ECLAT — AGM Information 2019

Jun 20, 2019

ECLAT TEXTILE CO., LTD.

Further Explanatory Note of 2019 Annual General Shareholders’ Meeting

Time: June 18, 2019 (Tuesday) 9:00AM

Location: No. 39, Sanhao Road, Hsichou Village, Houlong Township, Miaoli County 3F Conference Room, Eclat’s Hsichou Plant

I Approval Matters

Proposal 1 Proposed by the board of directors

Proposal: To approve 2018 Business Report and Financial Statements. Explanation:

1. The 2018 financial statements (including consolidated financial statements) of the Company had been audited by KPMG’s CPA Hsin-I Kuo and CPA Hsiu-Lan Chen, and audit reports which were capable of appropriately presenting the financial status of the company were issued.

2. The aforementioned financial statements and business report, profit distribution table had been reviewed by the Audit Committee with the written review report issued on record, and had been submitted to the board of directors’ meeting for resolution and approval.

3. Refer to the Handbook Appendix IX and X for financial statements

Submitted for approval

Resolution:

Proposal 2

Proposed by the board of directors

Proposal: Recognition of the Proposal of 2018 Profit Distribution. Explanation:

1. The net profit after tax of the Company in 2018 was NTD 4,379,754,214, plus the undistributed profit from the previous year of NTD 3,634,038,040 and reversed special reserve NTD 97,236,894, followed by the deduction of other comprehensive income of NTD 11,831,000, the distributable profit of the current year was NTD 8,099,198,148. Excluding the legal reserve of NTD 437,975,421 according to the provisions of the Articles of Incorporation, the cash dividend is NTD 11 per share and for a total amount of NTD 3,018,038,221 (calculated based on the current ordinary share), and the remaining amount of NTD 4,643,184,506 is to be retained for future distributions in subsequent years.

2. According to the shareholding of the shareholders recorded on the shareholders’ roster on the ex-dividend date, the amount of issuance per share is calculated to the integer dollar with the decimal values truncated; where the distribution is less than 1 dollar, it would be accounted to Other Income of the Company.

3. After this proposal is approved through the resolution of the shareholders’ meeting, the Chairman is authorized to set the ex-dividend date and other relevant issues.

4. Where the new shares are issued due to the Company repurchase of the treasury stocks or transfer of the treasury stocks to employees or employees’ exercise of the subscription right with the share subscription warrants or due to capital increased by cash, then for the dividend distribution ratio of shareholders, the Chairman is authorized to make adjustment proportionally accordingly to the number of shares outstanding on the ex-dividend date.

5. Refer to the Handbook for the Earnings Distribution Table

Regarding the profit distribution proposal, it is submitted for approval. Resolution:

II Discussion Matters

Proposal 1

Proposed by the board of directors

Explanation:

According to the amendment of the “Company Act” and laws of competent authorities, the Company proposes to amend the “Articles of Incorporation” of the Company, and the Comparison Table for the Provisions Before and After Amendment is provided in the following. It is submitted for resolution.

Eclat Textile Co., Ltd.

Comparison Table for the Provisions Before and After Amendment of

“Articles of Incorporation”

		“Articles	of Incorporation”	of Incorporation”
Article No.		Provision After Amendment	Current Provision		Reason of Amendment
Article 1		The Company shall be incorporated under the Company Act.The English name of the Company shall be	The Company’s name shall be Eclat Textile Co., Ltd. and shall be incorporated under the Company Act.		Specify the English name of the Company according to Article 392-1 of the “Company Act”.
		“Eclat Textile Co., Ltd.”
Article 22		The Company shall have eleven to thirteen directors. The election of the directors of the Company shall adopt the candidate nomination system prescribed in Article 192-1 of the Company Act, and directors shall be elected by the shareholders’meeting from the candidate roster announced by the Company. Required compliance matters shall be handled according to relevant laws.The total number of registered shares held by all of the directors shall not be less than the percentage specified by the competent authority according to the laws. In the roster of directors described in thepreceding	The Company shall have eleven to thirteen directors, ~~elected by the shareholders’~~ ~~meeting from candidates with~~ ~~capabilities.~~The total number of registered shares held by all of the directors shall not be less than the percentage specified by the competent authority according to the laws. In the roster of directors described in thepreceding	The Company shall have eleven to thirteen directors, ~~elected by the shareholders’~~ ~~meetin from candidates with~~	According to Article 6 of the “Taiwan Stock Exchange Corporation Operation Directions for “Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers” and “New Corporate Governance Blueprint (2018~2020)”, the election of all of the directors of the Company is amended to adopt the candidate nomination system.

Article No.		Provision After Amendment	Current Provision	Current Provision	Reason of Amendment
		paragraph, the number of independent directors shall not be less thanthree and shall not be less than one fifth of the total number of Directors, with the adoption of the candidates nomination system shall be adopted, and elected by the shareholders’ meeting from the independent director candidate roster. Relevant matters of the professional qualification, shareholding, concurrent job position limitation, nomination and election methods of the Independent Director as well as other necessary requirements shall comply with relevant regulations specified by the competent authority. Independent and non-independent directors shall be elected at the same time, but in separately calculated numbers.	paragraph, the number of independent directors shall not be less than~~two~~and shall not be less than one fifth of the total number of Directors, with the adoption of the candidates nomination system shall be adopted, and elected by the shareholders’ meeting from the independent director candidate roster. Relevant matters of the professional qualification, shareholding, concurrent job position limitation, nomination and election methods of the Independent Director as well as other necessary requirements shall comply with relevant regulations specified by the competent authority. Independent and non-independent directors shall be elected at the same time, but in separately calculated numbers.
Article 31		According to the indemnification liabilities required to be borne under the laws within the scope of duties of all of the directors within their term of office, the Companyshallpurchase liability insurances for the directors in order to reduce and diversify the damage risks of all of the directors, the Company and the shareholders. The Board of Directors is authorized to have the full authorityto		~~Depending upon the actual~~ ~~needs of the scope of duties~~ ~~of all of the directors within~~ ~~their term of office,~~The Company~~may~~purchase liability insurances for the directors in order to reduce and diversify the damage risks of all of the directors, the Company and the shareholders. The Board of Directors is authorized to have the full authority to handle matters related to the application of liability	According to Article 16 of the “Taiwan Stock Exchange Corporation Operation Directions for “Compliance with the Establishment of Board of Directors by TWSE Listed Companies and the Board's Exercise of Powers”, a publicly listed company shall purchase liability insurance for all directors;therefore,the

Article No.		Provision After Amendment	Current Provision	Reason of Amendment
		handle matters related to the application of liability insurances for all of the directors.	insurances for all of the directors.	content of this provision is amended.
Article 41		These Articles of Incorporation were established on November 10, 1977. The first amendment was made on August 21, 1981. (omitted) The twenty-fifth amendment was made on June 21, 2016. The twenty-sixth amendment was made on June 18, 2019.	These Articles of Incorporation were established on November 10, 1977. The first amendment was made on August 21, 1981. (omitted) The twenty-fifth amendment was made on June 21, 2016.	Newly added the date of the twenty-sixth amendment.

Resolution:

Proposal 2

Proposed by the board of directors

Proposal: Amendment to the “Procedures for Acquisition and Disposal of Assets”. Explanation:

1. According to the amendment of the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” by the competent authority, the Company proposes to amend parts of the provisions of the “Procedures for Acquisition and Disposal of Assets”. The Comparison Table for the provisions before and after amendment is provided in the following. It is submitted for resolution.

2. Refer to the Handbook for financial statements Comparison Table for the Provisions Before and After Amendment.

Resolution:

Proposal 3

Proposed by the board of directors

Proposal: Amendments to the “Regulations for Making of Endorsements/Guarantees”.

Explanation:

1. According to the amendment of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” of the competent authorities, the Company proposes to amend the “Regulations for Loaning of Funds and Making of Endorsements/Guarantees”, and the Comparison Table for the Provisions Before and After Amendment is provided in the following. It is submitted for resolution.

2. Refer to the Handbook for financial statements Comparison Table for the Provisions Before and After Amendment.

Resolution:

Proposal 4 Proposed by the board of directors

Proposal: Amendments to the “Operational Procedures for Loaning Funds to Others” Explanation:

1. According to the amendment of the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” of the competent authorities, the Company proposes to amend the “Operational Procedures for Loaning Funds to Others”, and the Comparison Table for the Provisions Before and After Amendment is provided in the following. It is submitted for resolution.

2. Refer to the Handbook for financial statements Comparison Table for the Provisions Before and After Amendment.

Resolution: