Far Eastern International Bank (FEIB) 2017 Annual General Shareholders’ Meeting Minutes

Date: Thursday, 15 June 2017

Time: 9:00 a.m. Taipei time

Place: Auditorium in the Taipei Hero House, No. 20, Changsha Street, Section 1, Taipei, Taiwan

Shareholders at present:

Total outstanding shares of FEIB: 3,111,367,169 shares

Total shares represented by shareholders present: 1,959,440,457shares

Percentage of shares held by shareholders present: 62.98%

Directors at present: Ms. Ching-Ing Hou, Representative of Yue Ding Industry Co., Ltd.

Mr. Douglas Tong Hsu

Mr. Shaw Y. Wang, Representative of Far Eastern New Century Corp.

Mr. Humphrey Cheng, Representative of Far Eastern New Century Corp.
Mr. Tsung-Ming Cheng, Representative of Asia Cement Corp.
Mr. Shi-Chun Hsu, Representative of Asia Cement Corp.
Mr. Ben C.B. Chang, Independence Director
Mr. Bing Shen, Independence Director

Ms. Susan S. Chang, Independence Director

Total 9 directors attended, exceeding 50% of 10 seats in the board.

Chairman: Ching Ing Hou

Recorder: Chia Yu Lin

A. Items for Reporting (Non-Voting Items)

1. 2016 Business Report

The 2016 business report is detailed in the meeting handbook from page 13 to 18.

2. 2016 Financial Statements

The 2016 financial statements and independent auditors’ report by Deloitte & Touche are detailed in Attachment I. (The 2016 financial statements are available for access at http://mops.twse.com.tw )

3. Audit Committee’s Review Report on 2016 Business Report and Financial Statements

The Audit Committee’s review report is detailed in Attachment II.

4. 2016 Summary of Employees’ Compensation and Directors’ Remuneration

The summary of employees’ compensation and directors’ remuneration for 2016 is detailed on page 45 of the meeting handbook.

5. Article 25 of The Banking Act of The Republic of China

The Article 25 of The Banking Act of The Republic of China is detailed in the meeting handbook from page 46 to 48.

6. Subordinated Financial Debentures Issued in 2016

The summary of subordinated financial debentures issued in 2016 is detailed on page 49 of the meeting handbook.

7. Report of Merger Between Far Eastern International Bank, Far Eastern Life Insurance Agency Ltd. Co. and Far Eastern Property Insurance Agency Ltd. Co.

The report of merger between Far Eastern International Bank, Far Eastern Life Insurance Agency Ltd. Co. and Far Eastern Property Insurance Agency Ltd. Co. is detailed on page 50 of the meeting handbook.

B. Items for Acknowledgement (Voting Items)

1. 2016 Business Report and Financial Statements

The Board of Directors recommends shareholders vote FOR 2016 business report and financial statements.

Explanatory Notes:

i. The Audit Committee of the Bank has reviewed the business report and the audited financial statements (by S.Z. Wu, CPA, and C.S. Yang, CPA, of Deloitte & Touche) of the Bank for the year ended 2016 and found them acceptable.
ii. The 2016 business report, the independent auditors’ report & 2016 financial statements, and Audit Committee’s review report are attached in the meeting handbook from page 13 to 44
iii. Please vote FOR.
Resolutions ： The total number of eligible votes represented by the shareholders present at the time of voting (including e-voting) was 1,961,041,753 (1 share for 1 vote), where 1,905,572,920 votes (including e-voting) were FOR the proposal, or 97.17% of the total votes; 3,237,887 votes were AGAINST the proposal, or 0.17% of the total votes; 3,105 votes were INVALID, or 0.00% of the total votes; and 52,227,841 votes were ABSTAINED, or 2.66% of the total votes; The proposal hereby is approved.

2. Proposal of 2016 Earnings Distribution

The Board of Directors recommends shareholders vote FOR 2016 earnings distribution. Explanatory Notes:

planatory Notes:
The 2016 earnings distribution of the Bank is as follows: Unappropriated earnings - beginning Net income Legal reserve Adjustment on retained earnings for remeasurement of defined benefit plans Adjustment on retained earnings for investment under equity method Special reserve Distributable earnings Earnings distribution: Shareholder dividends Unappropriated earnings - ending	(in NT$) 787,954,628 3,243,885,689 (973,165,707) (114,333,503) (671,506) (129,674,872)
	2,813,994,729 2,022,388,661
	791,606,068

i. The 2016 earnings distribution of the Bank is as follows:
ii. Shareholder dividends are allocated as follows: (Unit: NT$)

Cash dividend Stock dividend Total	Per share 0.420 0.230 0.650	Total amount
		1,306,774,211 715,614,450
		2,022,388,661

The 2016 shareholder dividends are appropriated based on earnings of 2016. The cash dividend to each and every shareholder shall be paid in a whole amount of New Taiwan Dollars and any fraction of one New Taiwan Dollar shall be discarded. The total unpaid odd amount will be included in “other revenues” of the Bank.

iii. Dividends will be distributed on the ex-dividend (ex-right) date which is to be determined by Board of Directors after 2017 annual shareholders’ meeting. Dividend per share as referred above is calculated based on the number of shares outstanding on December 31, 2016. The Board of Directors is authorized to adjust cash and stock dividend payout ratio within the total dividend amount, if the actual number of shares outstanding on the ex-dividend (ex-right) date differs from the estimated number of shares.

iv. Please vote FOR.

Resolutions ： The total number of eligible votes represented by the shareholders present at the time of voting (including e-voting) was 1,961,041,753 (1 share for 1 vote), where 1,909,772,950

votes (including e-voting) were FOR the proposal, or 97.39% of the total votes; 3,277,524 votes were AGAINST the proposal, or 0.17% of the total votes; 3,105 votes were INVALID, or 0.00% of the total votes; and 47,988,174 votes were ABSTAINED, or 2.44% of the total votes; The proposal hereby is approved.

C. Items for Discussion and Elections (Voting Items)

1. Proposal of Issuing New Shares - to Capitalize Shareholder Dividend

The Board of Directors recommends shareholders vote FOR capitalization of 2016 stock dividend. Explanatory Notes:
i. Capitalization purpose and funding sources: In order to support business needs, enhance operational capital and improve capital structure, capitalization of NT$715,614,450 shareholder dividend from 2016 earnings distribution is proposed by issuing 71,561,445 new shares at par of NT$10 per share.
ii. Allotment method: The 71,561,445 new shares are distributed in accordance with the shareholding record of the shareholder’s register on the dividend ex-right date, that is, 23 shares per thousand shares. For odd share, two or more shareholders may, within the specific period of time, consolidate each of their respective odd shares into a round number of shares for one person’s shareholding only. For any odd shares that are not consolidated before the deadline, or are still remaining after consolidation, cash will be distributed based on the par value of the share (rounded up to dollars). The total accumulated odd shares will be subscribed at par by the employee shareholding trust of the Bank. The rights and obligations of new shares are the same as those of existing shares.
iii. The distributable dividend shares as referred above are calculated based on the number of shares outstanding on December 31, 2016. The Board of Directors is authorized to adjust stock dividend payout ratio within the total dividend amount if the actual number of shares outstanding on the ex-right date differs from the estimated number of shares.
iv. The ex-right date of stock dividend (same as the effective date of issuing new shares) will be determined by resolution of Board of Directors after 2017 annual shareholders’ meeting.
v. Please vote FOR.
Resolutions ： The total number of eligible votes represented by the shareholders present at the time of voting (including e-voting) was 1,961,041,753 (1 share for 1 vote), where 1,908,814,261 votes (including e-voting) were FOR the proposal, or 97.34% of the total votes; 4,435,584 votes were AGAINST the proposal, or 0.23% of the total votes; 3,105 votes were INVALID, or 0.00% of the total votes; and 47,788,803 votes were ABSTAINED, or 2.43% of the total votes; The proposal hereby is approved.

2. Proposal of Private Placement - to issue Common Shares, Preferred Shares, Convertible Bonds or A Combination of Above Securities to Specific Parties

The Board of Directors recommends shareholders vote FOR issuing of common shares, preferred shares, convertible bonds or a combination of above securities to specific parties for a total amount of not exceeding NT$10 billion or equivalent in foreign currencies. Explanatory Notes:

i. The Bank’s Board of Directors was authorized in annual shareholders’ meeting on June 15, 2016 to proceed private placement for a total amount of not exceeding NT$10 billion or equivalent in foreign currencies. This proposal here is to request extension of last shareholders’ approval for another year.
ii. The purpose of private placement is to seek alliance opportunities with domestic or foreign strategic investors, to strengthen the Bank’s financial structure and capital adequacy ratio, and to facilitate the Bank’s long-term development. The preferred shares will be issued according to Article 4-1 of the Bank’s Articles of Incorporation.
iii. According to Article 43-6 of the “Securities and Exchange Act”, the disclosure of private placement proposal shall include:
(i) The basis and reasonableness of private placement pricing

The common stock price per share shall be no less than 80% of the reference price. The reference price is the higher of the following two basis prices:
- (1) The simple average closing price from either 1, 3 or 5 prior to the pricing date, minus dividends adjustment, plus price discount adjustment due to capital reduction.
- (2) The simple average price of 30 days prior to the pricing date, minus dividends adjustment, plus price discount adjustment due to capital reduction.
The issuing price of preferred shares and convertible bonds shall be no less than 80% of the theoretical price, which is the price determined by a pricing model applicable to all the issuing terms, including options in the issuing terms.
The pricing date, reference price, theoretical price, and actual issuing price, as referred above, will be actually determined subject to market conditions, terms, and discussion with specific parties. If the issuing price is below par and results in cumulative losses to the Bank, the Bank, subject to operation status then, may decapitalize its capital base, reverse retained earnings or capital surplus to make up the losses.
The private placement pricing, as determined by reference to government regulation, the reference price or theoretical price above, and the 3-year lock-up period required by the Securities and Exchange Act, is deemed reasonable.
(ii) The selection method, purpose and necessity of allying with the specific parties, and anticipated benefits:
The selection method and purpose: The selection is based on qualification specified in Article 43-6 of the “Securities and Exchange Act” to invite those strategic investors who are able to assist the Bank to expand sales channels, grow market shares, improve service quality, and reduce operating costs.
Necessity: In order to apply the trend of global financial supervision, the investment from the specific parties is necessary to improve the Bank’s capital adequacy and risk-taking capacity by Basel III implementation, and to support the Bank’s long-term development.
Anticipated benefits: The participation of the specific parties will enhance the Bank’s competitiveness and profitability.

(iii) The necessity of private placement:

Reason for no public offering: Public offering is not considered a recommendable approach, due to concerns of transaction cost and execution efficiency. Plus, the public offering is less supportive to provide the business needs of working with strategic investors, and the intended long-term relationship with the strategic investors, which is to be secured by the 3-year lock-up period per requirement of private placement regulation.
The amount of private placement: Within the limit of NT$10 billion or equivalent in foreign currencies, the amount of private placement could be raised by one or two tranches, within the period of 1 year from the shareholders’ meeting resolution date, subject to market conditions and negotiation progress with the specific parties.
Capital usage plan and anticipated benefits of private placement: The capital amount raised through one or two tranches will be used to expand the scale of the Bank’s business operations and to pursue strategic alliance opportunities domestically or overseas. The anticipated benefits will include strengthening of the Bank’s competitiveness, profitability, capital adequacy, and shareholders’ equity.
iv. The Board of Directors is authorized to determine key terms of capital issuance plans pertaining to the private placement, including issuing shares, pricing, terms and conditions, specific parties’ selection, capital-raising effective date, capital usage plan, anticipated benefits, and all other matters related to the private placement. The Board of Directors is also authorized to revise the issuance plan due to changes of law regulations, or market conditions, or upon instructions from government authorities.
v. Please vote FOR.
Resolutions ： The total number of eligible votes represented by the shareholders present at the time of voting (including e-voting) was 1,961,041,753 (1 share for 1 vote), where 1,623,803,291

votes (including e-voting) were FOR the proposal, or 82.80% of the total votes; 289,155,003 votes were AGAINST the proposal, or 14.74% of the total votes; 0 vote were INVALID, or 0.00% of the total votes; and 48,083,459 votes were ABSTAINED, or 2.46% of the total votes; The proposal hereby is approved.

3 . Amendments to the Procedures of Asset Acquisition or Disposal of Far Eastern International Bank

The Board of Directors recommends shareholders vote FOR the amendments of the Bank’s Procedures of Asset Acquisition or Disposal.

Explanatory Notes:
i Pursuant to the “Guidelines for Handling Acquisition and Disposal of Assets by Public Companies” amended by the Financial Supervisory Commission in the Gin-Guan-Jheng-Fa-Zi No. 1060001296 Order dated February 9, 2017, the Bank amends some of the articles of the Bank’s Procedures of Asset Acquisition or Disposal, in order to meet actual operational needs and to improve information disclosure quality.
ii A summary table of the amendments in the “Procedures of Asset Acquisition or Disposal of Far Eastern International Bank” is attached in the meeting handbook from page 51o 58
iii Please vote FOR.
Resolutions ： The total number of eligible votes represented by the shareholders present at the time of voting (including e-voting) was 1,961,041,753 (1 share for 1 vote), where 1,909,249,709 votes (including e-voting) were FOR the proposal, or 97.36% of the total votes; 3,623,486 votes were AGAINST the proposal, or 0.18% of the total votes; 3,105 votes were INVALID, or 0.00% of the total votes; and 48,165,453 votes were ABSTAINED, or 2.46% of the total votes; The proposal hereby is approved.

4. By-election of the 9th Term Board of Directors

The Board of Directors recommends shareholders vote FOR the candidate of the 9th term Board of Directors.

Explanatory Notes:

i. According to the board resolution on March 21 2017, the Bank schedules by-election of a director, for the 9th term Board of Directors at 2017 annual shareholders’ meeting, with tenor effective from the election date till June 15, 2018. Shareholders may nominate candidates for election from April 11, 2017 to April 20, 2017.
ii. The Bank’s directors are elected from candidates who are nominated by Board of Directors or any shareholders with more than 1% shareholdings. During the above mentioned time period, Far Eastern New Century Corp., a shareholder with more than 1% shareholdings, nominates a candidate for election, and the nomination is later approved per the board resolution on May 2, 2017. The summary of the candidate nomination is detailed is attached on page 59 of the meeting handbook.

iii. Please vote FOR.

Election: Newly Elected Director

Shareholder NO.	Name	Votes Received	Legal Entity Represent
0000001	Mr. James Wu	1,895,206,664 (including 397,656,603 e-voting)	Far Eastern New Century Corp.

D. Questions and Motions (Voting Items): None

E. Meeting adjourned

Attachment I

Independent Auditors’ Report & 2016 Financial Statements

( English Translation of a Report Originally Issued in Chinese)

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