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CSRC AGM Information 2019

Jun 28, 2019

51970_rns_2019-06-28_b9dbb359-2fd4-4615-aa50-43b071d90f67.pdf

AGM Information

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Stock Code: 2104

MOPs

Website: http: //mops.twse.com.tw/mops/web/index INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD.

Website: http: //www.csrcgroup.com

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INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD. (Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION)

2019

Annual General Meeting Handbook

Time: 9:00 a.m., Wednesday, June 19, 2019 Location: 3F., No.113, Sec. 2, Zhongshan N. Rd., Zhongshan Dist., Taipei City (Shimin Hall, Taiwan Cement Building)

Table of Content

Table of Content
Page
I. Meeting Procedures................................................................................................. 1
II. Meeting Agenda...................................................................................................... 3
1. Matters to Report .................................................................................................. 4
2. Matters for Approval .......................................................................................... 29
3. Matters for Discussion ....................................................................................... 31
4. Extemporary Motions ......................................................................................... 35
5. Meeting Adjourned ............................................................................................. 35
III. Annex
1. The Comparison Table of Amended Provisions of Ethical Corporate Management
Best Practice Principles ..................................................................................... 36
2. Earnings Distribution Proposal .......................................................................... 42
3. The Comparison Table of the Amended Articles of the Articles of Incorporation
........................................................................................................................... 43
4. The Comparison Table of the Amended Provisions of the Procedures for the
Acquisition and Disposal of Assets ................................................................... 46
5. The Comparison Table of Amended Provisions of the Operation Procedures for
Loaning of Funds to Others ............................................................................... 74
6. The Comparison Table of Amended Provisions for Endorsements/Guarantees
........................................................................................................................... 80
IV. Appendices
1. Article of Incorporation ...................................................................................... 85
2. Shareholdings of All Directors ....................................................................... …92
4. Impact of Issuance of Stock Dividends on Business Performance, Earnings per
Shares, and Return on Equity .................................................................. ……..91

Rules of Procedure for INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD.Shareholders Meeting

(Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION)

Amended by regular shareholders meeting on June 24, 2014

  1. The shareholders meeting of the company shall, except those stipulated in the ordinance otherwise, follow these rules.

  2. The shareholders meeting should provide an attendee register for the shareholders to sign in or the attending shareholders shall hand in the sign-in cards in place of sign-in. The number of shares in attendance is calculated based on the attendee register or signin cards handed in and the number of shares in the voting rights submitted in writing or electronically.

  3. The attendance and vote of the shareholders meeting shall be calculated on the basis of shares.

  4. The place of the shareholders meeting shall be the place where the company is located or where is convenient for the shareholders to be present and suitable for the meeting of the shareholders. The meeting shall start no earlier than 9 am or later than 3 pm.

  5. The shareholders meeting convened by the board of directors shall be chaired by the chairman. When the chairman is absent, the chairman designates one director as agent. If the chairman does not appoint an agent, an agent will be chosen by the directors. If the shareholders meeting is convened by a convener with calling rights other than the board of directors, the chairman is assumed by the convener of calling right. If there are two or more conveners of calling right, one person should be elected to assume the post.

  6. The lawyers, accountants or related personnel appointed by the company may attend the shareholders meeting. The meeting affair personnel handling the shareholders meeting should wear identification cards or armbands.

  7. The process of the shareholders meeting should be recorded or videotaped throughout the process and kept for at least one year.

  8. When the time of the meeting arrives, the chairman announces to start the meeting. However, when no shareholders representing more than half of the total number of issued shares are present, the chairman may announce a delay in the meeting. The number of delays shall be limited to twice, and the total delay time shall not exceed one hour. If the second time is still insufficient and the shareholders representing more than one-third of the total number of issued shares are not present, it may be deemed to be false resolution in accordance with the subparagraph 1 of Article 175 of the Company Act.

Before the end of the current meeting, if the number of shares represented by the shareholders attending the meeting exceeds half of the total number of issued shares, the chairman may re-submit the created false resolution to the meeting to be voted on according to Article 174 of the Company Act.

  1. The agenda of shareholders meeting convened by the board of directors is set by the board of directors. The meeting shall be conducted in accordance with the scheduled agenda and may not be changed without resolution.

If the shareholders meeting is convened by a convener of calling right other than the board of directors, the provisions of the preceding subparagraph may apply. Before the agenda of the first two subparagraphs is finalized (including the provisional motion), the chairman would not be allowed to announce the adjournment without resolution.

After the meeting is adjourned, the shareholders must not elect another chairman to continue the meeting at the original site or another site.

  • 1 -

  • Before an attending shareholder speaks, the speech notes should be filled out with the speech gist, the shareholder number (or attendance card number) and the account name, and the chairman should set the order of his speech.

  • Attending shareholders who present the speech notes alone but do not speak are considered as not speaking.

  • If the content of the speech is inconsistent with the record of the speech notes, the content of the speech shall prevail.

When the attending shareholders speak, other shareholders may not interfere with the speech except with the consent of the chairman and the speaking shareholders, and the chairman shall stop the violators.

  1. In the same motion, each shareholder's speech may not exceed two times without the consent of the chairman and shall not exceed five minutes at a time. If the shareholder makes a speech that violates the provisions of the preceding subparagraph or exceeds the scope of the topic, the chairman may stop his speech.

  2. When a legal person is entrusted to attend a shareholders meeting, the legal person may only appoint one person to attend as agent.

  3. When a legal person shareholder appoints more than two representatives to attend the shareholders meeting, only one person may speak for the same motion.

  4. After the attending shareholder's speech, the chairman may reply in person or by designating the relevant person.

  5. In the discussion of the motion, when the chairman thinks that the degree of voting has been reached, he may announce that he will stop the discussion and put it to the vote.

  6. The scrutineer and the vote counting personnel for the vote on the motion shall be designated by the chairman. The scrutineers should have the status of shareholders. The results of the vote shall be reported on site and recorded.

  7. In the course of the meeting, the chairman may declare a rest at a time of his discretion.

  8. When the company convenes a shareholders’ meeting, it is likely to exercise the voting rights in writing or electronically. The relevant exercise methods are governed by the Company Act and the regulations of the competent authority.

  9. The voting of the motion shall be passed with the consent of more than half of the voting rights of the shareholders present unless otherwise provided in the Company Act and the Articles of Association of the Company.

  10. In case of a vote, if no objection is raised via the chairman’s query, it is deemed as passing. The effect is the same as that of a vote.

  11. When there are amendments or alternatives to the same motion, the chairman sets the voting order in conjunction with the original case. If one of the cases has been passed, other motions will be considered vetoed and no further voting will be required.

  12. The chairman may command pickets (or security personnel) to help maintain order at the venue. When pickets (or security personnel) are present to help maintain order at the scene, they should wear the “picket” armbands.

  13. These rules will be implemented after approval by the shareholders meeting, which applies to any amendments thereto.

  14. 2 -

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD. (Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION) Agenda of Year 2019 Annual General Meeting of Shareholders

Time & Date: 9 a.m., Wednesday, June 19, 2019

Venue: 3F, No. 113 Chung-Shan North Road Sec. 2, Taipei, Taiwan (TCC’s Cement Hall)

  1. Chairman’s Statement

  2. Matters to Report

  3. (1) Employees’ and directors’ compensation from 2018 profits.

  4. (2) Business report and financial statements of 2018.

  5. (3) Audit Committee’s Review Report.

  6. (4) Amendments on part of Ethical Corporate Management Best Practice

Principles.

  1. Matters for Ratification

  2. (1) Business report and financial statements of 2018.

  3. (2) Proposal of profit distribution of 2018.

  4. Matters for Discussion

  5. (1) Issuance of common shares for capitalization.

  6. (2) Amendments on part of Articles of Incorporation.

  7. (3) Amendments on part of Procedures for Acquisition or Disposal of Fixed Assets.

  8. (4) Amendments on part of Procedures for Loaning of Funds.

  9. (5) Amendments on part of Procedures for Endorsement/Guarantee.

  10. Extemporary Motions

  11. Meeting Adjourned

  12. 3 -

Matters to Report

I. Employees’ and directors’ compensation from 2018 profits.

Notes:

  1. According to Article 28 of the Company’s Article of Incorporation, if the Company has surplus, it shall (i) set aside 0.01-3% for employees’ compensation; and (ii) set aside no more than 1% as directors’ compensation.

  2. The proposal has been approved by the 6[th] meeting of the 17[th] term Board of Directors. For 2018, the Company distributes cash dividend of NT$3,324,450 as employees’ compensation and NT$37,000,000 as directors’ compensation.

  3. 4 -

II. Business report and financial statements of 2018

Business Report

In 2018, global economic growth faced uncertainties derived from factors such as the trade war between the US and China and turbulences in the global financial market. The US economy has been showing strong performance while developed economies such as Europe and Japan have been showing weaker than expected growth. China’s economy has also been negatively impacted by the trade war as growth showed signs of slowing down. In 2019, due to factors such as the trade war between the US and China, weakening domestic demand in China, waning effects from the US tax cuts and financial contractions, global economic growth is expected to decelerate.

The Company completed the spinoff and was renamed International CSRC Investment Holdings for the purpose of achieving financial transparency of each business unit, industry-specific adjustment and development strategies for parent and subsidiaries and be more flexible in forming possible strategic alliances and acquisitions to enhance growth and competitiveness.

Carbon black BU: continue to innovate and breakthrough as a leading company in the arena of carbon black

Battery BU: maintain long-term customers and enhance market presence through continuous innovation of application diversification

Biotech BU: maintain stable growth and cooperate with medical institutions to develop new medicines

Even though the oversupply condition of the global carbon black market remains unchanged, INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD. continues to stand by our core beliefs: commitment, synergy, rebirth and creativity, and operate to create a circular economy that allows civilization and the environment to co-exist in harmony. By increasing productivity and efficiency, the Company saw 2018 performance surpassing 2017 performance. Additionally, the Company continues to develop high-value products and storage battery applications. Working with our tier-one clients, International CSRC Investment Holdings aims to explore new markets and enhance overall competitiveness by upgrading the production facilities to conserve energy and meet environmental standards.

  • 5 -

  • Production: 490 thousands metric tons of carbon black (core business)

  • Sales:

Individual: operating income NT$3,467.44 million

Consolidated: operating income NT$24,431.72 million

  1. Performance

Individual: net profits of NT$2,994.20 million, an on-year growth of

32% and budget achieving rate of 167%

Consolidated: net profits of NT$3,252.46 million, an on-year growth of 41% and budget achieving rate of 180%

Chairman: Koo, Gong-Yi CEO: Huang, Po-Sung Accounting Supervisor: Lee, Chia-Wen

  • 6 -

Financial statement

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III. Audit Committee’s Review Report

Audit Committee’s Review Report

The Board of Directors has prepared the Company’s 2018 Business Report, Financial Statements, and proposal for distribution of earnings. The CPA firm of Deloitte & Touch was retained to audit International CSRC Investment Holdings’ Financial Statements and has issued an audit report relating to the Financial Statements. The Business Report, Financial Statements, and proposal for distribution of earnings have been reviewed and determined to be correct and accurate by the Audit Committee members of INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD. According to Article 14-4 of Security Exchange Act and Article 219 of Company Act, we hereby submit this report.

To

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD. 2019 Annual General Meeting

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD. Audit Committee convener: Chih, Ching-Kang March 22, 2019

  • 27 -

IV. Amendments on part of Ethical Corporate Management Best Practice Principles

Notes:

  1. In accordance with company development, amendments need to be made on part of Ethical Corporate Management Best Practice Principles.

  2. The proposal has been approved by the 6[th] meeting of the 17[th] term of Board of Directors. Amendments can be viewed in Annex 1 (page 36-41).

  3. 28 -

Matters for Approval

1. To approve 2018 Annul Business Report and Financial Statements. (Proposed by the Board of Directors)

Notes:

  • (1) It was conducted according to Article 228 of the Company Act.

  • (2) The 2018 Annual Business Report, Individual Financial Statements and Consolidated Financial Statement have been approved by the 6[th] meeting of the 17[th] term Board of Directors. The Individual Financial Statements and Consolidated Financial Statement were audited by independent auditors, Wu, Mei-Hui and Kuo, Cheng-Hung, of Deloitte & Touch.

  • (3) The above Annual Business Report and Financial Statements were audited by the Auditor Committee. Please refer to Page 5-27.

  • (4) Please review and ratify.

Resolution:

  • 29 -

2. The proposal for distribution of 2018 profits (Proposed by the Board of Directors)

Notes:

  • (1) The proposal of distribution of 2018 profits is conducted in accordance with Article 228 of the Company Act and Article 29 of the amended Articles of Incorporation.

  • (2) The 2018 unappropriated retained earnings were NT$2,268,697,172, adding NT$6,790,410 affected by the adoption of IFRS 9 and the remeasurement of defined benefit obligation of NT$5,736,600, the adjusted unappropriated retained earnings of 2018 were NT$2,281,224,182. By adding 2018 net profit of NT$2,994,195,837, and setting aside legal reserve of NT$299,419,584, the total earnings available for distribution amounts to NT$ 4,976,000,435. It is proposed to distribute cash dividends at NT$1.5 per share and stock dividends at NT$1.3 per share for common stock which amounts to NT$2,440,047,921. After distribution of the dividends, the 2018 unappropriated retained earnings are NT$2,535,952,514. The distribution of cash dividends shall be accounted by dollars and rounded off to the integer. Fractional dividend amounts that are less than NT$1 shall be combined into other income.

  • (3) Upon the approval of the Annual Shareholders’ Meeting, the Company will determine the ex-dividend date and distribute the dividend to each share based on the number of actual outstanding on the record date for distribution. The cash dividend to each and every shareholder shall be paid in a whole number of New Taiwan Dollars.

  • (4) Please see the Annex 2 for 2018 Earnings Distribution Proposal (page 42).

  • (5) The proposal has been approved by the 6[th] meeting of the 17[th] term Board of Directors and sent to the Audit Committee for approval.

  • (6) Please review and ratify.

Resolution:

  • 30 -

Matters for Discussion

1.Proposal for a new share issue through capitalization of earnings. (Proposed by the Board of Directors)

Notes:

  • (1) The total capital of the Company is set at NT$10 billion, divided into 1 billion shares and NT$10 per share. At the end of 2018, the total outstanding shares were 871,445,686 with actual capital of NT$8,714,456,860. There are still 128,554,314 shares not issued equals to the amount of NT$1,285, 543,140.

  • (2) For replenishing capital and further development of company business, the management plans to issue new shares through capitalization of earnings. The plan is to withdraw dividends of NT$1,132,879,390 from 2018 distributable earnings to issue dividends stocks of 113,287,939 shares. (share par value NT$10). Based on the total number of outstanding shares of 871,445,686 at the end of 2018, 130 shares to be distributed without consideration for each 1,000 shares held.

  • (3) Upon the approval of 2018 Annual Shareholders’ Meeting and the Competent Authority, the Board Meeting is authorized to determine the distribution record date. Any amount less than one share following distribution will be distributed in cash with minimum calculation unit of one NT dollar. The Chairman is authorized to procure specific persons of the purchase of these shares based on face value. Actual amounts of distributed shares shall be determined by the amounts of shares held in the register of shareholders on the record date of dividend.

  • (4) The rights and duties of the new shares are identical to those of the existing shares.

  • (5) The Proposal has been approved by the 6[th] meeting of the 17[th] term Board of Directors.

  • (6) Please discuss and resolve.

Resolution:

  • 31 -

2. To approve the amendments on part of Article of Incorporation. (Proposed by the Board of Directors)

Notes:

  • (1) In accordance with amendments of The Company Act and company development, amendments need to be made on part of Article of Incorporation.

  • (2) The proposal has been approved by the 6[th] meeting of the 17[th] term of Board of Directors. Amendments can be viewed on Annex 3 (page 43-45).

  • (3) Please discuss and resolve.

Resolution:

  • 32 -

3. To approve the amendments on part of Procedures for Acquisition or Disposal of Fixed Assets. (Proposed by the Board of Directors)

Notes:

  • (1) In accordance with the Competent Authority and company development, amendments need to be made on part of Procedures for Acquisition or Disposal of Fixed Assets.

  • (2) The proposal has been approved by the 6[th] meeting of the 17[th] term of Board of Directors. Amendments can be viewed on Annex 4 (page 46-73).

  • (3) Please discuss and resolve.

Resolution:

  • 33 -

4. To approve the amendments on part of Procedures for Loaning of Funds. (Proposed by the Board of Directors) Notes:

  • (1) In accordance with the Competent Authority and company development, amendments need to be made on part of Procedures for Loaning of Funds.

  • (2) The proposal has been approved by the 6[th] meeting of the 17[th] term of Board of Directors. Amendments can be viewed on Annex 5 (page 74-79).

  • (3) Please discuss and resolve.

Resolution:

  • 34 -

5.To approve the amendments on part of Procedures for

Endorsement/Guarantee. (Proposed by the Board of Directors)

Notes:

  • (1) In accordance with the Competent Authority and company development, amendments need to be made on part of Procedures for Handling Endorsement/Guarantee.

  • (2) The proposal has been approved in the 6[th] meeting of the 17[th] term of Board of Directors. Amendments can be viewed on Annex 6 (page 80-84).

  • (3) Please discuss and resolve.

Resolution:

Extemporary Matters

Meeting Adjourned

  • 35 -

Annex 1: The Comparison Table of the Amended Provisions of the Ethical Corporate Management Best Practice Principles

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD (Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION) The Comparison Table of Amended Provisions of Ethical Corporate Management Best Practice Principles

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Article after Amendment Article before Amendment Reason for
Amendment
Article 18 (Prohibition of 1. Add this
Discriminatory Behaviors) Article.
the Company's directors, 2. Adopt
managers, employees, prohibition of
mandataries, and substantial discriminatory
controllers shall not behaviors.
discriminate in recruitment or
in the workplace on grounds of
race, color, age, gender, sexual
orientation, race, disability,
pregnancy, beliefs, political
affiliation, community members
or marital status.
Article 19 (Prohibition of 1. Add this
Engaging in Unfair Article.
Competition) 2. Adopt
The Company shall engage in prohibition of
business activities in accordance engaging in
with applicable competition unfair
laws and regulations, and may competition.
not make concerted price
increase, make rigged bids,
establish output restrictions or
quotas, or share or divide
markets by allocating
customers, suppliers, territories,
or lines of commerce.
Article 20 (Prohibition of 1. Add this
Insider Trading) the Company's Article.
directors, managers, employees, 2. Adopt
mandataries, and substantial prohibition of
controllers shall observe insider trading
Securities and Exchange Act,
and shall neither use non-public
information he/she knows to
conduct insider trading, nor
disclose such information to
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  • 36 -

other parties in order to prevent - such other parties to use non public information to conduct insider trading.

other parties in order to prevent
such other parties to use non-
public information to conduct
insider trading.		 other parties in order to prevent
such other parties to use non-
public information to conduct
insider trading.
Article 21 (Accounting Systems
and Internal Control Systems)
The Company shall establish
effective accounting systems and
internal control systems for
business activities possibly at a
higher risk of being involved in an
unethical conduct, not have under-
the-table accounts or keep secret
accounts, and conduct reviews
regularly so as to ensure that the
design and enforcement of the
systems are showing results.
The internal audit unit of the
Company shall periodically
examine the company's
compliance with the foregoing
systems and prepare audit reports
and submit the same to the board
of directors. The internal audit
unit may engage a certified public
accountant to carry out the audit,
and may engage professionals to
assist if necessary.		 Article 18 (Accounting Systems
and Internal Control Systems)
The Company shall establish
effective accounting systems and
internal control systems for
business activities possibly at a
higher risk of being involved in an
unethical conduct, not have under-
the-table accounts or keep secret
accounts, and conduct reviews
regularly so as to ensure that the
design and enforcement of the
systems are showing results.
The internal audit unit of the
Company shall periodically
examine the company's
compliance with the foregoing
systems and prepare audit reports
and submit the same to the board
of directors. The internal audit
unit may engage a certified public
accountant to carry out the audit,
and may engage professionals to
assist if necessary.		 Change the
numbering of
Articles.
Article 22 (Operational
Procedures and Guidelines)
The Company shall establish
operational procedures and
guidelines for the plan of
prevention from an unethical
conduct to guide directors,
managers, employees, and
substantial controllers on how to
conduct business. The procedures
and guidelines contains the
following matters:
1. Standards for determining
whether improper benefits
have been offered or accepted.
2. Procedures for offering
legitimate political donations.
3. Procedures and the standard
rates for offering charitable
donations or sponsorship.
4. Rules for avoidingwork-		 Article 19 (Operational
Procedures and Guidelines)
The Company shall establish
operational procedures and
guidelines for the plan of
prevention from an unethical
conduct to guide directors,
managers, employees, and
substantial controllers on how to
conduct business. The procedures
and guidelines contains the
following matters:
1. Standards for determining
whether improper benefits
have been offered or accepted.
2. Procedures for offering
legitimate political donations.
3. Procedures and the standard
rates for offering charitable
donations or sponsorship.
4. Rules for avoidingwork-		 1. Change the
numbering of
Articles.
2. Add the
content
contained in
the
operational
procedures
and
guidelines.
  • 37 -
5.
6.
7.
8.
9.
10.
**11. **		 related conflicts of interests
and how they should be
reported and handled.
Rules for keeping confidential
trade secrets and sensitive
business information obtained
in the ordinary course of
business.
Regulations and procedures
for dealing with suppliers,
clients and business
transaction counterparties
suspected of unethical
conduct.
Handling procedures for
violations of these Principles.
Disciplinary measures on
offenders.
Procedures for handling
prohibition of employment
discrimination.
Procedures for investigating
and handling prohibition of
engaging in unfair
competition.
Procedures for investigating
and handling prohibition of
insider trading.		 related conflicts of interests
and how they should be
reported and handled.
5. Rules for keeping confidential
trade secrets and sensitive
business information obtained
in the ordinary course of
business.
6. Regulations and procedures
for dealing with suppliers,
clients and business
transaction counterparties
suspected of unethical
conduct.
7. Handling procedures for
violations of these Principles.
8. Disciplinary measures on
offenders.
Article 23 (Training Program and
Appraisal)
The chairperson, general manager,
or senior management of the
Company shall communicate the
importance of corporate ethics to
its directors, employees, and
mandataries on a regular basis.
The Company shall periodically
organize training and awareness
programs for directors, managers,
employees, mandataries, and
substantial controllers and invite
the companies' commercial
transaction counterparties so they
understand the companies' resolve
to implement ethical corporate
management, the related policies,
prevention programs and the
consequences of committing
unethical conduct.		 Article 20 (Training Program and
Appraisal)
The chairperson, general manager,
or senior management of the
Company shall communicate the
importance of corporate ethics to
its directors, employees, and
mandataries on a regular basis.
The Company shall periodically
organize training and awareness
programs for directors, managers,
employees, mandataries, and
substantial controllers and invite
the companies' commercial
transaction counterparties so they
understand the companies' resolve
to implement ethical corporate
management, the related policies,
prevention programs and the
consequences of committing
unethical conduct.		 Change the
numbering of
Articles.
  • 38 -
The Company shall apply the
policies of ethical corporate
management when creating its
employee performance appraisal
system and human resource
policies to establish a clear and
effective reward and discipline
system.		 The Company shall apply the
policies of ethical corporate
management when creating its
employee performance appraisal
system and human resource
policies to establish a clear and
effective reward and discipline
system.
Article 24 (Whistle-blowing
System)
The Company shall adopt a
concrete whistle-blowing system
and scrupulously operate the
system. The whistle-blowing
system shall include at least the
following:
1. An independent mailbox or
hotline, either internally
established and publicly
announced or provided by an
independent external
institution, to allow company
insiders and outsiders to
submit reports.
2. Dedicated personnel or unit
appointed to handle whistle-
blowing system. Any tip
involving a director or senior
manager shall be reported to
the independent directors.
Categories of reported
misconduct shall be delineated
and standard operating
procedures for the
investigation of each shall be
adopted.
3. Documentation of case
acceptance, investigation
processes, investigation
results, and relevant
documents.
4. Confidentiality of the identity
of whistle-blowers and the
content of reported cases.
5. Measures for protecting
whistle-blowers from
inappropriate disciplinary
actions due to their whistle-
blowing.		 Article 21 (Whistle-blowing
System)
The Company shall adopt a
concrete whistle-blowing system
and scrupulously operate the
system. The whistle-blowing
system shall include at least the
following:
1. An independent mailbox or
hotline, either internally
established and publicly
announced or provided by an
independent external
institution, to allow company
insiders and outsiders to
submit reports.
2. Dedicated personnel or unit
appointed to handle whistle-
blowing system. Any tip
involving a director or senior
manager shall be reported to
the independent directors.
Categories of reported
misconduct shall be delineated
and standard operating
procedures for the
investigation of each shall be
adopted.
3. Documentation of case
acceptance, investigation
processes, investigation
results, and relevant
documents.
4. Confidentiality of the identity
of whistle-blowers and the
content of reported cases.
5. Measures for protecting
whistle-blowers from
inappropriate disciplinary
actions due to their whistle-
blowing.		 Change the
numbering of
Articles.
  • 39 -
6. Whistle-blowing incentive
measures.
When material misconduct or
likelihood of material impairment
to the Company comes to its
awareness upon investigation, the
dedicated personnel or unit
handling the whistle-blowing
system shall immediately prepare
a report and notify the
independent directors in written
form.		 6. Whistle-blowing incentive
measures.
When material misconduct or
likelihood of material impairment
to the Company comes to its
awareness upon investigation, the
dedicated personnel or unit
handling the whistle-blowing
system shall immediately prepare
a report and notify the
independent directors in written
form.
Article 25 (Disciplinary and
Appeal System)
The Company shall adopt and
publish a well-defined
disciplinary and appeal system for
handling violations of the ethical
corporate management rules, and
shall make immediate disclosure
on the company's internal website
of the title and name of the
violator, the date and details of the
violation, and the actions taken in
response.		 Article 22 (Disciplinary and
Appeal System)
The Company shall adopt and
publish a well-defined
disciplinary and appeal system for
handling violations of the ethical
corporate management rules, and
shall make immediate disclosure
on the company's internal website
of the title and name of the
violator, the date and details of the
violation, and the actions taken in
response.		 Change the
numbering of
Articles.
Article 26 (Disclosure of
Information)
The Company shall collect
quantitative data about the
promotion of ethical management
and continuously analyze and
assess the effectiveness of the
promotion of ethical management
policy. They shall also disclose
the measures taken for
implementing ethical corporate
management, the status of
implementation, the foregoing
quantitative data, and the
effectiveness of promotion on
their company websites, annual
reports, and prospectuses, and
shall disclose their ethical
corporate management best
practice principles on the Market
Observation Post System.		 Article 23 (Disclosure of
Information)
The Company shall collect
quantitative data about the
promotion of ethical management
and continuously analyze and
assess the effectiveness of the
promotion of ethical management
policy. They shall also disclose
the measures taken for
implementing ethical corporate
management, the status of
implementation, the foregoing
quantitative data, and the
effectiveness of promotion on
their company websites, annual
reports, and prospectuses, and
shall disclose their ethical
corporate management best
practice principles on the Market
Observation Post System.		 Change the
numbering of
Articles.
Article 27(Review of Ethical Article 24(Review of Ethical Change the
  • 40 -
Corporate Management Policies
and Measures)
The Company shall at all times
monitor the development of
relevant local and international
regulations concerning ethical
corporate management and
encourage their directors,
managers, and employees to make
suggestions, based on which the
adopted ethical corporate
management policies and
measures taken will be reviewed
and improved with a view to
achieving better implementation
of ethical management.		 Corporate Management Policies
and Measures)
The Company shall at all times
monitor the development of
relevant local and international
regulations concerning ethical
corporate management and
encourage their directors,
managers, and employees to make
suggestions, based on which the
adopted ethical corporate
management policies and
measures taken will be reviewed
and improved with a view to
achieving better implementation
of ethical management.		 numbering of
Articles.
Article 28 (Implementation)
The Principles shall be
implemented after the board of
directors grants the approval, and
shall be sent to each member of
the audit committee and reported
at a shareholders' meeting. The
same procedure shall be followed
when the Principles have been
amended. When the ethical
corporate management best
practice principles are submitted
for discussion by the board of
directors pursuant to the
preceding paragraph, 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. An independent director
that cannot attend the board
meeting in person to express
objection or reservations shall
provide a written opinion before
the board meeting, unless there is
some legitimate reason to do
otherwise, and the opinion shall
be specified in the minutes of the
board of directors meeting.		 Article 25 (Implementation)
The Principles shall be
implemented after the board of
directors grants the approval, and
shall be sent to each member of
the audit committee and reported
at a shareholders' meeting. The
same procedure shall be followed
when the Principles have been
amended. When the ethical
corporate management best
practice principles are submitted
for discussion by the board of
directors pursuant to the
preceding paragraph, 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. An independent director
that cannot attend the board
meeting in person to express
objection or reservations shall
provide a written opinion before
the board meeting, unless there is
some legitimate reason to do
otherwise, and the opinion shall
be specified in the minutes of the
board of directors meeting.		 Change the
numbering of
Articles.
  • 41 -

Annex 2: Earnings Distribution Proposal

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD

(Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION)

Earnings Distribution Proposal

2018

2018
Unit: NTD
Item Amount
Unappropriated retained earnings as of
December31,2017
Add: Effect of retrospective application
Add: Remeasurement of defined benefit
obligation
Unappropriated retained earnings- adjusted
Add: Net income of 2018
Less: Legal Reserve appropriation(10%)
Retained earnings available for distribution
Less: distribution items

Cash dividend (NT$1.5/share)
Stock dividend (NT$1.3/share)
Balance of unappropriated retained earnings		 2,268,697,172
6,790,410
5,736,600
2,281,224,182
2,994,195,837
(299,419,584)
4,976,000,435

(1,307,168,531)
(1,132,879,390)
2,535,952,514

Note: 1. Cash dividend shall be allocated to each shareholder up to the dollar (fractional amount shall be rounded down to the dollar). The fractional amount total shall be listed in the Company's other income.

  1. According to the Ministry of Finance's Letter No. 871941343 dated April 30, 1998, when distributing profit, an individual recognition method shall be utilized. The distribution of current profit shall give priority to that of the most current year.

  2. 42 -

Annex 3 ： Comparison of the Articles of incorporation before and after the amendments.

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD (Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION)

Contrast Table of Amended Articles of the “Articles of Incorporation”

After Amendment Current Article Notes
Article 1
The Company shall be incorporated
under the provisions for company
limited by shares of The Company Act
and the relevant regulations, and its
names shall be International CSRC
Investment Holdings Co., Ltd.and its
English name shall be International
CSRC Investment Holdings Co.,
Ltd.		 Article 1
The Company shall be
incorporated under the provisions
for company limited by shares of
The Company Act and the
relevant regulations, and its names
shall be International CSRC
Investment Holdings Co., Ltd.		 To meet the
operation and
development needs
of the Corporation
and add formal
corporation name in
English.
Article 6-2
Treasury stock purchased by the
Company can be transferred to the
employees of parents or subsidiaries
of the Company or controlled by the
Company.
Stock warrants of the Company can
be issued to the employees of
parents or subsidiaries of the
Company or controlled by the
Company.
Issuance of new shares by the
Company can be subscribed by the
employees of parents or subsidiaries
of the Company or controlled by the
Company.
Issuance of new restricted employee
shares by the Company can be
subscribed by the employees of
parents or subsidiaries of the
Company or controlled by the
Company.		 (Newly added) To meet the
operation and
development needs
of the Corporation,
and to stipulate the
rules regarding
employee
remuneration.
Article 18
The Board of Directors assembled by
the directors have the following
authorities:
1. Draft business plan
2. Draft earnings distribution
3. Draft capital increase or decrease
details		 Article 18
The Board of Directors assembled
by the directors have the
following authorities:
1. Draft business plan
2. Draft earnings distribution
3. Draft capital increase or
decrease details		 To meet the
operation and
development needs
of the Corporation
and to stipulate the
CEO position.

  • 43 -

  • Ratify important articles and 4. Ratify important articles and contracts contracts

  • Appoint CEO and General 5. Appoint General Manager Manager 6. Set up and dismantle of

  • Set up and dismantle of subsidiaries subsidiaries 7. Ratify budgets

  • Ratify budgets 8. Ratify purchase and sell of 8. Ratify purchase and sell of properties and investments in properties and investments in business units business units 9. Ratify any other major matters 9. Ratify any other major matters Article 25 Article 25 To meet the The Company is in compliance with The Company is in compliance operation and the resolution by the Board of with the resolution by the Board development needs Directors on the appointment of CEO, of Directors on the appointment of of the Corporation general manager, vice president or any general manager, vice president or and to stipulate the other managers for the Company’s any other managers for the CEO position. operational needs and the Company’s operational needs and aforementioned positions may be one the aforementioned positions may or more persons. be one or more persons. Article 28 Article 28 To meet the If the Company is profitable for the If the Company is profitable for operation and year, it shall set aside: the year, it shall set aside: development needs 1. As the Employees’ remuneration: 3. As the Employees’ of the Corporation to 0.01% to 3% of the profit: remuneration: 0.01% to 3% of add eligible roles for 2. As the Directors’ remuneration: no the profit: employees’ more than 1% of the profit. 4. As the Directors’ remuneration However, if the Company has remuneration: no more than program. accumulated losses, the Company 1% of the profit. shall first reserve an amount to make However, if the Company has up the losses, and then set aside the accumulated losses, the Company Employees’ and the Directors’ shall first reserve an amount to remuneration as specified in items (1) make up the losses, and then set & (2) above. aside the Employees’ and the The Employees’ remuneration may be Directors’ remuneration as distributed in shares or in cash. specified in items (1) & (2) above. Employees of the Company’s The Employees’ remuneration subsidiaries or subsidiaries may be distributed in shares or in controlled by the Company who cash. Employees of the meet certain requirements may also Company’s subsidiaries who meet receive such remuneration. certain requirements may also The distribution of the Employees’ receive such remuneration. and the Directors’ remuneration shall The distribution of the be approved by a majority vote at a Employees’ and the Directors’ Board meeting attended by over tworemuneration shall be approved thirds of the Directors. In addition, a by a majority vote at a Board - report of such distribution shall be meeting attended by over two

  • 44 -

submitted to the shareholders’
meeting.		 submitted to the shareholders’
meeting.		 thirds of the Directors. In
addition, a report of such
distribution shall be submitted to
the shareholders’ meeting.
Article 33
These Articles of Incorporation
were established on May 16, 1973.
The 1stamendment was made on
December 5, 1973, (omitting the dates
in the middle), 29thamendment was
made on June 26,2018.,and the 30th
amendment was made on June 13,
2019		 Article 33
These Articles of Incorporation
were established on May 16, 1973.
The 1stamendment was made on
December 5, 1973, (omitting the
dates in the middle), and the 29th
amendment was made on June 26,
2018.		 Add the date for the
30thamendment.
2019
  • 45 -

Annex 4:The Comparison Table of the Amended Provisions of the Procedures for the Acquisition and Disposal of Assets

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD

(Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION) The Comparison Table of Amended Provisions of the Procedures for the Acquisition and Disposal of Assets

Article after Amendment Article before Amendment Reason for
Amendment
Amend the numbers of major
provisions in the Procedures; for
example, 1 is changed into
Article 1. This also applies to
other items.		 Reasons for
amendment and order
change.
Article 1(Omitted) 1.
Article 2The term "assets" as
used in these Procedures
includes the following:
1. (Omitted)
2. Real
property
(including
land, houses and buildings,
investment
property,
and
construction
enterprise
inventory) and equipment.
3. ~4 (Omitted)
5. Right-of-use assets.
6. (Omitted)
7. (Omitted)
8. (Omitted)		 2.The term "assets" as used
in these Procedures includes
the following:
2.1.(Omitted)
2.2.Real property (including
land, houses and buildings,
investment property,land
use rights and construction
enterprise inventory) and
equipment.
2.3.~2.4 (Omitted)
2.5.Move the provision in
ascending order. (Omitted)
2.6.Move the provision in
ascending order. (Omitted)
2.7.Move the provision in
ascending order. (Omitted)		 1. Pursuant to the FSC
letter
(Jin-Guan-
Zheng-Fa-Zi
1070341072),
amend the words.
2. To comply with the
provisions
provided by IFRS
16, add Paragraph
5, expand the scope
of
right-of-use
assets, and move
land use rights of
current
provision
2.2 to Paragraph 5.
3. Move
provisions
2.5
to
2.7
in
ascending order.
Article 3Terms used in these
Procedures are defined as		 3.Terms used in these
Procedures are defined as		 1. To comply with the
definition
of
  • 46 -
follows:
1. Derivatives:
Refers
to
forward contracts, options
contracts, futures contracts,
leverage contracts, or swap
contracts, whose value is
derived from aspecified
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
of
through
mergers,
demergers, acquisitions, or
transfer
of
shares
in
accordance with law: Refers
to assets acquired or disposed
of
through
mergers,
demergers, or acquisitions
conducted under the Business
Mergers and Acquisitions
Act,
Financial
Holding
Company
Act,
Financial		 follows:
3.1.Derivatives:
Refers
to
forward contracts, options
contracts, futures contracts,
leverage contracts, or swap
contracts, whose value is
derived froman asset,
interest,foreign exchange
rate,
index
or
other
interest products; and
hybrid
contracts
combining
the
above
products.
The
term
"forward contracts" does
not
include
insurance
contracts,
performance
contracts,
after-sales
service
contracts,
long-
term leasing contracts, or
long-term purchase (sales)
agreement.
3.2.Assets
acquired
or
disposed
of
through
mergers,
demergers,
acquisitions, or transfer of
shares in accordance with
law:
Refers
to
assets
acquired or disposed of
through
mergers,
demergers, or acquisitions
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 companythrough		 financial
instruments
provided by IFRS
9,
amend
the
words.
2. To comply with the
amended
provisions of the
Company
Act
promulgated
on
August 1, 2018,
amend the number
of the article.
3. Add Paragraph 7 to
specify
the
definition
of
investment
professional.
  • 47 -
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 (the
"transfer of shares") under
Article
156-3
of
the
Company Act.
3~6 (Omitted)
7. Investment professional:
Refers to financial holding
companies, banks,
insurance companies, bill
finance companies, trust
enterprises, securities firms
operating proprietary
trading or underwriting
business, futures
commission merchants
operating proprietary
trading business, securities
investment trust
enterprises, securities
investment consulting
enterprises, and fund
management companies,
that are lawfully
incorporated and are
regulated by the competent
financial authorities of the
jurisdiction where they are
located.		 issuance of new shares of
its own as the consideration
therefor (the "transfer of
shares") underparagraph
8 of Article 156 of the
Company Act.
3.3~3.6 (Omitted)
Article 4Assessment and
Operation Procedures for the
Acquisition and Disposal of
Assets		 4.Assessment and Operation
Procedures for the Acquisition
and Disposal of Assets
4.1.(Omitted)		 1. To comply with the
provisions
provided by IFRS
16,add right-of-use
  • 48 -
1.
2.
A.
B.		 (Omitted)
Acquisition or disposal of
real estate, equipment or
right-of-use assets:
(Omitted)
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
NT$300 million or more, the
Company, unless transacting
with adomestic government
agency, engaging others to
build on its own land,
engaging others to build on
rented land, or acquiring or
disposing of equipmentor
right-of-use assets thereof
held for business use, shall
obtain an appraisal report,
where the mandatory matters
are subject to the provisions
provided by the FSC, prior to
the date of occurrence of the
event from a professional
appraiser and shall further
comply with the following
provisions:
a. 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		 4.2.(Omitted)
4.2.1.
(Omitted)
4.2.2.
In
acquiring
or
disposing of real property
or equipment, where the
transaction amount reaches
20
percent
of
the
Company's paid-in capital
or NT$300 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,
where
the
mandatory
matters are subject to the
provisions provided by the
FSC, 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 bythe		 assets.
2. Pursuant to the FSC
letter
(Jin-Guan-
Zheng-Fa-Zi
1070341072),
amend the words.
  • 49 -
3. 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.
b.~c. (Omitted)
d. 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.
Acquisition and Disposal of
intangible
assets
or the
right-of-use
thereof
or
membership
and
other
material assets:
The general manager is
authorized to approve any
acquisition or disposal of
intangible assetsor the
right-of-use thereof or
membership and other
material assets reaching the
value ofNT$50million or		 Board of Directors;the
same procedure shall
also
be
followed
whenever
there
is
future change to the
terms and conditions of
the transaction.
2)~3) (Omitted)
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.
4.3.Acquisition and Disposal
ofmembership, intangible
assets and other material
assets:
The general manager is
authorized to approve any
acquisition or disposal of
membership, intangible
assets and other material
assets reaching the value
of NT$50 million or less;
the chairperson of the
board of directors is
authorized to approve such
  • 50 -
**4. ** less; the chairperson of the
board of directors is
authorized to approve such
acquisition or disposal
reaching the value of
NT$100 million or less; any
acquisition or disposal
exceeding the above-
mentioned thresholds shall
be submitted to the board of
directors for approval. Such
acquisition or disposal where
the transaction amount
reaches 20 percent or more
of paid-in capital or NT$300
million or more, except in
transactions with adomestic
government agency, the
Company shall engage a
CPA 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.
The
calculation
of
the
transaction amounts referred
to in thepreceding three
paragraphs shall be done in
accordance with Paragraph 2
of Article 5 herein, and
"within the preceding year"
as used herein refers to the
year preceding the date of
occurrence of the current		 acquisition or disposal
reaching the value of
NT$100 million or less;
any acquisition or disposal
exceeding the above-
mentioned thresholds shall
be submitted to the board
of directors for approval.
Such acquisition or
disposal where the
transaction amount reaches
20 percent or more of
paid-in capital or NT$300
million or more, except in
transactions with a
government agency, the
Company shall engage a
CPA 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.
4.3.1.
The calculation of
the transaction amounts
referred to in4.1, 4.2 and
4.3 shall be done in
accordance with Paragraph
2 of 5.1 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
  • 51 -
**5. ** 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.
Where the Company acquires
or disposes of assets through
court auction procedures:
The supporting documents
issued by the court may be
substituted for an appraisal
report or a CPA’s opinion.		 from
a
professional
appraiser
or
a
CPA's
opinion has been obtained
need not be counted toward
the transaction amount.
4.4.Where
the
Company
acquires or disposes of
assets
through
court
auction procedures:
The supporting documents
issued by the court may be
substituted for an appraisal
report or a CPA’s opinion.
6.
**A. **		 Related Party Transactions:
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
in
accordance
with
Paragraphs 1 to 3 and this
Paragraph,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 Article 4.
The
calculation
of
the
transaction amount referred
to in the preceding paragraph
shall be made in accordance		 4.5.Related
Party
Transactions:
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 in accordance
with4.1 to 4.3 and 4.5,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
with4..The calculation of
the transaction amount
  • 52 -
withParagraph 4 herein.
a. (Omitted)
b. 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 propertyor
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
NT$300 million or more,
except
in
trading
of
domestic
government
bonds or bonds under
repurchase
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 audit committee and
recognized bythe Board		 referred to in the preceding
paragraph shall be made in
accordance with4.3.1
herein.
4.5.1. (Omitted)
4.5.2. When the Company
intends to acquire or
dispose of real property
from or to a related
party,
or
when
it
intends to acquire or
dispose of assets other
than real property from
or to a related party and
the transaction amount
reaches 20 percent or
more of paid-in capital,
10 percent or more of
the Company's total
assets,
or
NT$300
million or more, except
in
trading
of
government bonds or
bonds under repurchase
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 audit committee
  • 53 -
**B. ** of Directors:
i.~ii. (Omitted)
iii.
With respect to the
acquisition of real
propertyor right-
of-use
assets
thereof
from
a
related
party,
information
regarding appraisal
of
the
reasonableness
of
the
preliminary
transaction terms in
accordance
with
Subparagraphs D
to F.
iv.~vii. (Omitted)
The
calculation
of
the
transaction amounts referred
to
in
the
preceding
subparagraph shall be made
in accordance with Paragraph
2 of Article 5 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 audit
committee and the board of
directors pursuant to the
Procedures
need
not
be
counted
toward
the
transaction
amount.
With
respect to the types of
transactions
listed
below,		 **A. ** and recognized by the
Board of Directors:
1)~2) (Omitted)
3)
With respect to the
acquisition of real
property from a
related
party,
information
regarding
appraisal of the
reasonableness of
the
preliminary
transaction terms
in
accordance
with 4.5.4 to 4.5.6.
iv.~vii. (Omitted)
The calculation of the
transaction
amounts
referred to in the preceding
paragraph shall be made
in
accordance
with
Paragraph 2 of5.1 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 audit committee and the
board of directors pursuant
to the Procedures need not
be counted toward the
transaction amount. With
respect toacquisition or
disposal of equipment
held for business use,
when to be conducted
  • 54 -
when
to
be
conducted
between the Company and its
subsidiaries,or between its
subsidiaries in which it
directly or indirectly holds
100 percent of the issued
shares
or
authorized
capital, the Company's board
of directors may,pursuant
to
Subparagraph
A,
Paragraph 1 of Article 4,
authorize the chairperson of
the board to decide such
matters when the transaction
is within a certain amount
and
have
the
decisions
subsequently submitted to
and ratified by the board of
directors in the upcoming
meeting:
a. Acquisition or disposal
of equipment or right-
of-use
assets
thereof
held for business use.
b. Acquisition or disposal
of real property right-
of-use assets held for
business use.		 between the Company and
its
subsidiaries,
the
Company's
board
of
directors may,pursuant
4.1.1,
authorize
the
chairperson of the board to
decide such matters when
the transaction is within a
certain amount and have
the decisions subsequently
submitted to and ratified by
the board of directors in the
upcoming meeting.
D. The Company shall evaluate
the reasonableness of the
transaction costs by the
following means and shall
also engage a CPA to check
the appraisal and render a
specific opinion:
a.~b. (Omitted)
c.
Where
land
and		 4.5.4.
The Company shall
evaluate
the
reasonableness
of
the
transaction costs by the
following means and shall
also engage a CPA to check
the appraisal and render a
specific opinion:
1)~2) (Omitted)
  • 55 -
structures thereupon are
combined as a single
property purchasedor
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 inItems a and b
above.		 3)
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 in1)2)above.
E. Where one of the following
circumstances
exists,
the
acquisition
shall
be
conducted in accordance with
theSubparagraphs A to C
above, and the preceding
subparagraph do not apply:
a. The
related
party
acquired the real property
or right-of-use assets
thereof
through
inheritance or as a gift.
b. 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.
c. The real
property is
acquired through signing
of a joint development
contractwith the related		 4.5.5.
Where one of the
following
circumstances
exists, the acquisition shall
be conducted in accordance
with the4.5.2 and 4.5.3
above, and the preceding
subparagraph do not apply:
1) The
related
party
acquired
the
real
property
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
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
relatedpartyto build
  • 56 -
d. party,
or
through
engaging a related party
to build real property,
either on the Company's
own land or on rented
land.
The real property right-
of-use acquisition for
business
use
are
acquired between the
Company
with
its
subsidiaries, or with its
subsidiaries in which
the company directly or
indirectly
holds
100
percent of the issued
shares or authorized
capital.		 real property, either on
the Company's own
land or on rented land.
F. When the results of the
appraisal
conducted
in
accordance
with
Subparagraph
D
are
uniformly lower than the
transaction price, the matter
shall
be
handled
in
compliance
with
Subparagraph G.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, this
restriction shall not apply:
a. Where the relatedparty		 4.5.6.
When the results of
the appraisal conducted in
accordance with4.5.4are
uniformly lower than the
transaction
price,
the
matter shall be handled in
compliance
with
4.5.7.
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, this
restriction shall not apply:
1) Where the related party
acquired undeveloped
  • 57 -
acquired
undeveloped
land or leased land for
development,
it
may
submit
proof
of
compliance with one of
the following conditions:
i.
(Omitted)
ii.
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 leasingpractices.
iii.
(Deleted)
b. 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 oftransactions		 land or leased land for
development, it may
submit
proof
of
compliance with one of
the
following
conditions:
(1)
(Omitted)
(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)
Lease
by
unrelated parties
within
the
preceding
year
involving
other
floors of the same
property, where
  • 58 -

involving neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year. Transactions involving neighboring or closely valued parcels of land, 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 made 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.

involving neighboring or
closely valued parcels of
land of a similar size by
unrelated parties within
the
preceding
year.
Transactions involving
neighboring or closely
valued parcels of land, 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 madeby
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.		 2) transaction
terms are similar
after calculation
of
reasonable
price
discrepancies in
floor prices in
accordance with
standard
property market
leasing practices.
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 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
  • 59 -
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.
G. Where
the
results
of
appraisals
conducted
in
accordance
with
the
Subparagraphs D to Fare
uniformly lower than the
transaction
price,
the
following steps shall be
taken:
a. A special reserve shall be
set aside in accordance
with Paragraph 1 of
Article
41
of
the
Securities and Exchange
Act against the difference
between the transaction
price of the real property
or the right-or-use asset
thereof and the appraised
cost, and may not be
distributed or used for
capital
increase
or
issuance of bonus shares.		 4.5.7.
Where the results of
appraisals conducted in
accordance with the4.5.4
to 4.5.6are uniformly
lower than the transaction
price, the following steps
shall be taken:
1) A special reserve shall
be
set
aside
in
accordance
with
Paragraph 1 of Article
41 of the Securities and
Exchange Act against
the difference between
the transaction price of
the real property and
the appraised cost, and
may not be distributed
or used for capital
increase or issuance of
bonus shares. Where
theCompanyuses the
  • 60 -
b.
c.
d.		 Where the Company uses
the equity method to
account for its investment
in another company, then
the special reserve called
for under Paragraph 1 of
Article
41
of
the
Securities and Exchange
Act shall be set aside pro
rata
in
a
proportion
consistent with the share
of the Company's equity
stake
in
the
other
company.
(Omitted)
Actions taken pursuant to
Items a and bshall be
reported
to
a
shareholders’
meeting,
and the details of the
transaction
shall
be
disclosed in the annual
report and any investment
prospectus.
If the Company has set
aside a special reserve
underItem a, it may not
utilize the special reserve
until it has recognized a
loss on decline in market
value of the assets it
purchasedor leasedat a
premium, or they have
been disposed of,or the
leasing
contract
has
been
terminated,
or
adequate
compensation
has been made,or the		 equity
method
to
account
for
its
investment in another
company,
then
the
special reserve called
for under Paragraph 1
of Article 41 of the
Securities
and
Exchange Act shall be
set aside pro rata in a
proportion
consistent
with the share of the
Company's equity stake
in the other company.
2) (Omitted)
3) Actions taken pursuant
to1) and 2) of 4.5.7
shall be reported to a
shareholders’ meeting,
and the details of the
transaction
shall
be
disclosed in the annual
report
and
any
investment prospectus.
4) If the Company has set
aside a special reserve
under 1) of 4.5.7,it 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
statusquo ante has been
  • 61 -
H. 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.
When the Company obtains
real propertyor right-of-use
assets thereof from a related
party, it shall also comply
withSubparagraph G, if
there
is
other
evidence
indicating that the acquisition
was not an arm's length
transaction.		 restored, or there is
other
evidence
confirming that there
was
nothing
unreasonable about the
transaction,
and
the
FSC has
given its
consent.
4.5.8.
When the Company
obtains real property from a
related party, it shall also
comply with4.5.7,if there
is other evidence indicating
that the acquisition was not
an arm's length transaction.
7.
A.		 Engaging
in
Derivatives
Trading:
When
engaging
in
derivatives
trading,
the
Company shall pay strict
attention to control of risk
management and auditing
matters, and the Procedures
includes:
a. Trading principles and
strategies:
i.
Derivatives referred
to
in
these
Procedures
shall
mean
forward
contracts,
options
contracts,
futures
contracts,leverage
contracts,or swap
contracts,
whose
value
is
derived
from
a specified		 4.6.Engaging in Derivatives
Trading:
4.6.1.
When engaging in
derivatives
trading,
the
Company shall pay strict
attention to control of risk
management and auditing
matters, and the Procedures
includes:
1) Trading principles and
strategies:
(1)
Derivatives
referred to in these
Procedures
shall
mean
forward
contracts, options
contracts, futures
contracts, or swap
contracts, whose
value is derived
from
an
asset,
interest,
foreign
  • 62 -
ii. interest
rate,
financial
instrument
price,
commodity
price,
foreign
exchange
rate, index of prices
or
rates,
credit
rating
or
credit
index,
or
other
variable;orhybrid
contracts
combining
the
abovecontracts;or
hybrid contracts or
structured
products
containing
embedded
derivatives.
However, 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.
The derivatives that
the
Company
is
trading
shall
be
marketable and safe,
including
forward
contracts,
options
contracts,
futures
contracts, leverage		 exchange
rate,
index or other
interest
products;
and
hybrid contracts
combining
the
above products.
The term "forward
contracts"
does
not
include
insurance
contracts,
performance
contracts,
after-
sales
service
contracts,
long-
term
leasing
contracts, or long-
term
purchase
(sales)
agreement.
(2)
The
derivatives
that the Company
is trading shall be
marketable
and
safe,
including
forward contracts,
options contracts,
or swap contracts,
or
hybrid
contracts
combining
the
above products.
(3)~(7) (Omitted)
2)~4) (Omitted)
4.6.2~4.6.3 (Omitted)
  • 63 -
contracts,or swap
contracts, orhybrid
contracts
combining
the
abovecontracts;or
hybrid contracts or
structured
products
containing
embedded
derivatives.
iii~vii (Omitted)
b.~d. (Omitted)
B.~C. (Omitted)		 contracts,or swap
contracts, orhybrid
contracts
combining
the
abovecontracts;or
hybrid contracts or
structured
products
containing
embedded
derivatives.
iii~vii (Omitted)
b.~d. (Omitted)
B.~C. (Omitted)
9.
A.		 Professional
appraisers,
CPAs,
attorneys,
and
securities underwriters that
provide the Company with
appraisal
reports,
CPA's
opinions, attorney's opinions,
or
underwriter's
opinions
shall meet the following
requirements:
May not have previously
been quoted a final and
unappealable sentence to
imprisonment for 1 year or
longer due to any violation
of
the
Securities
and
Exchange
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,		 4.8.Professional
appraisers,
CPAs,
attorneys,
and
securities underwriters that
provide the Company with
appraisal reports, CPA's
opinions,
attorney's
opinions, or underwriter's
opinionsshall not be the
related party with the
transaction party.
  • 64 -
B.
C.
D.		 forgery of documents, or
occupational
crime.
However,
this
provision
does not apply to anyone
should here were 3years
since following the dace of
the completion of service of
the
sentence,
since
expiration of the period of a
suspended
sentence,
or
since
a
pardon
was
received.
Is not a related party or de
facto related party of any
party to the transaction.
If the Company is required
to obtain appraisal reports
from
two
or
more
professional appraisers, the
different
professional
appraisers
or
appraisal
officers shall not be related
parties or de facto related
parties of each other.
When issuing an appraisal
report
or
opinion,
the
personnel referred to in the
preceding paragraph shall
comply with the following:
a. Prior to accepting a
case,
they
shall
prudently assess their
own
professional
capabilities,
practical
experience,
and
independence.
b. When examining a case,
they shall appropriately

a.
**b. **
  • 65 -
c.
**d. **		 plan
and
execute
adequate
working
procedures, in order to
produce a conclusion
and use the conclusion
as the basis for issuing
the report or opinion.
The related working
procedures,
data
collected,
and
conclusion shall be fully
and accurately specified
in the case working
papers.
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.
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
  • 66 -
have
complied
with
applicable
laws
and
regulations.
Article 5Procedures for Public
Announcement and Filing
5.1.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:
5.1.1.
Acquisition
or
disposal of real property
from or to a related party,
or acquisition or disposal of
assets
other
than
real
property 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 NT$300
million or more; provided,
this shall not apply to
trading
of
government
bonds or bonds under
repurchase
and
resale
agreements, or subscription
or redemption of money		 1. To comply with the
provisions
provided by IFRS
16, add right-of-use
assets.
2. Pursuant to the FSC
letter
(Jin-Guan-
Zheng-Fa-Zi
1070341072),
amend the words.
  • 67 -
B.
C.
D.
E.
F.		 domestic
securities
investment trust enterprises.
(Omitted)
Losses
from
derivatives
trading reaching the limits on
aggregate losses or losses on
individual contracts set outin
the procedures adopted by the
Company.
Where equipmentor right-
of-use assets thereoffor
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:
a.~b. (Omitted)
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 NT$500 million or
more.
Where an asset transaction		 market funds issued by
domestic
securities
investment
trust
enterprises.
5.1.2.
(Omitted)
5.1.3.
Losses
from
derivatives
trading
reaching the limits on
aggregate losses or losses
on individual contractsset
out
in
the procedures
adopted by the Company.
5.1.4.
Wherethe assets,
the type of which is
equipment
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:
a.~b. (Omitted)
5.1.5.
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
  • 68 -
other than any of those
referred to in the preceding
five subparagraphs, or an
investment in the mainland
China
area,
reaches
20
percent or more of paid-in
capital or NT$300 million;
provided, this shall not apply
to
the
following
circumstances:
a. Trading
of
domestic
government bonds.
b. Where
done
by
professional investors—
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		 transaction
reaches
NT$500 million or more.
5.1.6.
Where
an
asset
transaction other than any
of those referred to in the
preceding
five
subparagraphs,
or
an
investment in the mainland
China area, reaches 20
percent or more of paid-in
capital or NT$300 million;
provided, this shall not
apply to the following
circumstances:
1. Trading of government
bonds.
2. Where
done
by
professional
investors—securities
trading on securities
exchanges
or
OTC
marketsin or outside
Taiwan,
or
subscription
by
a
securities
firm
of
securities
that
are
offered and issued in
thedomestic primary
market 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
  • 69 -
c.
d.
e.		 accordance with the rules
of the Taipei Exchange.
Trading of bonds under
repurchase
and
resale
agreements,
or
subscription
or
redemption
of
money
market funds issued by
domestic
securities
investment
trust
enterprises.
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 is
less than NT$500 million.
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		 investment
trust
enterprises.
4. Where equipmentor
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 is
less
than
NT$500
million.
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 is less than
NT$500 million.
The amount of transactions
above shall be calculated as
  • 70 -
expects to invest in the
transaction is less than
NT$500 million.
2. The amount of transactions
above shall be calculated as
follows:
A.~B. (Omitted)
1)
The cumulative transaction
amount of acquisitions and
disposals
(cumulative
acquisitions and disposals,
respectively)
of
real
propertyor right-of-use
assets thereof within the
same development project
within the preceding year.
2)
(Omitted)
"Within the preceding year"
as used in the preceding
subparagraph refers to the
year preceding the date of
occurrence of the current
transaction. Items duly
announced in accordance
with these Procedures need
not be counted toward the
transaction amount.
3. 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		 follows:
1)~2) (Omitted)
3)
The
cumulative
transaction
amount
of
acquisitions and disposals
(cumulative acquisitions
and
disposals,
respectively)
of
real
propertyor right-of-use
assets thereof within the
same development project
within the preceding year.
4)
(Omitted)
"Within the preceding
year" as used in the
preceding subparagraph
refers to the year
preceding the date of
occurrence of the current
transaction. Items duly
announced in accordance
with these Procedures
need not be counted
toward the transaction
amount.
5.2.The
Company
shall
compile monthly reports on
the status of derivatives
trading engaged in up to the
end of the preceding month
bythis 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
FSCbythe 10th dayof
  • 71 -
website designated by the
FSC by the 10th day of each
month.
4. (Omitted)
5. When acquiring or disposing
of assets, the Company shall
keep all relevant contracts,
meeting minutes, recordation
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.
6.~8.(Omitted)		 each month.
5.3.(Omitted)
5.4.When
acquiring
or
disposing of assets, the
Company shall keep all
relevant contracts, meeting
minutes,
recordation
books, appraisal reports
and CPA, attorney, and
securities
underwriter
opinions atthis Company,
where
they
shall
be
retained for 5 years except
where another act provides
otherwise.
Article 6Upper limits on the
total amounts of real property
and right-of-use assets thereof
or securities acquired by the
Company and its subsidiaries for
non-business use and the limits
on individual securities:
1. (Omitted)
2. The total amounts of real
property andright-of-use
assets thereof acquired by
the
Company
for
non-
business use shall not exceed
20 percent of shareholders'
equity
specified
on
the
Company's
most
recent
financial statements.
3. Upper limits on the total
amounts of real property and
right-of-use assets thereof
or securities acquired bya		 6.Upper limits on the total
amounts of real property or
securities acquired by the
Company and its subsidiaries
for non-business use and the
limits on individual securities:
6.1.(Omitted)
6.2.The total amounts of real
property acquired by the
Company for non-business
use shall not exceed 20
percent of shareholders'
equity specified on the
Company's most recent
financial statements.
6.3.Upper limits on the total
amounts of real property or
securities acquired by a
subsidiary of the Company
for non-business use and
the limits on individual		 To comply with the
provisions provided by
IFRS 16, incorporate
the real property right-
of-use assets for non-
business use into the
limit calculation in the
Procedures formulated
by the Company.
  • 72 -
A.
B.
C.
4.		 subsidiary of the Company
for non-business use and the
limits on individual securities
shall be subject to such
subsidiary's "Procedures for
the Acquisition and Disposal
of Assets"; provided that the
aggregate amount of each
aforesaid asset acquired by
each subsidiary shall not
exceed the limits set out
below:
The
total
amount
of
investment in securities may
not exceed 50 percent of the
shareholders' equity specified
on the Company's
most
recent financial statements.
The amount of investment in
individual securities may not
exceed 30 percent of the
shareholders' equity specified
on the Company's
most
recent financial statements.
Purchase of real property and
right-of-use assets thereof
for non-business uses may
not exceed 20 percent of the
shareholders' equity specified
on the Company's
most
recent financial statements.
(Omitted)		 securities shall be subject
to
such
subsidiary's
"Procedures
for
the
Acquisition and Disposal
of Assets"; provided that
the aggregate amount of
each
aforesaid
asset
acquired
by
each
subsidiary shall not exceed
the limits set out below:
6.3.1.
The total amount of
investment in securities
may not exceed 50 percent
of the shareholders' equity
specified on the Company's
most
recent
financial
statements.
6.3.2.
The
amount
of
investment in individual
securities may not exceed
30
percent
of
the
shareholders'
equity
specified on the Company's
most
recent
financial
statements.
6.3.3.
Purchase
of
real
property andright-of-use
assets thereof for non-
business uses may not
exceed 20 percent of the
shareholders'
equity
specified on the Company's
most
recent
financial
statements.
6.4.(Omitted)
  • 73 -

Annex 5: The Comparison Table of Amended Provisions of the Operation Procedures for Loaning of Funds to Others

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD (Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION) The Comparison Table of Amended Provisions of the Operation Procedures for Loaning of Funds to Others

Article after Amendment Article before Amendment Reason for Amendment Article 3 Under Article 15 Article 3 Under Article 15 In response to Article 3 of of the Company Act, funds of of the Company Act, funds of the Regulations the Company shall not be the Company shall not be Governing Loaning of loaned to any of its loaned to any of its Funds and Making of shareholders or any other shareholders or any other Endorsements/Guarantees person except under the person except under the by Public Companies following circumstances: following circumstances: allowing the company to 1. Where a company or firm 1. Where a company or firm extend loans to an business transaction with business transaction with overseas company in the Company calls for a the Company calls for a which the company loan arrangement; or loan arrangement; or holds, directly or 2. Where a short-term 2. Where a short-term indirectly, 100% of the financing facility of a financing facility of a voting shares in order to subsidiary of the subsidiary of the increase the flexibility of Company is necessary, Company is necessary, the use of internal funds provided that such provided that such in the business groups, financing amount shall not financing amount shall not amend the relevant exceed 40% of the lender's exceed 40% of the lender's words.

following circumstances:
1. Where a company or firm
business transaction with
the Company calls for a
loan arrangement; or		 following circumstances:
1. Where a company or firm
business transaction with
the Company calls for a
loan arrangement; or
2. Where a short-term 2. Where a short-term
financing facility of a financing facility of a
subsidiary of the subsidiary of the
Company is necessary, Company is necessary,
provided that such provided that such
financing amount shall not financing amount shall not
exceed 40% of the lender's exceed 40% of the lender's
net worth. net worth.
The term "short-term" as used The term "short-term" as used
in the preceding paragraph in the preceding paragraph
means one year. The term means one year. The term
"financing amount" as used in "financing amount" as used in
subparagraph 2, paragraph 1 subparagraph 2, paragraph 1
of this Article means the of this Article means the
cumulative balance of the cumulative balance of the
public company's short-term public company's short-term
financing. financing.
The restriction in The restriction in
subparagraph 2, paragraph 1 subparagraph 2, paragraph 1
shall not apply to inter- shall not apply to inter-
company loans of funds company loans of funds
between overseas companies between overseas companies
in which the public company in which the public company
holds, directly or indirectly, holds, directly or indirectly,
100% of the voting shares,or 100% of the voting shares.
loans extended by an However, the Company shall
overseas company in which formulate the amount limits
the Company holds, directly and the durations of loans in
or indirectly, 100% of the accordance with Paragraph 3
  • 74 -
voting shares to the
Company.However, the
Company shall formulate the
amount limits and the
durations of loans in
accordance with Paragraph 3
of Article 7.		 of Article 7.
Article 5 The term
"announce and report" as used
in the Procedures means the
process of entering data to the
information reporting website
designated by the Financial
Supervisory Commission
(FSC).
The term "date of occurrence"
in the Procedures meansthe
date of contract signing, date
of payment, dates of boards of
directors resolutions, or other
date that can confirmthe
counterparty and monetary
amount of loaning of funds,
whichever date is earlier.		 Article 5 The term
"announce and report" as used
in the Procedures means the
process of entering data to the
information reporting website
designated by the Financial
Supervisory Commission
(FSC).
The term "date of occurrence"
in the Procedures meansthe
date of contract signing of
the transaction,date of
payment, dates of boards of
directors resolutions, or other
date that can confirmthe
counterparty and monetary
amount of the transaction,
whichever date is earlier.		 In response to Article 7 of
the Regulations
Governing Loaning of
Funds and Making of
Endorsements/Guarantees
by Public Companies
taking into account that
the nature of loaning of
funds is not the
transaction, amend the
relevant words.
Article 6 The Company has
formulated its Operation
Procedures for Loaning of
Funds to Others in accordance
with the regulations
promulgated by the competent
authority, which is effective
and implemented after being
submitted to the shareholders'
meeting for approval on June
6, 1994. The amendment shall
adopted by a majoring of
audit committee members
and, after a resolution of the
board of directors, be
submitted to the shareholders'
meeting for approval and be
effective and implemented
thereafter.
The preceding paragraph
that has not been adopted
by a majoring of audit
committee members may be
undertaken upon the		 Article 6 The Company has
formulated its Operation
Procedures for Loaning of
Funds to Others in accordance
with the regulations
promulgated by the competent
authority, which is effective
and implemented after being
submitted to the shareholders'
meeting for approval on June
6, 1994. The amendment shall
be subject to the consent of
audit committee members
and, after the passage through
the board of directors, be
submitted to the shareholders'
meeting for approval and be
effective and implemented
thereafter.
Where the Company has
established the position of
independent director, when it
submits its Operational
Procedures for Endorsements		 In response to the
Regulations Governing
Loaning of Funds and
Making of
Endorsements/Guarantees
by Public Companies
amending the words
under Paragraph 2 of
Article 8 and adding the
authority of the audit
committee under
Paragraph 4 and/to
Paragraph 6, amend and
add the words under
Paragraphs 2 and 3.
  • 75 -
consent of two-thirds or
more of all directors, and
the resolution of the audit
committee shall be recorded
in the minutes of the
directors’ meeting.
The terms"all audit
committee members" and
“all directors” as used in the
preceding two paragraphs
shall be cakulated as the
number of members actually
in office.
Where the Company has
established the position of
independent director, when it
submits its Operational
Procedures for Endorsements
and Guarantees to the board of
directors for discussion under
the preceding paragraph, the
board of directors shall take
into full consideration each
independent director's
opinion;when an
independent director has a
dissenting opinion or
reserved opinion, it shall be
recorded in the minutes of
the directors’ meeting.		 and Guarantees to the board of
directors for discussion under
the preceding paragraph, the
board of directors shall take
into full consideration each
independent director's
opinion;the independent
directors' opinions
specifically expressing
assent or dissent and the
reasons for dissent shall be
included in the minutes of
the board of directors'
meeting.
Article 7 The Company’s
Operation Procedures for
Loaning of Funds to Others
are as follows:
1. Entities to which the
company may loan funds
are companies or firms
under Article 3 in Chapter
I of these Procedures.
2. Evaluation standards for
loaning funds to others:
A. Where funds are
loaned for reasons of
business dealings, the
Company shall
evaluate at any time
whether the amount
of a loan is
commensurate to the
total amount of		 Article 7 The Company’s
Operation Procedures for
Loaning of Funds to Others
are as follows:
1. Entities to which the
company may loan funds
are companies or firms
under Article 3 in Chapter
I of these Procedures.
2. Evaluation standards for
loaning funds to others:
A. Where funds are
loaned for reasons of
business dealings, the
Company shall
evaluate at any time
whether the amount
of a loan is
commensurate to the
total amount of		 In response to Article 3 of
the Regulations
Governing Loaning of
Funds and Making of
Endorsements/Guarantees
by Public Companies
allowing an overseas
company in which the
company holds, directly
or indirectly, 100% of the
voting shares to extend
loans to the company in
order to increase the
flexibility of the use of
internal funds in the
business groups, amend
the relevant words.
  • 76 -
trading between the
two companies.
B.
Where short-term
financing is needed,
the reasons for and
conditions of
extending loans shall
be enumerated.
The maximum amount
permitted to a single company
under Subparagraph 1,
Paragraph 1 of Article 3 in
Chapter I of these Procedures,
to which funds are loaned by
the Company, shall not exceed
the total last annual amount of
trading between the two
companies and may not
exceed 20% of the net worth
on the most current financial
statements of the Company.
The maximum amount
permitted to a single company
under Subparagraph 2,
Paragraph 1 of Article 3 in
Chapter I, to which funds are
loaned, shall not exceed 20%
of the net worth on the most
current financial statements of
the Company. The aggregate
amount of loans under the
preceding two paragraphs
shall not exceed 40% of the
net worth on the most current
financial statements of the
Company. The maximum
loaning amount of inter-
company loans of funds,
which is on grounds of
business transaction with a
single entity or necessity for a
short-term financing facility,
between overseas companies
in which the Company holds,
directly or indirectly, 100% of
the voting shares,or of loans
extended by an overseas
company in which the
Company holds, directly or
indirectly, 100% of the		 trading between the
two companies.
B.
Where short-term
financing is needed,
the reasons for and
conditions of
extending loans shall
be enumerated.
The maximum amount
permitted to a single company
under Subparagraph 1,
Paragraph 1 of Article 3 in
Chapter I of these Procedures,
to which funds are loaned by
the Company, shall not exceed
the total last annual amount of
trading between the two
companies and may not
exceed 20% of the net worth
on the most current financial
statements of the Company.
The maximum amount
permitted to a single company
under Subparagraph 2,
Paragraph 1 of Article 3 in
Chapter I, to which funds are
loaned, shall not exceed 20%
of the net worth on the most
current financial statements of
the Company. The aggregate
amount of loans under the
preceding two paragraphs
shall not exceed 40% of the
net worth on the most current
financial statements of the
Company. The maximum
loaning amount of inter-
company loans of funds,
which is on grounds of
business transaction with a
single entity or necessity for a
short-term financing facility,
between overseas companies
in which the Company holds,
directly or indirectly, 100% of
the voting shares shall not
exceed 40% of the net worth
of the Company; the
aggregate amount of such
loans shall not exceed 60%of
  • 77 -
voting shares to the
Company, shall not exceed
40% of the net worth of the
Company; the aggregate
amount of such loans shall not
exceed 60% of the net worth
of the Company; otherwise
duration of loans and
calculation of interest will be
decided based on its condition
respectively, provided that the
maximum duration shall not
exceed 10 years.
(Omitted)		 the net worth of the Company;
otherwise duration of loans
and calculation of interest will
be decided based on its
condition respectively,
provided that the maximum
duration shall not exceed 10
years.
(Omitted)
Article 9 Each relevant unit
shall prepare a memorandum
book for the Company's fund-
loaning activities and
truthfully record the following
information: borrower,
amount, date of approval by
the board of directors,
lending/borrowing date, and
matters to be carefully
evaluated under the preceding
Article. The Company's
internal auditors shall audit
the Operational Procedures for
Loaning Funds to Others and
the implementation thereof no
less frequently than quarterly
and prepare written records
accordingly. They shall
promptly notify the audit
committeeand independent
directors in writing of any
material violation found.		 Article 9 Each relevant unit
shall prepare a memorandum
book for the Company's fund-
loaning activities and
truthfully record the following
information: borrower,
amount, date of approval by
the board of directors,
lending/borrowing date, and
matters to be carefully
evaluated under the preceding
Article. The Company's
internal auditors shall audit
the Operational Procedures for
Loaning Funds to Others and
the implementation thereof no
less frequently than quarterly
and prepare written records
accordingly. They shall
promptly notify the audit
committee in writing of any
material violation found.		 In response to the
Regulations Governing
Loaning of Funds and
Making of
Endorsements/Guarantees
by Public Companies
adding Article 26-2 to
improve corporate
governance that any
material violation of
loaning of funds shall be
notified to independent
directors in writing; the
rectification plans as a
result of such violation
shall also be submitted to
independent directors,
amend the relevant
words.
Article 10 Where as a result
of changes of condition the
borrowing counterparty no
longer meets the requirements
of these Procedures, or the
loan balance exceeds the limit,
the Company shall adopt
rectification plans and submit
the rectification plans to the
audit committeeand
independent directors, and
shall complete the		 Article 10 Where as a result
of changes of condition the
borrowing counterparty no
longer meets the requirements
of these Procedures, or the
loan balance exceeds the limit,
the Company shall adopt
rectification plans and submit
the rectification plans to the
audit committee, and shall
complete the rectification
accordingto the timeframe set		 Please refer to the above.
  • 78 -
rectification according to the
timeframe set out in theplan.		 out in the plan.
  • 79 -

Annex 6: The Comparison Table of Amended Provisions for Endorsements/ Guarantees

INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD (Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION) The Comparison Table of Amended Provisions Endorsements/Guarantees.

Article after Amendment Article before Amendment Reason for Amendment
Article 6 The term
"announce and report" as used
in the Procedures means the
process of entering data to the
information reporting website
designated by the Financial
Supervisory Commission
(FSC).
The term "date of occurrence"
in the Procedures means the
date of contract signing, date
of payment, dates of boards of
directors resolutions, or other
date that can confirmthe
counterparty and monetary
amount of
endorsements/guarantees,
whichever date is earlier.		 Article 6 The term
"announce and report" as used
in the Procedures means the
process of entering data to the
information reporting website
designated by the Financial
Supervisory Commission
(FSC).
The term "date of occurrence"
in the Procedures meansthe
date of contract signing of
the transaction,date of
payment, dates of boards of
directors resolutions, or other
date that can confirmthe
counterparty and monetary
amount of the transaction,
whichever date is earlier.		 In response to Article 7 of
the Regulations
Governing Loaning of
Funds and Making of
Endorsements/Guarantees
by Public Companies
taking into account that
the nature of
endorsements/guarantees
is not the transaction,
amend the relevant
wordings.
Article 7 The Company has
formulated its Operational
Procedures for Endorsements
and Guarantees in accordance
with the regulations
promulgated by the competent
authority, which is effective
and implemented after being
submitted to the shareholders'
meeting for approval on June
6, 1994. The amendment shall
beadopted by a majority of
audit committee members
and, after a resolution of the
board of directors, be
submitted to the shareholders'
meeting for approval and be
effective and implemented
thereafter.
The preceding paragraph
that has not been adopted
by a majority of all audit
committee members may be		 Article 7 The Company has
formulated its Operational
Procedures for Endorsements
and Guarantees in accordance
with the regulations
promulgated by the competent
authority, which is effective
and implemented after being
submitted to the shareholders'
meeting for approval on June
6, 1994. The amendment shall
be subject to the consent of
audit committee members
and, after the passage through
the board of directors, be
submitted to the shareholders'
meeting for approval and be
effective and implemented
thereafter.
Where the Company has
established the position of
independent director, when it
submits its Operational		 In response to the
Regulations Governing
Loaning of Funds and
Making of
Endorsements/Guarantees
by Public Companies
amending the wordings
under Paragraph 2 of
Article 8 and adding the
authority of the audit
committee under
Paragraph 4 and/to
Paragraph 6, amend the
wordings under
Paragraphs 2 and 3.
  • 80 -
undertaken upon the
consent of two-thirds or
more of all directors, and
the resolution of the audit
committee shall be recorded
in the minutes of the
directors’ meeting.
The terms"all audit
committee members" and
“all directors” as used in the
preceding two paragraphs
shall be cokalated as the
actual umbers of members
in office.
Where the Company has
established the position of
independent director, when it
submits its Operational
Procedures for Endorsements
and Guarantees to the board of
directors for discussion under
the preceding paragraph, the
board of directors shall take
into full consideration each
independent director's
opinion;when an
independent director has a
dissenting opinion or
reserved opinion, it shall be
recorded in the minutes of
the directors’ meeting.		 Procedures for Endorsements
and Guarantees to the board of
directors for discussion under
the preceding paragraph, the
board of directors shall take
into full consideration each
independent director's
opinion;the independent
directors' opinions
specifically expressing
assent or dissent and the
reasons for dissent shall be
included in the minutes of
the board of directors'
meeting.
Article 10 The Company
shall prepare a memorandum
book for its
endorsement/guarantee
activities and record in detail
the following information for
the record: the entity for
which the
endorsement/guarantee is
made, the amount, the date of
passage by the board of
directors or of authorization
by the chairman of the board,
the date the
endorsement/guarantee is
made, and the matters to be
carefully evaluated under
Paragraph 1 of the preceding
Article.		 Article 10 The Company
shall prepare a memorandum
book for its
endorsement/guarantee
activities and record in detail
the following information for
the record: the entity for
which the
endorsement/guarantee is
made, the amount, the date of
passage by the board of
directors or of authorization
by the chairman of the board,
the date the
endorsement/guarantee is
made, and the matters to be
carefully evaluated under
Paragraph 1 of the preceding
Article.		 In response to the
Regulations Governing
Loaning of Funds and
Making of
Endorsements/Guarantees
by Public Companies
adding Article 26-2 to
improve corporate
governance that any
material violation of
endorsements/guarantees
shall be notified to
independent directors in
writing; the rectification
plans as a result of such
violation shall also be
submitted to independent
directors, amend the
relevant wordings.
  • 81 -
The Company's internal
auditors shall audit the
implementation of the
Operation Procedures for
Endorsements and Guarantees
no less frequently than
quarterly and prepare written
records accordingly. They
shall promptly notify the audit
committeeand independent
directors in writing of any
material violation found.		 The Company's internal
auditors shall audit the
implementation of the
Operation Procedures for
Endorsements and Guarantees
no less frequently than
quarterly and prepare written
records accordingly. They
shall promptly notify the audit
committee in writing of any
material violation found.
Article 11 Where the
Company needs to exceed the
limits set out in the Operation
Procedures for Endorsements
and Guarantees to satisfy its
business requirements, and
where the conditions set out in
the Operation Procedures for
Endorsements and Guarantees
are complied with, it shall
obtain approval from the
board of directors and half or
more of the directors shall act
as joint guarantors for any loss
that may be caused to the
company by the excess
endorsement/guarantee. It
shall also amend the
Operation Procedures for
Endorsements and Guarantees
accordingly and submit the
same to the shareholders'
meeting for ratification after
the fact. If the shareholders'
meeting does not give
consent, the Company shall
adopt a plan to discharge the
amount in excess within a
given time limit.
Where the Company has
established the position of
independent director, when it
makes
endorsements/guarantees for
others, it shall take into full
consideration the opinions of
each independent director;
when an independent		 Article 11 Where the
Company needs to exceed the
limits set out in the Operation
Procedures for Endorsements
and Guarantees to satisfy its
business requirements, and
where the conditions set out in
the Operation Procedures for
Endorsements and Guarantees
are complied with, it shall
obtain approval from the
board of directors and half or
more of the directors shall act
as joint guarantors for any loss
that may be caused to the
company by the excess
endorsement/guarantee. It
shall also amend the
Operation Procedures for
Endorsements and Guarantees
accordingly and submit the
same to the shareholders'
meeting for ratification after
the fact. If the shareholders'
meeting does not give
consent, the Company shall
adopt a plan to discharge the
amount in excess within a
given time limit.
Where the Company has
established the position of
independent director, when it
makes
endorsements/guarantees for
others, it shall take into full
consideration the opinions of
each independent director;the
independent directors'		 In response to the
Regulations Governing
Loaning of Funds and
Making of
Endorsements/Guarantees
by Public Companies
amending the wordings
under Paragraph 2 of
Article 8 and adding the
authority of the audit
committee under
Paragraph 4 and/to
Paragraph 6, amend the
wordings.
  • 82 -
director has a dissenting
opinion or reserved opinion,
it shall be recorded in the
minutes of the directors’
meeting.		 opinions specifically
expressing assent or dissent
and the reasons for dissent
shall be included in the
minutes of the board of
directors' meeting.
Article 12 Where as a result
of changes of condition the
entity for which an
endorsement/guarantee is
made no longer meets the
requirements of these
Procedures, or the amount of
endorsement/guarantee
exceeds the limit, the
Company shall adopt
rectification plans and submit
the rectification plans to the
audit committeeand
independent directors, and
shall complete the
rectification according to the
timeframe set out in the plan.		 Article 12 Where as a result
of changes of condition the
entity for which an
endorsement/guarantee is
made no longer meets the
requirements of these
Procedures, or the amount of
endorsement/guarantee
exceeds the limit, the
Company shall adopt
rectification plans and submit
the rectification plans to the
audit committee, and shall
complete the rectification
according to the timeframe set
out in the plan.		 In response to the
Regulations Governing
Loaning of Funds and
Making of
Endorsements/Guarantees
by Public Companies
adding Article 26-2 to
improve corporate
governance that any
material violation of
endorsements/guarantees
shall be notified to
independent directors in
writing; the rectification
plans as a result of such
violation shall also be
submitted to independent
directors, amend the
relevant wordings.
Article 14 The Company
whose balance of
endorsements/guarantees
reaches one of the following
levels shall announce and
report such event within two
days commencing
immediately from the date of
occurrence:
1. The aggregate balance of
endorsements/guarantees
by the Company and its
subsidiaries reaches 50%
or more of the Company's
net worth as stated in its
latest financial statement.
2. The balance of
endorsements/guarantees
by the Company and its
subsidiaries for a single
entity reaches 20% or
more of the public
company's net worth as
stated in its latest financial
statement.		 Article 14 The Company
whose balance of
endorsements/guarantees
reaches one of the following
levels shall announce and
report such event within two
days commencing
immediately from the date of
occurrence:
1. The aggregate balance of
endorsements/guarantees
by the Company and its
subsidiaries reaches 50%
or more of the Company's
net worth as stated in its
latest financial statement.
2. The balance of
endorsements/guarantees
by the Company and its
subsidiaries for a single
entity reaches 20% or
more of the public
company's net worth as
stated in its latest financial
statement.		 In response to the
amendment to Article 25
of the Regulations
Governing Loaning of
Funds and Making of
Endorsements/Guarantees
by Public Companies, in
order to specify the
definition of investment
of a long-term nature, we
reference Subparagraph
1, Paragraph 4 of Article
9 of
Regulations Governing
the Preparation of
Financial Reports by
Securities Issuers and
amend the relevant
wordings.
  • 83 -
3. The balance of
endorsements/guarantees
by the Company and its
subsidiaries for a single
entity reaches
NT$10,000,000 or more
and the aggregate amount
of all
endorsements/guarantees
for, carrying amount of
investments accounted
for using the equity
method of,and balance of
loans to, such entity
reaches 30% or more of
the Company's net worth
as stated in its latest
financial statement.
4. The amount of new
endorsements/guarantees
made by the Company or
its subsidiaries reaches
NT$30,000,000 or more,
and reaches 5% or more of
the Company's net worth
as stated in its latest
financial statement.
The Company shall announce
and report on behalf of any
subsidiary thereof that is not a
public company of the
Republic of China any matters
that such subsidiary is
required to announce and
report pursuant to
Subparagraph 4 of the
preceding paragraph.		 3. The balance of
endorsements/guarantees
by the Company and its
subsidiaries for a single
entity reaches
NT$10,000,000 or more
and the aggregate amount
of all
endorsements/guarantees
for,investment of a long-
term nature in,and
balance of loans to, such
entity reaches 30% or
more of the Company's net
worth as stated in its latest
financial statement.
4. The amount of new
endorsements/guarantees
made by the Company or
its subsidiaries reaches
NT$30,000,000 or more,
and reaches 5% or more of
the Company's net worth
as stated in its latest
financial statement.
The Company shall announce
and report on behalf of any
subsidiary thereof that is not a
public company of the
Republic of China any matters
that such subsidiary is
required to announce and
report pursuant to
Subparagraph 4 of the
preceding paragraph.
  • 84 -

Appendix 1.: Articles of Incorporation for INTERNATIONAL CSRC

INVESTMENT HOLDINGS CO., LTD.

Articles of Incorporation for INTERNATIONAL CSRC INVESTMENT HOLDINGS CO., LTD.

(Original Name of the Company: CHINA SYNTHETIC RUBBER CORPORATION)

Chapter 1. General

  • Article 1 The Company shall be incorporated under the provisions for company limited by shares of the Company Act and the relevant regulations, and its names shall be International CSRC Investment Holdings Co., Ltd.

  • Article 2 The Company’s business scope is as follows: H201010 General Investment Industry.

  • Article 3 The Company may provide endorsement and guarantee and act as a guarantor. Article 4 The Company’s reinvestment is in accordance with the Board of Directors’ resolution and the total investment amount may exceed forty (40) percent of the Company’s paid-in capital.

  • Article 5 The Company is headquartered in Taipei City. When necessary, the Board of Directors may agree to set up branches, subsidiaries and manufacturing facilities both domestically or abroad.

Chapter 2. Shares

  • Article 6 The total capital of the Company is set at NT$20 billion, divided into 2 billion shares and NT$10 per share and may be paid-up in installments. The Company may issue employee stock options to employees of the Company and domestic and overseas subsidiaries. Among the total shares aforementioned, 60 million shares are reserved as employee stock option shares, which may be issued in installments in accordance with resolutions of the Board of Directors. When the Company can legally repurchase company stocks, the Board of Directors will act in accordance to regulations.

  • Article 6-1 When the Company issues employee stock options with a subscription price lower than the closing price of the Company’s common shares on the day of issuance, it shall be approved by at least two-thirds of the voting rights represented at a shareholders’ meeting attended by shareholders representing a majority of the total issued shares.

  • If the Company wishes to transfer an employee stock options to an employee at a price lower than the average price of the shares that were bought back, it shall be approved by at least two-thirds of the voting rights represented at the latest shareholders’ meeting attended by shareholders representing a majority of the total issued shares.

Article 7 The share certificates of the Company shall be signed by or bear seals of three (3) or more Directors, and issued by the Competent Authority or the agency authorized to handle the registration of stock certificate issuance. The Company may issue shares without printing share certificates; but such shares shall be registered at a centralized securities depository agency.

Article 8 Any matters regarding the Company’s shares are in accordance with the relevant laws and the regulations of the Competent Authority.

Article 9 Registration for transfer of shares shall be suspended for sixty (60) days immediately before the day of an Annual General Shareholders’ Meeting, for

  • 85 -

thirty (30) days immediately before the day of any Extraordinary General Shareholders’ Meeting, and for five (5) days before the day on which dividends or any other benefit is scheduled to be paid by the Company.

Chapter 3. Shareholders’ meeting

  • Article 10 There are two kinds of shareholders’ meetings which are Annual General Meeting and Extraordinary General Meeting:

  • Annual General Meeting shall be convened by the Board of Directors within six months after the end of each fiscal year.

  • Extraordinary General Meeting shall be convened when necessary and in accordance with regulations.

  • Article 11 Unless otherwise stated in the Company Act, shareholders’ meetings are convened by the Board of Directors, chaired by the Chairperson. When the Chairperson is absent, the Chairperson designates a Director as deputy. When not specified, a deputy is chosen by the Directors among the Directors.

  • Article 12 The convening of the Annual General Meeting shall be notified to all shareholders thirty (30) days in advance. The convening of the Extraordinary General Meeting shall be notified to all shareholders fifteen (15) days in advance. The notice shall state the date, venue and reason for the convening of the meetings.

  • Article 13 Unless otherwise stated in the Company Act, resolution from shareholders’ meetings require the majority of the voting rights represented at the latest shareholders’ meeting attended by shareholders representing a majority of the total issued shares.

  • Article 14 Unless otherwise stated in the Company Act, each share of stock shall be entitled to one (1) vote.

  • Article 15 If a shareholder is unable to attend the shareholders’ meeting in person, such shareholder may appoint a proxy to attend the shareholders’ meeting and exercise such shareholder’s right in his/her/its behalf by executing a proxy issued by the Company and specifying therein the scope of power authorized to the proxy. With the exception of trust enterprises or shareholder service agencies approved by the Competent Authority, when a person who acts as the proxy of two (2) or more shareholders, the excessive voting power represented by such person exceeding three percent (3%) of the total outstanding voting shares of the Company shall not be counted.

  • A shareholder shall serve the foregoing proxy to the Company no later than five (5) days prior to the day of the shareholders’ meeting. If two (2) or more written proxies are received from one (1) shareholder, the first one received by the Company shall prevail; unless an explicit statement to revoke the previous proxy. The voting power at a shareholders’ meeting may be exercised in writing or by way of electronic transmission in accordance with the Company Act and the relevant regulations of the Competent Authority.

  • Article 16 Resolutions of the shareholders’ meeting shall be made into minutes, signed or sealed by the Chairperson, distributed to all shareholders within 20 days after the meeting, and shall be stored permanently within the Company for recordkeeping. The attendance registry of shareholders and the power of attorney for representing the attendance shall be retained for at least one (1) year. In the case of a lawsuit, the documents should be saved until the lawsuit ends. The distribution of the minutes of the preceding subparagraph shall be governed by the Company Act and related regulations.

  • 86 -

Chapter 4. Directors, Audit Committees and Managers

  • Article 17 The Board of Directors of the company has seven (7) to eleven (11) Directors, and the term of office is three (3) years. The election of Directors adopts the system of nomination for shareholders to vote from a list of nominated candidates at the shareholders’ meeting. Re-elected candidates are reappointed. Of the aforementioned Director quota, there must be no less than three (3) Independent Directors.

  • Independent Directors shall be elected from the list of candidates for Independent Directors by the shareholders at the shareholders’ meeting. The Independent Directors’ professional qualifications, shareholding, concurrent position restrictions, independence, the nomination and selection methods, and other compliance matters shall be handled in accordance with the relevant provisions of the Competent Authority. The election of Directors shall be held in accordance with the Company Act. Independent and non-Independent Directors shall be elected at the same time, provided that the number of Independent Directors and non-Independent Directors elected shall be calculated separately.

  • Article 18 The Board of Directors assembled by the Directors have the following authorities: 1. Draft business plan

  • Draft earnings distribution

  • Draft capital increase or decrease details

  • Ratify important articles and contracts

  • Appoint General Manager

  • Set up and dismantle of subsidiaries

  • Ratify budgets

  • Ratify purchase and sell of properties and investments in business units 9. Ratify any other major matters

  • Article 19 The Board of Directors meeting shall have the attendance of more than two-thirds of the Directors, and the consent of more than one-half of the Directors attending the meeting, and then elect one (1) of the Directors as the Chairperson, and one (1) as Vice Chairperson. The Chairperson shall represent the Company to preside over all business matters.

  • Article 20 The Board of Directors meeting shall be convened by the Chairperson. Unless otherwise stated in the Company Act and this Articles of Incorporation, the exercise of resolution shall need the attendance of more than half of the Directors and the consent by more than half of the attending Directors. Directors may entrust other Directors to attend if they cannot attend in person for any reason. If the Director participates the Board of Directors meeting via video conferencing, it is deemed to be present in person.

  • The Board of Directors meeting notification need to be in written format, e-mail or fax.

  • Article 21 The Board of Directors shall be chaired by the Chairperson. When the Chairperson takes leave or is unable to exercise his power for any reason, the Vice Chairperson of the Board shall represent the Chairperson. If both the Chairperson and the Vice Chairperson are absent, the Chairperson shall appoint one (1) Director to act as the deputy. If the Chairperson did not designate a deputy, the Directors shall choose one (1) Director as deputy.

  • Article 22 The Company sets up an Audit Committee and may set up other functional committees.

The Audit Committee is composed of all Independent Directors, and there shall

  • 87 -

not be less than three (3) members. One (1) of them shall be the Chair and at least one (1) shall have accounting or financial expertise.

The resolution of the Audit Committee shall be approved by more than one-half of all members and the exercise of their authorities and matters shall be in accordance with the provisions of relevant laws and company regulations. When Independent Directors of the Audit Committee exercises authorities, signatures or seals are required on the books and statements the members checked or consulted and to report in the shareholders’ meetings.

  • From the date of establishment of the Audit Committee in 2012, the Audit Committee or members of the Audit Committee shall be responsible for the enforcement of the supervisory authority provided in Company Act, Securities Exchange Act and other regulations.

  • Article 23 The Board of Directors are authorized to set Directors’ remuneration based on the Directors’ involvement in business operations and value contributed to the Company and shall be comparable to both domestic and overseas peers within the same industry.

  • Article 24 The Company may, within the term of office of the Directors, purchase liability insurance for their scope of business and the related compensation liability in accordance with the laws and regulations.

  • Article 25 The Company is in compliance with the resolution by the Board of Directors on the appointment of CEO, General Manager, Vice President or any other managers for the Company’s operational needs and the aforementioned positions may be one or more persons.

Chapter 5. Accounting

  • Article 26 The Company’s fiscal year shall be from January 1 of each year to December 31 of the same year.

  • Article 27 At the end of each fiscal year, the Board of Directors shall prepare statements and records in accordance with Article 228 of the Company Act, and comply with legal procedures to submit the statements and records to the Annual General Shareholders’ Meeting for ratification.

  • Article 28 If the Company is profitable for the year, it shall set aside:

  • As the Employees’ remuneration: 0.01% to 3% of the profit; 2. As the Directors’ remuneration: no more than 1% of the profit.

However, if the Company has accumulated losses, the Company shall first reserve an amount to make up the losses, and then set aside the Employees’ and the Directors’ remuneration as specified in items (1) & (2) above.

The Employees’ remuneration may be distributed in shares or in cash. Employees of the Company’s subsidiaries who meet certain requirements may also receive such remuneration.

The distribution of the Employees’ and the Directors’ remuneration shall be approved by a majority vote at a Board meeting attended by over two-thirds of the Directors. In addition, a report of such distribution shall be submitted to the shareholders’ meeting.

Article 29 When the Company completes final accounting to obtain net income, after deduction of income tax and dues and have covered the losses, the Company shall first set aside 10% of net income as legal reserve; provided that no legal reserve may be set aside when such legal reserve has reached the Company’s total paid-in capital. If necessary, it may set aside or reverse a special reserve or retain surplus earnings with discretion in accordance with the relevant laws from

  • 88 -

the balance plus undistributed earnings, the Company can then distribute earnings as stock dividends for common shareholders. The distribution is in accordance with Article 28 in the Articles, drafted by the Board of Directors and be ratified in the shareholders’ meetings.

To improve financial structure, replenish capital or support important investments, the earnings can be transferred as capital for stock dividend issuance but cash dividends payout ratio must be 20% more than the payout ratio of common share stock dividends.

Article 30 The distribution of dividends to shareholders shall be based on the shareholders’ roster on the record date.

Chapter 6. Annexes

Article 31 The Company’s Articles of Organization and operation details are set separately. Article 32 Any incomplete or matters that are not covered by this Article of Incorporation, please refer to the Company Act and related regulations.

Article 33 The Articles of Incorporation were established on May 16, 1973 and The 1[st] amendment on December 5, 1973 The 2[nd] amendment on May 30, 1975 The 3[rd] amendment on April 26, 1977 The 4[th] amendment on September 29, 1981 The 5[th ] amendment on June 28, 1983 The 6[th ] amendment on March 19, 1985 The 7[th ] amendment on March 7, 1986 The 8[th ] amendment on May 5, 1987 The 9[th ] amendment on April 14, 1989 The 10[th ] amendment on April 27, 1990 The 11[th ] amendment on April 23, 1991 The 12[th ] amendment on May 5, 1992 The 13[th ] amendment on May 14, 1993 The 14[th ] amendment on April 19, 1994 The 15[th ] amendment on May 21, 1998 The 16[th ] amendment on June 30, 1999 The 17[th ] amendment on June 15, 2000 The 18[th ] amendment on October 17, 2000 The 19[th ] amendment on June 26, 2002 The 20[th ] amendment on June 10, 2003 The 21[th ] amendment on June 15, 2004 The 22[th ] amendment on June 24, 2005 The 23[th ] amendment on June 19, 2008 The 24[th ] amendment on June 25, 2010 The 25[th ] amendment on June 10, 2011 The 26[th ] amendment on June 27, 2012 The 27[th ] amendment on June 24, 2014 The 28[th ] amendment on June 24, 2016 The 29[th] amendment on June 26, 2018.

  • 89 -

Appendix 2: Directors’ Shareholding Status

Appendix 2: Directors’ Shareholding S Appendix 2: Directors’ Shareholding S Appendix 2: Directors’ Shareholding S tatus tatus tatus tatus
Benchmark date: April 21,2019
Title Name Appointment
date		 Number of shares held at
the time of appointment		 Shares currently held

Number of
shares		 Accounting
for %
of the
stocks
issued at
the time
Number of
shares		 Accounting
for %
of the
stocks
issued at
the time
Chairman Taiwan Cement Corporation
Representative: Koo, Kung-Yi		 2018.06.26 55,180,171
8.78%
135,820,226
15.59%
Director Taiwan Cement Corporation
Representative: Yeh, Kuo-Hung		 2018.06.26 55,180,171
8.78%
135,820,226
15.59%
Director Fu Pin Investment Co., Ltd.
Representative: Koo, Kung-Kai		 2018.06.26 11,254,724
1.79%
14,958,487
1.72%
Director CTBC Venture Capital Company
Representative: Chien, Wen		 2018.06.26 28,340,800
4.51%
37,667,338
4.32%
Independent
directors
Chen, Yao-Sheng		 2018.06.26 0
0.00%
0
0.00%
Independent
directors
Chih, Ching-Kang		 2018.06.26 0
0.00%		 0
0.00%
Independent
directors
Ding, Yen Wei		 2018.06.26 0
0.00%		 0
0.00%
Total 94,775,695 188,446,051

Total shares issued on June 26, 2018: 628,586,987 Total shares issued on April 21, 2019: 871,445,686

Share Share

Note: 1. The total number of shares that directors of the Company should legally own is 27,886,261 shares. As of April 21, 2019, the directors hold 188,446,051 shares.

  1. The Company has established an Audit Committee; therefore, rules stipulating the number of shares legally owned by the supervisor do not apply.

  2. 90 -

Appendix 3. Impact of Issuance of Stock Dividends on Business Performance, Earnings per Shares, and Return of Equity

Year
Items		 Year
Items		 Year
Items
2019(Pro-Forma)
Beginning paid-in capital NTD 8,714,456,860
Stock
dividend
and cash
dividend
issued this
year		 Cash dividendper share NTD 1.5
Stock dividend per 1000 shares appropriate
from a capitalization of retained earnings
130 Shares
Stock dividend per shares appropriate from
a capitalization of capital reserve
Not applicable (Note)
Change in
business
performance		 Operatingincome Not applicable
Ratio of increase (decrease) in operating
income as compared to thepreviousyear
Net income after tax
Ratio of increase (decrease) in net income
after tax as compared to thepreviousyear

Earningsper share
Ratio of increase (decrease) in EPS as
compared to thepreviousyear
Average annual ROE ratio (Average annual
PE/ratio)
Pro-forma
EPS and
P/E Ratio		 In case that cash
dividends would be
paid in lieu of
stock dividend by a
Capitalization of
retained earnings		 Pro-forma EPS


Pro-forma average
annual ROE ratio
Pro-forma EPS
  • 91 -
In case that there
would be no stock
dividend
appropriated from
a capitalization of
capita;reserve		 Pro-forma average
annual ROE ratio
In case that there
would be no stock
dividend
appropriated from
a capitalization of
capital reserve and
cash dividends
would be paid in
lieu of stock
dividends by a
capitalization of
retained earnings		 Pro-forma EPS
Pro-forma average
annual ROE ratio
  • 92 -

MEMO

  • 93 -

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