraph, required documentation, shares to be acquired, purpose of
acquisition, sources of funding, and other matters to be complied with shall be prescribed by
the Competent Authority.
VII. Where the same person or same concerned party who holds voting shares issued by a Bank
without filing a report with the Competent Authority or obtaining approval from the
Competent Authority in accordance with the provisions set forth in Paragraphs 2, 3 or 5
hereof, the excess shares held by such same person or same concerned party shall not have
voting rights and shall be disposed of within the given period prescribed by the Competent
Authority.
VIII. If the total number of a Bank’s shares held by the same person or by the principal, his/her
spouse and children under twenty (20) years of age exceeds one percent (1%) of the Bank’s
outstanding voting shares, such principal shall notify the Bank thereof.
28
Proposals
29
Proposals No. 1
Proposal: The 2018 Business Report and Financial Statements
are presented for adoption.
Explanation: The Board of Directors of the Bank has passed the
Business Report, Financial Statements of individual
and consolidated financial statements of the Bank
covering 2018 (refer to P.6 ~10 and 132~157 Annual
Meeting Handbook).
Resolutions:
30
Proposals No. 2
Proposal: The 2018 Earnings Distribution Proposal is presented
for adoption.
Explanation:
1. The corporate net profit after tax of the Bank in 2018 amounted to NTD4,008,369,568.56. With the addition of undistributed earnings at the beginning amounting to NTD199,907,627.29.The effect of retrospective application and retrospective restatement is negative at NTD 80,676,006, and the gain or loss on disposal of equity instruments measured at fair value through OCI or losses is negative at NTD 5,350,216.66, and the defined benefit plan reassessed value of negative NTD29,116,472 in 2018, the Bank shall appropriate 30% or NTD1,202,510,871 as legal reserve under law, and 1% of corporate earnings or NTD40,083,696 as special reserve under FSC Letter Jin-Guan-Yin-Fa No. 10510001512. The earnings that could be appropriated for distribution amounted to NTD2,850,539,934.19 and will be distributed as follows:
(I) Shareholder dividends – stock dividends (NTD0.52 per share): NTD1,833,264,400.
(II) Shareholder dividends – cash dividend (NTD0.28 per share): NTD987,142,368.
2. Taichung Commercial Bank 2018 Earnings Distribution Statement. Please refer to Page 31 of the Annual Meeting Handbook
Resolutions:
31
Taichung Commercial Bank Co., Ltd.
Earnings Distribution Statement
2018
Unit: NTD
Unappropriated earnings - beginning $ 199,907,627.29
Effect of retrospective application and
retrospective restatement
(80,676,006.00)
Adjusted unappropriated earnings -
beginning
119,231,621.29
Disposal of equity instrument investments
measured at fair value through OCI,
cumulative gains and losses transferred
directly to retained earnings
(5,350,216.66)
Defined benefit plan remeasurement
recognized to retained earnings
(29,116,472.00)
Adjusted unappropriated earnings 84,764,932.63
Net income 4,008,369,568.56
Legal reserve appropriated (1,202,510,871.00)
Special reserve as required by law (40,083,696.00)
Current distributable earnings 2,850,539,934.19
Distributions
Shareholder dividends – stock
(NTD0.52/share)
1,833,264,400
Shareholder dividends – cash
(NTD0.28/share)
987,142,368 2,820,406,768.00
Unappropriated earnings - ending $ 30,133,166.19
32
Discussions
33
Discussions No. 1
Proposal: Proposing to have new shares issued through
capitalization of earnings in 2018, please proceed to
discuss.
Explanation:
1. The Company for business needs plans to appropriate
stock dividends of NTD1,833,264,400 from the 2018
distributable earnings with 183,326,440 shares issued at
the ratio of 52 shares distributed per thousand shares at
NTD10 par.
2. The earnings distribution is calculated in accordance with
the shareholders and their respective shareholding ratio in
the register of shareholders. Fractional share distribution is
to be consolidated by shareholders and registered with the
Company’s Stock Department for stock consolidation
within five days from the record date. Fractional share that
is not consolidated or remains a fractional share after
consolidation should be paid with an equivalent cash
amount (rounded up to the dollar). Fractional shares will
be purchased by persons arranged by the Chairman as
authorized by the Board. In the event that the total number
of outstanding shares in circulation and the shareholders’
dividend ratio are affected as a result of the company’s
issuing new shares or financial bonds conversion through
capitalization, employee’s exercising warrants,
repurchasing shares of the Company or transferring
treasury shares to employees and canceling treasury shares,
it is proposed to authorize the Board of Directors in the
meeting of shareholders to arrange the necessary
adjustments.
34
3. The capitalization of retained earnings into new shares is
pending on the final approval of the Annual meeting of
shareholders and the approval of the competent authority.
Once approved, the Annual meeting of shareholders is
requested to authorize the Board of Directors to set the
dividend day.
4. The terms and conditions of the capitalization of retained
earnings into new shares may be subject to alteration at the
request of the competent authority. The Annual meeting of
shareholders is requested to authorize the Board of
Directors with full power of attorney to make such
alteration as per the request of the competent authority.
5. The shareholder’s rights and obligations for the new shares
are the same as those of the existing shares.
6. The new shares issued through capitalization in
accordance with Article 10 of the Regulations Governing
the Offering and Issuance of Securities by Securities
Issuers are without a delivered printed stock but by a
book-entry delivery.
Resolutions:
35
Discussions No. 2
Proposal: Amendments to partial provisions of Procedure for
Handling Acquisition or Disposal of Assets. It is
submitted for discussion.
Explanation:
1. The amendments are made to partial provisions of 《Procedure for Handling Acquisition or Disposal of Assets 》�in accordance with the new amendments to the “Regulations Governing the Acquisition or Disposal of Assets by Public Companies "with the official letter Jin-guan-zheng-fa No.10703410725 dated November 26, 2018 by Financial Supervisory Commission, and in accordance with the announcement format required by the official letter Jin-guan-
zheng-fa No.10703439303 dated December 4, 2018 from FSC.
2. The main points of the amendment are as follows:
(1) In accordance with the International Financial Reporting Standards No. 16 Lease, to expand the scope of
right-of-use assets.
(2) Considering that in conducting derivatives transactions, the bank has applied the provisions of “Regulations Governing Internal Operating Systems and Procedures for
Banks Conducting Financial Derivatives Business” following its industry, it is therefore specified that the financial laws and regulations shall prevail.
(3) To define the passive qualifications of external experts.
3. Table of comparison of amendments to provisions, draft amendments and announcement format are detailed in the annex. (Please refer to pages 36-96 in this handbook)
Resolutions:
36
The “Procedural Rules for Acquisition or Disposal of Assets
of Taichung Commercial Bank” amendment before and after
Clauses after the amendment Existing clauses Remark
Article 1 For the management of assets,
Taichung Commercial Bank Co.,
Ltd. (hereinafter referred to as the
“Company”) enacted the Procedure
for Handling Acquisition or
Disposal of Assets (hereinafter
referred to as the “Procedure”) in
accordance with the “Regulations
Governing the Acquisition or
Disposal of Assets by Public
Companies,” issued by the
competent authority.
Article 1 For the management of assets,
Taichung Commercial Bank Co.,
Ltd. (hereinafter referred to as the
“Company”) enacted the Procedure
for Handling Acquisition or
Disposal of Assets (hereinafter
referred to as the “Procedure”) in
accordance with the “Regulations
Governing the Acquisition or
Disposal of Assets by Public
Companies,” issued by the
competent authority.
This article has
not been
amended.
Article 2 For acquisition or disposal of assets
by the Company, it shall be subject
to the provisions of the Procedure.
However, if there are other
provisions of the financial related
laws and regulations stated
otherwise, such provisions shall
prevail.
For the Company to conduct the
business of derivatives or engage in
the derivatives trading, it shall by
subject to the relevant provisions
issued by the competent authority
and “Operational Strategy and
Procedural Guidelines for
Conducting Derivative Financial
Commodity” issued by the
Competent.
Article 2 For acquisition or disposal of assets
by the Company, it shall be subject
to the provisions of the Procedure.
However, if there are other laws
and regulations stated otherwise,
such provisions shall prevail.
In accordance the
“Regulations
Governing the
Acquisition or
Disposal of
Assets by Public
Companies”
issued with the
official letter No.
Jin-guan-zheng-
fa 10703410725
dated November
26, 2018 by the
Financial
Supervisory
Commission, it is
specified that the
financial laws
and regulations
shall prevail.
Article 3 The term "assets" as used in these
Regulations includes the following:
1. Investments in stocks, government
bonds, corporate bonds, financial
bonds, securities representing
interest in a fund, depositary
receipts, call (put) warrants,
beneficial interest securities, and
asset-backed securities.
2. Real property (including land,
houses and buildings, investment
property) and equipment.
3. Memberships.
Article 3 The term "assets" as used in these
Regulations includes the following:
1. Investments in stocks, government
bonds, corporate bonds, financial
bonds, securities representing
interest in a fund, depositary
receipts, call (put) warrants,
beneficial interest securities, and
asset-backed securities.
2. Real property (including land,
houses and buildings, investment
property and land use rights) and
equipment.
3. Memberships
1. To add the
right-of-use
assets in
paragraph 5
and to move
the right to use
land from
paragraph 2
and include in
paragraph 5, in
accordance
with the
“Regulations
Governing the
Acquisition or
Disposal of
37
Clauses after the amendment Existing clauses Remark
4. Patents, copyrights, trademarks,
franchise rights, and other
intangible assets.
5. Right-of-use assets.
6. Claims of Taichung Commercial
Bank (including receivables, bills
purchased and discounted, loans,
and overdue receivables).
7. Derivatives.
8. Assets acquired or disposed of in
connection with mergers,
demergers, acquisitions, or transfer
of shares in accordance with law.
9. Other major assets.
4. Patents, copyrights, trademarks,
franchise rights, and other
intangible assets.
5. Claims of financial institutions
(including receivables, bills
purchased and discounted, loans,
and overdue receivables).
6. Derivatives.
7. Assets acquired or disposed of in
connection with mergers,
demergers, acquisitions, or transfer
of shares in accordance with law.
8. Other major assets.
Assets by
Public
Companies”
with the
official letter
No. Jin-guan-
zheng-fa
10703410725
dated
November 26,
2018 issued by
Financial
Supervisory
Commission.
2. The
numbering of
the paragraph
is amended
accordingly
and the partial
description of
wording in
paragraph 6 is
amended.
Article 4 The terms used in the Procedure are
defined as follows:
1. Derivatives: Forward contracts,
options contracts, futures contracts,
leverage contracts, or swap
contracts, whose value is derived
from a specified interest rate,
financial instrument price,
commodity price, foreign exchange
rate, index of prices or rates, credit
rating or credit index, or other
variable; or hybrid contracts
combining the above contracts; or
hybrid contracts or structured
products containing embedded
derivatives. The term "forward
contracts" does not include
insurance contracts, performance
contracts, after-sales service
contracts, long-term leasing
contracts, or long-term purchase
(sales) contracts.
2. Assets acquired or disposed through
mergers, demergers, acquisitions, or
transfer of shares in accordance
with law: Refers to assets acquired
or disposed through mergers,
demergers, or acquisitions
conducted under the Business
Article 4 The terms used in the Procedure
are defined as follows:
1. Derivatives: Forward contracts,
options contracts, futures contracts,
leverage contracts, or swap
contracts, whose value is derived
from assets, interest rates, foreign
exchange rates, indexes or other
interests. The term "forward
contracts" does not include
insurance contracts, performance
contracts, after-sales service
contracts, long-term leasing
contracts, or long-term purchase
(sales) contracts.
2. Assets acquired or disposed
through mergers, demergers,
acquisitions, or transfer of shares in
accordance with law: Refers to
assets acquired or disposed through
mergers, demergers, or acquisitions
1. In accordance
the
“Regulations
Governing the
Acquisition or
Disposal of
Assets by
Public
Companies”
issued with the
official letter
Jin-guan-
zheng-fa No.
10703410725
dated
November 26,
2018 by the
Financial
Supervisory
Commission,
to amend the
scope of the
derivatives
under
paragraph 1,
and the
wording
accordingly.
2. To amend the
38
Clauses after the amendment Existing clauses Remark
Mergers and Acquisitions Act,
Financial Holding Company Act,
Financial Institution Merger Act
and other acts, or to transfer of
shares from another company
through issuance of new shares of
its own as the consideration therefor
(hereinafter "transfer of shares")
under Article 156-3 of the Company
Act.
3. Related party or subsidiary: As
defined in the Regulations
Governing the Preparation of
Financial Reports by Securities
Issuers.
4. Professional appraiser: Refers to a
real property appraiser or other
person duly authorized by law to
engage in the value appraisal of real
property or equipment.
5. Date of occurrence: Refers to the
date of contract signing, date of
payment, date of consignment trade,
date of transfer, dates of boards of
directors resolutions, or other date
that can confirm the counterpart and
monetary amount of the transaction,
whichever date is earlier; provided,
for investment for which approval
of the competent authority is
required, the earlier of the above
date or the date of receipt of
approval by the competent authority
shall apply.
6. Mainland China area investment:
Refers to investments in the
mainland China area approved by
the Ministry of Economic Affairs
Investment Commission or
conducted in accordance with the
provisions of the Regulations
Governing Permission for
Investment or Technical
Cooperation in the Mainland Area.
conducted under the Business
Mergers and Acquisitions Act,
Financial Holding Company Act,
Financial Institution Merger Act
and other acts, or to transfer of
shares from another company
through issuance of new shares of
its own as the consideration
therefor (hereinafter "transfer of
shares") under Article 156-8 of the
Company Act.
3. Related party or subsidiary: As
defined in the Regulations
Governing the Preparation of
Financial Reports by Securities
Issuers.
4. Professional appraiser: Refers to a
real property appraiser or other
person duly authorized by law to
engage in the value appraisal of
real property or equipment.
5. Date of occurrence: Refers to the
date of contract signing, date of
payment, date of consignment
trade, date of transfer, dates of
boards of directors resolutions, or
other date that can confirm the
counterpart and monetary amount
of the transaction, whichever date
is earlier; provided, for investment
for which approval of the
competent authority is required, the
earlier of the above date or the date
of receipt of approval by the
competent authority shall apply.
6. Mainland China area investment:
Refers to investments in the
mainland China area approved by
the Ministry of Economic Affairs
Investment Commission or
conducted in accordance with the
provisions of the Regulations
Governing Permission for
Investment or Technical
Cooperation in the Mainland Area.
cited article of
the Procedure
in line with the
amendments to
the numbering
of the articles
in the
Company Act.
39
Article 5 Professional appraisers and their
officers, certified public accounts,
attorneys, and securities
underwriters that provide the
Company with appraisal reports,
certified public accountant's
opinions, attorney's opinions, or
underwriter's opinions shall meet
the following requirements:
1. May not have previously received a
final and unappealable sentence to
imprisonment for 1 year or longer
for a violation of the Act, the
Company Act, the Banking Act of
The Republic of China, the
Insurance Act, the Financial
Holding Company Act, or the
Business Entity Accounting Act, or
for fraud, breach of trust,
embezzlement, forgery of
documents, or occupational crime.
However, this provision does not
apply if 3 years have already passed
since completion of service of the
sentence, since expiration of the
period of a suspended sentence, or
since a pardon was received.
2. May not be a related party or de
facto related party of any party to
the transaction.
3. If the company is required to obtain
appraisal reports from two or more
professional appraisers, the different
professional appraisers or appraisal
officers may not be related parties
or de facto related parties of each
other. When the personnel of the
preceding paragraph issues the
appraisal report or opinion, it shall
be handled in accordance with the
following matters:
1. Prior to accepting a case, they
shall prudently assess their own
professional capabilities,
practical experience, and
independence.
2. When examining a case, they
shall appropriately plan and
execute adequate working
procedures, in order to produce
a conclusion and use the
conclusion as the basis for
Article 5 Professional appraisers and their
officers, certified public accounts,
attorneys, and securities
underwriters that provide the
Company with appraisal reports,
certified public accountant's
opinions, attorney's opinions, or
underwriter's opinions shall not be
the related party with the counter
party of the transaction.
1. To add
subparagraph
1-3 of
paragraph1 in
order to
specify the
passive
qualifications
of external
experts.
2. In order to
clarify the
responsibilities
of external
experts,
paragraph 2 is
added to
specify the
assessment,
examination
and statement
of the
appraisal
report or
opinion issued
by the relevant
experts.
40
issuing the report or
pinion. The related working
procedures, data collected, and
conclusion shall be fully and
accurately specified in the case
working papers.
3. They shall undertake an item-
by-item evaluation of the
comprehensiveness, accuracy,
and reasonableness of the
sources of data used, the
parameters, and the
information, as the basis for
issuance of the appraisal report
or the opinion.
4. They shall issue a statement
attesting to the professional
competence and independence
of the personnel who prepared
the report or opinion, and that
they have evaluated and found
that the information used is
reasonable and accurate, and
that they have complied with
applicable laws and regulations.
41
Article 6 The enactment of Procedure for
Handling Acquisition or Disposal of
the Company:
1. The enactment or amendment of
this Procedure shall be approved by
more than one-half of all members
of the Audit Committee and shall be
submitted to the Board of Directors
for a resolution.
2. If the preceding subparagraph is not
approved by more than one-half of
all members of the Audit
Committee, it may be agreed by
more than two-thirds of all
directors, and the resolution of the
Audit Committee shall be stated in
the minutes of the Board of
Directors.
3. All members of the Audit
Committee referred to in
subparagraph 1 and all directors
referred to in the preceding
subparagraph shall be calculated by
the actual incumbent.
Article 6 The assessment and operational
procedure of acquisition or
Disposal of the Company is as
follows:
1. The responsible department of the
Company shall, in handling
acquisition or disposal of the assets
by the Company, submit the
reasons for the intended acquisition
or disposal, the subject matter, the
counterparty, the transfer price, the
payment and collection terms and
the basis for the price, etc., for
approval in accordance with the
levels of responsibility chart of the
Company.
2. Under the condition that the
acquisition or disposal of assets by
the Company in accordance with
the Procedures or other laws shall
be approved by the Board of
Directors, if a director expresses
objection and has a record or
written statement, the Company
shall send such objection materials
by the Directors to the Audit
Committee.
3. When submitting the acquisition or
disposal of assets transactions to
the Board of Directors for
discussion in accordance with the
provisions of subparagraph 2, the
opinion of each of the independent
directors shall be fully considered.
If the independent director has
objections or reservations, such
objections or reservations shall be
stated in the minutes of the Board
of Directors.
4. The enactment or amendment of
acquisition or Disposal Assets
Procedure shall be approved by
more than one-half of all members
of the Audit Committee and shall
be submitted to the Board of
Directors for a resolution.
5. If the preceding subparagraph is
not approved by more than one-half
of all members of the Audit
Committee, it may be agreed by
more than two-thirds of all
directors, and the resolution of the
1. To adjust
accordingly
and move
paragraph 1,
subparagraph
1 and 7 of this
Article to
Article 7.
2. The Company
has established
Audit
Committee in
accordance
with the
regulations,
therefore
subparagraph
2 and 3 of
paragraph 1
are deleted.
3. The numbering
of
subparagraph
is amended
accordingly,
and the partial
wording
description of
subparagraph
1 is amended.
42
Audit Committee shall be stated in
the minutes of the Board of
Directors.
6. All members of the Audit
Committee referred to in
subparagraph 4 and all directors
referred to in the preceding
subparagraph shall be calculated by
the actual incumbent.
7. The relevant operations for the
acquisition or disposal of assets
shall be handled in accordance with
the relevant provisions of the
internal control system of the
Company. If a major violation is
discovered, the relevant personnel
shall be disciplined depending on
the circumstances surrounding the
violation.
Article 7 The operating procedure for the
acquisition or disposal of assets of
the Company include the reference
basis, trading term, authorization
level and executive unit, etc., shall
be handled in accordance with the
law, the relevant regulations of the
competent authority, the levels of
responsibilities chart of the
Company, and the related
operational specifications:
1. Securities: they shall be subject to
the relevant provisions of the
Banking Act and the “investment
policy” of the Company.
2. Real property or its right-of-use
assets: they shall comply with the
Banking Act, the relevant
regulations of the competent
authority and the standards of the
“Management Rules for Real
Estate” of the Company.
Article 7 The decision procedure of the
trading term for the acquisition or
disposal of assets (including price
determination method, reference
basis, authorization level and
executive unit) by the Company:
1. Securities: they shall be subject to
the relevant provisions of the
Banking Act and the “investment
policy” of the Company, and the
investment business department of
the Company shall take into
account the market conditions and
set a reasonable price. The
investment scope and amount shall
be operated within the amount
authorized by the Managing
Director of the Board or Board of
Directors.
2. Real property: subject to the
Banking Act and the provisions of
the “Rules for Real Property
Management", it shall be
conducted by the General Affairs
Department to collect the
information on market condition, to
secure a target and to send it to the
Review Department for appraisal in
accordance with the “Guidelines
for Appraisal on Real Estate
Collaterals" of the Company, so to
1. The original
subparagraph
1 and 7,
paragraph 1 of
the previous
article to be
included into
this Article.
2. To be in line
with the
International
Financial
Reporting
Standards No.
16 on Lease,
the right of use
is included in
subparagraph
3 and 4 of
paragraph 1.
3. Subparagraph
1-3 and 5 are
amended to
avoid
repeating the
relevant
regulations.
4. Alteration of
numbering of
the
subparagraph.
43
3. Membership card, intangible assets,
equipment or its right-of-use assets:
the purchase matters shall be
handled based on the divisions of
responsibilities under the
“Operational Rules for Matters of
Construction and the Purchase,
Order of the Custom-made and Sale
of the Property” of the Company.
4. The acquisition or disposal of the
real estate and equipment shall be
based on one of the price
comparison, negotiation or bidding.
5. Derivatives: it is to be conducted by
the Derivatives Investment Trading
Department of the Company in
accordance with the relevant
regulations of the competent
authority and the “Management
Strategy for Operational Guidelines
for Conducting Derivative Financial
Commodity Business”.
6. The acquisition or disposal of other
assets shall be subject to the
relevant regulations of the
Company.
The relevant operation regarding the
acquisition or disposal of assets
shall be all subject to the relevant
provisions of the internal control
system of the Company. I n the
event of major violations
discovered, the related personnel
shall be disciplined depending on
the circumstances surrounding the
violation.
set up a reference price to be
submitted to the Board of Directors
for approval.
3. Equipment: the market conditions
shall be considered to set a
reference price and the purchasing
matter to be conducted subject to
the divisions of responsibilities
under “Operational Guidelines for
Construction and the Purchase,
Order of the Custom-made and
Sale of Property" of the Company.
4. The acquisition or disposal of the
real estate and equipment shall be
based on one of the price
comparison, negotiation or bidding.
5. Derivatives: it is to be conducted
by the derivatives investment
trading department of the Company
to set a reasonable price based on
the market conditions and proceed
with the investment trading within
the investment scope and amount
authorized by the Board of
Directors.
6. The acquisition or disposal of other
assets shall be subject to the
relevant regulations of the
Company.
Article 8 The total amount of the real estate
not for business use and its right-of-
use assets or the securities acquired
by the Company and each of its
subsidiaries, and the limits of
individual securities shall be subject
to the Banking Act and the
regulations of the competent
authority.
Article 8 The total amount of the real estate
not for business use or the
securities acquired by the Company
and each of its subsidiaries, and the
limits of individual securities shall
be subject to the Banking Act and
the regulations of the competent
authority.
To be in line with
the International
Financial
Reporting
Standards No. 16
on Lease, the
right-of-use is
included in the
article.
Article 9 The control procedure for the
acquisition or disposal of assets by
the subsidiary company:
1. The subsidiary company shall, in
accordance with the relevant
Article 9 The control procedure for the
acquisition or disposal of assets by
the subsidiary company:
1. The subsidiary company shall, in
accordance with the relevant
The partial
wording of
subparagraph 3 is
slightly amended,
and the citing of
44
regulations and the provisions of the
competent authority, enact and
implement the procedure for the
acquisition or disposition of assets.
2. For the acquisition or disposal of
assets by the subsidiary company, it
shall be subject to the business
competency rules of each subsidiary
company.
3. The subsidiary company shall
ensure that the procedure for the
acquisition or disposal of assets
enacted is in compliance with the
relevant laws and regulations and
check precisely whether the relevant
matters are conducted in accordance
with the procedure. The internal
audit of the Company shall review
the audit report or self-inspection
report and other related matters of
the subsidiary company .
4. The Company shall handle the
relevant matters concerning the
regulatory filing for the public
announcement on behalf of the
subsidiary company, in accordance
with the provisions of Article 31.
regulations and the provisions of
the competent authority, enact and
implement the procedure for the
acquisition or disposition of assets.
2. For the acquisition or disposal of
assets by the subsidiary company,
it shall be subject to the business
competency rules of each
subsidiary company.
3. The subsidiary company shall
ensure that the procedure for the
acquisition or disposal of assets
enacted is in compliance with the
relevant laws and regulations and
check precisely whether the
relevant matters are conducted in
accordance with the procedure.
The internal audit of the Company
shall review the audit report or
self-inspection report and other
related matters of the subsidiary
company.
4. The Company shall handle the
relevant matters concerning the
regulatory filing for the public
announcement on behalf of the
subsidiary company, in accordance
with the provisions of Article 34.
paragraph 4 is
adjusted
accordingly.
Article 10 In acquiring or disposing of real
property, equipment, or right-of-use
assets thereof where the transaction
amount reaches 20 percent of the
Company's paid-in capital or
NTD300 million or more, the
Company, unless transacting with a
domestic government agency,
engaging others to build on its own
land, engaging others to build on
rented land, or acquiring or
disposing of equipment or right-of-
use assets thereof held for business
use, shall obtain an appraisal report
prior to the date of occurrence of the
event from a professional appraiser
and shall further comply withthe
following provisions:
1. Where due to special circumstances
it is necessary to give a limited
price, specified price, or special
price as a reference basis for the
transaction price, the transaction
shall be submitted for approval in
advance by the board of directors;
the same procedure shall also be
Article 10 In acquiring or disposing of real
property or equipment, or where
the transaction amount reaches 20
percent of the Company's paid-in
capital or NTD300 million or more,
the Company, unless transacting
with a government agency,
engaging others to build on its own
land, engaging others to build on
rented land, or acquiring or
disposing of equipment held for
business use, shall obtain an
appraisal report prior to the date of
occurrence of the event from a
professional appraiser and shall
further comply with the following
provisions:
1. Where due to special circumstances
it is necessary to give a limited
price, specified price, or special
price as a reference basis for the
transaction price, the transaction
shall be submitted for approval in
advance by the board of directors;
if the trading condition in the future
1. To be in line
with the
International
Financial
Reporting
Standard No.
16 on Lease,
the right-of-
use assets is
included in
this article,
and paragraph
1 is amended.
2. The scope of
exemption
from
transactions
with
government
agencies is
defined to be
limited to
domestic
government
agencies only.
3. The partial
45
followed whenever there is any
subsequent change to the terms and
conditions of the transaction.
2. Where the transaction amount is
NTD1 billion or more, appraisals
from two or more professional
appraisers shall be obtained.
3. Where any one of the following
circumstances applies with respect
to the professional appraiser's
appraisal results, unless all the
appraisal results for the assets to be
acquired are higher than the
transaction amount, or all the
appraisal results for the assets to be
disposed of are lower than the
transaction amount, a certified
public accountant shall be engaged
to perform the appraisal in
accordance with the provisions of
Statement of Auditing Standards
No. 20 published by the ROC
Accounting Research and
Development Foundation (ARDF)
and render a specific opinion
regarding the reason for the
discrepancy and the appropriateness
of the transaction price:
(1) The discrepancy between the
appraisal result and the transaction
amount is 20 percent or more of the
transaction amount.
(2) The discrepancy between the
appraisal results of two or more
professional appraisers is 10 percent
or more of the transaction amount.
4. No more than 3 months may elapse
between the date of the appraisal
report issued by a professional
appraiser and the contract execution
date; provided, where the publicly
announced current value for the
same period is used and not more
than 6 months have elapsed, an
opinion may still be issued by the
original professional appraiser.
changes, it shall also follow the
above procedure accordingly.
2. Where the transaction amount is
NTD1 billion or more, appraisals
from two or more professional
appraisers shall be obtained.
3. Where any one of the following
circumstances applies with respect
to the professional appraiser's
appraisal results, unless all the
appraisal results for the assets to be
acquired are higher than the
transaction amount, or all the
appraisal results for the assets to be
disposed of are lower than the
transaction amount, a certified
public accountant shall be engaged
to perform the appraisal in
accordance with the provisions of
Statement of Auditing Standards
No. 20 published by the ROC
Accounting Research and
Development Foundation (ARDF)
and render a specific opinion
regarding the reason for the
discrepancy and the
appropriateness of the transaction
price:
(1) The discrepancy between the
appraisal result and the transaction
amount is 20 percent or more of the
transaction amount.
(2) The discrepancy between the
appraisal results of two or more
professional appraisers is 10
percent or more of the transaction
amount.
4. No more than 3 months may elapse
between the date of the appraisal
report issued by a professional
appraiser and the contract
execution date; provided, where the
publicly announced current value
for the same period is used and not
more than 6 months have elapsed,
an opinion may still be issued by
the original professional appraiser.
wording in
subparagraph
1 of paragraph
1 is amended.
Article 11 The Company acquiring or
disposing of securities shall, prior to
the date of occurrence of the event,
obtain financial statements of the
issuing company for the most recent
Article 11 The Company acquiring or
disposing of securities shall, prior
to the date of occurrence of the
event, obtain financial statements
of the issuing company for the
The wording is
slightly amended.
46
period, certified or reviewed by a
certified public accountant (CPA),
for reference in appraising the
transaction price, and if the dollar
amount of the transaction is 20
percent of the Company's paid-in
capital or NTD300 million or more,
the Company shall additionally
engage a certified public accountant
prior to the date of occurrence of the
event to provide an opinion
regarding the reasonableness of the
transaction price. If the CPA needs
to use the report of an expert as
evidence, the CPA shall do so in
accordance with the provisions of
Statement of Auditing Standards
No. 20 published by the ARDF.
This requirement does not apply,
however, to publicly quoted prices
of securities that have an active
market, or where otherwise
provided by regulations of the
Financial Supervisory Commission
(FSC).
most recent period, certified or
reviewed by a certified public
accountant (CPA), for reference in
appraising the transaction price,
and if the dollar amount of the
transaction is 20 percent of the
Company's paid-in capital or
NTD300 million or more, the
Company shall additionally engage
a certified public accountant prior
to the date of occurrence of the
event to provide an opinion
regarding the reasonableness of the
transaction price. If the CPA needs
to use the report of an expert as
evidence, the CPA shall do so in
accordance with the provisions of
Statement of Auditing Standards
No. 20 published by the ARDF.
This requirement does not apply,
however, to publicly quoted prices
of securities that have an active
market, or where otherwise
provided by regulations of the
Financial Supervisory Commission
(FSC).
Article 12 Where the Company acquires or
disposes of intangible assets or
right-of-use assets thereof or
memberships and the transaction
amount reaches 20 percent or more
of paid-in capital or NTD300
million or more, except in
transactions with a domestic
government agency, the Company
shall engage a certified public
accountant prior to the date of
occurrence of the event to render an
opinion on the reasonableness of the
transaction price; the CPA shall
comply with the provisions of
Statement of Auditing Standards
No. 20 published by the ARDF.
Article 12 Where the Company acquires or
disposes of memberships and
intangible assets transaction
amount reaches 20 percent or more
of paid-in capital or NTD300
million or more, except in
transactions with a government
agency, the Company shall engage
a certified public accountant prior
to the date of occurrence of the
event to render an opinion on the
reasonableness of the transaction
price; the CPA shall comply with
the provisions of Statement of
Auditing Standards No. 20
published by the ARDF.
1. To be in line
with the
International
Financial
Reporting
Standards No.
16 on Lease,
the right-of-
use assets is
included in
this article,
and some
wordings are
amended.
2. The scope of
exemption
from
transactions
with
government
agencies is
defined to be
limited to
domestic
government
agencies only.
47
Article 13 The calculation of the transaction
amounts referred to in the preceding
3 articles shall be done in
accordance with Article 28,
paragraph 2 herein, and "within the
preceding year" as used herein
refers to the year preceding the date
of occurrence of the current
transaction. Items for which an
appraisal report from a professional
appraiser or a CPA's opinion has
been obtained need not be counted
toward the transaction amount.
Article 12-1 The calculation of the
transaction amounts referred to in
the preceding 3 articles shall be
done in accordance with Article 31,
paragraph 2 herein, and "within the
preceding year" as used herein
refers to the year preceding the date
of occurrence of the current
transaction. Items for which an
appraisal report from a professional
appraiser or a CPA's opinion has
been obtained need not be counted
toward the transaction amount.
The numbering of
the paragraph is
changed and the
citing of the
paragraph is
adjusted
accordingly.
Article 14 Where a public company acquires
or disposes of assets through court
auction procedures, the evidentiary
documentation issued by the court
may be substituted for the appraisal
report or CPA opinion.
Article 13 Where a public company
acquires or disposes of assets
through court auction procedures,
the evidentiary documentation
issued by the court may be
substituted for the appraisal report
or CPA opinion.
The numbering of
the paragraph is
changed.
Article 15 When the Company engages in
any acquisition or disposal of assets
from or to a related party, in
addition to ensuring that the
necessary resolutions are adopted
and the reasonableness of the
transaction terms is appraised, if the
transaction amount reaches 10
percent or more of the Company's
total assets, the Company shall also
obtain an appraisal report from a
professional appraiser or a CPA's
opinion in compliance with the
provisions of the preceding Section
and this Section.
The calculation of the transaction
amount referred to in the preceding
paragraph shall be made in
accordance with Article 13 herein.
When judging whether a transaction
counterparty is a related party, in
addition to legal formalities, the
substance of the relationship shall
also be considered.
Article 14 When the Company engages in
any acquisition or disposal of assets
from or to a related party, in
addition to ensuring that the
necessary resolutions are adopted
and the reasonableness of the
transaction terms is appraised, if
the transaction amount reaches 10
percent or more of the Company's
total assets, the Company shall also
obtain an appraisal report from a
professional appraiser or a CPA's
opinion in compliance with the
provisions of the preceding Section
and this Section.
The calculation of the transaction
amount referred to in the preceding
paragraph shall be made in
accordance with Article 12-1
herein.
When judging whether a
transaction counterparty is a related
party, in addition to legal
formalities, the substance of the
relationship shall also be
considered.
1. The
numbering of
the paragraph
is amended
and the
wording is
slightly
modified.
2. The citing of
the article in
paragraph 2 is
adjusted.
48
Article 16 When the Company intends to
acquire or dispose of real property
or right-of-use assets thereof from
or to a related party, or when it
intends to acquire or dispose of
assets other than real property or
right-of-use assets thereof from or
to a related party and the transaction
amount reaches 20 percent or more
of paid-in capital, 10 percent or
more of the Company's total assets,
or NTD300 million or more, except
in trading of domestic government
bonds or bonds and separate and
resale agreements, or subscription
or redemption of money market
funds issued by domestic securities
investment trust enterprises, the
company may not proceed to enter
into a transaction contract or make a
payment until the following matters
have been approved by the board of
directors and recognized by the
supervisors:
1. The purpose, necessity and
anticipated benefit of the acquisition
or disposal of assets.
2. The reason for choosing the related
party as a transaction counterparty.
3. With respect to the acquisition of
real property or right-of-use assets
thereof from a related party,
information regarding appraisal of
the reasonableness of the
preliminary transaction terms in
accordance with Article 17 and
Article 18.
4. The date and price at which the
related party originally acquired the
real property, the original
transaction counterparty, and that
transaction counterparty's
relationship to the company and the
related party.
5. Monthly cash flow forecasts for the
year commencing from the
anticipated month of signing of the
contract, and evaluation of the
necessity of the transaction, and
reasonableness of the fund
utilization.
Article 15 When the Company intends to
acquire or dispose of real property
thereof from or to a related party,
or when it intends to acquire or
dispose of assets other than real
property thereof from or to a
related party and the transaction
amount reaches 20 percent or more
of paid-in capital, 10 percent or
more of the Company's total assets,
or NTD300 million or more, except
in trading of government bonds or
bonds and separate and resale
agreements, or subscription or
redemption of money market funds
issued by domestic securities
investment trust enterprises, the
company may not proceed to enter
into a transaction contract or make
a payment until the following
matters have been approved by the
board of directors and recognized
by the supervisors:
1. The purpose, necessity and
anticipated benefit of the
acquisition or disposal of assets.
2. The reason for choosing the related
party as a transaction counterparty.
3. With respect to the acquisition of
real property thereof from a related
party, information regarding
appraisal of the reasonableness of
the preliminary transaction terms in
accordance with Article 16and
Article 17.
4. The date and price at which the
related party originally acquired the
real property, the original
transaction counterparty, and that
transaction counterparty's
relationship to the company and the
related party.
5. Monthly cash flow forecasts for the
year commencing from the
anticipated month of signing of the
contract, and evaluation of the
necessity of the transaction, and
reasonableness of the fund
utilization.
1. The numbering
of the article is
amended and
the citing of
paragraph1,
subparagraph 3
and paragraph
2 are adjusted.
2. To be in line
with the
International
Financial
Reporting
Standard No.
16 on Lease,
the right-of-
use assets is
include ding
the provisions
of this article,
so this article
is amended
accordingly.
3. In paragraph 1,
the
government
bond is
defined as the
domestic
government
bond, which
may be
exempted from
the procedure
of being
submitted to
the board of
directors for
approval and
to the
supervisors for
recognition.
4. Considering
that the
provisions
regarding to
related party
transactions
have been
included in the
“Real Estate
Management
Rules” and
“Operational
49
6. An appraisal report from a
professional appraiser or a CPA's
opinion obtained in compliance
with the preceding article.
7. Restrictive covenants and other
important stipulations associated
with the transaction.
The calculation of the transaction
amounts referred to in the preceding
paragraph shall be made in
accordance with Article 28,
paragraph 2 herein, and "within the
preceding year" as used herein
refers to the year preceding the date
of occurrence of the current
transaction. Items that have been
approved by the board of directors
and recognized by the supervisors
need not be counted toward the
transaction amount.
When a matter is submitted for
discussion by the board of directors
pursuant to paragraph 1, the board
of directors shall take into full
consideration each independent
director's opinions. If an
independent director objects to or
expresses reservations about any
matter, it shall be recorded in the
minutes of the board of directors
meeting.
Where an audit committee has been
established in accordance with the
provisions of the Act, the matters
for which paragraph 1 requires
recognition by the supervisors shall
first be approved by one-half or
more of all audit committee
members and then submitted to the
board of directors for a resolution,
and shall be subject to mutatis
6. An appraisal report from a
professional appraiser or a CPA's
opinion obtained in compliance
with the preceding article.
7. Restrictive covenants and other
important stipulations associated
with the transaction.
The calculation of the transaction
amounts referred to in the
preceding paragraph shall be made
in accordance with Article 31,
paragraph 2 herein, and "within
the preceding year" as used herein
refers to the year preceding the
date of occurrence of the current
transaction. Items that have been
approved by the board of directors
and recognized by the supervisors
need not be counted toward the
transaction amount.
For the acquisition or disposal of
the equipment for business use
between the Company and the
parent company or among the
subsidiaries, the board of directors
may authorize the chairman to
make a decision within a certain
amount according to the third
subparagraph of the first paragraph
of Article 7, and submit it
afterwards to the most recent
board of directors for recognition.
When a matter is submitted for
discussion by the board of
directors pursuant to paragraph 1,
the board of directors shall take
into full consideration each
independent director's opinions. If
an independent director objects to
or expresses reservations about
any matter, it shall be recorded in
the minutes of the board of
directors meeting.
Where an audit committee has
been established in accordance
with the provisions of the Act, the
matters for which paragraph 1
requires recognition by the
supervisors shall first be approved
by one-half or more of all audit
committee members and then
submitted to the board of directors
for a resolution, and shall be
Rules for
Matters of the
Purchase,
Ordering of
the Custom-
made, and sale
of Property” of
the Company,
paragraph 3 is
therefore
deleted to
simplify the
provisions of
administrative
procedure for
the acquisition
or disposal of
the equipment
for business
use among the
companies.
5. The
numbering of
the
paragraphs is
amended.
50
mutandis application of Article 6,
paragraphs 1, subparagraphs 2 and
3.
subject to mutatis mutandis
application of Article 6,
paragraphs 1, subparagraphs 5 and
6.
Article 17 The Company acquires real
property or right-of-use assets
thereof from a related party shall
evaluate the reasonableness of the
transaction costs by the following
means:
1. Based upon the related party's
transaction price plus necessary
interest on funding and the costs to
be duly borne by the buyer.
"Necessary interest on funding" is
imputed as the weighted average
interest rate on borrowing in the
year the Company purchases the
property; provided, it may not be
higher than the maximum non-
financial industry lending rate
announced by the Ministry of
Finance.
2. Total loan value appraisal from a
financial institution where the
related party has previously created
a mortgage on the property as
security for a loan; provided, the
actual cumulative amount loaned by
the financial institution shall have
been 70 percent or more of the
financial institution's appraised loan
value of the property and the period
of the loan shall have been 1 year or
more. However, this shall not apply
where the financial institution is a
related party of one of the
transaction counterparties.
Where land and structures
thereupon are combined as a single
property purchased or leased in one
transaction, the transaction costs for
the land and the structures may be
separately appraised in accordance
with either of the means listed in the
preceding paragraph.
The Company that acquires real
property or right-of-use assets
thereof from a related party and
appraises the cost of the real
property or right-of-use assets
thereof in accordance with the
preceding two paragraphs shall also
engage a CPA to check the
Article 16 The Company's transaction with
the related party shall evaluate the
reasonableness of the transaction
costs by the following means:
1. Based upon the related party's
transaction price plus necessary
interest on funding and the costs to
be duly borne by the buyer.
"Necessary interest on funding" is
imputed as the weighted average
interest rate on borrowing in the
year the Company purchases the
property; provided, it may not be
higher than the maximum non-
financial industry lending rate
announced by the Ministry of
Finance.
2. Total loan value appraisal from a
financial institution where the
related party has previously created
a mortgage on the property as
security for a loan; provided, the
actual cumulative amount loaned
by the financial institution shall
have been 70 percent or more of
the financial institution's appraised
loan value of the property and the
period of the loan shall have been 1
year or more. However, this shall
not apply where the financial
institution is a related party of one
of the transaction counterparties.
Where land and structures
thereupon are combined as a single
property purchased in one
transaction, the transaction costs
for the land and the structures may
be separately appraised in
accordance with either of the
means listed in the preceding
paragraph.
For the Company to trade with the
related party and to evaluate the
cost of real estate in accordance
with the provisions of Paragraph 1
and 2, it shall also retain an CPA to
review it and provide a substantive
opinion.
1. The numbering
of the article is
amended and
the wording is
slightly
modified.
2. To be in line
with the
International
Financial
Reporting
Standards,
No.16 on
Lease,
paragraph 1-4
are amended to
include in this
article the
right-of-use
assets of the
real estate
leased from
the related
party.
3. Considering
the fact that
between the
Company and
its
subsidiaries,
and the
subsidiaries
directly or
indirectly
100% held,
due to the
overall
planning of the
business, there
is a possibility
of collective
leasing of real
estate and sub-
lease
thereafter, and
the risk of
significant
trading
irregularity for
the previous
transaction is
51
appraisal and render a specific
opinion.
Where the Company acquires real
property or right-of-use assets
thereof from a related party and one
of the following circumstances
exists, the acquisition shall be
conducted in accordance with the
preceding article, and the preceding
three paragraphs do not apply:
1. The related party acquired the real
property or right-of-use assets
thereof through inheritance or as a
gift.
2. More than 5 years will have elapsed
from the time the related party
signed the contract to obtain the real
property or right-of-use assets
thereof to the signing date for the
current transaction.
3. The real property is acquired
through signing of a joint
development contract with the
related party, or through engaging a
related party to build real property,
either on the company's own land or
on rented land.
4. The real property right-of-use assets
for business use are acquired by the
public company with its parent or
subsidiaries, or by its subsidiaries in
which it directly or indirectly holds
100 percent of the issued shares or
authorized capital.
Where the Company's transaction
with the related party and one of
the following circumstances exists,
the acquisition shall be conducted in
accordance with Article 15, and the
preceding three paragraphs do not
apply:
1. The related party acquired the real
property thereof through
inheritance or as a gift.
2. The related party acquired the real
property thereof through
inheritance or as a gift.
3. More than 5 years will have
elapsed from the time the related
party signed the contract to obtain
the real property or right-of-use
assets thereof to the signing date
for the current transaction.
lower,
paragraph 4,
subparagraph 4
is therefore
added to
exclude the
application for
assessing the
reasonableness
of the
transaction
cost according
to this article
(the price of
the real estate
transaction or
the price of the
leased real
estate).
52
Article 18 When the results of a public
company's appraisal conducted in
accordance with paragraph 1 and
paragraph 2 of the preceding Article
are uniformly lower than the
transaction price, the matter shall be
handled in compliance with Article
19. However, where the following
circumstances exist, objective
evidence has been submitted and
specific opinions on reasonableness
have been obtained from a
professional real property appraiser
and a CPA have been obtained, this
restriction shall not apply:
1. Where the related party acquired
undeveloped land or leased land for
development, it may submit proof
of compliance with one of the
following conditions:
(1) Where undeveloped land is
appraised in accordance with the
means in the preceding Article, and
structures according to the related
party's construction cost plus
reasonable construction profit are
valued in excess of the actual
transaction price. The "Reasonable
construction profit" shall be deemed
the average gross operating profit
margin of the related party's
construction division over the most
recent 3 years or the gross profit
margin for the construction industry
for the most recent period as
announced by the Ministry of
Finance, whichever is lower.
(2) Completed transactions by
unrelated parties within the
preceding year involving other
floors of the same property or
neighboring or closely valued
parcels of land, where the land area
and transaction terms are similar
after calculation of reasonable price
discrepancies in floor or area land
prices in accordance with standard
property market sale or leasing
practices.
Article 17 When the results of a public
company's appraisal conducted in
accordance with paragraph 1 and
paragraph 2 of the preceding
Article are uniformly lower than
the transaction price, the matter
shall be handled in compliance
with Article 18. However, where
the following circumstances exist,
objective evidence has been
submitted and specific opinions on
reasonableness have been obtained
from a professional real property
appraiser and a CPA have been
obtained, this restriction shall not
apply:
1. Where the related party acquired
undeveloped land or leased land for
development, it may submit proof
of compliance with one of the
following conditions:
(1) Where undeveloped land is
appraised in accordance with the
means in the preceding Article, and
structures according to the related
party's construction cost plus
reasonable construction profit are
valued in excess of the actual
transaction price. The "Reasonable
construction profit" shall be
deemed the average gross operating
profit margin of the related party's
construction division over the most
recent 3 years or the gross profit
margin for the construction
industry for the most recent period
as announced by the Ministry of
Finance, whichever is lower.
(2) Completed transactions by
unrelated parties within the
preceding year involving other
floors of the same property or
neighboring or closely valued
parcels of land, where the land area
and transaction terms are similar
after calculation of reasonable price
discrepancies in floor or area land
prices in accordance with standard
property market sale practices.
(3) Completed transactions by
unrelated parties within the
preceding year involving other
floors of the same property, where
transaction terms are similar after
1. The numbering
of the article is
amended and
the cited
article for
paragraph 1 is
adjusted
accordingly.
2. To be in line
with the actual
operation of
real estate
leasing, the
limit is
extended on
the acquisition
of real estate
use-of-right
assets from the
related party,
under which
circumstance,
the lease
transaction
between non-
related parties
in the adjacent
area within
one year as a
reference case
for calculating
and estimating
the
reasonableness
of the
transaction
price. The
current
paragraph1,
subparagraph
1, item 3 is
consolidated
into item 2;
and to add that
a rental case is
also served as
a transaction
case.
Therefore,
paragraph 1,
subparagraph
1, item 2 and
subparagraph
2, and
paragraph 2
are amended
53
2. Where the Company acquiring real
property, or obtaining real property
right-of-use assets through leasing,
from a related party provides
evidence that the terms of the
transaction are similar to the terms
of completed transactions involving
neighboring or closely valued
parcels of land of a similar size by
unrelated parties within the
preceding year.
Completed transactions involving
neighboring or closely valued
parcels of land in the preceding
paragraph in principle refers to
parcels on the same or an adjacent
block and within a distance of no
more than 500 meters or parcels
close in publicly announced current
value; transactions involving
similarly sized parcels in principle
refers to transactions completed by
unrelated parties for parcels with a
land area of no less than 50 percent
of the property in the planned
transaction; within the preceding
year refers to the year preceding the
date of occurrence of the acquisition
of the real property or obtainment of
the right-of-use assets thereof.
calculation of reasonable price
discrepancies in floor land prices in
accordance with standard property
market leasing practices.
2. Where the Company acquiring real
property, from a related party
provides evidence that the terms of
the transaction are similar to the
terms of completed transactions
involving neighboring or closely
valued parcels of land of a similar
size by unrelated parties within the
preceding year.
Completed transactions involving
neighboring or closely valued
parcels of land in the preceding
paragraph in principle refers to
parcels on the same or an adjacent
block and within a distance of no
more than 500 meters or parcels
close in publicly announced current
value; transactions involving
similarly sized parcels in principle
refers to transactions completed by
unrelated parties for parcels with a
land area of no less than 50 percent
of the property in the planned
transaction; within the preceding
year refers to the year preceding the
date of occurrence of the acquisition
of the real property thereof.
accordingly.
Article 19 Where the Company acquires real
property or right-of-use assets
thereof from a related party and the
results of appraisals conducted in
accordance with the preceding two
articles are uniformly lower than the
transaction price, the following
steps shall be taken:
1. Special reserve shall be set aside in
accordance with Article 41,
paragraph 1 of the Securities and
Exchange Act against the difference
between the real property or right-
of-use assets thereof transaction
price and the appraised cost, and
may not be distributed or used for
capital increase or issuance of bonus
shares. Where a public company
uses the equity method to account
for its investment in another
Article 18 Where the Company's
transaction with related party and
the results of appraisals conducted
in accordance with the Articles 16
and 17 are uniformly lower than
the transaction price, the following
steps shall be taken:
1. Special reserve shall be set aside in
accordance with Article 41,
paragraph 1 of the Securities and
Exchange Act against the
difference between the real
property transaction price and the
appraised cost, and may not be
distributed or used for capital
increase or issuance of bonus
shares. Where a public company
uses the equity method to account
for its investment in another
company, then the special reserve
1. The numbering
of the article is
amended and
the wording is
slightly
modified.
2. To be in line
with the
International
Financial
Reporting
Standards, No.
16 on Lease,
the provision
for the process
required is
included when
the assessment
price of the
real estate use-
54
company, then the special reserve
called for under Article 41,
paragraph 1 of the Securities and
Exchange Act shall be set aside pro
rata in a proportion consistent with
the share of public company's
equity stake in the other company.
2. Independent directors of Audit
Committee shall comply with
Article 218 of the Company Act.
3. Actions taken pursuant to the
preceding two subparagraphs shall
be reported to a shareholders
meeting, and the details of the
transaction shall be disclosed in the
annual report and any investment
prospectus.
The Company, having set aside a
special reserve under the preceding
paragraph, may not utilize the
special reserve until it has
recognized a loss on decline in
market value of the assets it
purchased or leased at a premium,
or they have been disposed of, or the
leasing contract has been
terminated, or adequate
compensation has been made, or the
status quo ante has been restored, or
there is other evidence confirming
that there was nothing unreasonable
about the transaction, and the FSC
has given its consent.
For the company's acquisition of the
real estate or its right-of-use assets
from the related party, if there is
other evidence indicating that the
transaction has abnormal business
operations, it shall also be handled in
accordance with the preceding two
provisions.
called for under Article 41,
paragraph 1 of the Securities and
Exchange Act shall be set aside pro
rata in a proportion consistent with
the share of public company's
equity stake in the other company.
2. Audit Committee shall comply
with Article 218 of the Company
Act.
3. Actions taken pursuant to the
subparagraphs 1 and 2 shall be
reported to a shareholders meeting,
and the details of the transaction
shall be disclosed in the annual
report and any investment
prospectus.
The Company, having set aside a
special reserve under the preceding
paragraph, may not utilize the
special reserve until it has
recognized a loss on decline in
market value of the assets it
purchased at a premium, or they
have been disposed of, or adequate
compensation has been made, or
the status quo ante has been
restored, or there is other evidence
confirming that there was nothing
unreasonable about the transaction,
and the FSC has given its consent.
For the company's transaction with
the related parties, if there is other
evidence indicating that the
transaction has abnormal business
operations, it shall also be handled
in accordance with the preceding
two provisions.
of-right assets
leased from
the related
party is lower
than the
transaction
price.
Article 19 The Company engaging in
derivatives trading shall pay strict
attention to control of the following
important risk management and
auditing matters, and incorporate
them into their Procedures:
1. Trading principles and strategies:
Shall include the types of
derivatives that may be traded,
operating or hedging strategies,
segregation of duties, essentials of
performance evaluation, total
amount of derivatives contracts that
1. This article is
deleted.
2. The
“Regulations
Governing the
Acquisition or
Disposal of
Assets by
Public
Companies
"issued by the
Financial
Supervisory
55
maybe traded, and the maximum
loss limit on total trading and for
individual contracts.
2. Risk management measures.
3. Internal audit system.
4. Regular evaluation methods and
the handling of irregular
circumstances.
Commission
with the
official letter
Jin-guan-
zheng-fa No.
10703410725
dated
November 26,
2018, has
specified that
the related
financial laws
and
regulations
shall prevail.
In order to
prevent double
regulations,
the article is
deleted.
Article 20 The Company engaging in
derivatives trading shall adopt the
following risk management
measures:
1. Risk management shall address
credit, market, liquidity, cash flow,
operational, and legal risks.
2. Personnel engaged in derivatives
trading may not serve concurrently
in other operations such as
confirmation and settlement.
3. Risk measurement, monitoring, and
control personnel shall be assigned
to a different department that the
personnel in the preceding
subparagraph and shall report to the
board of directors or senior
management personnel with no
responsibility for trading or
position decision-making.
4. Derivatives trading positions held
shall be evaluated at least once per
week; however, positions for hedge
trades required by business shall be
evaluated at least twice per month.
Evaluation reports shall be
submitted to senior management
personnel authorized by the board
of directors.
5. Other important risk management
measures.
1. This article is
deleted.
2. The
"Regulations
Governing the
Acquisition or
Disposal of
Assets by
Public
Companies
"issued by the
Financial
Supervisory
Commission
with the
official letter
Jin-guan-
zheng-fa No.
10703410725
dated
November 26,
2018, has
specified that
the related
financial laws
and
regulations
shall prevail.
In order to
prevent double
regulations,
the article is
deleted.
56
Article 21 Internal audit of derivatives
transactions:
In addition to the internal audit
conducted by the Company's
derivatives trading department
itself , the internal auditors shall
make an audit report on the
suitableness and regulatory
compliance of the handling
procedure of the internal control
over the transactions conducted by
the derivatives transactions
department in accordance with the
“Internal Audit System
Implementation Measures” of the
Bank. If a major violation is
discovered, the audit committee
shall be notified in writing.
1. This article is
deleted.
2. The
“Regulations
Governing the
Acquisition or
Disposal of
Assets by
Public
Companies
"issued by the
Financial
Supervisory
Commission
with the
official letter
Jin-guan-
zheng-fa No.
10703410725
dated
November 26,
2018, has
specified that
the related
financial laws
and
regulations
shall prevail.
In order to
prevent double
regulations,
the article is
deleted.
Article 22 The principles for the
supervision and management of the
board of directors:
1. Designate senior management
personnel to monitor and control
the risk of derivatives trading.
2. Periodically evaluate whether
derivatives trading performance is
consistent with the established
operational strategy.
3. Periodically evaluate whether the
risk undertaken is within the
Company's permitted scope of
tolerance.
4. The Designated senior management
personnel shall periodically
evaluate the risk management
measures currently employed are
appropriate and are faithfully
conducted in accordance with the
1. This article is
deleted.
2. The
“Regulations
Governing the
Acquisition or
Disposal of
Assets by
Public
Companies”
issued by the
Financial
Supervisory
Commission
with the
official letter
Jin-guan-
zheng-fa No.
10703410725
dated
November 26,
2018, has
57
relevant regulations.
5. The designated senior management
personnel shall precisely supervise
the trading and profit-loss
circumstances. Appropriate
measures shall be adopted and a
report immediately made to the
board of directors if irregular
circumstances are found in the
course thereof. An independent
director shall be present at the
meeting and express an opinion.
The Company shall report to the
soonest meeting of the board of
directors after it authorizes the
relevant personnel to handle
derivates trading in accordance with
its Procedures for Engaging in
Derivatives Trading.
specified that
the related
financial laws
and
regulations
shall prevail.
In order to
prevent double
regulations,
this article is
deleted.
Article 20 The Company that conducts a
merger, demerger, acquisition, or
transfer of shares, prior to
convening the board of directors to
resolve on the matter, shall engage a
CPA, attorney, or securities
underwriter to give an opinion on
the reasonableness of the share
exchange ratio, acquisition price, or
distribution of cash or other
property to shareholders, and submit
it to the board of directors for
deliberation and passage. However,
the requirement of obtaining an
aforesaid opinion on reasonableness
issued by an expert may be
exempted in the case of a merger by
the Company of a subsidiary in
which it directly or indirectly holds
100 percent of the issued shares or
authorized capital, and in the case of
a merger between subsidiaries in
which the Company directly or
indirectly holds 100 percent of the
respective subsidiaries’ issued
shares or authorized capital.
Article 23 The Company that conducts a
merger, demerger, acquisition, or
transfer of shares, prior to
convening the board of directors to
resolve on the matter, shall engage
a CPA, attorney, or securities
underwriter to give an opinion on
the reasonableness of the share
exchange ratio, acquisition price, or
distribution of cash or other
property to shareholders, and
submit it to the board of directors
for deliberation and passage.
However, the requirement of
obtaining an aforesaid opinion on
reasonableness issued by an expert
may be exempted in the case of a
merger by the Company of a
subsidiary in which it directly or
indirectly holds 100 percent of the
issued shares or authorized capital,
and in the case of a merger between
subsidiaries in which the Company
directly or indirectly holds 100
percent of the respective
subsidiaries’ issued shares or
authorized capital.
The numbering of
the article is
amended.
Article 21 The Company shall prepare a
public report to shareholders
detailing important contractual
content and matters relevant to the
merger, demerger, or acquisition
prior to the shareholders meeting
and include it along with the expert
opinion referred to in paragraph 1 of
the preceding Article when sending
Article 24 The Company shall prepare a
public report to shareholders
detailing important contractual
content and matters relevant to the
merger, demerger, or acquisition
prior to the shareholders meeting
and include it along with the expert
opinion referred to in paragraph 1
of the preceding Article when
The numbering of
the article is
amended and the
partial wording
description in
paragraph 2 is
modified.
58
shareholders notification of the
shareholders meeting for reference
in deciding whether to approve the
merger, demerger, or acquisition.
Provided, where a provision of
another act exempts a company
from convening a shareholders
meeting to approve the merger,
demerger, or acquisition, this
restriction shall not apply.
Where the shareholders meeting
of the Company fails to convene or
pass a resolution due to lack of a
quorum, insufficient votes, or other
legal restriction, or the proposal is
rejected by the shareholders
meeting, the Company shall
immediately publicly explain the
reason, the follow-up measures, and
the preliminary date of the next
shareholders meeting.
sending shareholders notification of
the shareholders meeting for
reference in deciding whether to
approve the merger, demerger, or
acquisition. Provided, where a
provision of another act exempts a
company from convening a
shareholders meeting to approve
the merger, demerger, or
acquisition, this restriction shall not
apply.
For any party's shareholders
meeting from the companies
participating in a merger,
demerger, acquisition, fails to
convene or pass a resolution due to
lack of a quorum, insufficient
votes, or other legal restriction, or
the proposal is rejected by the
shareholders meeting, fails to
convene or pass a resolution due to
lack of a quorum, insufficient
votes, or other legal restriction, or
the proposal is rejected by the
shareholders meeting, the
companies participating in a
merger, demerger, acquisition, or
transfer of shares shall immediately
publicly explain the reason, the
follow-up measures, and the
preliminary date of the next
shareholders meeting.
Article 22 The Company shall convene a
board of directors meeting and
shareholders meeting on the day of
the transaction to resolve matters
relevant to the merger, demerger, or
acquisition, unless another act
provides otherwise or the FSC is
notified in advance of extraordinary
circumstances and grants consent.
The Company participating in a
transfer of shares shall call a board
of directors meeting on the day of
the transaction, unless another act
provides otherwise or the FSC is
notified in advance of extraordinary
circumstances and grants consent.
When participating in a merger,
demerger, acquisition, or transfer of
another company's shares, the
Company shall prepare a full written
record of the following information
Article 25 The Company shall convene a
board of directors meeting and
shareholders meeting on the day of
the transaction to resolve matters
relevant to the merger, demerger,
or acquisition, unless another act
provides otherwise or the FSC is
notified in advance of
extraordinary circumstances and
grants consent.
Participating in a transfer of shares
shall call a board of directors
meeting on the day of the
transaction, unless another act
provides otherwise or the FSC is
notified in advance of
extraordinary circumstances and
grants consent.
Participating in a merger,
demerger, acquisition, or transfer
of another company's shares, a
The numbering of
the article is
amended and the
partial wordings
in paragraph 1-5
are slightly
modified.
59
and retain it for 5 years for reference:
1. Basic identification data for
personnel: Including the
occupational titles, names, and
national ID numbers (or passport
numbers in the case of foreign
nationals) of all persons involved in
the planning or implementation of
any merger, demerger, acquisition,
or transfer of another company's
shares prior to disclosure of the
information.
2. Dates of material events: including
the signing of any letter of intent or
memorandum of understanding, the
hiring of a financial or legal advisor,
the execution of a contract, and the
convening of a board of directors
meeting.
3. Important documents and minutes:
Including merger, demerger,
acquisition, and share transfer plans,
any letter of intent or memorandum
of understanding, material contracts,
and minutes of board of directors'
meetings.
When participating in a merger,
demerger, acquisition, or transfer of
another company's shares, the
Company shall, within 2 days
counting inclusively from the date of
passage of a resolution by the board
of directors, report (in the prescribed
format and via the Internet-based
information system) the information
set out in subparagraphs 1 and 2 of
the preceding paragraph to the FSC
for recordation.
Where any of the companies
participating in a merger, demerger,
acquisition, or transfer of another
company's shares is neither listed on
an exchange nor has its shares traded
on an OTC market, the company(s)
so listed or traded shall sign an
agreement with such company
whereby the latter is required to
abide by the provisions of the
company that is listed on an
exchange or has its shares traded
on an OTC market, shall prepare a
full written record of the following
information and retain it for 5 years
for reference:
1. Basic identification data for
personnel: Including the
occupational titles, names, and
national ID numbers (or passport
numbers in the case of foreign
nationals) of all persons involved in
the planning or implementation of
any merger, demerger, acquisition,
or transfer of another company's
shares prior to disclosure of the
information.
2. Dates of material events: including
the signing of any letter of intent or
memorandum of understanding, the
hiring of a financial or legal
advisor, the execution of a contract,
and the convening of a board of
directors meeting.
3. Important documents and minutes:
Including merger, demerger,
acquisition, and share transfer
plans, any letter of intent or
memorandum of understanding,
material contracts, and minutes of
board of directors' meetings.
Participating in a merger,
demerger, acquisition, or transfer
of another company's shares, a
company that is listed on an
exchange or has its shares traded
on an OTC market shall, within 2
days counting inclusively from the
date of passage of a resolution by
the board of directors, report (in the
prescribed format and via the
Internet-based information system)
the information set out in
subparagraphs 1 and 2 of the
preceding paragraph to the FSC for
recordation.
Where any of the companies
participating in a merger, demerger,
acquisition, or transfer of another
company's shares is neither listed on
an exchange nor has its shares
traded on an OTC market, the
company(s) so listed or traded shall
sign an agreement with such
60
preceding 2 paragraphs. company whereby the latter is
required to abide by the provisions
of the paragraphs 3 and 4.
Article 23 Every person participating in or
privy to the plan for merger,
demerger, acquisition, or transfer of
shares shall issue a written
undertaking of confidentiality and
may not disclose the content of the
plan prior to public disclosure of the
information and may not trade, in
their own name or under the name
of another person, in any stock or
other equity security of any
company related to the plan for
merger, demerger, acquisition, or
transfer of shares.
Article 26 Every person participating in or
privy to the plan for merger,
demerger, acquisition, or transfer
of shares shall issue a written
undertaking of confidentiality and
may not disclose the content of the
plan prior to public disclosure of
the information and may not trade,
in their own name or under the
name of another person, in any
stock or other equity security of
any company related to the plan for
merger, demerger, acquisition, or
transfer of shares.
The numbering of
the article is
amended.
Article 24 The Company participating in a
merger, demerger, acquisition, or
transfer of shares may not arbitrarily
alter the share exchange ratio or
acquisition price unless under the
below-listed circumstances, and
shall stipulate the circumstances
permitting alteration in the contract
for the merger, demerger,
acquisition, or transfer of shares:
1. Cash capital increase, issuance of
convertible corporate bonds, or the
issuance of bonus shares, issuance
of corporate bonds with warrants,
preferred shares with warrants,
stock warrants, or other equity-
based securities.
2. An action, such as a disposal of
major assets that affects the
company's financial operations.
3. An event, such as a major disaster
or major change in technology, that
affects shareholder equity or share
price.
4. An adjustment where any of the
companies participating in the
merger, demerger, acquisition, or
transfer of shares from another
company, buys back treasury stock.
5. An increase or decrease in the
number of entities or companies
participating in the merger,
demerger, acquisition, or transfer of
shares.
Article 27 The Company participating in a
merger, demerger, acquisition, or
transfer of shares may not
arbitrarily alter the share exchange
ratio or acquisition price unless
under the below-listed
circumstances, and shall stipulate
the circumstances permitting
alteration in the contract for the
merger, demerger, acquisition, or
transfer of shares:
1. Cash capital increase, issuance of
convertible corporate bonds, or the
issuance of bonus shares, issuance
of corporate bonds with warrants,
preferred shares with warrants,
stock warrants, or other equity-
based securities.
2. An action, such as a disposal of
major assets, that affects the
company's financial operations.
3. An event, such as a major disaster
or major change in technology, that
affects shareholder equity or share
price.
4. An adjustment where any of the
companies participating in the
merger, demerger, acquisition, or
transfer of shares from another
company, buys back treasury stock.
5. An increase or decrease in the
number of entities or companies
participating in the merger,
demerger, acquisition, or transfer
The numbering of
the article is
amended and the
wording is
modified slightly.
61
6. Other terms/conditions that the
contract stipulates may be altered
and that have been publicly
disclosed.
of shares.
6. Other terms/conditions that the
contract stipulates may be altered
and that have been publicly
disclosed.
Article 25 The contract for participation by
the Company in a merger,
demerger, acquisition, or of shares
shall record the rights and
obligations of the companies
participating in the merger,
demerger, acquisition, or transfer of
shares, and shall also record the
following:
1. Handling of breach of contract.
2. Principles for the handling of
equity-type securities previously
issued or treasury stock previously
bought back by any company that is
extinguished in a merger or that is
demerged.
3. The amount of treasury stock
participating companies are
permitted under law to buy back
after the record date of calculation
of the share exchange ratio, and the
principles for handling thereof.
4. The manner of handling changes in
the number of participating entities
or companies.
5. Preliminary progress schedule for
plan execution, and anticipated
completion date.
6. Scheduled date for convening the
legally mandated shareholders
meeting if the plan exceeds the
deadline without completion, and
relevant procedures.
Article 28 The contract for participation by
the Company in a merger,
demerger, acquisition, or of shares
shall record the rights and
obligations of the companies
participating in the merger,
demerger, acquisition, or transfer
of shares, and shall also record the
following:
1. Handling of breach of contract.
2. Principles for the handling of
equity-type securities previously
issued or treasury stock previously
bought back by any company that
is extinguished in a merger or that
is demerged.
3. The amount of treasury stock
participating companies are
permitted under law to buy back
after the record date of calculation
of the share exchange ratio, and
the principles for handling thereof.
4. The manner of handling changes
in the number of participating
entities or companies.
5. Preliminary progress schedule for
plan execution, and anticipated
completion date.
6. Scheduled date for convening the
legally mandated shareholders
meeting if the plan exceeds the
deadline without completion, and
relevant procedures.
The numbering of
the article is
amended.
Article 26 After public disclosure of the
information, if the Company
participating in the merger,
demerger, acquisition, or share
transfer intends further to carry out
a merger, demerger, acquisition, or
share transfer with another
company, all of the participating
companies shall carry out anew the
procedures or legal actions that had
originally been completed toward
the merger, demerger, acquisition,
or share transfer; except that where
the number of participating
Article 29 After public disclosure of the
information, if any party of the
Company participating in the
merger, demerger, acquisition, or
share transfer intends further to
carry out a merger, demerger,
acquisition, or share transfer with
another company, all of the
participating companies shall carry
out anew the procedures or legal
actions that had originally been
completed toward the merger,
demerger, acquisition, or share
transfer; except that where the
The numbering of
the article is
amended and the
some wordings
are modified
slightly.
62
companies is decreased and a
participating company's
shareholders meeting has adopted a
resolution authorizing the board of
directors to alter the limits of
authority, such participating
company may be exempted from
calling another shareholders
meeting to resolve on the matter
anew.
number of participating companies
is decreased and a participating
company's shareholders meeting
has adopted a resolution
authorizing the board of directors
to alter the limits of authority, such
participating company may be
exempted from calling another
shareholders meeting to resolve on
the matter anew.
Article 27 Where any of the companies
participating in a merger, demerger,
acquisition, or transfer of shares is
not a public company, the Company
shall sign an agreement with the
non-public company whereby the
latter is required to abide by the
provisions of Article 22, Article 23,
and the preceding article.
Article 30 Where any of the companies
participating in a merger,
demerger, acquisition, or transfer
of shares is not a public company,
the Company shall sign an
agreement with the non-public
company whereby the latter, and to
be subject to the provisions of the
date to convene a board of directors
meeting under Article
25,undertaking of confidentiality
prior to public disclosure under
Article 26 and changes in the
number of participating companies
in mergers, demergers, acquisition
or transfer of shares under Article
29.
1. The
numbering
the article is
amended.
2. To adjust the
cited articles
and modified
some articles
accordingly.
Article 28
Under any of the following
circumstances, the Company
acquiring or disposing of assets
shall publicly announce and report
the relevant information on the
FSC's designated website in the
appropriate format as prescribed by
regulations within 2 days counting
inclusively from the date of
occurrence of the event:
1. Acquisition or disposal of real
property or right-of-use assets
thereof from or to a related party, or
acquisition or disposal of assets
other than real property or right-of-
use assets thereof from or to a
related party where the transaction
amount reaches 20 percent or more
of paid-in capital, 10 percent or
more of the Company's total assets,
or NTD300 million or more;
provided, this shall not apply to
trading of domestic government
bonds or bonds and separate and
resale agreements, or subscription
Article 31 The standards for making public
announcements and regulatory
filing
Under any of the following
circumstances, the Company
acquiring or disposing of assets
shall publicly announce and report
the relevant information on the
FSC's designated website in the
appropriate format as prescribed by
regulations within 2 days counting
inclusively from the date of
occurrence of the event:
1. Acquisition or disposal of real
property thereof from or to a
related party, or acquisition or
disposal of assets other than real
property thereof from or to a
related party where the transaction
amount reaches 20 percent or more
of paid-in capital, 10 percent or
more of the Company's total assets,
or NTD300 million or more;
provided, this shall not apply to
trading of government bonds or
bonds and separate and resale
agreements, or subscription or
redemption of money market funds
1. The numbering
of the article is
amended and
the repeated
article title is
deleted.
2. To specify it is
limited to the
domestic
government
bonds in
paragraph 1,
subparagraph 1
and 6.
3. To be in line
with the
International
Financial
Reporting
Standards, No.
16 on Lease,
the right-of-
use assets is
included in the
provisions of
this Article.
4. Considering
63
or redemption of money market
funds issued by domestic securities
investment trust enterprises.
2. Merger, demerger, acquisition, or
transfer of shares.
3. Losses from derivatives trading
reaching the limits on aggregate
losses or losses on individual
contracts set out in the procedures
adopted by the Company.
4. Where equipment or right-of-use
assets thereof for business use are
acquired or disposed of, and
furthermore the transaction
counterparty is not a related party,
and the transaction amount meets
any of the following criteria:
(1) For a public company whose
paid-in capital is less than NTD10
billion, the transaction amount
reaches NTD500 million or more.
(2) For a public company whose
paid-in capital is NTD10 billion or
more, the transaction amount
reaches NTD1 billion or more.
5. Where land is acquired under an
arrangement on engaging others to
build on the company's own land,
engaging others to build on rented
land, joint construction and
allocation of housing units, joint
construction and allocation of
ownership percentages, or joint
construction and separate sale, and
furthermore the transaction
counterparty is not a related party,
and the amount the Company
expects to invest in the transaction
reaches NTD500 million.
6. Where an asset transaction other
than any of those referred to in the
preceding 5 subparagraphs, a
disposal of receivables by the
Company, or an investment in the
mainland China area reaches 20
percent or more of paid-in capital of
the Company or NTD300 million;
provided, this shall not apply to the
following circumstances:
(1) Trading of domestic government
bonds.
(2) The Company's securities
issued by domestic securities
investment trust enterprises.
2. Merger, demerger, acquisition, or
transfer of shares.
3. Losses from derivatives trading
reaching the limits on aggregate
losses or losses on individual
contracts set out in the procedures
adopted by the Company.
4. Where equipment thereof for
business use of assets categories
are acquired or disposed of, and
furthermore the transaction
counterparty is not a related party,
and the transaction amount meets
any of the following criteria:
(1) For a public company whose
paid-in capital is less than NTD10
billion, the transaction amount
reaches NTD500 million or more.
(2) For a public company whose
paid-in capital is NTD10 billion or
more, the transaction amount
reaches NTD1 billion or more.
5. Where land is acquired under an
arrangement on engaging others to
build on the company's own land,
engaging others to build on rented
land, joint construction and
allocation of housing units, joint
construction and allocation of
ownership percentages, or joint
construction and separate sale, and
the amount the Company expects to
invest in the transaction reaches
NTD500 million.
6. Where an asset transaction other
than any of those referred to in the
preceding 5 subparagraphs, a
disposal of receivables by financial
institution, or an investment in the
mainland China area reaches 20
percent or more of paid-in capital
of the Company or NTD300
million; provided, this shall not
apply to the following
circumstances:
(1) Trading of domestic
government bonds.
(2) Taking investment as a
profession, the Company's
that the
provisions
under
paragraph 1,
subparagraph 1
have specified
the
requirement
for
announcement
on the related
party
transactions,
subparagraph 5
of the same
paragraph is
amended to
specify its
application in
the non-related
party
transactions, in
order to
facilitate
compliance.
5. To be in line
with the
explanations in
the Criteria,
paragraph 1,
subparagraph 6
is amended:
(1) In order
to unify the
wordings in
the
provisions of
the Criteria,
since the
target or
institutions
referred in
the Criteria
are in
principle
referring to
the ones both
domestically
and overseas,
the wordings
of domestic
and overseas
are deleted.
(2) In order to
extend the
64
trading on securities exchanges or
OTC markets, or subscription of
ordinary corporate bonds or general
bank debentures without equity
characteristics (excluding
subordinated debt) that are offered
and issued in the primary market, or
subscription or redemption of
securities investment trust funds or
futures trust funds, or subscription
by a securities firm of securities as
necessitated by its undertaking
business or as an advisory
recommending securities firm for an
emerging stock company, in
accordance with the rules of the
Taipei Exchange.
(3) Trading of bonds under
repurchase and resale agreements,
or subscription or redemption of
money market funds issued by
domestic securities investment trust
enterprises.
The amount of transactions above
shall be calculated as follows:
1. The amount of any individual
transaction.
2. The cumulative transaction amount
of acquisitions and disposals of the
same type of underlying asset with
the same transaction counterparty
within the preceding year.
3. The cumulative transaction amount
of acquisitions and disposals
(cumulative acquisitions and
disposals, respectively) of real
property or right-of-use assets
thereof within the same
development project within the
preceding year.
4. The cumulative transaction amount
of acquisitions and disposals
(cumulative acquisitions and
disposals, respectively) of the same
security within the preceding year.
"Within the preceding year" as used
in the preceding paragraph refers to
the year preceding the date of
occurrence of the current transaction.
Items duly announced in accordance
with these Regulations need not be
securities trading on securities
exchanges or OTC markets in
domestic or overseas, or
subscription of ordinary corporate
bonds or general bank debentures
without equity characteristics
(excluding subordinated debt) that
are offered and issued in the
domestic primary market, or
subscription or redemption of
securities investment trust funds or
futures trust funds, or subscription
by a securities firm of securities as
necessitated by its undertaking
business or as an advisory
recommending securities firm for
an emerging stock company, in
accordance with the rules of the
Taipei Exchange.
(3) Trading of bonds under
repurchase and resale agreements,
or subscription or redemption of
money market funds issued by
domestic securities investment
trust enterprises.
The amount of transactions above
shall be calculated as follows:
1. The amount of any individual
transaction.
2. The cumulative transaction amount
of acquisitions and disposals of the
same type of underlying asset with
the same transaction counterparty
within the preceding year.
3. The cumulative transaction amount
of acquisitions and disposals
(cumulative acquisitions and
disposals, respectively) of real
property thereof within the same
development project within the
preceding year.
4. The cumulative transaction amount
of acquisitions and disposals
(cumulative acquisitions and
disposals, respectively) of the same
security within the preceding year.
"Within the preceding year" as
used in the preceding paragraph
refers to the year preceding the
date of occurrence of the current
transaction. Items duly announced
in accordance with these
limit on the
professional
investor who
trades the
securities
defined under
paragraph 1,
subparagraph
6, item 2 to
be exempted
from the
announcemen
t requirement.
And
considering
the higher
risk of the
subordinated
debt, it is also
specified that
the ordinary
corporate
bonds or
general bank
debentures
without
equity
characteristic
s to be
excluded
from the
subordinate
debt.
6. The partial
wordings in
Paragraph 1,
subparagraph 3
and 4, and 6
are modified
accordingly to
unify the use
of wordings.
65
counted toward the transaction
amount.
The Company shall compile monthly
reports on the status of derivatives
trading engaged in up to the end of
the preceding month by the
Company and any subsidiaries that
are not domestic public companies
and enter the information in the
prescribed format into the
information reporting website
designated by the FSC by the 10th
day of each month.
When the Company at the time of
public announcement makes an error
or omission in an item required by
regulations to be publicly announced
and so is required to correct it, all the
items shall be again publicly
announced and reported in their
entirety within two days counting
inclusively from the date of knowing
of such error or omission.
The Company acquiring or disposing
of assets shall keep all relevant
contracts, meeting minutes, log
books, appraisal reports and CPA,
attorney, and securities underwriter
opinions at the company, where they
shall be retained for 5 years except
where another act provides
otherwise.
Regulations need not be counted
toward the transaction amount.
The Company shall compile
monthly reports on the status of
derivatives trading engaged in up
to the end of the preceding month
by the Company and any
subsidiaries that are not domestic
public companies and enter the
information in the prescribed
format into the information
reporting website designated by
the FSC by the 10th day of each
month.
When the Company at the time of
public announcement makes an
error or omission in an item
required by regulations to be
publicly announced and so is
required to correct it, all the items
shall be again publicly announced
and reported in their entirety within
two days counting inclusively from
the date of knowing of such error or
omission.
The Company acquiring or
disposing of assets shall keep all
relevant contracts, meeting
minutes, log books, appraisal
reports and CPA, attorney, and
securities underwriter opinions at
the company, where they shall be
retained for 5 years except where
another act provides otherwise.
Article 29 Formats for public disclosure:
1. For the trading by the Company in
the securities of its parent company,
subsidiary company or its related
enterprise from the domestic or
overseas exchange markets or
OTCs, the format for items and
contents to be publicly disclosed is
set out as Appendix 2.
2. Where land is acquired under an
arrangement on engaging others to
build on the company's own land,
engaging others to build on rented
land, joint construction and
allocation of housing units, joint
construction and allocation of
ownership percentages, or joint
construction and separate sale, the
format for the items and contents to
be publicly disclosed is set out as
Article 32 Formats for public disclosure:
1. For the trading by the Company in
the securities of its parent
company, subsidiary company or
its related enterprise from the
domestic or overseas exchange
markets or OTCs, the format for
items and contents to be publicly
disclosed is set out as Appendix 2.
2. Where land is acquired under an
arrangement on engaging others to
build on the company's own land,
joint construction and allocation of
housing units, joint construction
and allocation of ownership
percentages, or joint construction
and separate sale, the format for
the items and contents to be
publicly disclosed is set out as
Appendix 3.
It is modified in
accordance with
the announced
format under the
“Regulations
Governing the
Acquisition or
Disposal of
Assets by Public
Companies"
issued by the
Financial
Supervisory
Commission with
the official letter
Jin-guan-zheng-
fa No.
10703439303
dated December
4, 2018.
66
Appendix 3.
3. For the acquisition or disposal of
real property, equipment or its right-
of-use assets, and the related party
transactions, the format for the
public disclosure is set out as
Appendix 4.
4. For the trading in securities,
intangible assets or right-of-use
assets thereof or memberships
which are neither listed on an
exchange nor has its shares traded
on an OTC market, and the
disposal of right of claim by the
Company, the format for the public
disclosure is set out as Appendix 5.
5. For the investment in the mainland
China area, the format for public
disclosure is set out as Appendix 6.
6. For the derivatives trading, the
format for the public disclosure of
information within 2 days counting
inclusively from the date of
occurrence of the event is set out as
Appendix 7-1.
7. For the derivatives trading, the
format for the public disclosure of
information by the tenth of each
month is set out as Appendix 7-2.
8. For the transaction in a merger,
demerger, acquisition, or transfer of
shares, the announcement format is
set out as Appendix 8.
3. For the acquisition or disposal of
real property, other fixed assets,
and the related party transactions,
the format for the public disclosure
is set out as Appendix 4.
4. For the trading in securities,
memberships, intangible assets and
financial institutions which are
neither listed on an exchange nor
has its shares traded on an OTC
market, and the disposal of right of
claim by the Company, the format
for the public disclosure is set out
as Appendix 5.
5. For the investment in the mainland
China area, the format for public
disclosure is set out as Appendix 6.
6. For the derivatives trading, the
format for the public disclosure
within 2 days counting inclusively
from the date of occurrence of the
event is set out as Appendix 7-1.
7. For the derivatives trading, the
format for the public disclosure by
the tenth of each month is set out as
Appendix 7-2.
8. For the transaction in a merger,
demerger, acquisition, or transfer
of shares, the announcement format
is set out as Appendix 8.
Article 30
Where any of the following
circumstances occurs with respect
to a transaction that a public
company has already publicly
announced and reported in
accordance with Article 28, a public
report of relevant information shall
be made on the information
reporting website designated by the
FSC within 2 days counting
inclusively from the date of
occurrence of the event:
1. Change, termination, or rescission
of a contract signed in regard to the
original transaction.
2. The merger, demerger, acquisition,
or transfer of shares is not
completed by the scheduled date set
Article 33 Time limit for notification and
declaration
Where any of the following
circumstances occurs with respect
to a transaction that a public
company has already publicly
announced and reported in
accordance with Article 31, a
public report of relevant
information shall be made on the
information reporting website
designated by the FSC within 2
days counting inclusively from the
date of occurrence of the event:
1. Change, termination, or rescission
of a contract signed in regard to the
original transaction.
2. The merger, demerger, acquisition,
or transfer of shares is not
1. The
numbering of
the article is
amended and
to adjust the
cited article.
2. The title is
repeated with
the provision
and therefore
deleted.
67
forth in the contract.
3. Change to the originally publicly
announced and reported
information.
completed by the scheduled date
set forth in the contract.
3. Change to the originally publicly
announced and reported
information.
Article 31 Information required be publicly
announcing and reporting in
accordance with the provisions of
Article 28 and Article 30 on
acquisitions and disposals of assets
by a public company's subsidiary
that is not itself a public company in
Taiwan shall be reported by the
Company.
The paid-in capital or total assets of
the Company shall be the standard
applicable to a subsidiary referred to
in the preceding paragraph in
determining whether, relative to
paid-in capital or total assets, it
reaches a threshold requiring public
announcement and regulatory filing
under Article 28, paragraph 1.
Article 34 Information required be publicly
announcing and reporting in
accordance with the provisions of
Article 31 and Article 33on
acquisitions and disposals of assets
by a public company's subsidiary
that is not itself a public company
in Taiwan shall be reported by the
Company.
The paid-in capital or total assets of
the Company shall be the standard
applicable to a subsidiary referred
to in the preceding paragraph in
determining whether, relative to
20% of paid-in capital or 10% of
total assets, it reaches a threshold
requiring public announcement and
regulatory filing under Article 31,
paragraph 1.
1. The
numbering of
the article is
amended, and
to adjust the
cited article
and modify
some
wordings.
2. The subsidiary
is subject to
the provision
under Article
32, Paragraph
1, therefore the
partial
wording is
modified
accordingly.
Article 32 For the calculation of 10 percent
of total assets under the Procedure,
the total assets stated in the most
recent parent company only
financial report or individual
financial report prepared under the
Regulations Governing the
Preparation of Financial Reports by
Securities Issuers shall be used.
1. This article is
added.
2. To specify
the calculation
method
regarding total
assets.
Article 33 Where it is not specified in the
Procedure, it shall be subject to the
relevant laws and regulations and
the competent authorities.
Article 35 Where it is not specified in the
Procedure, it shall be subject to the
relevant laws and regulations and
the competent authorities.
The numbering of
the article is
amended.
Article 34 After the Procedure is approved
by the board of directors, it shall be
submitted to the shareholders'
meeting for approval. In the event
of amendments, the procedure shall
apply.
Article 36 After the Handling Procedure is
approved by the board of directors,
it shall be submitted to the
shareholders' meeting for approval.
In the event of amendments, the
procedure shall apply.
The numbering of
the article is
amended and to
modify some
wordings
accordingly.
68
The “Procedural Rules for Acquisition or Disposal of Assets
of Taichung Commercial Bank”(Draft)
Article 1 For the management of assets, Taichung Commercial Bank Co., Ltd. (hereinafter
referred to as the “Company”) enacted the Procedure for Handling Acquisition or
Disposal of Assets (hereinafter referred to as the “Procedure”) in accordance with the
“Regulations Governing the Acquisition or Disposal of Assets by Public Companies,”
issued by the competent authority.
Article 2 For acquisition or disposal of assets by the Company, it shall be subject to the provisions
of the Procedure. However, if there are other provisions of the financial related laws and
regulations stated otherwise, such provisions shall prevail.
For the Company to conduct the business of derivatives or engage in the derivatives
trading, it shall by subject to the relevant provisions issued by the competent authority
and “Operational Strategy and Procedural Guidelines for Conducting Derivative
Financial Commodity” issued by the Competent.
Article 3 The term "assets" as used in these Regulations includes the following:
1. Investments in stocks, government bonds, corporate bonds, financial bonds,
securities representing interest in a fund, depositary receipts, call (put) warrants,
beneficial interest securities, and asset-backed securities.
2. Real property (including land, houses and buildings, investment property) and
equipment.
3. Memberships.
4. Patents, copyrights, trademarks, franchise rights, and other intangible assets.
5. Right-of-use assets.
6. Claims of Taichung Commercial Bank (including receivables, bills purchased and
discounted, loans, and overdue receivables).
7. Derivatives.
8. Assets acquired or disposed of in connection with mergers, demergers, acquisitions,
or transfer of shares in accordance with law.
9. Other major assets.
Article 4 The terms used in the Procedure are defined as follows:
1. Derivatives: Forward contracts, options contracts, futures contracts, leverage
contracts, or swap contracts, whose value is derived from a specified interest rate,
financial instrument price, commodity price, foreign exchange rate, index of prices
or rates, credit rating or credit index, or other variable; or hybrid contracts combining
the above contracts; or hybrid contracts or structured products containing embedded
derivatives. The term "forward contracts" does not include insurance contracts,
performance contracts, after-sales service contracts, long-term leasing contracts, or
long-term purchase (sales) contracts.
2. Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of
shares in accordance with law: Refers to assets acquired or disposed through mergers,
demergers, or acquisitions conducted under the Business Mergers and Acquisitions
Act, Financial Holding Company Act, Financial Institution Merger Act and other
69
acts, or to transfer of shares from another company through issuance of new shares of
its own as the consideration therefor (hereinafter "transfer of shares") under Article
156-3 of the Company Act.
3. Related party or subsidiary: As defined in the Regulations Governing the Preparation
of Financial Reports by Securities Issuers.
4. Professional appraiser: Refers to a real property appraiser or other person duly
authorized by law to engage in the value appraisal of real property or equipment.
5. Date of occurrence: Refers to the date of contract signing, date of payment, date of
consignment trade, date of transfer, dates of boards of directors resolutions, or other
date that can confirm the counterpart and monetary amount of the transaction,
whichever date is earlier; provided, for investment for which approval of the
competent authority is required, the earlier of the above date or the date of receipt of
approval by the competent authority shall apply.
6. Mainland China area investment: Refers to investments in the mainland China area
approved by the Ministry of Economic Affairs Investment Commission or conducted
in accordance with the provisions of the Regulations Governing Permission for
Investment or Technical Cooperation in the Mainland Area.
Article 5 Professional appraisers and their officers, certified public accounts, attorneys, and
securities underwriters that provide the Company with appraisal reports, certified public
accountant's opinions, attorney's opinions, or underwriter's opinions shall meet the
following requirements:
1. May not have previously received a final and unappealable sentence to
imprisonment for 1 year or longer for a violation of the Act, the Company Act, the
Banking Act of The Republic of China, the Insurance Act, the Financial Holding
Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust,
embezzlement, forgery of documents, or occupational crime. However, this
provision does not apply if 3 years have already passed since completion of service
of the sentence, since expiration of the period of a suspended sentence, or since a
pardon was received.
2. May not be a related party or de facto related party of any party to the transaction.
3. If the company is required to obtain appraisal reports from two or more professional
appraisers, the different professional appraisers or appraisal officers may not be
related parties or de facto related parties of each other.
When the personnel of the preceding paragraph issues the appraisal report or opinion, it
shall be handled in accordance with the following matters:
1. Prior to accepting a case, they shall prudently assess their own professional
capabilities, practical experience, and independence.
2. When examining a case, they shall appropriately plan and execute adequate working
procedures, in order to produce a conclusion and use the conclusion as the basis for
issuing the report our pinion. The related working procedures, data collected, and
conclusion shall be fully and accurately specified in the case working papers.
3. They shall undertake an item-by-item evaluation of the comprehensiveness,
accuracy, and reasonableness of the sources of data used, the parameters, and the
information, as the basis for issuance of the appraisal report or the opinion.
4. They shall issue a statement attesting to the professional competence and independence of
the personnel who prepared the report or opinion, and that they have evaluated and found
that the information used is reasonable and accurate, and that they have complied with
70
applicable laws and regulations.
Article 6 The enactment of Procedure for Handling Acquisition or Disposal of the Company:
1. The enactment or amendment of this Procedure shall be approved by more than one-
half of all members of the Audit Committee and shall be submitted to the Board of
Directors for a resolution.
2. If the preceding subparagraph is not approved by more than one-half of all members
of the Audit Committee, it may be agreed by more than two-thirds of all directors,
and the resolution of the Audit Committee shall be stated in the minutes of the Board
of Directors.
3. All members of the Audit Committee referred to in subparagraph 1 and all directors
referred to in the preceding subparagraph shall be calculated by the actual incumbent.
Article 7 The operating procedure for the acquisition or disposal of assets of the Company include
the reference basis, trading term, authorization level and executive unit, etc., shall be
handled in accordance with the law, the relevant regulations of the competent authority,
the levels of responsibilities chart of the Company, and the related operational
specifications:
1. Securities: they shall be subject to the relevant provisions of the Banking Act and the
“investment policy” of the Company.
2. Real property or its right-of-use assets: they shall comply with the Banking Act, the relevant
regulations of the competent authority and the standards of the “Management Rules for Real
Estate” of the Company.
3. Membership card, intangible assets, equipment or its right-of-use assets: the purchase
matters shall be handled based on the divisions of responsibilities under the “Operational
Rules for Matters of Construction and the Purchase, Order of the Custom-made and Sale of
the Property” of the Company.
4. The acquisition or disposal of the real estate and equipment shall be based on one of the
price comparison, negotiation or bidding.
5. Derivatives: it is to be conducted by the Derivatives Investment Trading Department of the
Company in accordance with the relevant regulations of the competent authority and the
“Management Strategy for Operational Guidelines for Conducting Derivative
Financial Commodity Business”.
6. The acquisition or disposal of other assets shall be subject to the relevant regulations of the
Company.
The relevant operation regarding the acquisition or disposal of assets shall be all subject
to the relevant provisions of the internal control system of the Company. I n the event of
major violations discovered, the related personnel shall be disciplined depending on the
circumstances surrounding the violation.
Article 8 The total amount of the real estate not for business use and its right-of-use assets or the
securities acquired by the Company and each of its subsidiaries, and the limits of
individual securities shall be subject to the Banking Act and the regulations of the
competent authority.
Article 9 The control procedure for the acquisition or disposal of assets by the subsidiary company:
1. The subsidiary company shall, in accordance with the relevant regulations and the
provisions of the competent authority, enact and implement the procedure for the
acquisition or disposition of assets.
2. For the acquisition or disposal of assets by the subsidiary company, it shall be
71
subject to the business competency rules of each subsidiary company.
3. The subsidiary company shall ensure that the procedure for the acquisition or
disposal of assets enacted is in compliance with the relevant laws and regulations
and check precisely whether the relevant matters are conducted in accordance with
the procedure. The internal audit of the Company shall review the audit report or
self-inspection report and other related matters of the subsidiary company.
4. The Company shall handle the relevant matters concerning the regulatory filing for
the public announcement on behalf of the subsidiary company, in accordance with
the provisions of Article 31.
Article 10 In acquiring or disposing of real property, equipment, or right-of-use assets thereof
where the transaction amount reaches 20 percent of the Company's paid-in capital or
NTD300 million or more, the Company, unless transacting with a domestic government
agency, engaging others to build on its own land, engaging others to build on rented land,
or acquiring or disposing of equipment or right-of-use assets thereof held for business
use, shall obtain an appraisal report prior to the date of occurrence of the event from a
professional appraiser and shall further comply with the following provisions:
1. Where due to special circumstances it is necessary to give a limited price, specified
price, or special price as a reference basis for the transaction price, the transaction
shall be submitted for approval in advance by the board of directors; the same
procedure shall also be followed whenever there is any subsequent change to the
terms and conditions of the transaction.
2. Where the transaction amount is NTD1 billion or more, appraisals from two or more
professional appraisers shall be obtained.
3. Where any one of the following circumstances applies with respect to the
professional appraiser's appraisal results, unless all the appraisal results for the
assets to be acquired are higher than the transaction amount, or all the appraisal
results for the assets to be disposed of are lower than the transaction amount, a
certified public accountant shall be engaged to perform the appraisal in accordance
with the provisions of Statement of Auditing Standards No. 20 published by the
ROC Accounting Research and Development Foundation (ARDF) and render a
specific opinion regarding the reason for the discrepancy and the appropriateness of
the transaction price:
(1) The discrepancy between the appraisal result and the transaction amount is 20
percent or more of the transaction amount.
(2) The discrepancy between the appraisal results of two or more professional
appraisers is 10 percent or more of the transaction amount.
4. No more than 3 months may elapse between the date of the appraisal report issued
by a professional appraiser and the contract execution date; provided, where the
publicly announced current value for the same period is used and not more than 6
months have elapsed, an opinion may still be issued by the original professional
appraiser.
Article 11 The Company acquiring or disposing of securities shall, prior to the date of occurrence
of the event, obtain financial statements of the issuing company for the most recent
period, certified or reviewed by a certified public accountant (CPA), for reference in
appraising the transaction price, and if the dollar amount of the transaction is 20
percent of the Company's paid-in capital or NTD300 million or more, the Company
shall additionally engage a certified public accountant prior to the date of occurrence of
the event to provide an opinion regarding the reasonableness of the transaction price. If
72
the CPA needs to use the report of an expert as evidence, the CPA shall do so in
accordance with the provisions of Statement of Auditing Standards No. 20 published
by the ARDF. This requirement does not apply, however, to publicly quoted prices of
securities that have an active market, or where otherwise provided by regulations of the
Financial Supervisory Commission (FSC).
Article 12 Where the Company acquires or disposes of intangible assets or right-of-use assets
thereof or memberships and the transaction amount reaches 20 percent or more of paid-
in capital or NTD300 million or more, except in transactions with a domestic
government agency, the Company shall engage a certified public accountant prior to
the date of occurrence of the event to render an opinion on the reasonableness of the
transaction price; the CPA shall comply with the provisions of Statement of Auditing
Standards No. 20 published by the ARDF.
Article 13 The calculation of the transaction amounts referred to in the preceding 3 articles shall
be done in accordance with Article 28, paragraph 2 herein, and "within the preceding
year" as used herein refers to the year preceding the date of occurrence of the current
transaction. Items for which an appraisal report from a professional appraiser or a
CPA's opinion has been obtained need not be counted toward the transaction amount.
Article 14 Where a public company acquires or disposes of assets through court auction
procedures, the evidentiary documentation issued by the court may be substituted for
the appraisal report or CPA opinion.
Article 15 When the Company engages in any acquisition or disposal of assets from or to a related
party, in addition to ensuring that the necessary resolutions are adopted and the
reasonableness of the transaction terms is appraised, if the transaction amount reaches
10 percent or more of the Company's total assets, the Company shall also obtain an
appraisal report from a professional appraiser or a CPA's opinion in compliance with
the provisions of the preceding Section and this Section.
The calculation of the transaction amount referred to in the preceding paragraph shall
be made in accordance with Article 13 herein.
When judging whether a transaction counterparty is a related party, in addition to legal
formalities, the substance of the relationship shall also be considered.
Article 16 When the Company intends to acquire or dispose of real property or right-of-use assets
thereof from or to a related party, or when it intends to acquire or dispose of assets
other than real property or right-of-use assets thereof from or to a related party and the
transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of
the Company's total assets, or NTD300 million or more, except in trading of domestic
government bonds or bonds and separate and resale agreements, or subscription or
redemption of money market funds issued by domestic securities investment trust
enterprises, the company may not proceed to enter into a transaction contract or make a
payment until the following matters have been approved by the board of directors and
recognized by the supervisors:
1. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.
2. The reason for choosing the related party as a transaction counterparty.
3. With respect to the acquisition of real property or right-of-use assets thereof from a
related party, information regarding appraisal of the reasonableness of the
preliminary transaction terms in accordance with Article 17 and Article 18.
4. The date and price at which the related party originally acquired the real property,
the original transaction counterparty, and that transaction counterparty's relationship
73
to the company and the related party.
5. Monthly cash flow forecasts for the year commencing from the anticipated month of
signing of the contract, and evaluation of the necessity of the transaction, and
reasonableness of the fund utilization.
6. An appraisal report from a professional appraiser or a CPA's opinion obtained in
compliance with the preceding article.
7. Restrictive covenants and other important stipulations associated with the transaction.
The calculation of the transaction amounts referred to in the preceding paragraph shall
be made in accordance with Article 28, paragraph 2 herein, and "within the preceding
year" as used herein refers to the year preceding the date of occurrence of the current
transaction. Items that have been approved by the board of directors and recognized by
the supervisors need not be counted toward the transaction amount.
When a matter is submitted for discussion by the board of directors pursuant to
paragraph 1, the board of directors shall take into full consideration each independent
director's opinions. If an independent director objects to or expresses reservations about
any matter, it shall be recorded in the minutes of the board of directors meeting.
Where an audit committee has been established in accordance with the provisions of the
Act, the matters for which paragraph 1 requires recognition by the supervisors shall first
be approved by one-half or more of all audit committee members and then submitted to
the board of directors for a resolution, and shall be subject to mutatis mutandis
application of Article 6, paragraphs 1, subparagraphs 2 and 3.
Article 17 The Company acquires real property or right-of-use assets thereof from a related party
shall evaluate the reasonableness of the transaction costs by the following means:
1. Based upon the related party's transaction price plus necessary interest on funding
and the costs to be duly borne by the buyer. "Necessary interest on funding" is
imputed as the weighted average interest rate on borrowing in the year the Company
purchases the property; provided, it may not be higher than the maximum non-
financial industry lending rate announced by the Ministry of Finance.
2. Total loan value appraisal from a financial institution where the related party has
previously created a mortgage on the property as security for a loan; provided, the
actual cumulative amount loaned by the financial institution shall have been 70
percent or more of the financial institution's appraised loan value of the property and
the period of the loan shall have been 1 year or more. However, this shall not apply
where the financial institution is a related party of one of the transaction
counterparties.
Where land and structures thereupon are combined as a single property purchased or
leased in one transaction, the transaction costs for the land and the structures may be
separately appraised in accordance with either of the means listed in the preceding
paragraph.
The Company that acquires real property or right-of-use assets thereof from a related
party and appraises the cost of the real property or right-of-use assets thereof in
accordance with the preceding two paragraphs shall also engage a CPA to check the
appraisal and render a specific opinion.
Where the Company acquires real property or right-of-use assets thereof from a related
party and one of the following circumstances exists, the acquisition shall be conducted
in accordance with the preceding article, and the preceding three paragraphs do not
apply:
74
1. The related party acquired the real property or right-of-use assets thereof through
inheritance or as a gift.
2. More than 5 years will have elapsed from the time the related party signed the
contract to obtain the real property or right-of-use assets thereof to the signing date
for the current transaction.
3. The real property is acquired through signing of a joint development contract with
the related party, or through engaging a related party to build real property, either
on the company's own land or on rented land.
4. The real property right-of-use assets for business use are acquired by the public
company with its parent or subsidiaries, or by its subsidiaries in which it directly or
indirectly holds 100 percent of the issued shares or authorized capital.
Article 18 When the results of a public company's appraisal conducted in accordance with
paragraph 1 and paragraph 2 of the preceding Article are uniformly lower than the
transaction price, the matter shall be handled in compliance with Article 19. However,
where the following circumstances exist, objective evidence has been submitted and
specific opinions on reasonableness have been obtained from a professional real
property appraiser and a CPA have been obtained, this restriction shall not apply:
1. Where the related party acquired undeveloped land or leased land for development,
it may submit proof of compliance with one of the following conditions:
(1) Where undeveloped land is appraised in accordance with the means in the
preceding Article, and structures according to the related party's construction
cost plus reasonable construction profit are valued in excess of the actual
transaction price. The "Reasonable construction profit" shall be deemed the
average gross operating profit margin of the related party's construction division
over the most recent 3 years or the gross profit margin for the construction
industry for the most recent period as announced by the Ministry of Finance,
whichever is lower.
(2) Completed transactions by unrelated parties within the preceding year involving
other floors of the same property or neighboring or closely valued parcels of
land, where the land area and transaction terms are similar after calculation of
reasonable price discrepancies in floor or area land prices in accordance with
standard property market sale or leasing practices.
2. Where the Company acquiring real property, or obtaining real property right-of-use
assets through leasing, from a related party provides evidence that the terms of the
transaction are similar to the terms of completed transactions involving neighboring
or closely valued parcels of land of a similar size by unrelated parties within the
preceding year.
Completed transactions involving neighboring or closely valued parcels of land in the
preceding paragraph in principle refers to parcels on the same or an adjacent block and
within a distance of no more than 500 meters or parcels close in publicly announced
current value; transactions involving similarly sized parcels in principle refers to
transactions completed by unrelated parties for parcels with a land area of no less than
50 percent of the property in the planned transaction; within the preceding year refers
to the year preceding the date of occurrence of the acquisition of the real property or
obtainment of the right-of-use assets thereof.
Article 19 Where the Company acquires real property or right-of-use assets thereof from a related
party and the results of appraisals conducted in accordance with the preceding two
articles are uniformly lower than the transaction price, the following steps shall be
75
taken:
1. Special reserve shall be set aside in accordance with Article 41, paragraph 1 of the
Securities and Exchange Act against the difference between the real property or
right-of-use assets thereof transaction price and the appraised cost, and may not be
distributed or used for capital increase or issuance of bonus shares. Where a
public company uses the equity method to account for its investment in another
company, then the special reserve called for under Article 41, paragraph 1 of the
Securities and Exchange Act shall be set aside pro rata in a proportion consistent
with the share of public company's equity stake in the other company.
2. Audit Committee shall comply with Article 218 of the Company Act.
3. Actions taken pursuant to the preceding two subparagraphs shall be reported to a
shareholders meeting, and the details of the transaction shall be disclosed in the
annual report and any investment prospectus.
The Company, having set aside a special reserve under the preceding paragraph, may
not utilize the special reserve until it has recognized a loss on decline in market value
of the assets it purchased or leased at a premium, or they have been disposed of, or the
leasing contract has been terminated, or adequate compensation has been made, or the
status quo ante has been restored, or there is other evidence confirming that there was
nothing unreasonable about the transaction, and the FSC has given its consent.
For the company's acquisition of the real estate or its right-of-use assets from the
related party, if there is other evidence indicating that the transaction has abnormal
business operations, it shall also be handled in accordance with the preceding two
provisions.
Article 20 The Company that conducts a merger, demerger, acquisition, or transfer of shares,
prior to convening the board of directors to resolve on the matter, shall engage a CPA,
attorney, or securities underwriter to give an opinion on the reasonableness of the share
exchange ratio, acquisition price, or distribution of cash or other property to
shareholders, and submit it to the board of directors for deliberation and passage.
However, the requirement of obtaining an aforesaid opinion on reasonableness issued
by an expert may be exempted in the case of a merger by the Company of a subsidiary
in which it directly or indirectly holds 100 percent of the issued shares or authorized
capital, and in the case of a merger between subsidiaries in which the Company
directly or indirectly holds 100 percent of the respective subsidiaries’ issued shares or
authorized capital.
Article 21 The Company shall prepare a public report to shareholders detailing important
contractual content and matters relevant to the merger, demerger, or acquisition prior to
the shareholders meeting and include it along with the expert opinion referred to in
paragraph 1 of the preceding Article when sending shareholders notification of the
shareholders meeting for reference in deciding whether to approve the merger,
demerger, or acquisition. Provided, where a provision of another act exempts a
company from convening a shareholders meeting to approve the merger, demerger, or
acquisition, this restriction shall not apply.
Where the shareholders meeting of the Company fails to convene or pass a resolution
due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is
rejected by the shareholders meeting, the Company shall immediately publicly explain
the reason, the follow-up measures, and the preliminary date of the next shareholders
meeting.
Article 22 The Company shall convene a board of directors meeting and shareholders meeting on
76
the day of the transaction to resolve matters relevant to the merger, demerger, or
acquisition, unless another act provides otherwise or the FSC is notified in advance of
extraordinary circumstances and grants consent.
The Company participating in a transfer of shares shall call a board of directors
meeting on the day of the transaction, unless another act provides otherwise or the FSC
is notified in advance of extraordinary circumstances and grants consent.
When participating in a merger, demerger, acquisition, or transfer of another company's
shares, the Company shall prepare a full written record of the following information
and retain it for 5 years for reference:
1. Basic identification data for personnel: Including the occupational titles, names, and
national ID numbers (or passport numbers in the case of foreign nationals) of all
persons involved in the planning or implementation of any merger, demerger,
acquisition, or transfer of another company's shares prior to disclosure of the
information.
2. Dates of material events: including the signing of any letter of intent or
memorandum of understanding, the hiring of a financial or legal advisor, the
execution of a contract, and the convening of a board of directors meeting.
3. Important documents and minutes: Including merger, demerger, acquisition, and
share transfer plans, any letter of intent or memorandum of understanding, material
contracts, and minutes of board of directors' meetings.
When participating in a merger, demerger, acquisition, or transfer of another
company's shares, the Company shall, within 2 days counting inclusively from the
date of passage of a resolution by the board of directors, report (in the prescribed
format and via the Internet-based information system) the information set out in
subparagraphs 1 and 2 of the preceding paragraph to the FSC for recordation.
Where any of the companies participating in a merger, demerger, acquisition, or
transfer of another company's shares is neither listed on an exchange nor has its
shares traded on an OTC market, the company(s) so listed or traded shall sign an
agreement with such company whereby the latter is required to abide by the
provisions of the preceding 2 paragraphs.
Article 23 Every person participating in or privy to the plan for merger, demerger, acquisition, or
transfer of shares shall issue a written undertaking of confidentiality and may not
disclose the content of the plan prior to public disclosure of the information and may
not trade, in their own name or under the name of another person, in any stock or other
equity security of any company related to the plan for merger, demerger, acquisition, or
transfer of shares.
Article 24 The Company participating in a merger, demerger, acquisition, or transfer of shares
may not arbitrarily alter the share exchange ratio or acquisition price unless under the
below-listed circumstances, and shall stipulate the circumstances permitting alteration
in the contract for the merger, demerger, acquisition, or transfer of shares:
1. Cash capital increase, issuance of convertible corporate bonds, or the issuance of
bonus shares, issuance of corporate bonds with warrants, preferred shares with
warrants, stock warrants, or other equity-based securities.
2. An action, such as a disposal of major assets, that affects the company's financial
operations.
3. An event, such as a major disaster or major change in technology, that affects
shareholder equity or share price.
77
4. An adjustment where any of the companies participating in the merger, demerger,
acquisition, or transfer of shares from another company, buys back treasury stock.
5. An increase or decrease in the number of entities or companies participating in the
merger, demerger, acquisition, or transfer of shares.
6. Other terms/conditions that the contract stipulates may be altered and that have been
publicly disclosed.
Article 25 The contract for participation by the Company in a merger, demerger, acquisition, or of
shares shall record the rights and obligations of the companies participating in the
merger, demerger, acquisition, or transfer of shares, and shall also record the following:
1. Handling of breach of contract.
2. Principles for the handling of equity-type securities previously issued or treasury
stock previously bought back by any company that is extinguished in a merger or that
is demerged.
3. The amount of treasury stock participating companies are permitted under law to buy
back after the record date of calculation of the share exchange ratio, and the
principles for handling thereof.
4. The manner of handling changes in the number of participating entities or companies.
5. Preliminary progress schedule for plan execution, and anticipated completion date.
6. Scheduled date for convening the legally mandated shareholders meeting if the plan
exceeds the deadline without completion, and relevant procedures.
Article 26 After public disclosure of the information, if the Company participating in the merger,
demerger, acquisition, or share transfer intends further to carry out a merger, demerger,
acquisition, or share transfer with another company, all of the participating companies
shall carry out anew the procedures or legal actions that had originally been completed
toward the merger, demerger, acquisition, or share transfer; except that where the
number of participating companies is decreased and a participating company's
shareholders meeting has adopted a resolution authorizing the board of directors to
alter the limits of authority, such participating company may be exempted from calling
another shareholders meeting to resolve on the matter anew.
Article 27 Where any of the companies participating in a merger, demerger, acquisition, or
transfer of shares is not a public company, the Company shall sign an agreement with
the non-public company whereby the latter is required to abide by the provisions of
Article 22, Article 23, and the preceding article.
Article 28 Under any of the following circumstances, the Company acquiring or disposing of
assets shall publicly announce and report the relevant information on the FSC's
designated website in the appropriate format as prescribed by regulations within 2 days
counting inclusively from the date of occurrence of the event:
1. Acquisition or disposal of real property or right-of-use assets thereof from or to a
related party, or acquisition or disposal of assets other than real property or right-of-
use assets thereof from or to a related party where the transaction amount reaches 20
percent or more of paid-in capital, 10 percent or more of the Company's total assets,
or NTD300 million or more; provided, this shall not apply to trading of domestic
government bonds or bonds and separate and resale agreements, or subscription or
redemption of money market funds issued by domestic securities investment trust
enterprises.
78
2. Merger, demerger, acquisition, or transfer of shares.
3. Losses from derivatives trading reaching the limits on aggregate losses or losses on
individual contracts set out in the procedures adopted by the Company.
4. Where equipment or right-of-use assets thereof for business use are acquired or
disposed of, and furthermore the transaction counterparty is not a related party, and
the transaction amount meets any of the following criteria:
(1) For a public company whose paid-in capital is less than NTD10 billion, the
transaction amount reaches NTD500 million or more.
(2) For a public company whose paid-in capital is NTD10 billion or more, the
transaction amount reaches NTD1 billion or more.
5. Where land is acquired under an arrangement on engaging others to build on the
company's own land, engaging others to build on rented land, joint construction and
allocation of housing units, joint construction and allocation of ownership
percentages, or joint construction and separate sale, and furthermore the transaction
counterparty is not a related party, and the amount the Company expects to invest in
the transaction reaches NTD500 million.
6. Where an asset transaction other than any of those referred to in the preceding 5
subparagraphs, a disposal of receivables by the Company, or an investment in the
mainland China area reaches 20 percent or more of paid-in capital of the Company or
NTD300 million; provided, this shall not apply to the following circumstances:
(1) Trading of domestic government bonds.
(2) The Company's securities trading on securities exchanges or OTC markets, or
subscription of ordinary corporate bonds or general bank debentures without
equity characteristics (excluding subordinated debt) that are offered and issued in
the primary market, or subscription or redemption of securities investment trust
funds or futures trust funds, or subscription by a securities firm of securities as
necessitated by its undertaking business or as an advisory recommending
securities firm for an emerging stock company, in accordance with the rules of
the Taipei Exchange.
(3) Trading of bonds under repurchase and resale agreements, or subscription or
redemption of money market funds issued by domestic securities investment trust
enterprises.
The amount of transactions above shall be calculated as follows:
1. The amount of any individual transaction.
2. The cumulative transaction amount of acquisitions and disposals of the same type
of underlying asset with the same transaction counterparty within the preceding
year.
3. The cumulative transaction amount of acquisitions and disposals (cumulative
acquisitions and disposals, respectively) of real property or right-of-use assets
thereof within the same development project within the preceding year.
4. The cumulative transaction amount of acquisitions and disposals (cumulative
acquisitions and disposals, respectively) of the same security within the preceding
year.
"Within the preceding year" as used in the preceding paragraph refers to the year
preceding the date of occurrence of the current transaction. Items duly announced in
accordance with these Regulations need not be counted toward the transaction amount.
79
The Company shall compile monthly reports on the status of derivatives trading engaged
in up to the end of the preceding month by the Company and any subsidiaries that are not
domestic public companies and enter the information in the prescribed format into the
information reporting website designated by the FSC by the 10th day of each month.
When the Company at the time of public announcement makes an error or omission in an
item required by regulations to be publicly announced and so is required to correct it, all
the items shall be again publicly announced and reported in their entirety within two days
counting inclusively from the date of knowing of such error or omission.
The Company acquiring or disposing of assets shall keep all relevant contracts, meeting
minutes, log books, appraisal reports and CPA, attorney, and securities underwriter
opinions at the company, where they shall be retained for 5 years except where another
act provides otherwise.
Article 29 Formats for public disclosure:
1. For the trading by the Company in the securities of its parent company, subsidiary
company or its related enterprise from the domestic or overseas exchange markets or
OTCs, the format for items and contents to be publicly disclosed is set out as Appendix 2.
2. Where land is acquired under an arrangement on engaging others to build on the
company's own land, engaging others to build on rented land, joint construction and
allocation of housing units, joint construction and allocation of ownership percentages, or
joint construction and separate sale, the format for the items and contents to be publicly
disclosed is set out as Appendix 3.
3. For the acquisition or disposal of real property, equipment or its right-of-use assets, and
the related party transactions, the format for the public disclosure is set out as Appendix 4.
4. For the trading in securities, intangible assets or right-of-use assets thereof or
memberships which are neither listed on an exchange nor has its shares traded on an OTC
market, and the disposal of right of claim by the Company, the format for the public
disclosure is set out as Appendix 5.
5. For the investment in the mainland China area, the format for public disclosure is set out
as Appendix 6.
6. For the derivatives trading, the format for the public disclosure of information within 2
days counting inclusively from the date of occurrence of the event is set out as Appendix
7-1.
7. For the derivatives trading, the format for the public disclosure of information by the
tenth of each month is set out as Appendix 7-2.
8. For the transaction in a merger, demerger, acquisition, or transfer of shares, the
announcement format is set out as Appendix 8.
Article 30 Where any of the following circumstances occurs with respect to a transaction that a
public company has already publicly announced and reported in accordance with
Article 28, a public report of relevant information shall be made on the information
reporting website designated by the FSC within 2 days counting inclusively from the
date of occurrence of the event:
1. Change, termination, or rescission of a contract signed in regard to the original transaction.
2. The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled
date set forth in the contract.
3. Change to the originally publicly announced and reported information.
80
Article 31 Information required to be publicly announced and reported in accordance with the
provisions of Article 28 and Article 30 on acquisitions and disposals of assets by a
public company's subsidiary that is not itself a public company in Taiwan shall be
reported by the Company.
The paid-in capital or total assets of the Company shall be the standard applicable to a
subsidiary referred to in the preceding paragraph in determining whether, relative to
paid-in capital or total assets, it reaches a threshold requiring public announcement and
regulatory filing under Article 28, paragraph 1.
Article 32 For the calculation of 10 percent of total assets under the Procedure, the total assets
stated in the most recent parent company only financial report or individual financial
report prepared under the Regulations Governing the Preparation of Financial Reports
by Securities Issuers shall be used.
Article 33 Where it is not specified in the Procedure, it shall be subject to the relevant laws and
regulations and the competent authorities.
Article 34 After the Procedure is approved by the board of directors, it shall be submitted to the
shareholders' meeting for approval. In the event of amendments, the procedure shall
apply.
These Articles of Incorporation were set up on April 28, 1989.
The 1stamendment was implemented on October 29, 1991.
The 2nd
amendment was implemented on May 27, 1995.
The 3rd
amendment was implemented on December 28, 1999.
The 4th
amendment was implemented on April 24, 2003.
The 5th
amendment was implemented on June 15, 2007.
The 6th
amendment was implemented on June 19, 2009.
The 7th
amendment was implemented on June 6, 2012.
The 8th
amendment was implemented on June 19, 2014.
The 9th
amendment was implemented on June 21, 2016.
The 10th
amendment was implemented on June 7, 2017.
The - amendment was implemented on -
81
APPENDIX 1
The appraisal report shall specify the following items:
1. The items specified under the technical rules for the appraisal of real estate.
2. The matters related to the professional appraiser and appraisal officer.
(1) The name, capital amount, organizational structure and personnel composition of the
professional appraiser.
(2) The name, age, and educational and career background (with certificates) of the appraiser ;
the number of years and duration being engaged in the appraisal work, and the number of
cases undertaking the appraisal work.
(3) The relationship between the professional appraiser, appraisal officer and the principal of the
appraisal.
(4) The appraisal report shall include a statement attesting to the professional competence and
independence of the appraisal personnel who prepared the report or opinion, and that they
have evaluated and found that the information used is reasonable and accurate, and that they
have complied with applicable laws and regulations, and the matters contained therein shall
contain no misrepresentations or nondisclosures.
(5) The date on which the appraisal report is issued.
3. The basic information on the target surveyed shall include at least the name, nature, location,
area and other information of the target.
4. A comparative example of real estate transactions in the target area.
5. For the types of the appraisal being limited price, specified price or special price, the limited,
specified or special conditions; whether the current situation meets such conditions; the reason
and rationality of the difference from the normal price; and whether such limited price, specified
price or special price shall be sufficient to serve as the reference for the trading price.
6. In the case of a contract for joint construction, the reasonable allocation ratio between the two
parties shall be stated.
7. Estimation of land value-added tax.
8. In the case that appraised value of a real estate at the same appraisal date among appraisers
differs and the difference in value is in excess of 20 percent, whether it been handled in
accordance with Article 41 of the Real Estate Appraiser Act.
9. The annex shall include the appraisal details of the target, the ownership registration material,
the cadastral map transcript, the urban plan sketch, the location map of the target, the land use
zoning certificate, and the current status of the target.
82
APPENDIX 2
(Applicable for the securities trading in the domestic and overseas centralized securities exchange
markets or over-the-counter markets)
Announcement by the x x Co., Ltd.
Date:
The Company hereby announces the relevant information on the securities it acquired or disposed in
accordance with the “Regulations Governing the Acquisition or Disposal of Assets by Public
Companies” as follows:
1. Name of the securities:
2. Date of the transaction: from (day) (month) (year) to (day) (month) (year)
3. Quantity: ; price per unit: NTD ; total amount: NTD
4. If the transaction counterparty is a related party, the counterparty of the transaction: (ex. xx
Incorporation); the relationship with the company: (ex. the invested company re-invested by
the Company holding xx% of its shares), the date that the board of directors passes the
resolution: (day) (month) (year) ; the date of the supervisor's recognition: (day) (month)
(year)
5. Gains (or losses) of disposition: NTD
6. Accumulative quantity of the trading securities held to date (including this
transaction): ; amount: NTD ; shareholding ratio: %; rights restricted: (ex.
pledge)
7. Relationship with the target company of the transaction:
8. Ratio of the portfolio investment (including this transaction) to date accounting for the most
recent financial report: total assets % ; total equity % ; the most recent financial
report working capital (not applicable for the financial holding company, bank, bills finance
and insurance industry) : NTD
9. Specific purpose for the acquisition or disposition:
10. Whether or not objected by the director in this transaction:
11. Other statements:
Notes:
1. Item 4: If the counterparty of the transaction is a related party, the filing item “date of the
supervisor's recognition” shall be the date of approval of the audit committee, if the audit
committee has been set up in accordance with the provisions of the Act.
2. Item 5: not applicable for the securities acquired.
3. Item 8:
(1) The portfolio investment is the total amount (including this transaction) held by
the company to date of its own settlement; the total assets and total equity are the
amounts specified in the most recent financial statements of the company.
(2) If the securities are acquired with the working capital being negative, the source of
the funds for acquiring the securities and the specific reason for acquiring the
securities even under the situation of insufficient funds shall be additionally
announced.
83
APPENDIX 3 (Applicable for the real property acquired where the land is acquired under an
arrangement on engaging others to build on the company's own land, engaging others to build on
rented land, joint construction and allocation of housing units, joint construction and allocation of
ownership percentages, or joint construction and separate sale)
Announcement by the x x Co., Ltd.
Date:
The Company hereby announces the relevant information on the xx assets it intends to acquire with
the means of xx in accordance with the “Regulations Governing the Acquisition or Disposal of
Assets by Public Companies” as follows:
1. Type of contract:
2. Date of the occurrence: from (day) (month) (year) to (day) (month) (year)
3. Contract counterparty: ; the relationship with the company:
4. If the transaction counterparty is a related party, the date that the board of directors passes the
resolution: (day) (month) (year) ; the date of the supervisor's recognition: (day) (month)
(year)
5. Total contract amount: NTD ; Estimated investment amount: NTD
Duration of the contract: from (day) (month) (year) to (day) (month) (year)
Limitation clauses:
Other important agreements:
6. Name of firm or company of the professional appraiser: ; appraisal result: NTD
Name of real estate appraiser: ; practicing license No. of the real estate appraiser:
If the appraisal result has material difference, the reason for such difference and the
accountant's opinion:
Name of accounting firm: ; certified public accountant name: ; practicing license No. of
the certified public accountant:
Whether the appraisal report adopts a limited price, a specified price or special price:
Whether the appraisal report has not been obtained: ; reasons for not yet obtaining the
appraisal report:
7. Specific purpose for the acquisition:
8. Whether or not objected by the director in this transaction:
9. Other statements:
Notes:
1. Item 2: The date of occurrence means the date of contract signing, date of payment, date of
execution of a trading order, date of title transfer, date of a resolution of the board of directors,
or other date that can confirm the counterparty and monetary amount of the transaction,
whichever date is earlier.
2. Item 4: If the counterparty of the transaction is a related party, the filing item “date of the
supervisor's recognition” shall be the date of approval of the audit committee, if the audit
committee has been set up in accordance with the provisions of the Act.
3. Item 5: Other important agreements shall indicate whether there is a repurchase (reverse)
agreement, cancellation of the contract or other uncertain or special terms.
4. Item 6:
(1) Not applicable for the real property acquired where the land is acquired under an
arrangement on engaging others to build on the company's own land, engaging others to
build on rented land; the appraisal result shall indicate the appraiser's assessment opinion
on the reasonableness of the cooperation mode of the contract.
(2) When the reference price of the transaction price is based on a limited price, a specified
price or a special price, the normal price and the appraisal result of the limited price or
84
specified price shall be announced separately.
(3) Non-related party transactions: based on the date of occurrence of the current
transaction, the transaction amount within the preceding year reaches 20 percent or more
of paid-in capital, or NTD300 million or more, a professional appraisal report or a
certified public accountant opinion shall be obtained.
(4) Related party transactions: based on the date of occurrence of the current transaction, the
transaction amount within the preceding year reaches 20 percent or more of paid-in
capital, or NTD300 million or more, or 10 percent or more of the company's total assets,
a professional appraisal report or a certified public accountant opinion shall be obtained.
(5) In the case of a company with shares having no par value or a par value other than NTD10,
based on the date of occurrence of the current transaction, the transaction amount within
the preceding year reaches 10 percent or more of the equity attributed to the shareholders
of the parent company, or NTD300 million or more, a professional appraisal report or a
CPA opinion shall be obtained.
(6) If the appraisal results of the acquired asset are all higher than the transaction price, or
the appraisal results of the disposed assets are all lower than the transaction price, it
shall not be necessary to obtain another certified public accountant opinion.
85
APPENDIX 4 (Applicable for acquisition or disposal of the real estate, equipment or its right-of-
use assets)
Announcement by the x x Co., Ltd.
Date:
The Company hereby announces the relevant information on the xx assets it acquired/disposed in
accordance with the “
Regulations Governing the Acquisition or Disposal of Assets by Public Companies” as follows:
1. Name and type of the target: (ex. the land located in xx subsection, xx section, northern
district, Taichung City)
2. Date of the occurrence: (day) (month) (year)
3. Quantity of trading units: (ex. xx square meters, equivalent to xx ping); price per unit:
NTD ; total amount: NTD
4. Counterparty of the transaction: (ex. xx Inc.); the relationship with the company: (ex. the
invested company re-invested by the company holding xx% of its shares)
5. If the transaction counterparty being a related party:
(1) Date of adoption by the board of directors: the date that the board of directors passes the
resolution: (day) (month) (year) ; the date of the supervisor's recognition: (day) (month)
(year)
(2) If the real estate or its right of-use assets is acquired from a related party, the appraisal
price in accordance with the provisions of Articles 16 and 17 of the Criteria:
6. Reasons for selecting the related party for the transaction:
Owner of the previous transfer: ; relationship with the company: ;
relationship with the counterparty of the transaction:
Last transfer date: (day) (month) (year) ; amount: NTD
7. The owner within the last 5 years of the transaction target has been the company's related
party:
Date of the acquisition by the related party: (day) (month) (year); acquisition price: NTD ;
relationship with the company at the time of acquisition:
Date of the disposal by the related party: (day) (month) (year); disposition price: NTD ;
relationship with the company at the time of disposition:
8. Estimated gains (or losses) from the disposition: NTD
9. Terms on delivery or payment (including payment period and amount):
Limitation clauses:
Other important agreements:
10. Type of transaction decided: (ex. bidding, price comparison or bargaining)
Reference basis for price decision:
Decision made by:
11. Name of firm or company of the professional appraiser: ; appraisal amount: NTD
Name of professional appraiser: ; practicing certificate No. of the professional
appraiser: ; when the appraisal results have significant difference, the reason for such
difference and the certified public accountant's opinion:
Name of accounting firm: ; certified public accountant name: ; certified public
accountant practicing certificate No.: ;
Whether the appraisal report adopts a limited price, a specified price or a special price:
Whether the appraisal report has not yet obtained: ; reasons for not yet
obtaining the appraisal report:
12. Broker:
Brokerage fee: NTD
86
13. Specific purpose for the acquisition or disposition:
14. Whether or not objected by the director in this transaction:
15. Other statements:
Notes:
1. Item 2: The date of occurrence means the date of contract signing, date of payment, date of
execution of a trading order, date of title transfer, date of a resolution of the board of directors,
or other date that can confirm the counterparty and monetary amount of the transaction,
whichever date is earlier.
2. Item 4: If the counterparty of the transaction is a natural person without being a related party
of the company, it is exempted to disclose the name.
3. Item 5: If the counterparty of the transaction is a related party, the filing item “date of the
supervisor's recognition” shall be the date of approval of the audit committee, if the audit
committee has been set up in accordance with the provisions of the Act.
4. Item 8: not applicable for the acquisition of assets; if deferred gains (or losses) out of
disposition are expected, a list shall be made to explain on the recognition.
5. Item 9: Other important agreements shall indicate whether there is a repurchase (reverse)
agreement, cancellation of the contract or other uncertain or special terms. In the case of the
right-of-use asset, the lease term, whether the priority lease or rent exists upon lease
expiration, and other important matters regarding the lease shall be indicated.
6. Item 11:
(1) When the reference price of the transaction price is based on a limited price, a specified
price or a special price, the normal price and the appraisal result of the limited price or
specified price shall be announced separately.
(2) Non-related party transactions: based on the date of occurrence of the current
transaction, the transaction amount within the preceding year reaches 20 percent or more
of paid-in capital, or NTD300 million or more, a professional appraisal report or a
certified public accountant opinion shall be obtained.
(3) Related party transactions: based on the date of occurrence of the current transaction, the
transaction amount within the preceding year reaches 20 percent or more of paid-in
capital, or NTD300 million or more, or 10 percent or more of the company's total assets,
a professional appraisal report or a certified public accountant opinion shall be obtained.
(4) In the case of a company with shares having no par value or a par value other than
NTD10, based on the date of occurrence of the current transaction, the transaction
amount within the preceding year reaches 10 percent or more of the equity attributed to
the shareholders of the parent company, or NTD300 million or more, a professional
appraisal report or a certified public accountant opinion shall be obtained.
(5) If the assets are acquired or disposed of by the court auction procedure, the certificate
issued by the court may be used instead of the appraisal report or certified public
accountant's opinion.
(6) If the appraisal results of the acquired real estate, equipment or its right-of-use assets are
all higher than the transaction price, or the appraisal results of the disposed real estate,
equipment or its right-of-use assets are all lower than the transaction price, it shall not be
necessary to obtain another certified public accountant opinion.
87
APPENDIX 5
(Applicable for trading in the securities, intangible assets or its right-of-use assets, membership
certificate and the right of claims disposed by the Company not on the centralized securities
exchange market or over-the-counter market )
Announcement by the x x Co., Ltd.
Date:
The Company hereby announces the relevant information on xx securities (intangible assets or its
right-of-use assets, membership certificate, the right of claims) it acquired or disposed in accordance
with the “ Regulations Governing the Acquisition or Disposal of Assets by Public Companies” as
follows:
1. Transaction target: (in case of preferred stocks, the terms and conditions of its issuance shall
be indicated, such as the dividend yield ratio.)
2. Date of the occurrence: (day) (month) (year)
3. Quantity of trading units: ; price per unit: NTD ; total amount: NTD
4. Counterparty of the transaction: (ex. xx Inc.); the relationship with the company: (ex. the
invested company re-invested by the company holding xx% of its shares)
5. If the transaction counterparty being a related party, the date of resolution passed by the board
of directors: (day) (month) (year) ; the date of the supervisor's recognition: (day) (month)
(year)
6. Reasons for selecting the related party for the transaction:
Owner of the previous transfer: ; relationship with the company: ; relationship with
the counterparty of the transaction:
Last transfer date: (day) (month) (year) ; amount: NTD
7. The owner within the last 5 years of the transaction target has been the company's related
party:
Date of the acquisition by the related party: (day) (month) (year); acquisition price: NTD ;
relationship with the company at the time of acquisition:
Date of the disposal by the related party: (day) (month) (year); disposition price: NTD ;
relationship with the company at the time of disposition:
8. The relevant matters concerning the disposition of the right of claims:
(1) The type of collateral attached to the right of claims disposed:
(2) If such disposition is concerning the right of claims toward the related party:
Name of the related party: ;
Face value of this disposition of the right of claims toward such related party:
9. Gains (or losses) from the disposition: NTD
10. Terms on delivery or payment (including payment period and amount):
Limitation clauses of the contract:
Other important agreements:
11. Method of transaction decision: ; decision made by:
Reference basis for price decision:
Net value per share of the target company of the securities acquired or disposed: 12. Whether the certified public accountant issued an opinion that the transaction price is reasonable:
Name of accounting firm: ; certified public accountant name: ; certified public
accountant practicing certificate No.:
13. Accumulative quantity of the trading securities held to date (including this
transaction): ; amount: NTD ; shareholding ratio: %; rights restricted: (ex.
pledge)
14. Ratio of the portfolio investment (including this transaction) to date accounting for the most
88
recent financial report: total assets % ; total equity % ; the most recent financial
report working capital (not applicable for the financial holding company, bank, bills finance
and insurance industry) : NTD
15. Broker: ; brokerage fee: NTD
16. Specific purpose for the acquisition or disposition:
17. Whether or not objected by the director in this transaction:
18. Other statements:
Notes:
1. Item 2: The date of occurrence means the date of contract signing, date of payment, date of
execution of a trading order, date of title transfer, date of a resolution of the board of directors,
or other date that can confirm the counterparty and monetary amount of the transaction,
whichever date is earlier.
2. Item 4: If the counterparty of the transaction is a natural person without being a related party
of the company, it is exempted to disclose the name.
3. Item 5: If the counterparty of the transaction is a related party, the filing item “date of the
supervisor's recognition” shall be the date of approval of the audit committee, if the audit
committee has been set up in accordance with the provisions of the Act.
4. Item 9: not applicable for the acquisition of assets; if deferred gains (or losses) out of
disposition are expected, a list shall be made to explain on the recognition.
5. Item 10: Other important agreements shall indicate whether there is a repurchase (reverse)
agreement, cancellation of the contract or other uncertain or special terms. In the case of the
right-of-use asset, the lease term, whether the priority lease or rent exists upon lease
expiration, and other important matters regarding the lease shall be indicated.
6. Item 12:
(1) Non-related party transactions: based on the date of occurrence of the current
transaction, the transaction amount within the preceding year reaches 20 percent or more
of paid-in capital, or NTD300 million or more, a professional appraisal report or a
certified public accountant opinion shall be obtained.
(2) Related party transactions: based on the date of occurrence of the current transaction, the
transaction amount within the preceding year reaches 20 percent or more of paid-in
capital, or NTD300 million or more, or 10 percent or more of the company's total assets,
a professional appraisal report or a certified public accountant opinion shall be obtained.
(3) In the case of a company with shares having no par value or a par value other than
NTD10, based on the date of occurrence of the current transaction, the transaction amount
within the preceding year reaches 10 percent or more of the equity attributed to the
shareholders of the parent company, or NTD300 million or more, a professional appraisal
report or a certified public accountant opinion shall be obtained.
(4) If the assets are acquired or disposed of by the court auction procedure, the certificate
issued by the court may be used instead of the appraisal report or certified public
accountant's opinion.
7. Item 14:
(1) The portfolio investment is the total amount (including this transaction) held by the
company to date of its own settlement; the total assets and total equity are the amounts
specified in the most recent financial statements of the company.
(2) If the securities are acquired with the working capital being negative, the source of the
funds for acquiring the securities and the specific reason for acquiring the securities even
under the situation of insufficient funds shall be additionally announced.
89
APPENDIX 6 (Applicable for investment in mainland China area) The Company hereby announces the relevant information on the investment in mainland China are
in accordance with the “Regulations Governing the Acquisition or Disposal of Assets by Public
Companies” as follows:
1. Increased (decreased) investment portion in this transaction:
(1) Date of the occurrence: (day) (month) (year)
(2) Investment method:
(3) Quantity of trading units: ; price per unit: NTD ; total amount: NTD
(4) Information on the invested company in mainland China:
(1) Name of the company:
(2) Paid-in capital: NTD
(3) Intended capital increase in this transaction: NTD
(4) Major business items:
(5) Financial statements of the most recent year:
Type of CPA's opinion: ; total equity: ; profit and loss amount:
(6) Actual investment amount to date in the invested company of mainland China of
this transaction:
(5) Counterparty of the transaction: ; relationship with the company:
(6) If the transaction counterparty being a related party, the date of resolution passed by the
board of directors: (day) (month) (year) ; the date of the supervisor's recognition: (day)
(month) (year)
(7) Reasons for selecting the related party for the transaction:
Owner of the previous transfer: ; relationship with the company: ; relationship
with the counterparty of the transaction: ; last transfer date: (day) (month) (year) ;
amount: NTD
(8) The owner within the last 5 years of the transaction target has been the company's
related party:
Date of the acquisition by the related party: (day) (month) (year); acquisition price:
NTD ; relationship with the company at the time of acquisition:
Date of the disposal by the related party: (day) (month) (year); disposition price:
NTD ; relationship with the company at the time of disposition:
(9) Gains (or losses) of disposition:
(10) Terms on delivery or payment (including payment period and amount): ; limitation
clauses of the contract: ; Other important agreements:
(11) Method of transaction decision: ; decision made by: ; reference basis for price
decision:
(12) Whether the certified public accountant issued an opinion that the transaction price is
reasonable:
Name of accounting firm: ; certified public accountant name: ; certified public
accountant practicing certificate No.:
(13) Broker:
(14) Specific purpose for the acquisition or disposition:
(15) Whether or not objected by the director in this transaction:
2. Total investment amount in the mainland China to date:
(1) The total amount of investment approved by the Investment Commission (MOEAIC)
in the mainland China area (including this investment): NTD
Paid-in capital: %
accounting for the total assets ratio of the most recent financial statements: %
Total equity: %
90
(2) The actual total amount of investment in the mainland China area: NTD
Paid-in capital: %
accounting for the total assets ratio of the most recent financial statements: %
Total equity: %
The amount of gains or losses recognized in the past three years for the investment in
mainland China: NTD , NTD , NTD
The amount of profit remitted back in the last three years: NTD , NTD
(3) Other statements:
Notes:
1. Investing in the mainland China area includes the following investment methods:
(1) Direct investments in the company of the mainland China.
(2) Remittances from the third region to invest the company of the mainland China.
(3) Investments in establishing a company in the third region to reinvest in the company of the
mainland China.
(4) Investments in an existing company in the third region to reinvest in the company of the
mainland China.
(5) Other methods of investment in the mainland China.
2. Item 1 (1): The date of occurrence means the date of contract signing, date of payment, date of
execution of a trading order, date of title transfer, date of a resolution of the board of directors, or
other date that can confirm the counterparty and monetary amount of the transaction, whichever
date is earlier.
3. Item 1 (6): If the counterparty of the transaction is a related party, the filing item “date of the
supervisor's recognition” shall be the date of approval of the audit committee, if the audit
committee has been set up in accordance with the provisions of the Act.
91
APPENDIX 7-1 (Applicable for public disclosure of Information on engaging in the derivatives
trading within 2 days counting inclusively from the date of occurrence of the event) Announcement by the x x Co., Ltd.
Date:
The Company hereby announces the relevant information on engaging in the derivatives trading
in accordance with the “Regulations Governing the Acquisition or Disposal of Assets by Public
Companies” as follows:
1. Type of contract (Note 1):
2. Date of the occurrence:
3. Amount of the contract (Note 2):
4. Amount of the margin (or premium) paid:
5. Reasons for engaging in derivatives(Note 3):
6. Amount of losses assessed at fair value (including realized and unrealized):
Maximum amount of losses for overall or individual contracts under the Handling Procedure:
Reasons for losses and impact on the company:
7. Contract period:
8. Limitation clauses:
9. Other important agreements:
10. Other statements:
Note 1: The type of contract shall indicate the futures contract, the forward contract, the exchange or
the option contract.
Note 2: The contract notional amount shall disclose the principal amount, fixed amount,
denomination or other similar amount of the contract.
Note 3: The reason for engaging in derivatives transactions; the purpose is for trading or for hedging.
For the purpose of hedging, the hedged item, its amount and profit and loss status shall be
indicated.
Note 4: The embedded derivatives commodity that are separately recognized from the main contract
are derivatives commodity under the provisions of this form.
92
APPENDIX 7-2 (Applicable for public disclosure of information on engaging in the derivatives trading being reported before 10th of every month)
In accordance with the “Regulations Governing the Acquisition or Disposal of Assets by Public Companies”, the Company hereby announces the relevant information
on the accumulated derivatives trading engaged by the Company, its overseas subsidiaries and domestic non-public subsidiaries as of the end of the month of the year
as follows: (The announcements shall be made in separate forms with respect to the Company, its overseas subsidiaries and domestic non-public subsidiaries.)
1. Applicable for non-banking & bills financing industry (Unit: NTD thousand) Contract Type Futures Individual Options Portfolio
Options
Forward
Contract
Swaps Hybrid contract (including
the mixed product as
designated at fair value
through profit and loss)
Others
Transaction Information Put Call Put Call
Holding for trading Margin paid
Premium received (paid)
Open
Contract
Total contract amount
Fair value
Recognized as the non-realized gains
and losses in the current year
Offset
Contract
Total contract amount
Recognized as the realized gains and
losses in the current year
No
t ho
ldin
g F
or trad
ing
Does not
match Hedging
Accounting
Margin paid
Premium received (paid)
Open
Contract
Total contract amount
Fair value
Recognized as the non-realized gains
and losses in the current year
Offset
Contract
Total contract amount
Recognized as the realized gains and
losses in the current year
Match Heding
Accounting
Total contract amount
Premium received (paid)
Open
Contract
Total contract amount
Fair value
Recognized as the non-realized gains
and losses in the current year
Offset
Contract
Total contract amount
Recognized as the realized gains and
losses in the current year
93
Note 1: This table shall indicate the announcement of the derivative trading information as of the end of last month, not only the trading situation of one
single month.
Note 2: The announcement of the overseas subsidiaries and the domestic non-public subsidiaries shall be made by the public company on their behalf.
If they are not engaged in derivatives trading, they shall perform the “No-filing Setting” operation on a monthly basis.
Note 3: For a hybrid contract of which the commodity of its main contract is within the scope of IFRS9 and does not meet the contractual cash flow
characteristic test, the overall information of the hybrid contract shall be stated in this form, and additional notes may be made to describe the
nature of the contract, the trading conditions and other information in the remark column.
Note 4: For a hybrid contract of which the commodity of its main contract is not within the scope of IFRS9, the transaction content shall be
disassembled into its original form, except that the accounting treatment of the embedded derivative instrument is not required to be recognized
separately from its main contract (non-derivatives), and the information of the derivative trading shall be stated in this form. In addition, for the
overall hybrid contract “designated as a financial asset or financial liability measured at fair value through profit or loss” by the company, a
separate form shall be used for filing subject to the regulations and additional notes may be made to describe the nature of the contract, the
trading conditions and other information in the remark column.
94
2. Applicable for the banking & bills financing industry
for the trading on behalf of customer accounts, some certain parts may not be listed for statistics) Unit: US$1,000
Contract Type Interest
Rate
Exchange
Rate
Equity
Securities
Commodity Credit Others
Notional Amount
Outstanding
OTC Market For the Purpose of Trading
Not for the Purpose of Trading
Exchange Market For the Purpose of Trading
Not for the Purpose of Trading
Fair Value For the Purpose of
Trading
Total Positive Amount
Total Negative Amount
Not for the
Purpose of Trading
Item Hedged
Hedging Instrument
Gains and Losses Amount
Recognized in the
Statements
For the Purpose of Trading
Not for the
Purpose of Trading
Item Hedged
Hedging Instrument
The Company may additionally disclose the portion in line with the hedge account which is classified into the purpose of hedging.
95
APPENDIX 8 (Applicable for conducting a merger, demerger, acquisition or transfer of
shares)
Announcement by the x x Co., Ltd.
Date:
The Company hereby announces the relevant information on conducting a merger, demerger,
acquisition or transfer of shares in accordance with the “Regulations Governing the Acquisition or
Disposal of Assets by Public Companies” as follows:
1. Type of merger and acquisition: (ex. merger, demerger, acquisition or transfer of shares)
2. Date of occurrence:
3. Name of the company participating in the merger and acquisition: (ex. the name of the company that merges
the other company, is divided into a newly established company, acquires or take assignment of the shares of
the target company)
4. The counterparty of the transaction: (the transaction partner that mergers another company, takes
over the divide d and assigned company, acquires or take assignment of the shares of the
target company )
5. The relationship between the counterparty and the company: (The invested company reinvested by the
Company holding xx% of its shares)
Reasons for selecting the related company or related party for acquisition or transfer of shares:
Whether it does not impact on the shareholders' equity:
6.Purpose of merger and acquisition:
7. Benefits expected after the merger and acquisition :
8.Impact of the net value per share and earnings per share after the merger and acquisition :
9.Conversion ratio and calculation basis:
Whether the certified public accountant, lawyer or securities underwriter has issued an opinion with
reasonable assurance:
Name of certified public accountant firm, law firm or securities underwriter company:
Name of certified public accountant, lawyer: ; practicing certificate No. of certified public accountant or
lawyer:
10.Schedule of completion:
11. Relevant matters regarding the rights and obligations of the surviving or newly established company that
generally assumes the dissolved (or divided) company:
12. Basic information on the participating companies in the merger and acquisition:
13. Relevant matters regarding division:
(1) Assessed value of the business and assets prepared to be transferred to the surviving or the newly
established company
(2) The total number, type and quantity of shares acquired by the divided company or its shareholders
(3) When the capital of the divided company is reduced, the relevant matters regarding the capital
reduction
14. Future terms and conditions and restrictions of the transfer of shares acquired:
96
15. Other important agreements:
16. Whether or not objected by the director in this transaction:
17. Other statements:
Notes:
I. Item 9: Where a public company merges its subsidiary held directly or indirectly 100% of the
issued shares or total capital, or the merger between its subsidiaries held directly or indirectly
100% of the issued shares or total capital, it is not necessary to obtain a reasonable opinion from a
CPA, attorney or securities underwriter on the share conversion ratio, the purchase price or the
allotment on cash or other property to the shareholders.
2. Item 11: The relevant matters regarding the surviving or newly established company generally
assuming the rights and obligations of the dissolved company shall include the principles for
handling treasury shares and already-issued equity securities).
3. Item 12: The basic information of the participating companies in the merger and acquisition
include the company name and the main content of its business.
97
Discussions No. 3
Proposal: The Company Corporate Charter (Articles of
Incorporation) amendment is submitted for discussion.
1. In order to implement corporate governance, the election of
directors is conducted overall via the nomination system,
and the provisions of Article 21 are amended.
2. The mapping of the Articles of Incorporation before and
after the amendment and Draft of Amendment is shown in
the table below. (Please refer to Page 98~108 of the
Annual Meeting Handbook)
Resolutions:
98
“Taichung Commercial Bank’s Corporate Charter” (Articles of
Incorporation) amended before and after
Clauses after the amendment Original clause Remark
Article 21
The Bank’s Board is composed of 9~15
directors elected among the competent
individuals in the meeting of
shareholders for a 3-year tenure and can
be reelected in accordance with Article
198 of the Company Act. The total
ordered stock shares of all directors
shall comply with the requirements of
the “Rules and Review Procedures for
Director and Supervisor Share
Ownership Ratios at Public
Companies.”
For the directors (including independent
directors) of this Bank, the nomination
system is adopted to have directors
elected from the list of candidates.
For the directors, the number of
independent directors shall not be less
than two seats, and one fifth of the
director seats; also, non-independent
directors and independent directors
should be elected together for the
respective number of seats with the
candidates receiving the higher electoral
votes elected.
The professional qualifications,
shareholding and part-time job
restrictions, definition of independence,
nomination method, proxy and other
compliance matters of the independent
directors shall be handled in accordance
with the “Regulations Governing
Appointment of Independent Directors
and Compliance Matters for Public
Companies”.
Article 21
The Bank’s Board is composed of 9~15
directors elected among the competent
individuals in the meeting of
shareholders for a 3-year tenure and can
be reelected in accordance with Article
198 of the Company Act. The total
ordered stock shares of all directors
shall comply with the requirements of
the “Rules and Review Procedures for
Director and Supervisor Share
Ownership Ratios at Public
Companies.”
For the directors referred to above, the
number of independent directors shall
not be less than two seats, and one fifth
of the director seats; also, the
nomination system is adopted to have
independent directors elected from the
list of candidates. Non-independent
directors and independent directors
should be elected together for the
respective number of seats with the
candidates receiving the higher electoral
votes elected.
The professional qualifications,
shareholding and part-time job
restrictions, definition of independence,
nomination method, proxy and other
compliance matters of the independent
directors shall be handled in accordance
with the “Regulations Governing
Appointment of Independent Directors
and Compliance Matters for Public
Companies”.
In order to
implement
corporate
governance, the
election of
directors is
conducted overall
via the
nomination
system, and the
provisions of
Article 21 are
amended.
99
Taichung Commercial Bank Co., Ltd.
Company Corporate Charter (Articles of Incorporation) (Draft) Chapter 1 General rules
Article 1 The Bank was organized and incorporated in accordance with The Banking Act of
The Republic of China and the Company Corporate Charter (Articles of
Incorporation), known as “Taichung Commercial Bank” (hereinafter referred to as
“Taichung Bank”)
Article 2 The Bank is dedicated to support the national policy in finance and banking, and
provide viable financial service and advocate industrial and economic development.
Article 3 The Bank’s head office is in Taichung City and with appropriate branches set-up
domestically and internationally depending on its business operations. The
incorporation, revocation, or amendment of branch offices are reported to the
competent authorities for approval and are registered with the Ministry of Economic
Affairs in accordance with the resolutions of the Board.
Article 4 The Bank has announcements made by publishing it in the local daily newspaper
where the head office of the Bank is located or by the instructions of the competent
authorities.
Chapter 2 Stock
Article 5 The Bank’s authorized capital amounted to NTD43.2 billion with 4.32 billion shares
issued at NTD10 par, in which, the Board is authorized to have the unissued shares
issued by installments.
Preferred shares may be offered within the total amount of shares as mentioned in the
previous paragraph.
Article 5-1 The rights and obligations of the preferred shares of the Bank and other important
conditions for issuance are shown below:
1. If the Bank has earnings after account settlement, it shall appropriate the payment
of applicable taxes and for write-off loss carried forward from previous periods.
If there is still a balance, appropriate or make reversal for the legal reserve and
special reserve as required by law. The remainder shall be distributed as the stock
dividend of the year at the first priority.
2. Dividends for preferred shares shall be set at no more than 8% per annum.
3. Dividends for preferred shares shall be calculated on the offering price per share
and will be paid in cash once a year. After the ratification of the financial
statements by the annual meeting of shareholders, the Board shall set the
dividend day for the distribution of dividends of the previous fiscal year. The
distribution of dividends in the year of offering and the year of redemption shall
be based on the quantity of the issuing day.
4. The Bank is discretionary in payment of stock dividend for preferred shares. If
the Bank has no earnings in particular year and there is no payment of stock
dividend for common stocks, or the earnings are insufficient for dividend
payment, or the payment of dividend of preferred shares makes the capital
100
adequacy ratio of the Bank fall below the minimum requirements under law or
the competent authority, the Bank may resolve not to pay dividend for preferred
shares. Holders of preferred shares shall not have any objection of such decision.
If the preferred shares so issued are the non-accumulative type, the dividends not
being distributed or inadequate amount of dividends shall not be accumulated to
deferred payments with subsequent years in which the Bank has earnings.
5. Further to the entitlement of dividend stated in Subparagraph 3, if the preferred
shares offered are non-participating, the holders of preferred shares are not
entitled to cash dividend or stock dividend for common stocks through for cash
payment or capitalization of retained earnings and capital reserve.
6. Holders of preferred shares issued by the Bank have the priority to distribution of
residual assets over the holders of common stocks up to the amount of cash in the
offering. In case the competent authority ordered for a takeover of the Bank,
discontinuation of operation for clearing, and liquidation, the priority of the
holders of preferred shares is the same as the holders of common stocks.
7. Holders of preferred shares are not entitled to vote and taking part in the election
but could be elected as Directors, and are entitled to vote only in the
Shareholders’ Meeting of preferred shares and session of the Shareholders’
Meeting related to the rights and obligations of the holders of preferred shares.
8. No conversion of the convertible preferred shares issued by the Bank within 1
year from the day of offering. The timing for conversion shall be determined by
the Board as an integral part of the condition of offering under authorization.
Holders of convertible preferred shares may apply for conversion of preferred
shares in their holding to common stocks in whole or in part as stated in the
conditions of offering at the ratio of 1 preferred share to 1 common stock
(conversion ratio is 1:1). After the conversion of preferred shares to common
stocks, the rights and obligations shall be the same as common stocks. The
payment of dividend in the year of conversion of preferred shares shall be based
on the exact number of outstanding days of the shares in proportion to the
number of days in the year in the calculation. However, preferred shares
converted to common stocks prior to the ex-right (dividend) day are not entitled
to the payment of dividend for preferred shares in the year of payment and
payment in subsequent years, but are entitled to the payment of dividend of
common stocks from earnings and capital reserve.
9. There is no maturity date for preferred shares issued by the Bank and the holders
of preferred shares are not entitled to claim for the redemption of the shares. The
Bank may redeem the outstanding preferred shares in whole or in part from the
day after the 5th
anniversary of the offering of preferred shares under law or at the
permission of the competent authority. Redemption will be made at the offering
price. The preferred shares not being redeemed still be granted the rights and
obligations as mentioned in preceding paragraphs. Where the Bank may
determine to pay stock dividend in particular year, the payable dividend to the
deadline of redemption shall be calculated on the exact number of outstanding
days.
10. If the preferred shares issued by the Bank have a maturity date, it shall be no less
than 5 years. Holders of preferred shares are not entitled to request the Bank for
redemption of the shares before maturity. At maturity or the day after the
101
5th
anniversary of the issuance day and as permitted by applicable laws and the
competent authority, the Bank may redeem the shares at the offering price and
under related regulations of issuance, issue new shares for compulsory
conversation with the preferred shares (in the ratio of 1:1), or redeem by another
means as permitted by law. If the Bank cannot redeem the preferred shares in
whole or in part at maturity under objective factors or force majeure, the rights
inherent to the preferred shares shall prevail under the same conditions for
issuance provided under related regulations for issuance until the whole issue
was redeemed by the Bank.
The Board shall be authorized to assign the title, issuing date and the terms and
conditions for the offering of preferred shares at the time of offering pending on the
situation of the capital market and the willingness of the investors and in accordance
with the Articles of Incorporation of the Bank and other applicable legal rules.
Article 6 The Bank’s shares are ordered with the signature or seal of at least three directors
affixed for lawful issuance.
The Bank may have new shares issued by a book-entry in accordance with the
Company Act.
Article 7 The Bank’s dividend distribution is proposed by the Board for resolution in the
meeting of shareholders, but the Bank may not propose to have the capital distributed
as dividends when there are no earnings.
Article 8 The Company’s stock is processed in accordance with the “Regulations Governing the
Administration of Shareholder Services of Public Companies” published by the
competent authorities and other relevant laws and regulations.
Article 9 The Bank’s stock shares cannot be transferred within 60 days prior to the Annual
Meeting of Shareholders, 30 days prior to the extraordinary meeting of shareholders,
or 5 days prior to the record date of the bank’s distributing dividends, bonus or other
benefits.
Article 10 The Bank’s elected directors shall report the shareholding at the time of election to the
competent authorities. A director in office who has stock shares transferred for over
one half of the shareholding at the time of election will be discharged automatically.
A director in office shall report to the competent authorities and announce any
increase or decrease of shareholdings.
The director who is reelected prior to the tenure expired and has shares transferred
before inauguration for over one half of the shareholding at the time of election, or has
shares transferred for over one half of the shareholding during the stop-transferring
period before the meeting of shareholders convened will be disqualified.
Chapter 3 Business operation
Article 11 The Bank’s business operation is as follows:
1. H101021 Commercial banking
2. H301011 Securities firms
3. H408011 Futures introducing brokers
It is limited to the businesses authorized by the competent authorities referred to
102
above.
Article 12 The Bank may operate other businesses authorized by the competent authorities.
Chapter 4 Meeting of shareholders
Article 13 The meeting of shareholders includes the annual meeting of shareholders and
extraordinary meeting of shareholders. The annual meeting of shareholders is held
once a year and it is to be convened by the Board within 6 months after the fiscal year.
The extraordinary meeting of shareholders is to be convened by the Board or the
Auditing Committee when it is necessary. Shareholders who have over 3%
shareholding for more than 1 year may request the Board to convene an extraordinary
meeting of shareholders by filing a written proposal with the matters and reasons
detailed.
Where necessary, the meeting of the holders of preferred shares may be convened
under the applicable legal rules.
Article 14 Shareholders should be informed of the meeting date, place and subject 30 days in
advance for the Annual Meeting of Shareholders and 15 days in advance for the
extraordinary meeting of shareholders.
Article 15 Shareholders who are unable to attend the meeting of shareholders may issue the
Bank’s proxy with the scope of authorization detailed and signed or sealed to
commission the representative attending the meeting, but a shareholder is limited to
issuing one proxy and assigning one representative only. Proxy shall be served to the
Bank 5 days prior to the meeting of shareholders. When the proxy is issued in
duplicate, whichever is served first shall prevail. The proxy referred to above that was
announced to be revoked is not subject to this restriction.
Other pending matters are to be processed in accordance with the “Regulations
Governing the Use of Proxies for Attendance at Shareholder Meeting of Public
Companies” published by the competent authorities.
Article 16 The resolutions reached in the meeting of shareholders and the executions are as
follows:
1. Regulating and amending the Bank’s Company Corporate Charter (Articles of
Incorporation).
2. Resolutions reached on capital increase or decrease;
3. The election or dismissal of directors.
4. Audit the financial statements prepared by the Board and the Auditing
Committee’s Report. The reviewers for auditing the financial statements and
reports are to be appointed at the meeting of shareholders.
5. Resolutions reached on the distribution of earnings and shareholder bonus;
6. Resolutions reached on the other important matters;
Article 17 The resolutions reached in the meeting of shareholders, unless otherwise provided in
the Company Act, must be with the majority votes of the attending shareholders and
the shareholdings of the attending shareholders is over one half of the total number of
shares issued.
Article 18 If the shareholdings of the attending shareholders are not more than 50% but one third
103
of the total number of shares issued, a pseudo-resolution can be reached with the
majority votes of the attending shareholders. The shareholders should be informed
regarding the pseudo-resolution reached and another meeting of shareholders will be
convened within one month.
The pseudo-resolution reached in the meeting of shareholders referred to above with
the attendance of shareholders representing over one third of the shareholdings and
resolved with the majority votes is deemed as a resolution reached.
Article 19 Shareholders are entitled to one vote per share, unless otherwise provided by law.
Article 20 The minutes of the meeting of shareholders shall include the meeting time and date
and place, the name of the Chairman and the method of the resolutions, the essentials
of procedure and results, and the signature or seal of the Chairman. It should be
permanently reserved throughout the duration of the Company. The attendance
registry for the signature of the attending shareholders or the proxy of the
representative should be reserved for at least one year. However, for the litigation
filed by the shareholders in accordance with Article 189 of the Company Act, it
should be reserved until the end of the proceedings.
Chapter 5 Directors and the Board of Directors
Article 21 The Bank’s Board is composed of 9~15 directors elected among the competent
individuals in the meeting of shareholders for a 3-year tenure and can be reelected in
accordance with Article 198 of the Company Act. The total ordered stock shares of all
directors shall comply with the requirements of the “Rules and Review Procedures for
Director and Supervisor Share Ownership Ratios at Public Companies.”
For the directors (including independent directors) of this Bank, the nomination
system is adopted to have directors elected from the list of candidates.
For the directors, the number of independent directors shall not be less than two seats,
and one fifth of the director seats; also, non-independent directors and independent
directors should be elected together for the respective number of seats with the
candidates receiving the higher electoral votes elected.
The professional qualifications, shareholding and part-time job restrictions, definition
of independence, nomination method, proxy and other compliance matters of the
independent directors shall be handled in accordance with the “Regulations Governing
Appointment of Independent Directors and Compliance Matters for Public
Companies”.
Article 22 The Board shall have 3~5 managing directors elected by voting with the consent of
the majority attending directors and the attendance of two thirds of the directors.
According to the “Regulations Governing Appointment of Independent Directors and
Compliance Matters for Pubic Companies,” there must be at least one independent
director among the managing directors, and shall not constitute less than one fifth of
the managing directors. The Vice Chairman and Managing Director will be appointed,
if necessary, by a resolution of the Board.
Chairman, Vice Chairman and Managing Director will be elected among the
managing directors in accordance with the methods described in the preceding
paragraph. The chairman chairs the meeting of shareholders, the Board and the
104
General Board internally, and represents the Bank externally. When the Chairman is
on leave or unable to exercise his powers for certain reasons, the vice chairman is to
act on the Chairman’s behalf. When the vice chairman is on leave or is unable to
exercise his/her powers for certain reasons, the chairman is to appoint one managing
director to act on his/her behalf. If a representative is not appointed by the chairman,
one of the managing directors is elected to chair the meeting.
If the credibility of the Bank or the person in charge is damaged by the spreading
rumors or fraud, the chairman of the Bank should immediately file a lawsuit to the
prosecution office according to law.
When the Board meeting is in recess, the managing directors shall comply with the
law and regulations, the resolutions of the meeting of shareholders and the resolution
of the Board to execute banking business by convention convened by the chairman at
any time and resolved with the consent of the majority votes of the majority attending
general shareholders.
Article 23 The Board of Directors exercises the following authorities:
1. Review and approval of bylaws;
2. The review and approval of important business and plans, and the decision on
business plan;
3. Review and approval of important contracts;
4. Review and approval of budget;
5. The proposed earnings distribution;
6. The proposed capital increase or decrease;
7. The establishment, revocation or amendment of the Bank’s branches;
8. The property trade and investment decisions;
9. Auditing management and execution;
10. The appointment and dismissal of the managers;
11. The other powers entrusted in accordance with the law and regulations and in the
meeting of shareholders;
Article 24 The Board is to convene a meeting quarterly. An extraordinary meeting can be
convened for urgent matters or upon the request of a majority of the directors, unless
otherwise provided by the Company Act; it is to be convened by the Chairman. To
strengthen the management functions, the Board may set up functional committees for
various types of functionalities with the terms of powers regulated by the Board
separately.
Article 25 Directors shall attend the Board meeting in person. The directors who are unable to
attend the meeting for reasons may appoint another director to attend the meeting by
proxy each time and with the scope of authorization detailed.
The proxy referred to above is limited to one representative only.
Article 26 The resolutions of the Board, unless otherwise provided by the Company Act, must be
with the attendance of the majority of the directors and the consent of the majority of
the attending directors. The minutes of meeting should be signed or sealed by the
Chairman.
105
Article 27 When the number of the director discharged is over one third of the elected seats, the
Board shall convene a meeting of shareholders for a lawful election. The newly
reelected directors are to serve the remaining tenure of the former directors.
Article 27-1 The Board of Directors is authorized to have the remuneration to the chairman, vice
chairman, managing director, and independent directors determined and paid by
referring to the general payment standard of the industry.
Independent Directors are not eligible for our bank’s earnings distribution.
Our bank may pay for liability insurance policies that cover the liabilities for damages
as defined by statutes or court ruling within the scope of the business of Directors.
Article 28 The President and Vice President may be invited to attend the Board meetings,
managing director and responsible personnel meeting for consultation.
Chapter 6 Audit Committee
Article 29 The Auditing Committee of the Bank is consisted of all the independent directors. The
term of office is identical with the term of office for the independent directors and the
committee shall contain at least three members of whom at least one shall be expertise
in accounting or finance.
The performance of the duties and exercise of rights by the Auditing Committee, the
meeting procedure and other rules to comply shall be based on the “Regulations
Governing the Exercise of Powers by the Audit Committees of Public Companies”
and the “Organizational Code of the Auditing Committee” of the Bank.
Article 29-1 (Deleted)
Article 30 (Deleted)
Article 31 (Deleted)
Chapter 7 Manager
Article 32 The Bank has one President appointed to manage business fully adhering to the
resolutions of the Board of Directors, and with one Vice President and several Deputy
Executive Vice President appointed to help the President in business operations whose
appointment is with the consent of a majority of the Board of Directors. In addition,
several managers at all levels are appointed by the President who are proposed to the
Board of Directors for appointment and dismissal with the consent of a majority of the
Board of Directors.
The Bank has one Chief Auditor appointed, a position equivalent to the Vice President,
with the consent of a majority of the Audit Committee and two thirds of the Board of
Directors; also, the appointment, dismissal, and transfer of the Chief Auditor should
be reported to the competent authorities for approval in advance.
If the said appointment of the Chief Auditor in the preceding paragraph is without the
consent of a majority of the Audit Committee, the resolution of the Audit Committee
should be stated in the minutes of the Board meeting.
Chapter 8 Accounting
106
Article 33 The Bank has the business operations settled at the end of each month and the final
settlement scheduled on December 31.
Article 34 The Bank shall have the following books and statements prepared after the annual
settlement for the review of the Board and the audit of the Audit Committee; also,
submitted to the meeting of shareholders for admission and reported to the competent
authorities and the Central Bank for filing within 15 days, respectively.
1. Business report
2. Financial statements
3. Earnings distribution or deficit compensation proposal;
Article 35 If there is a profit, the Bank shall appropriate 0.5% to 3% as remuneration to the
employees. The Board shall determine if stock or cash shall be released for such
purpose. In addition, the Bank may allocate no more than 1.5% of the aforementioned
amount as remuneration to the Directors. The distribution of remuneration to
employees and directors should be reported in the shareholders’ meeting. If the Bank
has accumulated deficit, an equivalent amount should be reserved for making up such
loss, then the remuneration to employees and directors can be appropriated in
accordance with the ratio stated in the preceding paragraph thereafter.
Article 36 If the Bank has earnings after account settlement, appropriate for payment of
applicable taxes as required by law and for write-off loss carried forward, followed by
the appropriation of 30% as legal reserve. No further appropriation is necessary if the
amount of legal reserve is equivalent to the paid-in capital of the Bank. The remainder
shall be appropriated or made reversal for special reserve, followed by the distribution
of dividends of preferred shares. If there is still a balance, pool up with accumulated
undistributed earnings and the amount of reversal of special reserve as required by law
for the distribution of dividends and bonuses to the shareholders at the proposal of the
Board and ratification of the General Meeting.
For the earnings distribution proposed to the Board of Directors in the shareholders’
meeting for resolution in the preceding paragraph, a working capital should be
reserved first according to the changes in the operating environment, business
operation, and investment, the ratio of cash and stock dividends should be proposed,
of which, cash dividends should not be less than 10% of the total dividend amount.
If the capital adequacy ratio fails to reach the legal ratio, the earnings shall be
allocated in accordance with the Banking Act of The Republic of China and the
competent authority’s requirements.
Chapter 9 Appendix
Article 37 The organization code of the Bank shall be instituted separately.
Article 38 The matters that are not regulated in the Company Corporate Charter (Articles of
Incorporation) should be processed in accordance with the Company Act, the Banking
Act of The Republic of China and related laws and regulations.
Article 39 The Company Corporate Charter (Articles of Incorporation) is implemented after the
resolution reached in the meeting of shareholders, so is the amendment. The Company
Corporate Charter (Articles of Incorporation) was established on October 22, 1977
and implemented on January 1, 1978.
107
The 1st amendment was implemented on March 4, 1979.
The 2nd
amendment was implemented on March 9, 1980.
The 3rd
amendment was implemented on March 1, 1981.
The 4th
amendment was implemented on March 7, 1982.
The 5th
amendment was implemented on March 5, 1983.
The 6th
amendment was implemented on March 7, 1985.
The 7th
amendment was implemented on March 22, 1986.
The 8th
amendment was implemented on March 19, 1987.
The 9th
amendment was implemented on March 23, 1988.
The 10th
amendment was implemented on March 23, 1989.
The 11th
amendment was implemented on October 5, 1989.
The 12th
amendment was implemented on March 23, 1990.
The 13th
amendment was implemented on June 28, 1991.
The 14th
amendment was implemented on October 13, 1992.
The 15th
amendment was implemented on June 5, 1993.
The 16th
amendment was implemented on April 23, 1994.
The 17th
amendment was implemented on June 10, 1995.
The 18th
amendment was implemented on October 18, 1995.
The 19th
amendment was implemented on March 28, 1996.
The 20th
amendment was implemented on May 8, 1997.
The 21st amendment was implemented on June 20, 1998.
The 22nd
amendment was implemented on October 12, 1998.
The 23rd
amendment was implemented on May 18, 1999.
The 24th
amendment was implemented on June 15, 2000.
The 25th
amendment was implemented on May 17, 2002.
The 26th
amendment was implemented on June 25, 2003.
The 27th
amendment was implemented on June 9, 2006.
The 28th
amendment was implemented on December 7, 2006.
The 29th
amendment was implemented on June 15, 2007.
The 30th
amendment was implemented on June 13, 2008.
The 31st amendment was implemented on June 19, 2009.
The 32nd
amendment was implemented on June 15, 2010.
The 33rd
amendment was implemented on June 22, 2011
The 34th
amendment was implemented on June 13, 2013.
108
The 35th
amendment was implemented on June 19, 2014.
The 36th
amendment was implemented on June 2, 2015.
The 37th
amendment was implemented on June 21, 2016.
The 38th
amendment was implemented on June 7, 2017.
The 39th
amendment was implemented on June 5, 2018.
The 40th
amendment was implemented on
109
Discussions No. 4
Proposal: Amendments to the Regulations Governing Selection of
Directors. Please discuss.
Explanation:
1. In order to implement corporate governance, the nomination system will be adopted starting from next session (24th session) of directors' election. Therefore, based on the sample template issued by the Taiwan Stock Exchange Co., Ltd. of "XXX Co., Ltd. Procedures for Election of Directors and Supervisors", the “Guidelines for the Selection Election of Directors of Taichung Commercial Bank Co., Ltd.” is to be amended and its name is to be revised to "Procedures for the Election of Directors of Taichung Commercial Bank Co., Ltd. (Draft)".
2. The Comparison Chart of the Amended Articles and the Draft Amendments thereof are hereto attached. (Please see pages 110-119 of this handbook)
Resolutions:
110
The Comparison Chart of the Amended Articles of Procedures for
the Election of Directors of Taichung Commercial Bank Co., Ltd.
Clauses after the amendment Original clause Remark
Name of the regulation:
Procedures for the Election of
Directors of Taichung
Commercial Bank Co., Ltd.
Name of the regulation: Procedures for
the Selection of Directors of Taichung
Commercial Bank Co., Ltd.
The reference is
taken from the
sample template
issued by the
Taiwan Stock
Exchange of
"XXX Co., Ltd.
Procedures for
Election of
Directors and
Supervisors" to
modify the name
of the regulation.
Article 1
The election of directors of the
Company shall be handled in
accordance with the Procedures,
unless otherwise provided by
laws, regulations, or the Articles
of Incorporation.
Article 1
The selection of directors of Taichung
Commercial Bank Co., Ltd. (hereinafter
referred to as the Bank) shall be held by
the shareholders' meeting in accordance
with the Guidelines
Article 10
For the matter not specified in the
Guidelines, it shall be handled in
accordance with the Company Act, the
Articles of Incorporation of the Bank
and the relevant regulations.
The numbering
of the article is
adjusted and
some wordings
are modified.
Article 2
The composition of the board of
directors of the Company shall be
determined by taking diversity
into consideration and formulating
an appropriate policy on diversity
based on the Company's business
operations, operating dynamics,
and development needs. The
standards shall include the
following 2 dimensions:
1. Basic requirements and
values: Gender, age,
nationality, and culture, etc.
2. Professional knowledge and
The reference is
taken from the
Article 3 of
“Sample
Template for
XXX Co., Ltd.
Procedures for
Election of
Directors and
Supervisors”
issued by the
Taiwan Stock
Exchange to add
this article.
111
skills: a professional
background (e.g., law,
accounting, industry, finance,
marketing, technology),
professional skills, and
industry experience.
Each board member shall have the
necessary knowledge, skill, and
experience to perform their duties;
the abilities that must be present in
the board as a whole are as
follows:
1. The ability to make judgments
about operations.
2. Accounting and financial
analysis ability.
3. Business management ability.
4. Risk management ability.
5. Crisis management ability.
6. Knowledge of the industry.
7. An international market
perspective.
8. Leadership ability.
9. Decision-making ability.
More than half of the directors
shall be persons who have neither
a spousal relationship nor a
relationship within the second
degree of kinship with any other
director.
The board of directors of this
Company shall consider adjusting
its composition based on the
results of performance evaluation.
Article 3
The qualifications and selection
for the independent directors of
this Company shall comply with
the “Regulations Governing
Appointment of Independent
Directors and Compliance Matters
for Public Companies” and the
The reference is
taken from the
Article 5 of
“Sample
Template for
XXX Co., Ltd.
Procedures for
Election of
Directors and
112
“Corporate Governance Best-
Practice Principles
Supervisors”
issued by the
Taiwan Stock
Exchange to add
this article.
Article 4
Elections of both directors and
supervisors in this Company shall
be conducted in accordance with
the candidate nomination system
and procedures set out in Article
192-1 of the Company Act. This
Corporation shall review the
qualifications, education, working
experience, background, and the
existence of any other matters set
forth in Article 30 of the Company
Act with respect to nominee
directors and supervisors and may
not arbitrarily add requirements
for documentation of other
qualifications. It shall further
provide the results of the review to
shareholders for their reference, so
that qualified directors and
supervisors will be elected.
When the number of directors falls
below five due to the dismissal of
a director for any reason, the
Company shall hold a by-election
to fill the vacancy at its next
shareholders meeting. When the
number of directors falls short by
one third of the total number
prescribed in the Company's
articles of incorporation, the
Company shall call a special
shareholders meeting within 60
days from the date of occurrence
to hold a by-election to fill the
vacancies.
When the number of independent
directors falls below that required
under the proviso of Article 14-2,
paragraph 1 of the Securities and
Exchange Act, or the related
provisions of the Taiwan Stock
The reference is
taken from the
Article 6 of
“Sample
Template for
XXX Co., Ltd.
Procedures for
Election of
Directors and
Supervisors”
issued by the
Taiwan Stock
Exchange to add
this article.
113
Exchange Corporation rules
governing the review of listings, a
by-election shall be held at the
next shareholders meeting to fill
the vacancy. When the
independent directors are
dismissed en masse, an
extraordinary shareholders
meeting shall be called within 60
days from the date of occurrence
to hold a by-election to fill the
vacancies.
Article 5
The single-named ballot
cumulative voting system shall be
used for election of the directors
of the Company. Each share will
have voting rights in number equal
to the directors to be elected, and
may be cast for a single candidate
or split among multiple
candidates.
Article 2
The single-named ballot cumulative
voting method shall be used for election
of the directors of the Bank.
Each share will have voting rights in
number equal to the directors to be
elected, and may be cast for a single
candidate or split among multiple
candidates, and the attendance card
numbers printed on the ballots may be
used instead of recording the names of
voting shareholders.
The numbering
of the article is
adjusted and
some wordings
are modified.
Article 6
The board of directors shall
prepare separate ballots for
directors and supervisors in
numbers corresponding to the
directors or supervisors to be
elected. The number of voting
rights associated with each ballot
shall be specified on the ballots,
which shall then be distributed to
the attending shareholders at the
shareholders meeting. Attendance
card numbers printed on the
ballots may be used instead of
recording the names of voting
shareholders.
Article 5
The election ballots shall be prepared by
the Bank and shall be numbered in
accordance with the attendance card
numbers and specified with the number
of voting rights associated with each
ballot.
The numbering
of the article is
adjusted and
some wordings
are modified.
Article 7
The number of directors will be as
specified in the Company's articles
of incorporation and the resolution
of the Board of Directors, with
voting rights separately calculated
for independent and non-
Article 4
The number of directors in accordance
with and as specified in the articles of
incorporation of the Bank shall be
elected by the shareholders meeting in
accordance with Article 198 of the
Company Act and other relevant
1.The numbering
of the article
is adjusted
and some
wordings are
modified.
2. Paragraph 2 is
114
independent director positions.
Those receiving ballots
representing the highest numbers
of voting rights will be elected
sequentially according to their
respective numbers of votes.
When two or more persons receive
the same number of votes, thus
exceeding the specified number of
positions, they shall draw lots to
determine the winner, with the
chair drawing lots on behalf of any
person not in attendance.
regulations. Those receiving ballots
representing the highest numbers of
voting rights will be elected
sequentially according to their
respective numbers of votes. When two
or more persons receive the same
number of votes, thus exceeding the
specified number of positions, they shall
draw lots to determine the winner, with
the chair drawing lots on behalf of any
person not in attendance but with the
same number of votes.
The election of the directors for
independent and non-independent
director positions shall be conducted in
one proceeding with voting rights
separately calculated.
deleted.
Article 8
Before the election begins, the
chair shall appoint the counting
personnel and a number of persons
with shareholder status to perform
the duties of vote monitoring. The
ballot boxes shall be prepared by
the board of directors and publicly
checked by the v
Article 3
When the election begins, the chair
shall appoint the personnel to perform
the respective duties of vote monitoring
and counting. The ballot boxes shall be
prepared by the board of directors and
publicly checked by the vote monitoring
personnel before voting commences.
The numbering
of the article is
adjusted, and the
wording is
slightly modified.
And taking
reference of
Article 10 of the
sample template
issued by the
Taiwan Stock
Exchange of
"XXX Co., Ltd.
Procedures for
Election of
Directors and
Supervisors" to
modify the
wording.
Article 9
If a candidate is a shareholder, a
voter must enter the candidate's
account name and shareholder
account number in the "candidate"
column of the ballot; for a non-
shareholder, the voter shall enter
the candidate's full name and
identity card number. However,
when the candidate is a
governmental organization or
juristic-person shareholder, the
Article 6
If a candidate is a shareholder, a voter
must enter the candidate's account name
and shareholder account number or the
identification number in the "candidate"
column of the ballot and then drop it in
the voting box; However, when the
candidate is a governmental
organization or juristic-person
shareholder, the name of such
governmental organization or juristic-
person shareholder shall be entered in
The numbering
of the article is
adjusted and
some wordings
are modified.
115
name of the governmental
organization or juristic-person
shareholder shall be entered in the
column for the candidate's account
name in the ballot paper, or both
the name of the governmental
organization or juristic-person
shareholder and the name of its
representative may be entered.
When there are multiple
representatives, the names of each
respective representative shall be
entered.
the column for the candidate's account
name in the ballot paper in accordance
with Paragraph 1, Article 27 of the
Company Act, or both the name of such
governmental organization or juristic-
person shareholder and the name of its
representative may be entered in
accordance with Paragraph 2 of the
same Act.
Article 10
A ballot is invalid under any of the
following circumstances:
1. The ballot was not prepared by
the board of directors.
2. A blank ballot is placed in the
ballot box.
3. The writing is unclear and
indecipherable or has been
altered.
4. The candidate whose name is
entered in the ballot is a
shareholder, but the candidate's
account name and shareholder
account number do not conform
with those given in the
shareholder register, or the
candidate whose name is
entered in the ballot is a non-
shareholder, and a cross-check
shows that the candidate's name
and identity card number do not
match.
5. Other words or marks are
entered in addition to the
candidate's account name or
shareholder account number
(or identity card number) and
the number of voting rights
allotted.
6. The name of the candidate
entered in the ballot is
Article 7
A ballot is invalid under any of the
following circumstances:
1. The ballot was not prepared
prescribed by the Guidelines.
2. A blank ballot is placed in the ballot
box.
3. The writing is unclear and
indecipherable or has been altered.
4. The candidate whose name is entered
in the ballot is a shareholder, but the
candidate's account name and
shareholder account number or the
identification number do not conform
with those given in the shareholder
register.
5. With more than 2 names of the
candidates being stated on the same
ballot.
6. Other words or marks are entered in
addition to the candidate's account
name and shareholder account
number (or identification number)
and the number of voting rights
allotted.
7. For the matter not handled in
accordance with Article 6.
The numbering
of the article is
adjusted, and the
wording is
slightly modified.
And taking
reference of
Article 12 of the
sample template
issued by the
Taiwan Stock
Exchange of
"XXX Co., Ltd.
Procedures for
Election of
Directors and
Supervisors" to
modify the
wording.
116
identical to that of another
shareholder, but no
shareholder account number
or identity card number is
provided in the ballot to
identify such individual.
Article 11
The voting rights shall be
calculated on site immediately
after the end of the poll, and the
results of the calculation,
including the list of persons
elected as directors or supervisors
and the numbers of votes with
which they were elected, shall be
announced by the chair on the site.
The ballots for the election
referred to in the preceding
paragraph shall be sealed with the
signatures of the monitoring
personnel and kept in proper
custody for at least one year. If,
however, a shareholder files a
lawsuit pursuant to Article 189 of
the Company Act, the ballots shall
be retained until the conclusion of
the litigation.
Article 8
The voting rights shall be calculated on
site immediately after the end of the
poll, and the results of the calculation
shall be announced by the chairman on-
site.
1. The numbering
of the article is
adjusted and
some wordings
are modified.
2. The reference is
taken from the
Article 13 of
“Sample
Template for
XXX Co., Ltd.
Procedures for
Election of
Directors and
Supervisors”
issued by the
Taiwan Stock
Exchange to
add the
paragraph 2.
Article 12
The board of directors of the
Company shall issue notifications
to the persons elected as directors.
Article 9
The board of directors shall issue
notifications to the persons elected as
directors.
The numbering of
the article is
adjusted and
some wordings
are modified.
Article 13
These Procedures, and any
amendments hereto, shall be
implemented after approval by a
shareholders meeting.
Article 11
The Guidelines and any amendments
hereto, shall be drawn up by the board
of directors of the Bank and
implemented after approval by a
shareholders meeting.
The numbering of
the article is
adjusted and
some wordings
are modified.
117
Procedures for Election of Directors of Taichung Commercial
Bank Co., Ltd. (Draft) This regulation was set up in the 6th Extraordinary Meeting of Shareholders on Oct. 20, 1968.
The 1st amendment was made in the 11th Extraordinary Meeting of Shareholders on Oct. 26, 1980.
The 2nd amendment was made in the 13th Extraordinary Meeting of Shareholders on Oct. 4, 1986.
The 3rd amendment was made in the 14th Extraordinary Meeting of Shareholders on Oct. 4, 1989.
The 4th amendment was made in the 15th Extraordinary Meeting of Shareholders on Oct. 13, 1992.
The 5th amendment was made in the 41th Annual Meeting of Shareholders on Jun. 5, 1993.
The 6th amendment was made in the 17th Extraordinary Meeting of Shareholders on Oct. 12, 1998.
The 7th amendment was made in the Annual Meeting of Shareholders on May 17, 2002.
The 8th amendment was made in the Annual Meeting of Shareholders on Jun. 15, 2007.
The 9h amendment was made in the Annual Meeting of Shareholders on Jun. 13, 2013.
The 10th amendment was made in an Annual Meeting of Shareholders.
Article 1 The election of directors of the Company shall be handled in accordance with the
Guidelines, unless otherwise provided by laws, regulations, or the Articles of
Incorporation.
Article 2 The composition of the board of directors of the Company shall be determined by taking
diversity into consideration and formulating an appropriate policy on diversity based on
the Company's business operations, operating dynamics, and development needs. The
standards shall include the following 2 dimensions:
1. Basic requirements and values: Gender, age, nationality, and culture, etc.
2. Professional knowledge and skills: a professional background (e.g., law,
accounting, industry, finance, marketing, and technology), professional skills, and
industry experience.
Each board member shall have the necessary knowledge, skill, and experience to
perform their duties; the abilities that must be present in the board as a whole are as
follows:
1. The ability to make judgments about operations.
2. Accounting and financial analysis ability.
3. Business management ability.
4. Risk management ability.
5. Crisis management ability.
6. Knowledge of the industry.
7. An international market perspective.
8. Leadership ability.
9. Decision-making ability.
More than half of the directors shall be persons who have neither a spousal
relationship nor a relationship within the second degree of kinship with any other
director.
The board of directors of this Company shall consider adjusting its composition
based on the results of performance evaluation.
Article 3 The qualifications and selection for the independent directors of this Company shall
118
comply with the “Regulations Governing Appointment of Independent Directors and
Compliance Matters for Public Companies” and the “Corporate Governance Best
Practice Principles for TWSE/TPEx Listed Companies
Article 4 Elections of both directors and supervisors in this Company shall be conducted in
accordance with the candidate nomination system and procedures set out in Article 192-
1 of the Company Act. This Corporation shall review the qualifications, education,
working experience, background, and the existence of any other matters set forth in
Article 30 of the Company Act with respect to nominee directors and supervisors and
may not arbitrarily add requirements for documentation of other qualifications. It shall
further provide the results of the review to shareholders for their reference, so that
qualified directors and supervisors will be elected.
When the number of directors falls below five due to the dismissal of a director for any
reason, the Company shall hold a by-election to fill the vacancy at its next shareholders
meeting. When the number of directors falls short by one third of the total number
prescribed in the Company's articles of incorporation, the Company shall call a special
shareholders meeting within 60 days from the date of occurrence to hold a by-election
to fill the vacancies.
When the number of independent directors falls below that required under the proviso
of Article 14-2, paragraph 1 of the Securities and Exchange Act, or the related
provisions of the Taiwan Stock Exchange Corporation rules governing the review of
listings, a by-election shall be held at the next shareholders meeting to fill the vacancy.
When the independent directors are dismissed en masse, an extraordinary shareholders
meeting shall be called within 60 days from the date of occurrence to hold a by-election
to fill the vacancies.
Article 5 The single-named ballot cumulative voting system shall be used for election of the
directors of the Company. Each share will have voting rights in number equal to the
directors to be elected, and may be cast for a single candidate or split among multiple
candidates.
Article 6 The board of directors shall prepare separate ballots for directors and supervisors in
numbers corresponding to the directors or supervisors to be elected. The number of
voting rights associated with each ballot shall be specified on the ballots, which shall
then be distributed to the attending shareholders at the shareholders meeting. Attendance
card numbers printed on the ballots may be used instead of recording the names of
voting shareholders.
Article 7 The number of directors will be as specified of the Company's articles of incorporation,
with voting rights separately calculated for independent and non-independent director
positions. Those receiving ballots representing the highest numbers of voting rights will
be elected sequentially according to their respective numbers of votes. When two or
more persons receive the same number of votes, thus exceeding the specified number of
positions, they shall draw lots to determine the winner, with the chair drawing lots on
behalf of any person not in attendance.
Article 8 Before the election begins, the chair shall appoint the counting personnel and a number
of persons with shareholder status to perform the duties of vote monitoring. The ballot
boxes shall be prepared by the board of directors and publicly checked by the v
Article 9 If a candidate is a shareholder, a voter must enter the candidate's account name and
119
shareholder account number in the "candidate" column of the ballot; for a non-
shareholder, the voter shall enter the candidate's full name and identity card number.
However, when the candidate is a governmental organization or juristic-person
shareholder, the name of the governmental organization or juristic-person shareholder
shall be entered in the column for the candidate's account name in the ballot paper, or
both the name of the governmental organization or juristic-person shareholder and the
name of its representative may be entered. When there are multiple representatives, the
names of each representative shall be entered.
Article 10 A ballot is invalid under any of the following circumstances:
1. The ballot was not prepared by the board of directors.
2. A blank ballot is placed in the ballot box.
3. The writing is unclear and indecipherable or has been altered.
4. The candidate whose name is entered in the ballot is a shareholder, but the
candidate's account name and shareholder account number do not conform with
those given in the shareholder register, or the candidate whose name is entered
in the ballot is a non-shareholder, and a cross-check shows that the candidate's
name and identity card number do not match.
5. Other words or marks are entered in addition to the candidate's account name or
shareholder account number (or identity card number) and the number of voting
rights allotted.
6. The name of the candidate entered in the ballot is identical to that of another
shareholder, but no shareholder account number or identity card number is
provided in the ballot to identify such individual.
Article 11 The voting rights shall be calculated on site immediately after the end of the poll, and
the results of the calculation, including the list of persons elected as directors or
supervisors and the numbers of votes with which they were elected, shall be announced
by the chair on the site.
The ballots for the election referred to in the preceding paragraph shall be sealed with
the signatures of the monitoring personnel and kept in proper custody for at least one
year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company
Act, the ballots shall be retained until the conclusion of the litigation.
Article 12 The board of directors of the Company shall issue notifications to the persons elected as
directors.
Article13 These Procedures, and any amendments hereto, shall be implemented after approval by
a shareholders meeting.
120
Discussions No. 5
Proposal: Amendments to the Rules of Procedure for Shareholders
Meeting. Please discuss.
Explanation:
1. The amendments are explained as follows:
(1) The addition of Article 172 of the Amended
Company Act promulgated by Order Hua-tsung-
yi-jing No. 10700083291 on August 1, 2018,
specifies the matters that shall be listed in the
notice to convene a shareholders' meeting, and
such matters shall not be put forth as extemporary
motions.
(2) According to the “Sample Template for xxx Co.
Ltd. Rules of Procedure for Shareholders'
Meeting” as amended on November 12, 2015 by
the Financial Supervisory Commission with
Order Jin-guan-zheng-fa No. 1040044352,
Article 56-1 and Article 60-2 of the Regulations
Governing the Offering and Issuance of
Securities Issuer are added to specify the matters
that shall be listed in the notice to convene a
shareholders' meeting, and shall not be set forth
as extemporary motion.
(3) To delete the relevant wording of a supervisor,
and to modify the rest of the wording.
2. The Comparison Chart of the Amended Articles and
the Draft Amendments thereof are hereto attached.
(Please see pages 121-129 of this handbook)
Resolutions:
121
Taichung Commercial Bank Co., Ltd.
Rules of Procedure for Shareholder Meetings
Clauses after the amendment Original clause Remark
Article 3
(Paragraph 1-obmitted)
The Company’s meeting of
shareholders shall be convened by
the Board, unless otherwise
provided by law. The Company
shall have the Annual Meeting of
Shareholders notice, proxy and
the proposal and information on
admission, discussions and
directors election and dismissal
compiled into electronic files and
uploaded to the MOPS 30 days
prior to the annual meeting of
shareholders or fifteen days prior
to the extraordinary meeting of
shareholders. Also, the Annual
Meeting Handbook and the
supplementary information are
compiled into electronic files and
uploaded to the MOPS 21 days
prior to the Annual Meeting of
Shareholders or 15 days prior to
the extraordinary meeting of
shareholders. The Annual
Meeting Handbooks and the
supplementary information are
made available to shareholders 15
days prior to the annual meeting
of shareholders; also, on display
at the Company’s and its Stock
Agent’s and distributed to
shareholders at the meeting place.
(Paragraph 3-obmitted)
Election or dismissal of directors,
amendments to the articles of
incorporation, reduction of
capital, application for the
approval of ceasing its status as a
public company, approval of
competing with the company by
Article 3
(Paragraph 1-obmitted)
The Company’s meeting of
shareholders shall be convened by the
Board, unless otherwise provided by
law. The Company shall have the
Annual Meeting of Shareholders notice,
proxy and the proposal and information
on admission, discussions and directors
and supervisors election and dismissal
compiled into electronic files and
uploaded to the MOPS 30 days prior to
the annual meeting of shareholders or
fifteen days prior to the extraordinary
meeting of shareholders. Also, the
Annual Meeting Handbook and the
supplementary information are
compiled into electronic files and
uploaded to the MOPS 21 days prior to
the Annual Meeting of Shareholders or
15 days prior to the extraordinary
meeting of shareholders. The Annual
Meeting Handbooks and the
supplementary information are made
available to shareholders 15 days prior
to the annual meeting of shareholders;
also, on display at the Company’s and
its Stock Agent’s and distributed to
shareholders at the meeting place.
(Paragraph 3-obmitted)
The election or dismissal of directors,
supervisors, amendments to the
Company Corporate Charter (Articles of
Incorporation), dissolution, merger,
division or the clauses of Paragraph 1,
Article 185 of the Company Act, the
matters stated in Article 26-1 and
1. The Bank set up an
audit committee to
replace the
supervisor in June,
2014. Thus, in
paragraph 2 and 4,
the wording of
supervisor shall be
deleted.
2. The addition of Article
172 of the Amended
Company Act
promulgated by
Order No.
10700083291 on
August 1, 2018,
specifies the matters
that shall be listed in
the notice to
convene a
shareholders'
meeting, and such
matters shall not be
put forth as
extemporary
motions; The major
content thereof may
be posted on the
website of the
competent securities
authority or the
website designated
by the Company,
and such website
address shall be
stated in the notice.
3. According to the
“Sample Template
for xxx Co. Ltd.
Rules of Procedure
for Shareholders'
Meeting” as
amended by the
Financial
Supervisory
122
Clauses after the amendment Original clause Remark
directors, surplus profit
distributed in the form of new
shares, reserve distributed in the
form of new shares, the
dissolution, merger, or demerger
of the corporation, or any matter
under Article 185, paragraph 1 of
the Company Act, Articles 26-1
and 43-6 of the Securities and
Exchange Act, or Articles 56-1
and 60-2 of the Regulations
Governing the Offering and
Issuance of Securities by
Securities Issuers shall be set out
in the notice of the reasons for
convening the shareholders
meeting, and the essential contents
shall be explained. None of the
above matters may be raised by
an extraordinary motion. The
essential contents may be posted
on the website designated by the competent authority in charge of
securities affairs or the company,
and such website shall be indicated
in the above notice.
Shareholder holding 1 percent or
more of the total number of
issued shares may submit to this
Corporation a written proposal for
discussion at a regular
shareholders meeting. Such
proposals, however, are limited to
one item only, and no proposal
containing more than one item
will be included in the meeting
agenda. Unless any of the
circumstances under Article 172-
1, paragraph 4 of the Company
Act is satisfied, the board of
directors of the Company shall
include the proposal submitted by
a shareholder in the list of
proposals to be discussed at a
meeting of shareholders:
(Paragraph 6-8-obmitted)
Article 43-6 of Securities and Exchange
Act shall be stated in the reasons for
convening the meeting not in the
motion.
Shareholder holding 1 percent or more
of the total number of issued shares may
submit to the Company a written
proposal for discussion at a regular
shareholders meeting. Such proposals,
however, are limited to one item only,
and no proposal containing more than
one item will be included in the meeting
agenda. In addition, when the
circumstances of any subparagraph of
Article 172-1, paragraph 4 of the
Company Act apply to a proposal put
forward by a shareholder, the board of
directors may exclude it from the
agenda.
(Paragraph 6-8 omitted)
Commission dated
Nov. 12, 2015 with
Order No.
1040044352, Article
56-1 and Article 60-
2 of the Regulations
Governing the
Offering and
Issuance of
Securities Issuer
are added to specify
the matters that shall
be listed in the
notice to convene a
shareholders'
meeting, and shall
not be set forth as
extemporary motion.
4. The wording of
Paragraph 5 is
modified in
accordance with
Article 172 of the
Company Act.
123
Clauses after the amendment Original clause Remark
Article 6
(Paragraph 1-obmitted)
The Company should have the
annual meeting handbook, annual
reports, attendance pass, speech
slip, voting ballots, and other
meeting materials delivered to the
attending shareholders; also, the
electoral ballots should be
distributed for the election of
directors, if applicable.
(Paragraph 3-4 omitted)
Article 6
(Paragraph 1-obmitted)
The Company should have the annual
meeting handbook, annual reports,
attendance pass, speech slip, voting
ballots, and other meeting materials
delivered to the attending shareholders;
also, the electoral ballots should be
distributed for the election of directors
and supervisors, if applicable.
(Paragraph 3-4 omitted)
The Bank set up an
audit committee to
replace the supervisor
in June, 2014. Thus, in
paragraph 2, the
wording of supervisor
shall be deleted.
Article 14
The election of directors held at
the meeting of shareholders
should be arranged in accordance
with the Company’s election
specifications and with the
election results announced
immediately at the meeting place.
(Paragraph 2 omitted)
Article 14
The election of directors and
supervisors held at the meeting of
shareholders should be arranged in
accordance with the Company’s
election specifications and with the
election results announced immediately
at the meeting place.
(Paragraph 2 omitted)
The Bank set up an
audit committee to
replace the supervisor
in June, 2014. Thus, in
paragraph 1, the
wording of supervisor
shall be deleted.
124
Rules of Procedure for Shareholder Meetings (Draft)
Resolved in the Annual Meeting of Shareholders on June 20, 1998
Resolved in the Annual Meeting of Shareholders s on June 13, 2013
Resolved in the Annual Meeting of Shareholders s on
Article 1 The rules for compliance are stipulated in accordance with Article 5 of the “Corporate
Governance Best Practice Principles for TWSE/TPEx Listed Companies” for establishing
the Company’s excellent meeting of shareholders governance system, substantiating
supervisory function, and enhancing management functions.
Article 2 The Company’s procedures for shareholders meeting shall follow these Procedures, unless
otherwise provided by law or the Company’s Articles of Incorporation.
Article 3 The Company’s meeting of shareholders shall be convened by the Board, unless
otherwise provided by law.
The Company’s meeting of shareholders shall be convened by the Board, unless
otherwise provided by law. The Company shall have the Annual Meeting of Shareholders
notice, proxy and the proposal and information on admission, discussions and directors
election and dismissal compiled into electronic files and uploaded to the MOPS 30 days
prior to the annual meeting of shareholders or fifteen days prior to the extraordinary
meeting of shareholders. Also, the Annual Meeting Handbook and the supplementary
information are compiled into electronic files and uploaded to the MOPS 21 days prior to
the Annual Meeting of Shareholders or 15 days prior to the extraordinary meeting of
shareholders. The Annual Meeting Handbooks and the supplementary information are
made available to shareholders 15 days prior to the annual meeting of shareholders; also,
on display at the Company’s and its Stock Agent’s and distributed to shareholders at the
meeting place.
The reasons for convening the meeting should be stated in the notice and announcement.
The notice with the consent of the counterparty can be issued electronically.
Election or dismissal of directors, amendments to the articles of incorporation, reduction
of capital, application for the approval of ceasing its status as a public company, approval
of competing with the company by directors, surplus profit distributed in the form of new
shares, reserve distributed in the form of new shares, the dissolution, merger, or demerger
of the corporation, or any matter under Article 185, paragraph 1 of the Company Act,
Articles 26-1 and 43-6 of the Securities and Exchange Act, or Articles 56-1 and 60-2 of
the Regulations Governing the Offering and Issuance of Securities by Securities Issuers
shall be set out in the notice of the reasons for convening the shareholders meeting, and
the essential contents shall be explained. None of the above matters may be raised by an
extraordinary motion. The essential contents may be posted on the website designated by
the competent authority in charge of securities affairs or the company, and such website
shall be indicated in the above notice.
Shareholder holding 1 percent or more of the total number of issued shares may submit to
this Corporation a written proposal for discussion at a regular shareholders meeting. Such
125
proposals, however, are limited to one item only, and no proposal containing more than
one item will be included in the meeting agenda. Unless any of the circumstances under
Article 172-1, paragraph 4 of the Company Act is satisfied, the board of directors of the
Company shall include the proposal submitted by a shareholder in the list of proposals to
be discussed at a regular meeting of shareholders:
The Company shall announce the proposals admitted, the premises and the admission
period before the stock stop-transfer date prior to the Annual Meeting of Shareholders is
convened; also, the admitting period may not be less than 10 days.
Motion proposed by shareholders is limited to three hundred words. A proposed motion
of more than three hundred words will not be included in the proposal. The proposing
shareholders must attend the Annual Meeting of Shareholders in person or by proxy and
must participate in the proposal discussion.
The Company shall have the proposing shareholder notified about the proposal results
before the date of the meeting notice and must have the proposals in compliance with this
provision included in the meeting notice. The Board shall state the reasons for not
including the proposal of shareholders in the meeting agenda.
Article 4 Shareholders may attend the meeting of shareholders by proxy that is printed and issued
by the Company with the scope of authorization detailed.
It is limited to one proxy per shareholder and one proxy only that should be served to the
Company five days prior to the meeting of shareholders. When the proxy is issued in
duplicate, whichever is served first shall prevail. The proxy referred to above that was
announced to be revoked is not subject to this restriction.
After serving the proxy to the Company, the shareholders who wish to attend the meeting
of the shareholders in person or to vote in writing or by electronic means shall notify the
Company in writing to revoke the proxy two days prior to the meeting of the shareholders.
If the proxy is not revoked before the deadline, the vote by proxy shall prevail.
Article 5 The place of meeting of shareholders should be at the Company’s or any suitable location
or for shareholders to attend the meeting conveniently; also, the meeting of shareholders
shall not be started before 9:00 or after 15:00.
Article 6 The Company should have the attendance registry ready for the signature of the attending
shareholders or the shareholder’s representative (hereinafter referred to as the
Shareholders), or the attending shareholders may have the signature card submitted as an
alternative to the signature.
The Company should have the annual meeting handbook, annual reports, attendance pass,
speech slip, voting ballots, and other meeting materials delivered to the attending
shareholders; also, the electoral ballots should be distributed for the election of directors,
if applicable.
Shareholders should attend the meeting of shareholders with the presentation of the
attendance pass, attendance card or other attendance documents. Proxy solicitors should
have identity documents with them for examination.
When the government or juridical person is a shareholder, the shareholder attending the
meeting by proxy is not limited to one representative. The juridical person that has
attended the meeting of shareholder by proxy can authorize only one representative to
attend the meeting.
Article 7 If the meeting of shareholders is convened by the Board, the Chairman of the Board is to
126
chair the meeting. If the Chairman is on leave or is unable to exercise his powers for
certain reasons, the Vice Chairman is to chair the meeting. If a Vice Chairman is not
appointed or the Vice Chairman is also on leave or is unable to perform his duties for
certain reasons, the Chairman is to appoint one of the managing directors to chair the
meeting. If a managing director is not appointed, one of the directors is appointed to chair
the meeting. If a representative is not appointed by the Chairman, one of the managing
directors or directors should be elected among the board members to chair the meeting.
The Company may assign the appointed attorney, CPA, or responsible personnel to attend
the meeting of the shareholders.
Article 8 The Company should have the entire meeting of shareholders taped in audio or video
recording and stored for at least one year.
However, for the litigation filed by the shareholders in accordance with Article 189 of the
Company Act, it should be reserved until the end of the proceedings.
Article 9 Attendance of the meeting of shareholders should be calculated in accordance with the
shareholdings. The shareholding attendance is based on the attendance registry or the
signature cards submitted, plus the votes exercised in writing or by electronic means.
The Chairman shall call the meeting to order at the meeting time. If the shareholding of
the attending shareholders is not more than half of the total number of shares issued, the
Chairman may announce the meeting postponed, which is limited to two postponements
and for less than one-hour in total. If the shareholding of the attending shareholders
remaining do not constitute more than one third of the total number of shares issued after
the two postponements, the Chairman may announce to have the meeting aborted.
If the shareholdings of the attending shareholders are not more than half of the total
number of shares issued after two postponements but more than one third of the total
number of shares issued, a pseudo-resolution can be resolved in accordance with
Paragraph 1, Article 175 of the Company Act; also, shareholders should be informed
regarding the pseudo-resolution with another meeting of shareholders to be convened
within one month.
If the shareholdings of the attending shareholders are more than one half of the total
number of shares issued before the end of the meeting, the Chairman may have the
pseudo-resolution presented again in the next meeting of the shareholders for resolution
in accordance with Article 174 of the Company Act.
Article 10 If the meeting of shareholders is convened by the Board, the agenda is scheduled by the
Board; also, the meeting should be conducted in accordance with the agenda scheduled
and it may not be amended without the resolution reached in the meeting of shareholders.
If the meeting of shareholders is convened by an authorized person other than the Board,
the provision referred to above is applicable.
The Chairman may not have the meeting adjourned at his discretion before the proposals
(including motions) resolved in the two agendas referred to above. If the Chairman has
the meeting adjourned in violation of the Rules of Procedure for Shareholder Meetings,
the other Board members shall promptly assist the attending shareholders in accordance
with the legal procedures to have one shareholder elected as the Chairman with the
majority votes of the attending shareholders to continuously chair the meeting.
A Chairman who believes that the proposal under discussion is ready for voting may at
his discretion stop the discussion and call for a vote.
127
Article 11 Attending shareholders before speaking on the subject must fill out the speech slip,
shareholder account number, and account name (or attendance pass number) in detail, and
then the Chairman is to determine the order of speakers.
Attending shareholders who have speech slips submitted but not speak shall be deemed as
silent shareholders. If there is a discrepancy found between the text of the speech and the
speech slip submitted, the contents of the speech shall prevail.
Each shareholder may not speak more than twice on the same motion for 5 minutes each
time without the consent of the Chairman. However, the Chairman may have the speaking
shareholders who violate the rules or speak beyond the scope of those issues silenced.
Attending shareholders may not interfere with the speaking shareholders without the
consent of the Chairman and the speaking shareholders. The Chairman will have the
violating shareholders stopped.
If the juridical person shareholder has more than two representatives assigned to attend
the meeting of shareholders, only one of the two representatives may speak on the same
proposal.
The Chairman may reply to the speaking shareholders personally or by the designated
personnel.
Article 12 Resolutions of the meeting of shareholders should be based on their shareholdings.
For the resolutions in the meeting of shareholders, the shares of the shareholders without
votes are not included in the calculation of outstanding shares.
Shareholders who have a conflict of interest with the proposals that are detrimental to the
Company’s interests shall not vote, and cannot vote by proxy on behalf of the other
shareholders.
The shares without votes referred to above are not included in the calculation of the
attending shareholders’ votes.
Except for Trust agencies or stock agencies approved by the securities regulatory
authorities, the votes of the representative delegated by two or more shareholders shall
not exceed 3% of the total votes representing the total number of shares issued; also, the
votes exceeding the threshold shall not be counted.
Article 13 Shareholders are entitled to one vote per share; except for those subject to restrictions or
the non-voting matters illustrated in Paragraph 2, Article 179 of the Company Act.
The Company’s meeting of shareholders can be convened with the votes cast in writing or
by electronic means. When the vote is cast in writing or by electronic means, the election
method should be stated in the notice of meeting of shareholders. Shareholders who have
their votes cast in writing or by electronic means are deemed as attending the meeting in
person. However, with respect to motions and original proposal amendments of the
meeting of shareholders, it is deemed as a waiver.
For the votes exercised in writing or by electronic means referred to above, the intention
should be delivered to the Company two days prior to the meeting of shareholders. For
the intention expressed in duplicate, whichever is delivered first shall prevail. The
intention referred to above that was announced to be revoked is not subject to this
restriction.
Shareholders after exercising their votes in writing or by electronic means wish to attend
the meeting of shareholders in person shall have the intension of exercising votes in
128
writing or by electronic means revoked the same way of exercising their votes two days
prior to the meeting commencement date. For overdue revocations, the votes exercised in
writing or by electronic means shall prevail. If the vote is exercised in writing or by
electronic means and a representative is to attend the meeting of shareholders by proxy,
the votes exercised by the representative in person shall prevail.
For the resolution of proposals, unless otherwise provided in the Company Act and the
Company Corporate Charter (Articles of Incorporation), the consent of a majority vote of
the attending shareholders shall prevail. The motion resolved by the Chairman’s
consulting the attending shareholders without dissent is deemed as passed and with the
same effect as voting.
When there is an amendment or alternative for the same motion, the Chairman shall have
the order of vote, including the original proposal, determined accordingly. If one of the
motions has been passed, the other motions shall be deemed as rejected without the need
for further resolution.
Chairman is to appoint the scrutineers and counting officers who must be shareholders.
Ballot counting should be held at the meeting place with the ballot counting result
announced immediately and records kept.
Article 14 The election of directors held at the meeting of shareholders should be arranged in
accordance with the Company’s election specifications and with the election results
announced immediately at the meeting place.
Electoral ballots referred to above shall be sealed and signed by the scrutineers and
reserved for at least one year. However, for the litigation filed by the shareholders in
accordance with Article 189 of the Company Act, it should be reserved until the end of
the proceedings.
Article 15 The resolutions reached in the meeting of shareholders should be documented in the
minutes of meeting and signed or sealed by the Chairman; also, it should be uploaded to
the MOPS within 20 days after the meeting adjournment.
The minutes of meeting should be prepared in accordance with the year, month, date,
place, name of the Chairman, the resolution method, meeting procedure and the results,
and shall be permanently reserved throughout the duration of the Company.
Article 16 The Company shall have the statistical report for the number of shares solicited by the
solicitor and the number of shares by proxy prepared in the specific format during the
meeting of the shareholders commencement date and disclosed in the meeting.
For the resolutions reached in the meeting of shareholders that involved laws and
regulations or the material information defined by the Taiwan Stock Exchange
Corporation, the Company shall, within the specified time, have the information uploaded
to MOPS.
Article 17 The staff responsible for organizing the meeting of shareholders shall wear identification
badges or armbands.
The Chairman may direct disciplinary personnel or security personnel to help keep the
meeting place in order. The disciplinary personnel or security personnel that help keep the
meeting place in order should wear an armband with “Marshal” affixed or an
identification card.
When the meeting place is equipped with amplifying equipment, the Chairman may stop
129
shareholders who do not use the speaking device provided by the Company from
speaking.
The Chairman may instruct the disciplinary personnel or security personnel to have
shareholders who violate the Rules of Procedure for Shareholder Meetings, disobey the
instructions of the Chairman, intervene in the meeting proceedings and fail to comply
with the disciplinary act escrowed to leave the meeting place.
Article 18 The Chairman may announce the meeting in recess. The Chairman may rule to have the
meeting suspended temporarily under unruly circumstance and have the meeting resume
depending on the situation.
If the meeting place cannot be used continuously before the proposals (including motions)
resolved in the agendas scheduled, it can be resolved to be continued in the meeting of
shareholders to find another venue for the meeting.
The meeting of shareholders may, in accordance with Article 182 of the Company Act,
resolve to have the meeting postponed or resumed in five days.
Article 19 The Rules of Procedure for Shareholder Meetings is implemented after the resolution
reached in the meeting of shareholders, so is the amendment and revocation.
130
Questions and Motions
131
Appendix
- 132-
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Shareholders
Taichung Commercial Bank Co., Ltd.
Opinion
We have audited the accompanying parent company only financial statements of Taichung Commercial Bank
Co., Ltd. (the “Bank”), which comprise the balance sheets as of December 31, 2018 and 2017, and the
statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes
to the parent company only financial 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 Bank as of December 31, 2018 and 2017, and its financial performance
and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of
Financial Reports by Public Banks.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial
Statements of Financial Institutions by Certified Public Accountants and auditing standards generally accepted
in the Republic of China. Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the
Bank in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of
China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion.
Emphasis of Matter
We draw attention to Note 3 of the parent company only financial statements, which describes Taichung
Commercial Bank Co., Ltd. initial application of the amendments to the Regulations Governing the
Preparation of Financial Reports by Public Banks, the International Financial Reporting Standards (IFRS),
International Accounting Standards (IAS), Interpretations of IFRIC (IFRIC), and Interpretations of SIC (SIC)
endorsed and issued into effect by the FSC starting from 2018. The Bank elects not to restate prior reporting
periods when applying the abovementioned standards, interpretations and interpretations endorsed and issued.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Appendix 1
- 133-
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 for the year ended December 31, 2018.
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.
The following are the descriptions of the key audit matters in the audit of the parent company only
financial statements of the Bank for the year ended December 31, 2018:
Expected Credit Losses of Notes Discounted and Loans, Net
As described in Notes 13 and 30 to the parent company only financial statements, notes
discounted and loans amounted to $451,728,578 thousand which accounted for 66% of total assets at
December 31, 2018 and the expected credit losses of the notes discounted and loans and receivables
amounted to $487,296 thousand which accounted for 5% of total net revenue for the year ended
December 31, 2018. Due to the large amount, the account has a significant influence on the Bank.
As discussed in Note 5, the measurement of expected credit losses of notes discounted and loans
involves various financial factors, such as probability of default and loss given default. Therefore,
the expected credit losses of notes discounted and loans were identified as one of the key audit
matters.
The relevant accounting policies, estimations, assumptions and other information are referred to in
Notes 4, 5, 13 and 30 to the parent company only financial statements.
The audit procedures performed for the expected credit losses of notes discounted and loans were
as follows:
We understood and tested the internal controls for the expected credit losses of notes discounted
and loans of Taichung Commercial Bank Co., Ltd.
We selected samples from schedule of expected credit losses of the notes discounted and loans
assessed by Taichung Commercial Bank Co., Ltd., and evaluated collateral’s value and feasibility of
the expected credit losses.
We understood and tested the key parameters for the expected credit losses of notes discounted
and loans (such as probability of default and loss given default) assessed by Taichung Commercial
Bank Co., Ltd. in assessing whether the expected credit losses were reasonable and met the current
experience and the economic situation in Taiwan.
Interest Revenue Recognition on Notes Discounted and Loans
As described in Note 33 to the parent company only financial statements, interest revenue on notes
discounted and loans of Taichung Commercial Bank Co., Ltd. amounted to $10,725,813 thousand
which accounted for 100% of total net revenue for the year ended December 31, 2018, which was the
- 134-
main revenue for Taichung Commercial Bank Co., Ltd. The establishment of loans of Taichung
Commercial Bank Co., Ltd. must be verified and reviewed by the supervisors who have been
authorized. The input data done by person in-charge have to be reviewed by the division supervisors
before loans are being disbursed. Taichung Commercial Bank Co., Ltd. use IT systems to compute
monthly interest revenue on notes discounted and loans automatically. The computation of interest
revenue on notes discounted and loans of Taichung Commercial Bank Co., Ltd. is highly dependent
on the IT systems. The input data of loans and the operation logic are very important for the accuracy
of the computation of interest revenue on notes discounted and loans. Therefore, interest revenue
recognition on notes discounted and loans was identified as one of the key audit matters.
The relevant accounting policies, estimations and other information are referred to in Notes 4 and 30
to the parent company only financial statements.
The audit procedures performed for interest revenue recognition on notes discounted and loans were
as follows:
• We understood and tested the internal controls for accuracy of interest revenue of notes
discounted and loans, included the understanding and testing of internal controls for IT system.
• We selected samples of interest revenue computed by IT system and cross-checked whether the samples agreed with the contracts. Subsequently, we recomputed interest revenue and verified that the amounts did not differ significantly from the reported amounts.
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 the Regulations Governing the Preparation of Financial
Reports by Public Banks, 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 Bank’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 Bank or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including the audit committee, are responsible for overseeing the
Bank’s financial reporting process.
Auditors’ 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 auditors’ 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 the auditing standards generally accepted in the Republic of
China, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
1. Identify and assess 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. Obtain 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 Bank’s internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
4. Conclude 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 Bank’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to
the related 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 auditors’ report. However, future events or conditions may cause the Bank to cease to
continue as a going concern.
5. Evaluate 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. Obtain sufficient and appropriate audit evidence regarding the financial information ofentities or
business activities within the Bank to express an opinion on the parent company only financial
statements. We are responsible for the direction, supervision, and performance of the audit. We
remain solely responsible for our audit opinion.
- 135-
- 136-
We communicate 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 identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate 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 determine those matters
that were of most significance in the audit of the parent company only financial statements for the
year ended December 31, 2018 and are therefore the key audit matters. We describe these matters in
our auditors’ 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.
The engagement partners on the audit resulting in this independent auditors’ report are Wen-Yea
Shyu and Kwan-Chung Lai.
Deloitte & Touche
Taipei, Taiwan
Republic of China
March 14, 2019
The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying parent company only financial statements have been translated into English from 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 independent auditors’ report and parent company only financial statements shall prevail.
Notice to Readers
- 137-
TAICHUNG COMMERCIAL BANK CO., LTD.
BALANCE SHEETS
DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
ASSETS Amount % Amount %
CASH AND CASH EQUIVALENTS $ 14,971,054 2 $ 13,944,328 2
DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS 31,768,897 5 30,121,642 5
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 26,136,939 4 30,965,512 5
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME 28,197,495 4 - -
INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST 100,462,761 15 - -
SECURITIES PURCHASED UNDER RESELL AGREEMENTS 9,094,151 1 11,283,082 2
RECEIVABLES, NET 5,028,141 1 6,329,074 1
NOTES DISCOUNTED AND LOANS, NET 451,728,578 66 429,656,232 65
AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET - - 31,192,871 5
HELD-TO-MATURITY FINANCIAL ASSETS, NET - - 85,542,095 13
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET 5,224,701 1 4,735,107 1
OTHER FINANCIAL ASSETS, NET 1,111 - 1,067,625 -
PROPERTIES AND EQUIPMENT, NET 9,368,329 1 9,296,259 1
INVESTMENT PROPERTIES, NET 22,660 - 22,750 -
INTANGIBLE ASSETS, NET 125,025 - 115,605 -
DEFERRED TAX ASSETS 732,826 - 635,955 -
OTHER ASSETS 1,295,939 - 1,581,823 -
TOTAL $ 684,158,607 100 $ 656,489,960 100
LIABILITIES AND EQUITY
DUE TO THE CENTRAL BANK AND OTHER BANKS $ 3,378,752 1 $ 9,518,872 1
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS 162,127 - 207,225 -
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS 9,904,467 1 4,307,810 1
PAYABLES 11,342,864 2 12,195,742 2
CURRENT TAX LIABILITIES 296,788 - 223,235 -
DEPOSITS AND REMITTANCES 589,242,889 86 567,255,591 86
BANK DEBENTURES 20,000,000 3 17,500,000 3
OTHER FINANCIAL LIABILITIES 2,127 - 43,434 -
PROVISIONS 1,421,814 - 1,389,979 -
DEFERRED TAX LIABILITIES 111,021 - 111,021 -
OTHER LIABILITIES 472,105 - 335,111 -
Total liabilities 636,334,954 93 613,088,020 93
EQUITY
Ordinary shares 35,255,084 5 32,931,789 5
Capital surplus 726,981 - 684,156 -
Retained earnings
Legal reserve 6,985,726 1 5,896,530 1
Special reserve 110,159 - 73,833 -
Unappropriated earnings 4,093,133 1 3,630,655 1
Other equity 652,570 - 184,977 -
Total equity 47,823,653 7 43,401,940 7
TOTAL $ 684,158,607 100 $ 656,489,960 100
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019)
- 138-
TAICHUNG COMMERCIAL BANK CO., LTD.
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
Percentage
2018 2017
Increase
(Decrease)
Amount % Amount % %
INTEREST REVENUE $ 12,453,151 117 $ 11,591,419 112 7
INTEREST EXPENSE (4,462,015) (42) (3,768,078) (36) 18
NET INTEREST 7,991,136 75 7,823,341 76 2
NET INCOME AND LOSS OTHER
THAN INTEREST
Service fee income, net 1,792,954 17 1,553,501 15 15
Gains on financial assets and liabilities
at fair value through profit or loss 146,351 1 472,898 5 (69)
Realized gains on available-for-sale
financial assets - - 27,608 - (100)
Realized gains on financial assets at
fair value through other
comprehensive income 54,017 1 - - -
Foreign exchange gains (losses), net 254,894 2 (91,229) (1) 379
Impairment losses on assets (17,488) - (50,533) - (65)
Share of profit of associates and joint
venture for using the equity method 435,743 4 252,540 2 73
Net (loss) gain on disposal of property (2,689) - 348,277 3 (101)
Other non-interest (losses) gains, net 20,105 - 11,676 - 72
TOTAL NET REVENUE 10,675,023 100 10,348,079 100 3
BAD-DEBT EXPENSES AND
PROVISION FOR LOSSES ON
COMMITMENTS AND
GUARANTEES
(410,947) (4) (946,897) (9) (57)
(Continued)
- 139-
TAICHUNG COMMERCIAL BANK CO., LTD.
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
Percentage
2018 2017
Increase
(Decrease)
Amount % Amount % %
OPERATING EXPENSES
Employee benefits $ (3,343,879) (31) $ (3,001,210) (29) 11
Depreciation and amortization (235,924) (2) (258,431) (3) (9)
Other selling and administrative
expenses (2,046,101) (19) (1,871,903) (18) 9
Total operating expenses (5,625,904) (52) (5,131,544) (50) 10
PROFIT BEFORE INCOME TAX
FROM CONTINUING
OPERATIONS 4,638,172 44 4,269,638 41 9
INCOME TAX EXPENSE (629,803) (6) (637,096) (6) (1)
NET PROFIT FOR THE YEAR 4,008,369 38 3,632,542 35 10
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified
subsequently to profit or loss:
Remeasurement of defined benefit
plans (69,552) (1) (3,687) - 1,786
Unrealized gains on investments in
equity instruments at fair value
through other comprehensive
income 50,761 1 - - -
Share of the other comprehensive
income of associates and joint
venture accounted for using the
equity method 36,287 - 53 - 68,366
Income tax relating to items that
will not be reclassified
subsequently to profit or loss 29,425 - 626 - 4,600
Items that will not be reclassified
subsequently to profit or loss,
net of income tax 46,921 - (3,008) - 1,660
(Continued)
- 140-
TAICHUNG COMMERCIAL BANK CO., LTD.
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
Percentage
2018 2017
Increase
(Decrease)
Amount % Amount % %
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on the
translation of financial statements
of foreign operations $ 13,818 - $ (2,856) - 584
Unrealized gains on available-for-
sale financial assets - - 196,642 2 (100)
Share of the other comprehensive
loss of associates accounted and
joint venture for using the equity
method (13,638) - (15,029) - (9)
Unrealized losses on investments in
debt instruments designated as at
fair value through other
comprehensive income (13,948) - - - -
Income tax relating to items that
may be reclassified subsequently
to profit or loss - - (7,414) - 100
Items that may be reclassified
subsequently to profit or loss,
net of income tax (13,768) - 171,343 2 (108)
Other comprehensive income for
the year, net of income tax 33,153 - 168,335 2 (80)
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR $ 4,041,522 38 $ 3,800,877 37 6
EARNINGS PER SHARE
Basic $1.18 $1.08
Diluted $1.18 $1.08
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019) (Concluded)
- 141-
TAICHUNG COMMERCIAL BANK CO., LTD.
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
Other Equity
Retained Earnings
Exchange
Differences on the
Translation of
Financial
Unrealized Gain on
Financial Assets at
Fair Value
Through Other
Unrealized
Gain on
Unappropriated Statements of Comprehensive Available-for-sale
Ordinary Shares Capital Surplus Legal Reserve Special Reserve Earnings Foreign Operations Income Financial Assets Total Equity
BALANCE AT JANUARY 1, 2017 $ 32,381,307 $ 684,156 $ 4,881,792 $ 38,685 $ 3,382,461 $ (23,183) $ - $ 36,817 $ 41,382,035
Appropriation of 2016 earnings
Legal reserve - - 1,014,738 - (1,014,738) - - - -
Special reserve - - - 35,148 (35,148) - - - -
Cash dividends - - - - (1,780,972) - - - (1,780,972)
Share dividends 550,482 - - - (550,482) - - - -
Net profit for the year ended December 31, 2017 - - - - 3,632,542 - - - 3,632,542
Other comprehensive (loss) income for the year ended December 31, 2017, net of income
tax - - - - (3,008) (15,324) - 186,667 168,335
Total comprehensive income (loss) for the year ended December 31, 2017 - - - - 3,629,534 (15,324) - 186,667 3,800,877
BALANCE AT DECEMBER 31, 2017 32,931,789 684,156 5,896,530 73,833 3,630,655 (38,507) - 223,484 43,401,940
Effect of retrospective application and retrospective restatement (Notes 3) - - - - (80,676) - 623,457 (223,484) 319,297
BALANCE AT JANUARY 1, 2018 AS RETROSPECTIVE 32,931,789 684,156 5,896,530 73,833 3,549,979 (38,507) 623,457 - 43,721,237
Appropriation of 2017 earnings
Legal reserve - - 1,089,196 - (1,089,196) - - - -
Special reserve - - - 36,326 (36,326) - - - -
Cash dividends - - - - (1,481,931) - - - (1,481,931)
Share dividends 823,295 - - - (823,295) - - - -
Net profit for the year ended December 31, 2018 - - - - 4,008,369 - - - 4,008,369
Other comprehensive (loss) income for the year ended December 31, 2018, net of income
tax - - - - (29,117) 180 62,090 - 33,153
Total comprehensive income for the year ended December 31, 2018 - - - - 3,979,252 180 62,090 - 4,041,522
Issuance of ordinary shares for cash 1,500,000 30,000 - - - - - - 1,530,000
Compensation costs of employee share options - 12,825 - - - - - - 12,825
Disposals of investments in equity instruments designated as at fair value through other
comprehensive income - - - - (5,350) - 5,350 - -
BALANCE AT DECEMBER 31, 2018 $ 35,255,084 $ 726,981 $ 6,985,726 $ 110,159 $ 4,093,133 $ (38,327) $ 690,897 $ - $ 47,823,653
The accompanying notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019)
- 142-
TAICHUNG COMMERCIAL BANK CO., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax $ 4,638,172 $ 4,269,638
Adjustments for:
Depreciation expenses 189,733 197,125
Amortization expenses 46,191 61,306
Expected credit losses/bad-debt expenses 410,947 946,897
Gains on financial assets and liabilities at fair value through profit or
loss (146,351) (472,898)
Losses on disposal of properties and equipment 2,689 395
Gains on disposal of investment properties - (348,672)
Interest expense 4,462,015 3,768,078
Interest revenue (12,453,151) (11,591,419)
Dividend income (27,230) (21,619)
Provision for losses on others (2,437) 26,000
Compensation costs of employee share options 12,825 -
Share of profit of associates (435,743) (252,540)
Gains on disposal of investments (26,787) (27,608)
Impairment loss on financial assets 17,488 50,533
Unrealized (gain) loss on foreign currency exchange (356,756) 850,912
Total adjustment (8,306,567) (6,813,510)
Net changes in operating assets and liabilities
Due from the central bank and call loans to other banks (746,918) (609,388)
Financial assets at fair value through profit or loss 5,834,931 (7,418,639)
Receivables 1,491,373 (2,189,611)
Notes discounted and loans (22,586,332) (6,492,597)
Other financial assets 38,085 (35,342)
Other assets (24,203) 8,780
Due to the central Bank and other banks (6,140,120) (2,098,856)
Financial liabilities at fair value through profit or loss (4,770) (813,642)
Securities sold under repurchase agreements 5,596,657 85,552
Payables (954,873) 2,939,543
Deposits and remittances 21,987,298 26,012,882
Other financial liabilities (41,307) (30,062)
Provision for employee benefits (45,369) (24,423)
Other liabilities 136,994 45,134
Changes in operating assets and liabilities 4,541,446 9,379,331
Cash generated from operations 873,051 6,835,459
Interest received 12,515,028 11,676,535
Dividend received 28,096 22,230
Interest paid (4,360,020) (3,637,226)
Income tax paid (623,696) (410,195)
Net cash generated from operating activities 8,432,459 14,486,803
(Continued)
- 143-
TAICHUNG COMMERCIAL BANK CO., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of financial assets at fair value through other
comprehensive income $ 4,297,417 -
Purchase of financial assets at amortized cost (761,952,805) -
Proceeds from sale of financial assets at amortized cost 45,650 -
Proceeds from repayments sale of financial assets at amortized cost 746,586,250 -
Purchase of available-for-sale financial assets - (1,050,000)
Proceeds from sale of available-for-sale financial assets - 7,319,614
Purchase of held-to-maturity financial assets - (748,721,306)
Proceeds from sale of held-to-maturity financial assets - 258,565
Proceeds from repayments sale of held-to-maturity financial assets - 676,269,904
Payments for properties and equipment (265,369) (122,022)
Proceeds from disposal of properties and equipment 967 -
Decrease in refundable deposits 87,287 63,679
Payments for intangible assets (55,611) (52,367)
Proceeds from disposal of investment properties - 403,950
Net cash used in investing activities (11,256,214) (65,629,983)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of bank debentures 2,500,000 6,000,000
Repayments of bank debentures - (1,500,000)
Cash dividends paid to owners of the Bank (1,481,931) (1,780,972)
Proceeds from issuance of ordinary shares 1,530,000 -
Net cash generated from financing activities 2,548,069 2,719,028
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN
CURRENCIES 13,818 (2,856)
NET DECREASE IN CASH AND CASH EQUIVALENTS (261,868) (48,427,008)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 38,811,338 87,238,346
CASH AND CASH EQUIVALENTS AT THE END OF YEAR $ 38,549,470 $ 38,811,338
(Continued)
- 144-
TAICHUNG COMMERCIAL BANK CO., LTD.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
December 31
2018 2017
RECONCILIATIONS OF THE AMOUNTS IN THE STATEMENTS
OF CASH FLOWS WITH THE EQUIVALENT ITEMS REPORTED
IN THE BALANCE SHEETS AT DECEMBER 31, 2018 AND 2017
Cash and cash equivalents in the balance sheets $ 14,971,054 $ 13,944,328
Due from the central bank and call loans to other banks in accordance
with cash and cash equivalents under IAS 7 “Statement of Cash
Flows” 14,484,265 13,583,928
Securities purchased under resell agreements in accordance with cash
and cash equivalents under IAS 7 “Statement of Cash Flows” 9,094,151 11,283,082
Cash and cash equivalents at the end of the year $ 38,549,470 $ 38,811,338
The notes are an integral part of the financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019) (Concluded)
Auditor’s Report
INDEPENDENT AUDITORS’ REPORT
The Board of Directors and Shareholders
Taichung Commercial Bank Co., Ltd.
Opinion
We have audited the accompanying consolidated financial statements of Taichung Commercial
Bank Co., Ltd. (the “Bank”) and its subsidiaries (collectively referred to as the “Group”), which
comprise the consolidated balance sheets as of December 31, 2018 and 2017, and the consolidated
statements of comprehensive income, changes in equity and cash flows for the years then ended,
and the 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 Group as of December 31, 2018 and 2017, and
its consolidated financial performance and its consolidated cash flows for the years then ended in
accordance with the Regulations Governing the Preparation of Financial Reports by Public Banks,
Regulations Governing the Preparation of Financial Reports by Securities Firms, and International
Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC
Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into by the Financial
Supervisory Commission (FSC) of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation
of Financial Statements of Financial Institutions by Certified Public Accountants and auditing
standards generally accepted in the Republic of China. Our responsibilities under those standards
are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial
Statements section of our report. We are independent of the Group in accordance with The Norm of
Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled
our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 3 of the consolidated financial statements, which describes Taichung
Commercial Bank Co., Ltd. and its subsidiaries initial application of the amendments to the
Regulations Governing the Preparation of Financial Reports by Public Banks, Regulations
Governing the Preparation of Financial Reports by Securities Firms, and the International Financial
Reporting Standards (IFRS), International Accounting Standards (IAS), Interpretations of IFRIC
(IFRIC), and Interpretations of SIC (SIC) endorsed and issued into effect by the FSC starting from
2018. The Group elects not to restate prior reporting periods when applying the above-mentioned
standards, interpretations and interpretations endorsed and issued. Our opinion is not modified in
respect of this matter.
- 145-
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 for the year ended December 31, 2018. 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.
The following are the descriptions of the key audit matters in the audit of the consolidated financial
statements of the Group for the year ended December 31, 2018:
Expected Credit Losses of Notes Discounted and Loans, Net
As described in Notes 13 and 33 to the consolidated financial statements, notes discounted and
loans amounted to $452,594,552 thousand which accounted for 66% of total assets at December 31,
2018 and the expected credit losses of the notes discounted and loans amounted to $487,333
thousand which accounted for 4% of total net revenue for the year ended December 31, 2018. Due
to the large amount, the account has a significant influence on the Group. As discussed in Note 5,
the measurement of expected credit losses of notes discounted and loans involves various financial
factors, such as probability of default and loss given default. Therefore, the expected credit losses
of notes discounted and loans were identified as one of the key audit matters.
The relevant accounting policies, estimations, assumptions and other information are referred to in
Notes 4, 5, 13 and 33 to the consolidated financial statements.
The audit procedures performed for the expected credit losses of notes discounted and loans were
as follows:
We understood and tested the internal controls for the expected credit losses of notes
discounted and loans of Taichung Commercial Bank Co., Ltd. and its subsidiaries.
We selected samples from schedule of expected credit losses of the notes discounted and loans
assessed by Taichung Commercial Bank Co., Ltd. and its subsidiaries, and evaluated
collateral’s value and feasibility of the expected credit losses.
We understood and tested the key parameters for the expected credit losses of notes discounted
and loans (such as probability of default and loss given default) assessed by Taichung
Commercial Bank Co., Ltd. and its subsidiaries in assessing whether the expected credit losses
were reasonable and met the current experience and the economic situation in Taiwan.
Interest Revenue Recognition on Notes Discounted and Loans
As described in Note 33 to the consolidated financial statements, interest revenue on notes
discounted and loans of Taichung Commercial Bank Co., Ltd. and its subsidiaries amounted to
$10,785,290 thousand which accounted for 92% of total net revenue for the year ended December
31, 2018, which was the main revenue for Taichung Commercial Bank Co., Ltd. and its
subsidiaries. The establishment of loans of Taichung Commercial Bank Co., Ltd. and its
subsidiaries must be verified and reviewed by the supervisors who have been authorized. The input
data done by person in-charge have to be reviewed by the division supervisors before loans are
being disbursed. Taichung Commercial Bank Co., Ltd. and its subsidiaries use IT systems to
compute monthly interest revenue on notes discounted and loans automatically. The computation
of interest revenue on notes discounted and loans of Taichung Commercial Bank Co., Ltd. and its
subsidiaries is highly dependent on the IT systems. The input data of loans and the operation logic
are very important for the accuracy of the computation of interest revenue on notes discounted and
loans. Therefore, interest revenue recognition on notes discounted and loans was identified as one
- 146 -
of the key audit matters.
The relevant accounting policies, estimations and other information are referred to in Notes 4 and
33 to the consolidated financial statements.
The audit procedures performed for interest revenue recognition on notes discounted and loans
were as follows:
We understood and tested the internal controls for accuracy of interest revenue of notes
discounted and loans, included the understanding and testing of internal controls for IT system.
We selected samples of interest revenue computed by IT system and cross-checked whether
the samples agreed with the contracts. Subsequently, we recomputed interest revenue and
verified that the amounts did not differ significantly from the reported amounts.
Other Matter
We have also audited the parent company only financial statements of Taichung Commercial Bank
Co., Ltd. as of and for the years ended December 31, 2018 and 2017 on which we have issued an
unmodified opinion with emphasis of matter and unmodified opinion, respectively.
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 the Regulations Governing the Preparation of Financial Reports by
Public Banks, Regulations Governing the Preparation of Financial Reports by Securities Firms, and
International Financial Reporting Standards (IFRS), International Accounting Standards (IAS),
IFRIC Interpretations (IFRIC), SIC Interpretations (SIC) endorsed and issued into effect 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
Group’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 Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance, including the audit committee, are responsible for overseeing the
Group’s financial reporting process.
Auditors’ 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 auditors’ 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.
- 147-
As part of an audit in accordance with the auditing standards generally accepted in the Republic of
China, we exercise professional judgment and maintain professional skepticism throughout the
audit. We also:
1. Identify and assess 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. Obtain 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 Group’s internal control.
3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.
4. Conclude 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 Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors’ 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 auditors’ report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
5. Evaluate 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. Obtain sufficient and appropriate audit evidence regarding the financial information of entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision, and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate 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 identify during our audit.
We also provide those charged with governance with a statement that we have complied with
relevant ethical requirements regarding independence, and to communicate 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 determine those matters
that were of most significance in the audit of the consolidated financial statements for the year
ended December 31, 2018 and are therefore the key audit matters. We describe these matters in our
auditors’ 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.
- 148-
The engagement partners on the audit resulting in this independent auditors’ report are Wen-Yea
Shyu and Kwan-Chung Lai.
Deloitte & Touche
Taipei, Taiwan
Republic of China
March 14, 2019
Notice to Readers
The accompanying consolidated financial statements are intended only to present the consolidated
financial position, financial performance and cash flows in accordance with accounting principles
and practices generally accepted in the Republic of China and not those of any other jurisdictions.
The standards, procedures and practices to audit such consolidated financial statements are those
generally applied in the Republic of China.
For the convenience of readers, the independent auditors’ report and the accompanying
consolidated financial statements have been translated into English from 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 independent auditors’ report and consolidated financial statements shall
prevail.
- 149-
- 150-
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
ASSETS Amount % Amount %
CASH AND CASH EQUIVALENTS $ 15,874,631 2 $ 15,001,053 2
DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS 31,768,897 5 30,121,642 5
FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 26,336,500 4 31,210,074 5
FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE INCOME 28,933,152 4 - -
INVESTMENTS IN DEBT INSTRUMENTS AT AMORTIZED COST 100,462,761 15 - -
SECURITIES PURCHASED UNDER RESELL AGREEMENTS 9,294,168 1 11,283,082 2
RECEIVABLES, NET 12,780,910 2 13,658,151 2
CURRENT TAX ASSETS 35 - 5,701 -
NOTES DISCOUNTED AND LOANS, NET 452,594,552 66 430,857,960 65
AVAILABLE-FOR-SALE FINANCIAL ASSETS, NET - - 31,615,817 5
HELD-TO-MATURITY FINANCIAL ASSETS, NET - - 85,542,095 13
INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD, NET 153,423 - 128,113 -
RESTRICTED ASSETS, NET 447,036 - 249,003 -
OTHER FINANCIAL ASSETS, NET 1,111 - 1,067,625 -
PROPERTIES AND EQUIPMENT, NET 9,446,769 1 9,387,663 1
INVESTMENT PROPERTIES, NET 108,950 - 45,250 -
INTANGIBLE ASSETS, NET 163,172 - 160,054 -
DEFERRED TAX ASSETS 781,879 - 681,396 -
OTHER ASSETS 1,684,157 - 2,009,404 -
TOTAL $ 690,832,103 100 $ 663,024,083 100
LIABILITIES AND EQUITY
DUE TO THE CENTRAL BANK AND OTHER BANKS $ 3,378,752 1 $ 9,518,872 1
FUNDS BORROWED FROM CENTRAL BANK AND OTHER BANKS 5,495,519 1 5,120,940 1
FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS 165,360 - 207,225 -
SECURITIES SOLD UNDER REPURCHASE AGREEMENTS 9,904,467 1 4,307,810 1
PAYABLES 12,254,764 2 13,331,722 2
CURRENT TAX LIABILITIES 380,869 - 255,559 -
DEPOSITS AND REMITTANCES 587,967,658 85 566,094,780 85
BANK DEBENTURES 20,000,000 3 17,500,000 3
OTHER FINANCIAL LIABILITIES 1,000,807 - 1,057,866 -
PROVISIONS 1,421,814 - 1,389,979 -
DEFERRED TAX LIABILITIES 111,021 - 111,021 -
OTHER LIABILITIES 927,419 - 726,369 -
Total liabilities 643,008,450 93 619,622,143 93
EQUITY ATTRIBUTABLE TO OWNERS OF THE BANK
Ordinary shares 35,255,084 5 32,931,789 5
Capital surplus 726,981 - 684,156 -
Retained earnings
Legal reserve 6,985,726 1 5,896,530 1
Special reserve 110,159 - 73,833 -
Unappropriated earnings 4,093,133 1 3,630,655 1
Other equity 652,570 - 184,977 -
Total equity attributable to owners of the Bank 47,823,653 7 43,401,940 7
Total equity 47,823,653 7 43,401,940 7
TOTAL $ 690,832,103 100 $ 663,024,083 100
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019)
- 151 -
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
Percentage
2018 2017
Increase
(Decrease)
Amount % Amount % %
INTEREST REVENUE $ 13,060,733 112 $ 12,078,007 106 8
INTEREST EXPENSE (4,626,523) (40) (3,892,000) (34) 19
NET INTEREST 8,434,210 72 8,186,007 72 3
NET INCOME AND LOSS OTHER
THAN INTEREST
Service fee income, net 2,846,174 24 2,448,579 22 16
Gains on financial assets and liabilities
at fair value through profit or loss 117,134 1 490,717 4 (76)
Realized gains on available-for-sale
financial assets - - 34,743 - (100)
Realized gains on financial assets at
fair value through other
comprehensive income 77,048 1 - - -
Foreign exchange gains (losses), net 232,895 2 (88,738) (1) 362
Impairment losses on assets (17,488) - (50,533) - (65)
Share of loss of associates and joint
venture for using the equity method (6,716) - (2,875) - 134
Net (loss) gain on disposal of property (2,437) - 347,810 3 (101)
Other non-interest gains, net 8,604 - 29,045 - (70)
TOTAL NET REVENUE 11,689,424 100 11,394,755 100 3
BAD-DEBT EXPENSES AND
PROVISION FOR LOSSES ON
COMMITMENTS AND
GUARANTEES (472,772) (4) (1,124,859) (10) (58)
(Continued)
- 152-
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
Percentage
2018 2017
Increase
(Decrease)
Amount % Amount % %
OPERATING EXPENSES
Employee benefits $ (3,723,758) (32) $ (3,348,251) (29) 11
Depreciation and amortization (273,401) (2) (287,221) (3) (5)
Other selling and administrative
expenses (2,459,610) (21) (2,279,212) (20) 8
Total operating expenses (6,456,769) (55) (5,914,684) (52) 9
PROFIT BEFORE INCOME TAX
FROM CONTINUING
OPERATIONS 4,759,883 41 4,355,212 38 9
INCOME TAX EXPENSE (751,514) (6) (722,670) (6) 4
NET PROFIT FOR THE YEAR 4,008,369 35 3,632,542 32 10
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified
subsequently to profit or loss:
Remeasurement of defined benefit
plans (69,552) (1) (3,687) - 1,786
Unrealized gains on investments in
equity instruments at fair value
through other comprehensive
income 87,452 1 - - -
Share of the other comprehensive
(loss) income of associates and
joint venture accounted for using
the equity method (404) - 53 - (862)
Income tax relating to items that
will not be reclassified
subsequently to profit or loss 29,425 - 626 - 4,600
Items that will not be reclassified
subsequently to profit or (loss),
net of income tax 46,921 - (3,008) - 1,660
(Continued)
- 153 -
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars, Except Earnings Per Share)
Percentage
2018 2017
Increase
(Decrease)
Amount % Amount % %
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on the
translation of financial statements
of foreign operations $ 180 - $ (15,324) - 101
Unrealized gains on available-for-
sale financial assets - - 194,081 1 (100)
Unrealized losses on investments in
debt instruments designated as at
fair value through other
comprehensive income (13,948) - - - -
Income tax relating to items that
may be reclassified subsequently
to profit or loss - - (7,414) - 100
Items that may be reclassified
subsequently to profit or (loss),
net of income tax (13,768) - 171,343 1 (108)
Other comprehensive income for
the year, net of income tax 33,153 - 168,335 1 (80)
TOTAL COMPREHENSIVE INCOME
FOR THE YEAR $ 4,041,522 35 $ 3,800,877 33 6
EARNINGS PER SHARE
Basic $1.18 $1.08
Diluted $1.18 $1.08
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019) (Concluded)
- 154 -
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
Other Equity
Retained Earnings
Exchange
Differences on the
Translation of
Financial
Unrealized Gain on
Financial Assets at
Fair Value
Through Other
Unrealized
Gain on
Unappropriated Statements of Comprehensive Available-for-sale
Common Stock Capital Surplus Legal Reserve Special Reserve Earnings Foreign Operations Income Financial Assets Total Equity
BALANCE AT JANUARY 1, 2017 $ 32,381,307 $ 684,156 $ 4,881,792 $ 38,685 $ 3,382,461 $ (23,183) $ - $ 36,817 $ 41,382,035
Appropriation of 2016 earnings
Legal reserve - - 1,014,738 - (1,014,738) - - - -
Special reserve - - - 35,148 (35,148) - - - -
Cash dividends - - - - (1,780,972) - - - (1,780,972)
Share dividends 550,482 - - - (550,482) - - - -
Net profit for the year ended December 31, 2017 - - - - 3,632,542 - - - 3,632,542
Other comprehensive (loss) income for the year ended December 31, 2017, net of income
tax - - - - (3,008) (15,324) - 186,667 168,335
Total comprehensive income (loss) for the year ended December 31, 2017 - - - - 3,629,534 (15,324) - 186,667 3,800,877
BALANCE AT DECEMBER 31, 2017 32,931,789 684,156 5,896,530 73,833 3,630,655 (38,507) - 223,484 43,401,940
Effect of retrospective application and retrospective restatement - - - - (80,676) - 623,457 (223,484) 319,297
BALANCE AT JANUARY 1, 2018 AS RETROSPECTIVE 32,931,789 684,156 5,896,530 73,833 3,549,979 (38,507) 623,457 - 43,721,237
Appropriation of 2017 earnings
Legal reserve - - 1,089,196 - (1,089,196) - - - -
Special reserve - - - 36,326 (36,326) - - - -
Cash dividends - - - - (1,481,931) - - - (1,481,931)
Share dividends 823,295 - - - (823,295) - - - -
Net profit for the year ended December 31, 2018 - - - - 4,008,369 - - - 4,008,369
Other comprehensive (loss) income for the year ended December 31, 2018, net of income
tax - - - - (29,117) 180 62,090 - 33,153
Total comprehensive income for the year ended December 31, 2018 - - - - 3,979,252 180 62,090 - 4,041,522
Issuance of ordinary shares for cash 1,500,000 30,000 - - - - - - 1,530,000
Compensation costs of employee share options - 12,825 - - - - - - 12,825
Disposals of investments in equity instruments designated as at fair value through other
comprehensive income - - - - (5,350) - 5,350 - -
BALANCE AT DECEMBER 31, 2018 $ 35,255,084 $ 726,981 $ 6,985,726 $ 110,159 $ 4,093,133 $ (38,327) $ 690,897 $ - $ 47,823,653
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019)
- 155 -
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax $ 4,759,883 $ 4,355,212
Adjustments for:
Depreciation expenses 220,234 219,647
Amortization expenses 53,167 67,574
Expected credit losses/bad-debt expenses 472,772 1,124,859
Gains on financial assets and liabilities at fair value through profit or
loss (117,134) (490,717)
Losses on disposal of properties and equipment 2,437 862
Gains on disposal of investment properties - (348,672)
Interest expense 4,626,523 3,892,000
Interest revenue (13,060,733) (12,078,007)
Dividend income (50,261) (28,754)
Provision for losses on others (2,437) 26,000
Compensation costs of employee share options 12,825 -
Share of loss of associates 6,716 2,875
Gains on disposal of investments (26,787) (27,608)
Impairment loss on financial assets 17,488 50,533
Unrealized (gain) loss on foreign currency exchange (429,099) 850,927
Total adjustment (8,274,289) (6,738,481)
Net changes in operating assets and liabilities
Due from the central bank and call loans to other banks (746,918) (609,388)
Financial assets at fair value through profit or loss 6,738,946 (7,478,148)
Receivables 1,079,969 (3,977,913)
Notes discounted and loans (22,250,976) (6,428,669)
Other financial assets 38,085 (35,342)
Other assets (214,693) 31,149
Due to the central Bank and other banks (6,140,120) (2,098,856)
Financial liabilities at fair value through profit or loss (889,768) (813,642)
Securities sold under repurchase agreements 5,596,657 85,552
Payables (1,190,405) 3,391,522
Deposits and remittances 21,872,878 26,285,772
Other financial liabilities (41,307) (30,062)
Provision for employee benefits (45,369) (24,423)
Other liabilities 34,502 110,770
Changes in operating assets and liabilities 3,841,481 8,408,322
Cash generated from operations 327,075 6,025,053
Interest received 13,120,974 12,172,096
Dividend received 50,261 28,754
Interest paid (4,513,076) (3,757,507)
Income tax paid (691,596) (502,272)
Net cash generated from operating activities 8,293,638 13,966,124
(Continued)
- 156 -
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
2018 2017
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of financial assets at fair value through other comprehensive
income $ (276,021) $ -
Proceeds from disposal of financial assets at fair value through other
comprehensive income 4,297,417 -
Purchase of financial assets at amortized cost (761,952,805) -
Proceeds from sale of financial assets at amortized cost 45,650 -
Proceeds from repayments sale of financial assets at amortized cost 746,586,250 -
Purchase of available-for-sale financial assets - (1,351,137)
Proceeds from sale of available-for-sale financial assets - 7,319,614
Purchase of held-to-maturity financial assets - (748,721,306)
Proceeds from sale of held-to-maturity financial assets - 258,565
Proceeds from repayments sale of held-to-maturity financial assets - 676,269,904
Payments for properties and equipment (282,743) (196,583)
Proceeds from disposal of properties and equipment 1,930 24,921
Decrease in refundable deposits 117,963 46,516
Payments for intangible assets (56,112) (56,197)
Payments for investment properties (63,790) (22,500)
Proceeds from disposal of investment properties - 403,950
Net cash used in investing activities (11,582,261) (66,024,253)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from funds borrowed from central bank and other banks 374,579 921,082
(Repayments of ) proceeds from commercial papers issued (15,752) 279,961
Proceeds from issue of bank debentures 2,500,000 6,000,000
Repayments of bank debentures - (1,500,000)
Proceeds from guarantee deposits received 166,548 -
Cash dividends paid to owners of the Bank (1,481,931) (1,780,972)
Proceeds from issuance of ordinary shares 1,530,000 -
Net cash generated from financing activities 3,073,444 3,920,071
EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE
OF CASH AND CASH EQUIVALENTS HELD IN FOREIGN
CURRENCIES 180 (15,324)
NET DECREASE IN CASH AND CASH EQUIVALENTS (214,999) (48,153,382)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 39,868,063 88,021,445
CASH AND CASH EQUIVALENTS AT THE END OF YEAR $ 39,653,064 $ 39,868,063
(Continued)
- 157-
TAICHUNG COMMERCIAL BANK CO., LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017
(In Thousands of New Taiwan Dollars)
December 31
2018 2017
RECONCILIATIONS OF THE AMOUNTS IN THE CONSOLIDATED
STATEMENTS OF CASH FLOWS WITH THE EQUIVALENT
ITEMS REPORTED IN THE CONSOLIDATED BALANCE
SHEETS AT DECEMBER 31, 2018 AND 2017
Cash and cash equivalents in the consolidated balance sheets $ 15,874,631 $ 15,001,053
Due from the central bank and call loans to other banks in accordance
with cash and cash equivalents under IAS 7 “Statement of Cash
Flows” 14,484,265 13,583,928
Securities purchased under resell agreements in accordance with cash
and cash equivalents under IAS 7 “Statement of Cash Flows” 9,294,168 11,283,082
Cash and cash equivalents at the end of the year $ 39,653,064 $ 39,868,063
The accompanying notes are an integral part of the consolidated financial statements.
(With Deloitte & Touche auditors’ report dated March 14, 2019) (Concluded)
- 158 -
Taichung Commercial Bank Co., Ltd.
Rules of Procedure for Shareholder Meetings
Resolved in the Annual Meeting of Shareholders on June 20, 1998
Resolved in the Annual Meeting of Shareholders on June 13, 2013
Article 1 The rules for compliance are stipulated in accordance with Article 5 of the “Corporate
Governance Best Practice Principles for TWSE/TPEx Listed Companies” for
establishing the Company’s excellent meeting of shareholders governance system,
substantiating supervisory function, and enhancing management functions.
Article 2 The Rules of Procedure for Shareholder Meetings is processed in accordance with the
Rules, unless otherwise provided by law or Company Corporate Charter (Articles of
Incorporation).
Article 3 The Company’s meeting of shareholders shall be convened by the Board, unless
otherwise provided by law. The Company shall have the Annual Meeting of
Shareholders notice, proxy and the proposal and information on admission, discussions
and directors and supervisors election and dismissal compiled into electronic files and
uploaded to the MOPS 30 days prior to the annual meeting of shareholders or fifteen
days prior to the extraordinary meeting of shareholders. Also, the Annual Meeting
Handbook and the supplementary information are compiled into electronic files and
uploaded to the MOPS 21 days prior to the Annual Meeting of Shareholders or 15 days
prior to the extraordinary meeting of shareholders. The Annual Meeting Handbooks and
the supplementary information are made available to shareholders 15 days prior to the
annual meeting of shareholders; also, on display at the Company’s and its Stock Agent’s
and distributed to shareholders at the meeting place.
The reasons for convening the meeting should be stated in the notice and announcement.
The notice with the consent of the counterparty can be issued electronically.
The election or dismissal of directors, supervisors, amendments to the Company
Corporate Charter (Articles of Incorporation), dissolution, merger, division or the
clauses of Paragraph 1, Article 185 of the Company Act, the matters stated in Article 26-
1 and Article 43-6 of Securities and Exchange Act shall be stated in the reasons for
convening the meeting not in the motion.
Shareholders who have over 1% shareholdings in the Company’s total number of shares
issued may propose to the Company in writing to convene the Annual Meeting of
Shareholders. But it is limited to one proposal and the additional proposals will not be
included in the meeting agenda. In addition, the Board may have the proposals of
shareholders that fall under the circumstances stated in Paragraph 4, Article 172-1 of the
Company Act excluded from meeting discussions.
The Company shall announce the proposals admitted, the premises and the admission
period before the stock stop-transfer date prior to the Annual Meeting of Shareholders is
convened; also, the admitting period may not be less than 10 days.
Motion proposed by shareholders is limited to three hundred words. A proposed motion
of more than three hundred words will not be included in the proposal. The proposing
shareholders must attend the Annual Meeting of Shareholders in person or by proxy and
Appendix 2
- 159-
must participate in the proposal discussion.
The Company shall have the proposing shareholder notified about the proposal results
before the date of the meeting notice and must have the proposals in compliance with
this provision included in the meeting notice. The Board shall state the reasons for not
including the proposal of shareholders in the meeting agenda.
Article 4 Shareholders may attend the meeting of shareholders by proxy that is printed and issued
by the Company with the scope of authorization detailed.
It is limited to one proxy per shareholder and one proxy only that should be served to the
Company five days prior to the meeting of shareholders. When the proxy is issued in
duplicate, whichever is served first shall prevail. The proxy referred to above that was
announced to be revoked is not subject to this restriction.
After serving the proxy to the Company, the shareholders who wish to attend the
meeting of the shareholders in person or to vote in writing or by electronic means shall
notify the Company in writing to revoke the proxy two days prior to the meeting of the
shareholders. If the proxy is not revoked before the deadline, the vote by proxy shall
prevail.
Article 5 The place of meeting of shareholders should be at the Company’s or any suitable
location or for shareholders to attend the meeting conveniently; also, the meeting of
shareholders shall not be started before 9:00 or after 15:00.
Article 6 The Company should have the attendance registry ready for the signature of the
attending shareholders or the shareholder’s representative (hereinafter referred to as the
Shareholders), or the attending shareholders may have the signature card submitted as an
alternative to the signature.
The Company should have the annual meeting handbook, annual reports, attendance
pass, speech slip, voting ballots, and other meeting materials delivered to the attending
shareholders; also, the electoral ballots should be distributed for the election of directors
and supervisors, if applicable.
Shareholders should attend the meeting of shareholders with the presentation of the
attendance pass, attendance card or other attendance documents. Proxy solicitors should
have identity documents with them for examination.
When the government or juridical person is a shareholder, the shareholder attending the
meeting by proxy is not limited to one representative. The juridical person that has
attended the meeting of shareholder by proxy can authorize only one representative to
attend the meeting.
Article 7 If the meeting of shareholders is convened by the Board, the Chairman of the Board is to
chair the meeting. If the Chairman is on leave or is unable to exercise his powers for
certain reasons, the Vice Chairman is to chair the meeting. If a Vice Chairman is not
appointed or the Vice Chairman is also on leave or is unable to perform his duties for
certain reasons, the Chairman is to appoint one of the managing directors to chair the
meeting. If a managing director is not appointed, one of the directors is appointed to
chair the meeting. If a representative is not appointed by the Chairman, one of the
managing directors or directors should be elected among the board members to chair the
meeting.
The Company may assign the appointed attorney, CPA, or responsible personnel to
attend the meeting of the shareholders.
- 160-
Article 8 The Company should have the entire meeting of shareholders taped in audio or video
recording and stored for at least one year.
However, for the litigation filed by the shareholders in accordance with Article 189 of
the Company Act, it should be reserved until the end of the proceedings.
Article 9 Attendance of the meeting of shareholders should be calculated in accordance with the
shareholdings. The shareholding attendance is based on the attendance registry or the
signature cards submitted, plus the votes exercised in writing or by electronic means.
The Chairman shall call the meeting to order at the meeting time. If the shareholding of
the attending shareholders is not more than half of the total number of shares issued, the
Chairman may announce the meeting postponed, which is limited to two postponements
and for less than one-hour in total. If the shareholding of the attending shareholders
remaining do not constitute more than one third of the total number of shares issued after
the two postponements, the Chairman may announce to have the meeting aborted.
If the shareholdings of the attending shareholders are not more than half of the total
number of shares issued after two postponements but more than one third of the total
number of shares issued, a pseudo-resolution can be resolved in accordance with
Paragraph 1, Article 175 of the Company Act; also, shareholders should be informed
regarding the pseudo-resolution with another meeting of shareholders to be convened
within one month.
If the shareholdings of the attending shareholders are more than one half of the total
number of shares issued before the end of the meeting, the Chairman may have the
pseudo-resolution presented again in the next meeting of the shareholders for resolution
in accordance with Article 174 of the Company Act.
Article 10 If the meeting of shareholders is convened by the Board, the agenda is scheduled by the
Board; also, the meeting should be conducted in accordance with the agenda scheduled
and it may not be amended without the resolution reached in the meeting of shareholders.
If the meeting of shareholders is convened by an authorized person other than the Board,
the provision referred to above is applicable.
The Chairman may not have the meeting adjourned at his discretion before the proposals
(including motions) resolved in the two agendas referred to above. If the Chairman has
the meeting adjourned in violation of the Rules of Procedure for Shareholder Meetings,
the other Board members shall promptly assist the attending shareholders in accordance
with the legal procedures to have one shareholder elected as the Chairman with the
majority votes of the attending shareholders to continuously chair the meeting.
A Chairman who believes that the proposal under discussion is ready for voting may at
his discretion stop the discussion and call for a vote.
Article 11 Attending shareholders before speaking on the subject must fill out the speech slip,
shareholder account number, and account name (or attendance pass number) in detail,
and then the Chairman is to determine the order of speakers.
Attending shareholders who have speech slips submitted but not speak shall be deemed
as silent shareholders. If there is a discrepancy found between the text of the speech and
the speech slip submitted, the contents of the speech shall prevail.
Each shareholder may not speak more than twice on the same motion for 5 minutes each
time without the consent of the Chairman. However, the Chairman may have the
speaking shareholders who violate the rules or speak beyond the scope of those issues
- 161-
silenced.
Attending shareholders may not interfere with the speaking shareholders without the
consent of the Chairman and the speaking shareholders. The Chairman will have the
violating shareholders stopped.
If the juridical person shareholder has more than two representatives assigned to attend
the meeting of shareholders, only one of the two representatives may speak on the same
proposal.
The Chairman may reply to the speaking shareholders personally or by the designated
personnel.
Article 12 Resolutions of the meeting of shareholders should be based on their shareholdings.
For the resolutions in the meeting of shareholders, the shares of the shareholders without
votes are not included in the calculation of outstanding shares. Shareholders who have a
conflict of interest with the proposals that are detrimental to the Company’s interests
shall not vote, and cannot vote by proxy on behalf of the other shareholders. The shares
without votes referred to above are not included in the calculation of the attending
shareholders’ votes. Except for Trust agencies or stock agencies approved by the
securities regulatory authorities, the votes of the representative delegated by two or more
shareholders shall not exceed 3% of the total votes representing the total number of
shares issued; also, the votes exceeding the threshold shall not be counted.
Article 13 Shareholders are entitled to one vote per share; except for those subject to restrictions or
the non-voting matters illustrated in Paragraph 2, Article 179 of the Company Act.
The Company’s meeting of shareholders can be convened with the votes cast in writing
or by electronic means. When the vote is cast in writing or by electronic means, the
election method should be stated in the notice of meeting of shareholders. Shareholders
who have their votes cast in writing or by electronic means are deemed as attending the
meeting in person. However, with respect to motions and original proposal amendments
of the meeting of shareholders, it is deemed as a waiver.
For the votes exercised in writing or by electronic means referred to above, the intention
should be delivered to the Company two days prior to the meeting of shareholders. For
the intention expressed in duplicate, whichever is delivered first shall prevail. The
intention referred to above that was announced to be revoked is not subject to this
restriction.
Shareholders after exercising their votes in writing or by electronic means wish to attend
the meeting of shareholders in person shall have the intension of exercising votes in
writing or by electronic means revoked the same way of exercising their votes two days
prior to the meeting commencement date. For overdue revocations, the votes exercised
in writing or by electronic means shall prevail. If the vote is exercised in writing or by
electronic means and a representative is to attend the meeting of shareholders by proxy,
the votes exercised by the representative in person shall prevail.
For the resolution of proposals, unless otherwise provided in the Company Act and the
Company Corporate Charter (Articles of Incorporation), the consent of a majority vote
of the attending shareholders shall prevail. The motion resolved by the Chairman’s
consulting the attending shareholders without dissent is deemed as passed and with the
same effect as voting.
When there is an amendment or alternative for the same motion, the Chairman shall
- 162-
have the order of vote, including the original proposal, determined accordingly. If one of
the motions has been passed, the other motions shall be deemed as rejected without the
need for further resolution.
Chairman is to appoint the scrutineers and counting officers who must be shareholders.
Ballot counting should be held at the meeting place with the ballot counting result
announced immediately and records kept.
Article 14 The election of directors and supervisors held at the meeting of shareholders should be
arranged in accordance with the Company’s election specifications and with the election
results announced immediately at the meeting place.
Electoral ballots referred to above shall be sealed and signed by the scrutineers and
reserved for at least one year. However, for the litigation filed by the shareholders in
accordance with Article 189 of the Company Act, it should be reserved until the end of
the proceedings.
Article 15 The resolutions reached in the meeting of shareholders should be documented in the
minutes of meeting and signed or sealed by the Chairman; also, it should be uploaded to
the MOPS within 20 days after the meeting adjournment.
The minutes of meeting should be prepared in accordance with the year, month, date,
place, name of the Chairman, the resolution method, meeting procedure and the results,
and shall be permanently reserved throughout the duration of the Company.
Article 16 The Company shall have the statistical report for the number of shares solicited by the
solicitor and the number of shares by proxy prepared in the specific format during the
meeting of the shareholders commencement date and disclosed in the meeting.
For the resolutions reached in the meeting of shareholders that involved laws and
regulations or the material information defined by the Taiwan Stock Exchange
Corporation, the Company shall, within the specified time, have the information
uploaded to MOPS.
Article 17 The staff responsible for organizing the meeting of shareholders shall wear identification
badges or armbands.
The Chairman may direct disciplinary personnel or security personnel to help keep the
meeting place in order. The disciplinary personnel or security personnel that help keep
the meeting place in order should wear an armband with “Marshal” affixed or an
identification card.
When the meeting place is equipped with amplifying equipment, the Chairman may stop
shareholders who do not use the speaking device provided by the Company from
speaking.
The Chairman may instruct the disciplinary personnel or security personnel to have
shareholders who violate the Rules of Procedure for Shareholder Meetings, disobey the
instructions of the Chairman, intervene in the meeting proceedings and fail to comply
with the disciplinary act escrowed to leave the meeting place.
Article 18 The Chairman may announce the meeting in recess. The Chairman may rule to have the
meeting suspended temporarily under unruly circumstance and have the meeting resume
depending on the situation.
If the meeting place cannot be used continuously before the proposals (including
motions) resolved in the agendas scheduled, it can be resolved to be continued in the
- 163 -
meeting of shareholders to find another venue for the meeting. The meeting of
shareholders may, in accordance with Article 182 of the Company Act, resolve to have
the meeting postponed or resumed in five days.
Article 19 The Rules of Procedure for Shareholder Meetings is implemented after the resolution
reached in the meeting of shareholders, so is the amendment and revocation.
164
Taichung Commercial Bank Co., Ltd.
Company Corporate Charter (Articles of Incorporation)
Chapter 1 General rules
Article 1 The Bank was organized and incorporated in accordance with The Banking Act of
The Republic of China and the Company Corporate Charter (Articles of
Incorporation), known as “Taichung Commercial Bank” (hereinafter referred to as
“Taichung Bank”)
Article 2 The Bank is dedicated to support the national policy in finance and banking, and
provide viable financial service and advocate industrial and economic development.
Article 3 The Bank’s head office is in Taichung City and with appropriate branches set-up
domestically and internationally depending on its business operations. The
incorporation, revocation, or amendment of branch offices are reported to the
competent authorities for approval and are registered with the Ministry of Economic
Affairs in accordance with the resolutions of the Board.
Article 4 The Bank has announcements made by publishing it in the local daily newspaper
where the head office of the Bank is located or by the instructions of the competent
authorities.
Chapter 2 Stock
Article 5 The Bank’s authorized capital amounted to NTD43.2 billion with 4.32 billion shares
issued at NTD10 par, in which, the Board is authorized to have the unissued shares
issued by installments.
Preferred shares may be offered within the total amount of shares as mentioned in the
previous paragraph.
Article 5-1 The rights and obligations of the preferred shares of the Bank and other important
conditions for issuance are shown below:
1. If the Bank has earnings after account settlement, it shall appropriate the payment
of applicable taxes and for write-off loss carried forward from previous periods.
If there is still a balance, appropriate or make reversal for the legal reserve and
special reserve as required by law. The remainder shall be distributed as the stock
dividend of the year at the first priority.
2. Dividends for preferred shares shall be set at no more than 8% per annum.
3. Dividends for preferred shares shall be calculated on the offering price per share
and will be paid in cash once a year. After the ratification of the financial
statements by the annual meeting of shareholders, the Board shall set the
dividend day for the distribution of dividends of the previous fiscal year. The
distribution of dividends in the year of offering and the year of redemption shall
be based on the quantity of the issuing day.
4. The Bank is discretionary in payment of stock dividend for preferred shares. If
the Bank has no earnings in particular year and there is no payment of stock
dividend for common stocks, or the earnings are insufficient for dividend
payment, or the payment of dividend of preferred shares makes the capital
adequacy ratio of the Bank fall below the minimum requirements under law or
the competent authority, the Bank may resolve not to pay dividend for preferred
Appendix 3
165
shares. Holders of preferred shares shall not have any objection of such decision.
If the preferred shares so issued are the non-accumulative type, the dividends not
being distributed or inadequate amount of dividends shall not be accumulated to
deferred payments with subsequent years in which the Bank has earnings.
5. Further to the entitlement of dividend stated in Subparagraph 3, if the preferred
shares offered are non-participating, the holders of preferred shares are not
entitled to cash dividend or stock dividend for common stocks through for cash
payment or capitalization of retained earnings and capital reserve.
6. Holders of preferred shares issued by the Bank have the priority to distribution of
residual assets over the holders of common stocks up to the amount of cash in the
offering. In case the competent authority ordered for a takeover of the Bank,
discontinuation of operation for clearing, and liquidation, the priority of the
holders of preferred shares is the same as the holders of common stocks.
7. Holders of preferred shares are not entitled to vote and taking part in the election
but could be elected as Directors, and are entitled to vote only in the
Shareholders’ Meeting of preferred shares and session of the Shareholders’
Meeting related to the rights and obligations of the holders of preferred shares.
8. No conversion of the convertible preferred shares issued by the Bank within 1
year from the day of offering. The timing for conversion shall be determined by
the Board as an integral part of the condition of offering under authorization.
Holders of convertible preferred shares may apply for conversion of preferred
shares in their holding to common stocks in whole or in part as stated in the
conditions of offering at the ratio of 1 preferred share to 1 common stock
(conversion ratio is 1:1). After the conversion of preferred shares to common
stocks, the rights and obligations shall be the same as common stocks. The
payment of dividend in the year of conversion of preferred shares shall be based
on the exact number of outstanding days of the shares in proportion to the
number of days in the year in the calculation. However, preferred shares
converted to common stocks prior to the ex-right (dividend) day are not entitled
to the payment of dividend for preferred shares in the year of payment and
payment in subsequent years, but are entitled to the payment of dividend of
common stocks from earnings and capital reserve.
9. There is no maturity date for preferred shares issued by the Bank and the holders
of preferred shares are not entitled to claim for the redemption of the shares. The
Bank may redeem the outstanding preferred shares in whole or in part from the
day after the 5th
anniversary of the offering of preferred shares under law or at the
permission of the competent authority. Redemption will be made at the offering
price. The preferred shares not being redeemed still be granted the rights and
obligations as mentioned in preceding paragraphs. Where the Bank may
determine to pay stock dividend in particular year, the payable dividend to the
deadline of redemption shall be calculated on the exact number of outstanding
days.
10. If the preferred shares issued by the Bank have a maturity date, it shall be no less
than 5 years. Holders of preferred shares are not entitled to request the Bank for
redemption of the shares before maturity. At maturity or the day after the 5th
anniversary of the issuance day and as permitted by applicable laws and the
competent authority, the Bank may redeem the shares at the offering price and
166
under related regulations of issuance, issue new shares for compulsory
conversation with the preferred shares (in the ratio of 1:1), or redeem by another
means as permitted by law. If the Bank cannot redeem the preferred shares in
whole or in part at maturity under objective factors or force majeure, the rights
inherent to the preferred shares shall prevail under the same conditions for
issuance provided under related regulations for issuance until the whole issue
was redeemed by the Bank.
The Board shall be authorized to assign the title, issuing date and the terms and
conditions for the offering of preferred shares at the time of offering pending on the
situation of the capital market and the willingness of the investors and in accordance
with the Articles of Incorporation of the Bank and other applicable legal rules.
Article 6 The Bank’s shares are ordered with the signature or seal of at least three directors
affixed for lawful issuance.
The Bank may have new shares issued by a book-entry in accordance with the
Company Act.
Article 7 The Bank’s dividend distribution is proposed by the Board for resolution in the
meeting of shareholders, but the Bank may not propose to have the capital distributed
as dividends when there are no earnings.
Article 8 The Company’s stock is processed in accordance with the “Regulations Governing the
Administration of Shareholder Services of Public Companies” published by the
competent authorities and other relevant laws and regulations.
Article 9 The Bank’s stock shares cannot be transferred within 60 days prior to the Annual
Meeting of Shareholders, 30 days prior to the extraordinary meeting of shareholders,
or 5 days prior to the record date of the bank’s distributing dividends, bonus or other
benefits.
Article 10 The Bank’s elected directors shall report the shareholding at the time of election to the
competent authorities. A director in office who has stock shares transferred for over
one half of the shareholding at the time of election will be discharged automatically.
A director in office shall report to the competent authorities and announce any
increase or decrease of shareholdings.
The director who is reelected prior to the tenure expired and has shares transferred
before inauguration for over one half of the shareholding at the time of election, or has
shares transferred for over one half of the shareholding during the stop-transferring
period before the meeting of shareholders convened will be disqualified.
Chapter 3 Business operation
Article 11 The Bank’s business operation is as follows:
1. H101021 Commercial banking
2. H301011 Securities firms
3. H408011 Futures introducing brokers
It is limited to the businesses authorized by the competent authorities referred to
above.
Article 12 The Bank may operate other businesses authorized by the competent authorities.
167
Chapter 4 Meeting of shareholders
Article 13 The meeting of shareholders includes the annual meeting of shareholders and
extraordinary meeting of shareholders. The annual meeting of shareholders is held
once a year and it is to be convened by the Board within 6 months after the fiscal year.
The extraordinary meeting of shareholders is to be convened by the Board or the
Auditing Committee when it is necessary. Shareholders who have over 3%
shareholding for more than 1 year may request the Board to convene an extraordinary
meeting of shareholders by filing a written proposal with the matters and reasons
detailed.
Where necessary, the meeting of the holders of preferred shares may be convened
under the applicable legal rules.
Article 14 Shareholders should be informed of the meeting date, place and subject 30 days in
advance for the Annual Meeting of Shareholders and 15 days in advance for the
extraordinary meeting of shareholders.
Article 15 Shareholders who are unable to attend the meeting of shareholders may issue the
Bank’s proxy with the scope of authorization detailed and signed or sealed to
commission the representative attending the meeting, but a shareholder is limited to
issuing one proxy and assigning one representative only. Proxy shall be served to the
Bank 5 days prior to the meeting of shareholders. When the proxy is issued in
duplicate, whichever is served first shall prevail. The proxy referred to above that was
announced to be revoked is not subject to this restriction.
Other pending matters are to be processed in accordance with the “Regulations
Governing the Use of Proxies for Attendance at Shareholder Meeting of Public
Companies” published by the competent authorities.
Article 16 The resolutions reached in the meeting of shareholders and the executions are as
follows:
1. Regulating and amending the Bank’s Company Corporate Charter (Articles of
Incorporation).
2. Resolutions reached on capital increase or decrease;
3. The election or dismissal of directors.
4. Audit the financial statements prepared by the Board and the Auditing
Committee’s Report. The reviewers for auditing the financial statements and
reports are to be appointed at the meeting of shareholders.
5. Resolutions reached on the distribution of earnings and shareholder bonus;
6. Resolutions reached on the other important matters;
Article 17 The resolutions reached in the meeting of shareholders, unless otherwise provided in
the Company Act, must be with the majority votes of the attending shareholders and
the shareholdings of the attending shareholders is over one half of the total number of
shares issued.
Article 18 If the shareholdings of the attending shareholders are not more than 50% but one third
of the total number of shares issued, a pseudo-resolution can be reached with the
majority votes of the attending shareholders. The shareholders should be informed
regarding the pseudo-resolution reached and another meeting of shareholders will be
168
convened within one month.
The pseudo-resolution reached in the meeting of shareholders referred to above with
the attendance of shareholders representing over one third of the shareholdings and
resolved with the majority votes is deemed as a resolution reached.
Article 19 Shareholders are entitled to one vote per share, unless otherwise provided by law.
Article 20 The minutes of the meeting of shareholders shall include the meeting time and date
and place, the name of the Chairman and the method of the resolutions, the essentials
of procedure and results, and the signature or seal of the Chairman. It should be
permanently reserved throughout the duration of the Company. The attendance
registry for the signature of the attending shareholders or the proxy of the
representative should be reserved for at least one year. However, for the litigation
filed by the shareholders in accordance with Article 189 of the Company Act, it
should be reserved until the end of the proceedings.
Chapter 5 Directors and the Board of Directors
Article 21 The Bank’s Board is composed of 9~15 directors elected among the competent
individuals in the meeting of shareholders for a 3-year tenure and can be reelected in
accordance with Article 198 of the Company Act. The total ordered stock shares of all
directors shall comply with the requirements of the “Rules and Review Procedures for
Director and Supervisor Share Ownership Ratios at Public Companies.”
For the directors referred to above, the number of independent directors shall not be
less than two seats, and one fifth of the director seats; also, the nomination system is
adopted to have independent directors elected from the list of candidates. Non-
independent directors and independent directors should be elected together for the
respective number of seats with the candidates receiving the higher electoral votes
elected.
The professional qualifications, shareholding and part-time job restrictions,
definition of independence, nomination method, proxy and other compliance
matters of the independent directors shall be handled in accordance with the
“Regulations Governing Appointment of Independent Directors and Compliance
Matters for Public Companies”.
Article 22 The Board shall have 3~5 managing directors elected by voting with the consent of
the majority attending directors and the attendance of two thirds of the directors.
According to the “Regulations Governing Appointment of Independent Directors and
Compliance Matters for Pubic Companies,” there must be at least one independent
director among the managing directors, and shall not constitute less than one fifth of
the managing directors. The Vice Chairman and Managing Director will be appointed,
if necessary, by a resolution of the Board.
Chairman, Vice Chairman and Managing Director will be elected among the
managing directors in accordance with the methods described in the preceding
paragraph. The chairman chairs the meeting of shareholders, the Board and the
General Board internally, and represents the Bank externally. When the Chairman is
on leave or unable to exercise his powers for certain reasons, the vice chairman is to
act on the Chairman’s behalf. When the vice chairman is on leave or is unable to
169
exercise his/her powers for certain reasons, the chairman is to appoint one managing
director to act on his/her behalf. If a representative is not appointed by the chairman,
one of the managing directors is elected to chair the meeting.
If the credibility of the Bank or the person in charge is damaged by the spreading
rumors or fraud, the chairman of the Bank should immediately file a lawsuit to the
prosecution office according to law.
When the Board meeting is in recess, the managing directors shall comply with the
law and regulations, the resolutions of the meeting of shareholders and the resolution
of the Board to execute banking business by convention convened by the chairman at
any time and resolved with the consent of the majority votes of the majority attending
general shareholders.
Article 23 The Board of Directors exercises the following authorities:
1. Review and approval of bylaws;
2. The review and approval of important business and plans, and the decision on
business plan;
3. Review and approval of important contracts;
4. Review and approval of budget;
5. The proposed earnings distribution;
6. The proposed capital increase or decrease;
7. The establishment, revocation or amendment of the Bank’s branches;
8. The property trade and investment decisions;
9. Auditing management and execution;
10. The appointment and dismissal of the managers;
11. The other powers entrusted in accordance with the law and regulations and in the
meeting of shareholders;
Article 24 The Board is to convene a meeting quarterly. An extraordinary meeting can be
convened for urgent matters or upon the request of a majority of the directors, unless
otherwise provided by the Company Act; it is to be convened by the Chairman. To
strengthen the management functions, the Board may set up functional committees for
various types of functionalities with the terms of powers regulated by the Board
separately.
Article 25 Directors shall attend the Board meeting in person. The directors who are unable to
attend the meeting for reasons may appoint another director to attend the meeting by
proxy each time and with the scope of authorization detailed.
The proxy referred to above is limited to one representative only.
Article 26 The resolutions of the Board, unless otherwise provided by the Company Act, must be
with the attendance of the majority of the directors and the consent of the majority of
the attending directors. The minutes of meeting should be signed or sealed by the
Chairman.
Article 27 When the number of the director discharged is over one third of the elected seats, the
Board shall convene a meeting of shareholders for a lawful election. The newly
reelected directors are to serve the remaining tenure of the former directors.
170
Article 27-1 The Board of Directors is authorized to have the remuneration to the chairman, vice
chairman, managing director, and independent directors determined and paid by
referring to the general payment standard of the industry.
Independent Directors are not eligible for our bank’s earnings distribution. Our bank
may pay for liability insurance policies that cover the liabilities for damages as
defined by statutes or court ruling within the scope of the business of Directors.
Article 28 The President and Vice President may be invited to attend the Board meetings,
managing director and responsible personnel meeting for consultation.
Chapter 6 Audit Committee
Article 29 The Auditing Committee of the Bank is consisted of all the independent directors. The
term of office is identical with the term of office for the independent directors and the
committee shall contain at least three members of whom at least one shall be expertise
in accounting or finance.
The performance of the duties and exercise of rights by the Auditing Committee, the
meeting procedure and other rules to comply shall be based on the “Regulations
Governing the Exercise of Powers by the Audit Committees of Public Companies”
and the “Organizational Code of the Auditing Committee” of the Bank.
Article 29-1 (Deleted)
Article 30 (Deleted)
Article 31 (Deleted)
Chapter 7 Manager
Article 32 The Bank has one President appointed to manage business fully adhering to the
resolutions of the Board of Directors, and with one Vice President and several Deputy
Executive Vice President appointed to help the President in business operations whose
appointment is with the consent of a majority of the Board of Directors. In addition,
several managers at all levels are appointed by the President who are proposed to the
Board of Directors for appointment and dismissal with the consent of a majority of the
Board of Directors.
The Bank has one Chief Auditor appointed, a position equivalent to the Vice President,
with the consent of a majority of the Audit Committee and two thirds of the Board of
Directors; also, the appointment, dismissal, and transfer of the Chief Auditor should
be reported to the competent authorities for approval in advance.
If the said appointment of the Chief Auditor in the preceding paragraph is without the
consent of a majority of the Audit Committee, the resolution of the Audit Committee
should be stated in the minutes of the Board meeting.
Chapter 8 Accounting
Article 33 The Bank has the business operations settled at the end of each month and the final
settlement scheduled on December 31.
Article 34 The Bank shall have the following books and statements prepared after the annual
171
settlement for the review of the Board and the audit of the Audit Committee; also,
submitted to the meeting of shareholders for admission and reported to the competent
authorities and the Central Bank for filing within 15 days, respectively.
1. Business report
2. Financial statements
3. Earnings distribution or deficit compensation proposal;
Article 35 If there is a profit, the Bank shall appropriate 0.5% to 3% as remuneration to the
employees. The Board shall determine if stock or cash shall be released for such
purpose. In addition, the Bank may allocate no more than 1.5% of the aforementioned
amount as remuneration to the Directors. The distribution of remuneration to
employees and directors should be reported in the shareholders’ meeting. If the Bank
has accumulated deficit, an equivalent amount should be reserved for making up such
loss, then the remuneration to employees and directors can be appropriated in
accordance with the ratio stated in the preceding paragraph thereafter.
Article 36 If the Bank has earnings after account settlement, appropriate for payment of
applicable taxes as required by law and for write-off loss carried forward, followed by
the appropriation of 30% as legal reserve. No further appropriation is necessary if the
amount of legal reserve is equivalent to the paid-in capital of the Bank. The remainder
shall be appropriated or made reversal for special reserve, followed by the distribution
of dividends of preferred shares. If there is still a balance, pool up with accumulated
undistributed earnings and the amount of reversal of special reserve as required by law
for the distribution of dividends and bonuses to the shareholders at the proposal of the
Board and ratification of the General Meeting.
For the earnings distribution proposed to the Board of Directors in the shareholders’
meeting for resolution in the preceding paragraph, a working capital should be
reserved first according to the changes in the operating environment, business
operation, and investment, the ratio of cash and stock dividends should be proposed,
of which, cash dividends should not be less than 10% of the total dividend amount.
If the capital adequacy ratio fails to reach the legal ratio, the earnings shall be
allocated in accordance with the Banking Act of The Republic of China and the
competent authority’s requirements.
Chapter 9 Appendix
Article 37 The organization code of the Bank shall be instituted separately.
Article 38 The matters that are not regulated in the Company Corporate Charter (Articles of
Incorporation) should be processed in accordance with the Company Act, the Banking
Act of The Republic of China and related laws and regulations.
Article 39 The Company Corporate Charter (Articles of Incorporation) is implemented after the
resolution reached in the meeting of shareholders, so is the amendment. The Company
Corporate Charter (Articles of Incorporation) was established on October 22, 1977
and implemented on January 1, 1978.
The 1st amendment was implemented on March 4, 1979.
172
The 2nd
amendment was implemented on March 9, 1980.
The 3rd
amendment was implemented on March 1, 1981.
The 4th
amendment was implemented on March 7, 1982.
The 5th
amendment was implemented on March 5, 1983.
The 6th
amendment was implemented on March 7, 1985.
The 7th
amendment was implemented on March 22, 1986.
The 8th
amendment was implemented on March 19, 1987.
The 9th
amendment was implemented on March 23, 1988.
The 10th
amendment was implemented on March 23, 1989.
The 11th
amendment was implemented on October 5, 1989.
The 12th
amendment was implemented on March 23, 1990.
The 13th
amendment was implemented on June 28, 1991.
The 14th
amendment was implemented on October 13, 1992.
The 15th
amendment was implemented on June 5, 1993.
The 16th
amendment was implemented on April 23, 1994.
The 17th
amendment was implemented on June 10, 1995.
The 18th
amendment was implemented on October 18, 1995.
The 19th
amendment was implemented on March 28, 1996.
The 20th
amendment was implemented on May 8, 1997.
The 21st amendment was implemented on June 20, 1998.
The 22nd
amendment was implemented on October 12, 1998.
The 23rd
amendment was implemented on May 18, 1999.
The 24th
amendment was implemented on June 15, 2000.
The 25th
amendment was implemented on May 17, 2002.
The 26th
amendment was implemented on June 25, 2003.
The 27th
amendment was implemented on June 9, 2006.
The 28th
amendment was implemented on December 7, 2006.
The 29th
amendment was implemented on June 15, 2007.
The 30th
amendment was implemented on June 13, 2008.
The 31st amendment was implemented on June 19, 2009.
The 32nd
amendment was implemented on June 15, 2010.
The 33rd
amendment was implemented on June 22, 2011
The 34th
amendment was implemented on June 13, 2013.
The 35th
amendment was implemented on June 19, 2014.
The 36th
amendment was implemented on June 2, 2015.
173
The 37th
amendment was implemented on June 21, 2016.
The 38th
amendment was implemented on June 7, 2017.
The 39th
amendment was implemented on June 5, 2018.
174
Shareholdings of Directors 1. All directors minimum shareholding and the shareholdings listed in the registry of shareholders
Title Shareholdings Shareholdings
registered in the
registry of
shareholders
Remarks
Director 84,612,202 Shares 299,637,522
Shares
Note: The stop transfer date is scheduled on April 29, 2019.
2. Directors shareholding list
Title Name Shareholdings
registered in
the registry of
shareholders
Remarks
Chairman Hsu Tian Investment Co., Ltd.,
Representative: Kuei-Fong Wang
95,880,803
Managing
Director
Hsu Tian Investment Co., Ltd.,
Representative: Ming-Hsiung Huang
95,880,803
Independent
managing
director
Li -Woon Lim 0
Independent
director
Jin-Yi Lee 0
Independent
director
Hsin-Chang Tsai 0
Director Hsu Tian Investment Co., Ltd.,
Representative: Te-Wei Chia
95,880,803
Director Hsu Tian Investment Co., Ltd.,
Representative: Hsin-Ching Chang
95,880,803
Director Hsu Tian Investment Co., Ltd.,
Representative: Wei-Liang Lin
95,880,803
Director Hsu Tian Investment Co., Ltd.,
Representative: Lai-Hsing Tsai 95,880,803
Director Pan Asia Chemical Corporation: Ming-
Shan Chuang
201,963,956
Director Ho Yang Management Consultant Co.,
Ltd., Representative: Chien-Hui Huang
1,792,763
Appendix 4