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PBF — AGM Information 2023
Jul 11, 2023
51916_rns_2023-07-11_448c5f57-8250-4367-9a56-573725943dc3.pdf
AGM Information
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Stock code 1760
Panion & BF Biotech Inc.
Annual General Meeting of Shareholders for 2023
Time ：June 29, 2023 (Thursday) at 9:00 a.m.
Type ：Physical Shareholders meeting
- Venue ：4F, Building E, No. 19-11, Sanchong Road, Nangang District, Taipei City (Conference room on the fourth floor of the Nangang IC Design Incubation Center, Nangang Software Park)
---------Disclaimer--------------
This translated document is prepared in accordance with the Chinese version and is for reference only. In the event of any inconsistency between the English version and the Chinese version, the Chinese shall prevail.
TABLE OF CONTENTS
| Chapter | 1 | Meeting Procedures | 2 |
|---|---|---|---|
| Chapter | 2 | Meeting Agenda | 3 |
| Chapter | 3 | Announcement | 4 |
| Chapter | 4 | Proposals | 5 |
| Chapter | 5 | Extempore Motions | 5 |
| Chapter | 6 | Meeting Adjourned | 5 |
| Chapter | 7 | Appendices | 6 |
| I. Business Report |
6 | ||
| II. Audit Committee’s Review Report |
16 | ||
| III. Independent Auditor’s Report and Financial Statements | 17 | ||
| IV. Earnings Distribution Table | 33 | ||
| V. Articles of Incorporation | 34 | ||
| VI. Rules of Procedure for Shareholders’ Meetings | 43 | ||
| VII. Breakdown of Directors’ Shareholdings | 50 |
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Panion & BF Biotech Inc. Procedure for 2023Annual General Meeting of
Shareholders
I. Call Meeting to Order
II. Chairman’s Address
III. Announcement
IV. Proposals
V. Extempore Motions
VI. Meeting Adjourned
2
Panion & BF Biotech Inc.
Agenda for the 2022 Annual General Meeting of Shareholders
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I. Time: 9.00 a.m., June29, 2023 (Thursday)
-
II. Venue: 4F, Building E, No. 19-11, Sanchong Road, Nangang District, Taipei City
【Physical Shareholders’ Meeting】
(Conference room on the fourth floor of the Nangang IC Design Incubation Center, Nangang Software Park)
-
III. Call Meeting to Order
-
IV. Chairman’s Address
-
V. Announcement
-
(I) Business Report for 2022
-
(II) Audit Committee’s Review Report on the Final Statements for 2022
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(III) Distribution of Employee and Director Remuneration for 2022
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(IV) Distribution of Earnings for Cash Dividends and Distribution of Cash from Capital Reserves for 2022
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VI. Proposals
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(I) Business Report and Financial Statements for 2022
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(II) Distribution of Earnings for 2022
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VII. Extempore Motions
-
VIII. Meeting Adjourned
3
Announcement
Item I
(Proposed by the Board of Directors)
Subject: Business Report for 2022
Explanation: Kindly refer to Page 6 of this handbook for the Company’s business report for 2022.
Item II
(Proposed by the Board of Directors)
Subject: Audit Committee’s Review Report on the Final Statements for 2022
Explanation: The Company’s financial statements for 2022 have been audited by KPMG Taiwan, while the Company’s business report and distribution of earnings for 2022 have been reviewed by the Audit Committee. Kindly refer to Page 16 of this handbook for the aforesaid review report.
Item III
(Proposed by the Board of Directors)
Subject: Distribution of Employee and Director Remuneration for 2022
Explanation: 1. On March 30, 2023, the Company’s Board of Directors passed a resolution to distribute NT$14,586,840 in employee remuneration and NT$18,233,550 in director remuneration for 2022, all of which are to be paid in cash.
- There is no discrepancy between the above mentioned amount of remuneration distributed and the estimated amount of expenses recognized in 2022.
Item IV
(Proposed by the Board of Directors)
-
Subject: Distribution of Earnings for Cash Dividends and Distribution of Cash from Capital Reserves for 2022
-
Explanation: 1. According to Article 26-1 of the Company’s Articles of Incorporation, the Board of Directors shall be authorized to report the distribution of shareholders’ dividends from distributable earnings and capital reserves, when paid in cash, to the shareholders’ meeting after a special resolution has been adopted.
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The Company will allocate NT$167,191,075 from its distributable earnings for 2022 to pay a cash dividend of NT$1.95 per share to shareholders, and allocate NT$4,286,951 from its capital reserves to pay a cash dividend of NT$0.05 per share to shareholders. In other words, a cash dividend of NT$2 per share will be paid to shareholders in total. Cash dividends will be paid based on the number of shares held by shareholders on the record date, and calculated (rounded down) to the nearest New Taiwan dollar. Any amount less than NT$1 will be included in the Company’s other income.
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Having obtained approval for this proposal from the Board of Directors, the Chairman shall be authorized to determine the ex-dividend date, the payment date, and other related matters. In the event of any changes to the dividend payout ratio due to changes in the number of ordinary shares outstanding thereafter, the Chairman shall also be authorized to make adjustments at his/her sole discretion.
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Proposals
Item I
(Proposed by the Board of Directors)
Subject: Business Report and Financial Statements for 2022
-
Explanation: 1. The Company’s financial statements for 2022 have been audited by Lily Lu and Charlotte Chao from KPMG Taiwan, while the Company’s business report for 2022 has been approved by the Board of Directors and reviewed by the Audit Committee.
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Kindly refer to Page 6 and Page 17 to Page 32 of this handbook for the Company’s business report, the Independent Auditor’s Report, and the Company’s financial statements for 2022.
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The proposal above is submitted for resolution and adoption.
Resolution:
Item II
(Proposed by the Board of Directors)
Subject: Distribution of Earnings for 2022
Explanation: 1. As the Company recorded a net income of NT$182,344,351 in 2022, an earnings distribution table has to be prepared in accordance with the Company’s Articles of Incorporation. Kindly refer to Page 33 of this handbook for more details.
Resolution:
Extempore Motions
Meeting Adjourned
5
Appendix Ⅰ
Panion & BF Biotech Inc. Business Report
I. Operating Performance in 2022
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(I) Results of the 2022 Business Plan
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The Company’s consolidated operating revenue for 2022 was NT$2,398,648 thousand, an increase of NT$497,437 thousand compared with that of 2021, representing a 26.16% increase in revenue. The revenue of the Taiwan BU increased by NT$486,518 thousand, it is mainly due to new record revenue from COVID-19 antigen rapid test kits, and stable growth of active pharmaceutical ingredients (APIs) revenues. Additionally, the sales royalty income increased by NT$90,131 thousand in 2022, while the operating revenue of the China, Hong Kong and Macau BUs decreased by NT$79,212 thousand due to the impact of the COVID19 pandemic and lockdown.
The consolidated gross profit in 2022 was NT$1,318,596 thousand, an increase of NT$406,458 thousand compared with that of 2021, representing a 44.56% increase. Gross profit increased by NT$433,183 thousand mainly due to the significant increase in Taiwan BU’s operating revenue of COVID-19 antigen rapid test kits and royalty income obtained from the new drug for renal failure. The gross profit of the China, Hong Kong, and Macau BUs decreased by NT$26,725 thousand.
The consolidated operating expense for 2022 was NT$904,632 thousand, an increase of NT$157,836 thousand compared with that of 2021. This is mainly due to the growth in revenue from the Taiwan BU, the increase in various staffing costs, bonuses, business promotion, warehousing and shipping expenses, and continued investment in R&D expenses for COVID-19 antigen rapid test kits, new indications of Nephoxil[®] , medical aesthetic microneedling, and minimally invasive products.
The consolidated income tax for 2022 was NT$151,064 thousand, an increase of NT$72,814 thousand compared with that of 2021. This is mainly due to the increase in consolidated net income before tax.
As a result of the above, consolidated operating revenue, consolidated gross profit, and consolidated operating profit increased in 2022, resulting in a consolidated income of NT$182,345 thousand in 2022, an increase of NT$77,943 thousand or 74.66% compared to that of 2021.
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(II) Budget execution and analysis of revenues, expenses, and profitability
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Budget execution
In 2022, in response to changes in the market environment, the Taiwan BU actively explored markets, diversified operations, generated operating income, and comprehensively controlled costs and expenses. The consolidated net income after tax increased by 173.59% compared to that of 2021, the Company achieved its expected operating target.
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- Financial revenue & expenditure and profitability analysis
Unit: NT$ thousands
| Year | Year | 2021 | 2022 | ||
|---|---|---|---|---|---|
| Changes (%) | |||||
| Item | (Consolidated) | (Consolidated) | |||
| Financial revenue and expenditure |
OperatingRevenue | 1,901,211 | 2,398,648 |
26.16 |
|
| Gross Profit | 912,138 | 1,318,596 |
44.56 |
||
| Net Income | 104,402 | 182,345 |
7.66 |
||
| Profitability | Return on assets (%) | 3.85 | 6.23 |
61.82 |
|
| Return on shareholder’s equity (%) |
6.58 | 9.26 |
40.73 |
||
| As a percentage of paid-in capital (%) |
Operating profit |
48.28 | 150.41 |
140.20 |
|
| Income before tax |
38.89 |
82.58 |
137.28 |
||
| Net income margin(%) | 5.49 | 7.60 |
38.43 |
||
| Basic earnings per share (NT$) |
1.32 | 2.13 |
61.36 |
||
| Diluted earnings per share (NT$) |
1.32 | 2.12 |
60.61 |
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(III) Research and Development
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Research and Development Expenditure for the Last Two Years
Unit: NT$ thousands
| Year | ||
|---|---|---|
| 2021 (Consolidated) | 2022 (Consolidated) | |
| Item | ||
| Research and Development Expenses | 157,711 |
248,496 |
| OperatingRevenue | 1,901,211 | 2,398,648 |
| Ratio of Research and Development Expenditure to OperatingRevenue |
8.30% | 10.36% |
- Major Research and Development Achievements in Recent Year
After more than ten years of precise strategic layout, the Company’s new drug for renal failure Nephoxil[®] has begun to make profits. In addition to the Taiwan, Japan and the United States, the Company has added South Korea (the South Korean license partner successfully passed NDA in May, 2022) to its global sales territory, which is expected to bring stable revenue and profit contribution to the Company. In EU, Akebia granted the license to Averoa SAS at the end of December 2022, highlighting the Company's success in capturing international market.
With respect to sales results, the annual sales of Nephoxil[®] exceeded US$200 million in the U.S., Japan, and Taiwan, and its U.S. license partner (Akebia Therapeutics - formerly Keryx Corporation) achieved seven consecutive years of double-digit positive sales growth from 2016 to 2022.
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While Nephoxil® constantly expands its international sales, the Company has been more active in the R&D of expanded indications in recent years, to effectively extend the product life cycle and develop new sources of profit. Both the U.S. Akebia Therapeutics[®] —formerly Keryx Biopharmaceuticals) and the Japanese sublicense partner (Japan Tobacco and its subsidiary Torii Pharmaceuticals) have successfully developed an expanded indication, iron deficiency anemia, effectively extending the product’s profitable lifespan. In March, 2023, Taiwan successfully unblinded Phase III clinical trials data for the new indication of Nephoxil[®] . In the future, it will actively submit NDA (New Drug Application) and apply for health insurance coverage. Since the patient base of iron deficiency anemia among those with chronic renal failure is much larger than that of dialysis patients, the Company expects to increase its profit stream on top of the existing revenue of Nephoxil.
In terms of new market development, particularly with regard to progress in the Chinese market: The Company entered into an alliance with Shandong Weigao Pharmaceuticals to enter the mainland market, officially announcing on February 22, 2022 that its new Chinese renal failure drug Nephoxil[®] ferric citrate 500 mg capsule (a preparation for the treatment of hyperphosphatemia in dialysis patients with chronic renal failure) had achieved the target in Phase III clinical trial data analysis, with all major efficacy indicators and secondary efficacy measures comparable to those of sevelamer carbonate. Recently, DKSH, the Company’s exclusive distribution partner in Thailand, has submitted NDA to the Thai authorities. According to the global growth rate of the dialysis patients revealed by USRDS, Thailand had the highest annual compounded growth rate in the world at 18.1% from 2020 to 2025. According to reports, about 100,000 patients in Thailand received dialysis treatment in 2022 (Note 1). If the Company succeeds in passing NDA, it is expected to witness an increase in its sales revenue.
In terms of API integration, on November 30, 2020, the Company acquired Cheng Fong Chemical Co., Ltd., as a wholly-owned subsidiary. Cheng Fong Chemical is the foundry of API (Ferric Citrate) for the Company’s drug, Nephoxil[®] . The acquisition of Cheng Fong Chemical has a profound strategic impact on the Company’s future global strategy in the area of ferric citrate, an API for Nephoxil[®] . The Company has to respond in advance to the future sales demand in China and South Korea after obtaining the drug license. In addition to further development in the U.S. and Japan, the Company will also strive to engage with our authorized partners on the possibility of marketing the API (ferric citrate hydrate) to the U.S. and Japan (subject to obtaining a DMF Listing from the USFDA). Later, the Company will strive to sell ferric citrate to its partners in Japan and the European Union to strategically maximize revenue and profitability. At present, Cheng Fong Chemical and Panion & BF have a total of 17 drug licenses for APIs. In addition to ferric citrate, Cheng Fong Chemical focuses on the production and market
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expansion of two drug licenses (Pseudoephedrine and Phenylpropanolamine) that are highly profitable and potential.
We have successfully developed our core technology platform in the areas of chemical manufacture and control (CMC), clinical development, patent layout, new drug development regulations, and commercialization, and have developed a number of original, unique, and critical benchmark results and core values in the development of new drugs, which have led to the formation of our core R&D management team in new drug development. This R&D management team is capable of planning relevant R&D strategies and processes, mastering core technologies, laying out patents, and effectively managing and monitoring outsourced R&D tasks. This core new drug design know-how and team have driven the Company’ s becoming a world-class biotech pharmaceutical research and development center.
- Note 1. (https://www.tuneprotect.co.th/en/article/THAILANDS-AWARENESS-OF-CRITICALILLNESSES-IS-RATHER-CONCERNING)
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II. Business plan for 2023
- (I) Operational policy
Our philosophy is to develop our four core businesses of disease treatment, disease prevention, disease diagnosis, and aging delay, with a focus on improving human health and quality of life. Based on this development strategy, we have extended our six major business units—Taiwan PBF, China PBF, Innovative Medical, Innovative Diagnostics", Innovative Medical and Beauty, and API Business. The Company continues to engage in innovative R&D, adhere to international standards of product quality, and establish quality marketing channels. We are committed to developing new drugs, niche pharmaceuticals, APIs, infection control, diagnostic testing, and cosmeceuticals as well as to expanding in markets in Greater China and overseas to achieve our internationalization goals.
- (II) Expected sales volume and its basis
Looking ahead to 2023, based on the market conditions, the expectations of the Board of Directors, and corporate development strategy, the Company has set its business objectives. In addition to gradually realizing development revenue in the innovative medical business unit, the Company will focus on the sales mix of major customers, major products, and highmargin products in the development of channel management and enterprise resource integration, in order to increase gross profits and gross margins and create operating profit. In addition, we will continue to control our operating expenses and introduce production cost reductions and other management-oriented optimization programs in the hope of establishing a competitive advantage for the Company and fostering higher profitability.
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(III) Major production and marketing policies
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Pharmaceutical products are a long-established source of revenue and profit growth for the Company. The internal marketing team has been actively developing nephrologyrelated channels in major hospitals in Taiwan in line with the marketing of the new nephrological drug Nephoxil[®] and the development of new indications. In addition, we will stay focused on the development of drugs and medical materials for nephrology and infectious diseases, and we will also continue to expand our cooperation with other overseas markets to increase our revenue stream and realize the huge value of new drug development.
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We will develop our API business to achieve vertical integration, reduce production costs, optimize and streamline the production process, and seek opportunities to link with the biotech industry to upgrade biotech in Taiwan.
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Focusing on the development of our core business, we are not only diversifying our operations in the Taiwan market and focusing on target customers, but also actively expanding into mainland China and other overseas markets to expand our operating performance and achieve new profitability goals.
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4. We will continue to optimize the process technology and plant expansion of our PIC/S GMP manufacturing plant, enhance the plant’s optimal production capacity and reduce its operating costs, and keep track of regulatory changes and take countermeasures to improve the gross profit of our products and boost the profitability of the Company.
5. We continue to invest in innovative R&D with a focus on two major areas: product development (evolutionary and revolutionary products) and personalized precision diagnostics. With our successful experience in new drug development, we have built up an incubation platform and core team to select and introduce high potential technologies and products for full-scale development, and achieve the best development benefits through strategic alliances with global partners.
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III. Future development strategy
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(I) Mastering core technologies and deploying to global markets
- With Nephoxil[®] as the core drug, we have introduced a product lifecycle management strategy to expand the application of Nephoxil[®] in the field of chronic renal failure and established a global cooperation network with international nephrology partners. In addition to extending the development of new indications, we will continue to develop product lines for general and serious diseases to significantly enhance the efficiency of new drug development and our competitive advantage in the international market.
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(II) Expanding the business of “age-reversal and age-delaying”
By promoting the concept of age-reversal in all aspects of both aesthetic age and biological age and promoting personal health and sub-health management, we are actively developing our medical cosmetics and nutritional supplements businesses, targeting complementary treatments with dermatological/medical aesthetic minimally invasive surgeries in the skin medical business and developing a full range of medical cosmetics, hair loss cosmetics, and nutritional supplements to delay the aging process. The Company continues to research and develop new non-invasive and age-reversing medical aesthetic technology and develop functional products to achieve full differentiation in the market. In addition, the Company has leveraged its niche in a wide range of aesthetic medical channels (aesthetic medical clinics, dermatology, hair management clinics, etc.) to actively develop aesthetic medicine related materials. The Company will develop a complete range of products for physical and aesthetic aging and to use age-delaying and age reversal medical treatments as the development framework for innovative medical aesthetic business, so as to explore new blue ocean business opportunities in the highly competitive market of medical aesthetics. In addition to its diverse channels in Taiwan, the Company will continue to actively expand its professional medical channels and virtual e-commerce channels in China, as well as its international market presence elsewhere.
- (III) Development of “infection control” business
The Company is actively developing a full range of “infection control” products and has
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established its brand authority in the professional medical channel in Taiwan, with plans to expand its applications to the livestock and pet markets. In addition, the Company is also actively entering the long-term care market by developing new dosage forms of medical materials, which are currently under clinical trial and are expected to bring new revenues and profits to the Company after obtaining approval. The Company will continue to focus on infection-related products and promote research and development, with an eye on the huge market opportunities of long-term care of the aging and continuous development of infection control in everyday environments, along with actively developing markets such as mainland China and Japan.
- (IV) Investing in the testing and diagnostic business, developing prospective technologies and products
Biotechnology is an emerging part of the tech industry in the 21st century, and the development of testing reagents is a vital aspect of its the commercial application. In 2014, we established the Innovative Diagnostics Business Unit With the internal core team and R&D platform, we built ourselves as the first company in Taiwan to develop immunoassay reagents with an ISO- and GMP-compliant design control system. By the end of the 2022, we had successfully developed eight rapid tests for infectious diseases, including gastrointestinal and respiratory disease tests. Since 2020, the Company has achieved strong sales figures despite the rampant COVID-19 pandemic. In the future, the Company will continue to work on clinical and regulatory applications in other key strategic countries and regions. Besides, in the post-pandemic era, the Company is actively developing new products, including the rapid test kits for FluA/B & COVID and dengue fever. In medicine and clinical treatment, prevention is always better than cure. The Company’s ultimate goal is to become the world’s number one in bringing infectious disease prevention and diagnosis to home testing, maximizing business opportunities and enabling the general public can be diagnosed and treated at the earliest stages of disease.
- (V) Establishment of a sports medicine department
Our “Race On” brand was officially launched in December 2019, aiming to appeal to endurance sports-enthusiasts. Through the rapid dissemination of information through Facebook and the Company’s website, as well as trial promotions by athletes and coaches from schools and road running teams, sales figures have continued to rise several years after launch, and the Company expects to anchor itself in the Taiwanese sports market as it expands worldwide.
- (VI) Acquisition of API plants and integration of upstream and downstream resources
On November 30, 2020, the Company completed a share transaction, formally acquired Cheng Fong Chemical Co., Ltd. as a wholly-owned subsidiary, and actively carried out expansion plans. Cheng Fong Chemical is a GMP API plant and the sole API registrant for ferric citrate, the main ingredient of the Company’s new renal drug Nephoxil[®] . The Company
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is striving to become a partner in the US/Japan/EU for the supply of ferric citrate, and provides ferric citrate to Panion & BF for product launching preparation in China, Taiwan, South Korea, Thailand and other regions. Our strategic goal is to achieve market advantages by combining the integrated advantages of APIs and its benefits from vertical integration
(VII) Promoting ESG and moving towards sustainable development and corporate governance 3.0
To promote the sustainable development of the Company, the Board of Directors decided to set up a special Sustainable Development Committee. The Committee has established dedicated teams responsible for improving various indicators. Additionally, the Committee promotes and implements the progress of regular reports to the Board of Directors. The Sustainable Development Committee consists of six teams:
- Environmental Sustainability Team
Cooperate with the competent authority, the Financial Supervisory Commission (FSC), to promote the policies and measures related to Corporate Governance 3.0_Sustainable Development Blueprint, and actively strive to achieve energy saving, water saving, carbon reduction (implement the inventory and verification of greenhouse gas emissions to realize the effective control of carbon emissions), waste and sewage reduction, etc. In terms of product development, the Team aims to reduce the use of related surfactants and preservatives such as environmental hormones (in line with the strictest EU standards). To alleviate the impact of product packaging materials on environment, the Team will consider lightweight and environmentally friendly materials when designing packaging materials in the future.
- Social Responsibility Team
In terms of corporate social responsibility, the Company continues to care for the underprivileged and rural communities, strive to promote the healthy development of the mind, body, and spirit, and try to create a better and healthier society.
- Risk Management Team
In terms of risk management procedures, the risk management process includes risk identification, risk analysis, risk monitoring and response, risk reporting and disclosure, etc.
- Corporate Governance Team
At the corporate governance level, the Company strives to uphold the interests of shareholders with a sound and professional Board of Directors and impartial independent directors.
- Information Security Team
Responsible for implementing the formulation and management of information security regulations to ensure the safety of data, system and network, and reporting to the Board
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of Directors at least once a year.
- Ethical Management Team
Responsible for formulating and supervising the implementation of ethical management policies and prevention plans to improve ethical management and report to the Board of Directors at least once a year.
- IV. Effect of external competitive environment, regulatory environment, and general business environment
In recent years, domestic and foreign pharmaceutical companies have been facing increasing competition, coupled with the tightening of drug prices under the National Health Insurance system and consequent tightening profit margins, as well as the implementation of PIC/S GMP certification and government regulations and capacity expansion, all of which have led to an increase in drug costs. The traditional pharmaceutical market is becoming less profitable. The only ways for domestic pharmaceutical companies to secure a place in the domestic market are to continuously improve the quality of their pharmaceutical products and to innovate and develop niche markets.
The Company has invested many years in R&D into new patented international drugs, the development and deployment of global marketing channels, the upgrading of PIC/S GMP plants, and the active pursuit of transformation opportunities and enhancements related to the Group’s businesses. Since 2014, our new drugs have been approved for marketing in Japan, the U.S., Taiwan, Europe and South Korea, and our R&D achievements have blossomed internationally. We have also joined forces with Shandong Weigao Pharmaceutical Co., Ltd., a leading pharmaceutical company in China, to establish a joint venture company in Hong Kong and develop the market for chronic renal failure treatment in China and reach a new milestone in our overall operations. Looking ahead, the Company will continue to work hard to build a solid foundation for stable growth in its own industry while continuing to improve its revenue from new drugs as well as the revenue and profitability of its mainland subsidiaries during the post-pandemic period. In particular, the Company has announced that the Phase III clinical trial of Nephoxil[®] in mainland China has met the target data and will accelerate the preparation of the submission for the milestone of obtaining a drug license. It is expected to have more fruitful operating results in the future.
Although the Company will continue to encounter many new challenges and impacts from the external environment in the course of its pursuit of sustainable business growth, along with the continued impact of the COVID-19 pandemic since January 2020, as this pandemic was a sudden and irresistible external factor, it has also been a test of the Group’s handling of such situation and the adoption of relevant measures and countermeasures so as to minimize the impact on its operations.
We believe that with the concerted efforts of our Board of Directors, management team, and all employees, we will be able to overcome difficulties of all kinds, create better business results, and
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implement our corporate philosophy of sustainable management, thereby increasing shareholders’ equity and contributing to society.
Chairman: Chang, Li-Chiou
General Manager: Chiang, Chung-Ming
Vice President of Finance: Wang, Feng-Jen
Accounting Manager: Chiu, Mei-Lun
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Appendix Ⅱ
Panion & BF Biotech Inc.
Audit Committee’s Review Report
To: Panion & BF Biotech Inc. 2023 Annual General Meeting of Shareholders Following the issuance of the Company’s parent company only and consolidated financial statements, business report, and earnings appropriation plan for 2022 by the Board of Directors, KPMG Taiwan has been entrusted to audit the Company’s parent company only and consolidated financial statements, and issued an audit report with an unqualified opinion. No discrepancies have been observed in the abovementioned parent company only and consolidated financial statements, business report, and earnings appropriation plan upon review by the Audit Committee. Therefore, this report is issued in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act.
Convener of the Audit Committee：Chang,Ryh-Yan
March 30, 2023
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Appendix Ⅲ
Independent Auditors ’ Report
To the Board of Directors of PANION & BF BIOTECH INC.:
Opinion
We have audited the accompanying consolidated financial statements of PANION & BF BIOTECH INC. ("the Company") and its subsidiaries (collectively referred to as “the Group”), which comprise the consolidated statements of financial position as of December 31, 2022 and 2021, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2022 and 2021, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards ("IFRSs"), International Accounting Standards ("IASs"), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
- Revenue recognition
Please refer to notes 4(n) and 7(q) for the related disclosures on revenue recognition.
Description of key audit matter:
Revenue is one of the key performance indicators for evaluating the financial and operational performance of the Group. The risk for the revenue being recognized in an incorrect period or being recognized with incorrect amounts presents a material misstatement to the consolidated financial statements. Therefore, revenue recognition was considered one of the key audit matters in our audit.
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How the matter was addressed in our audit:
Testing the effectiveness of the internal control over sales and receivable collection processes, including the evaluation of when to recognize the revenue from those significant contracts with customers; evaluating the sales to the top ten customers by considering the product type, the significant unusual changes in their receivables turnover ratio, and the changes, such as amount and ranking, in the current period to the last quarter, and to the same period in the prior year; selecting sales transactions throughout the year and within a period before and after the year-end, and vouching them with the related supporting documents to evaluate whether the revenue has been recognized in the correct accounting period and assess if the significant sales returns and allowances occur in the subsequent period.
- Subsequent measurement of inventories
Please refer to notes 4(h), 5 and 6(c) for the related disclosures on subsequent measurement of inventories.
Description of key audit matter:
The inventories of the Group are mainly pharmaceutical drugs, health supplements, chemical products and test reagents. The products may be outdated or no longer meet the market demand due to the rapid development of new products. In addition, the price competition in the same industry, and the demand on related products and their prices which may fiercely fluctuate, may result in a risk wherein the cost of inventories may exceed its net realizable value. The subsequent measurement of inventories relies on the management ’ s subjective judgment using internal and external evidences. Therefore, the subsequent measurement of inventories was considered one of the key audit matters in our audit.
How the matter was addressed in our audit:
Assessing the rationality of accounting policy for inventory subsequent measurement; obtaining the documents on inventory subsequent measurement to determine whether they are in compliance with the accounting policy; understanding the rationality of sales prices adopted by the management, selecting samples and verifying the accuracy of net realizable value of inventories by examining relevant documents, and determining the reasonableness of the inventory provision recognized by the management.
Other Matter
The Company has prepared its parent company only financial statements as of and for the years ended December 31, 2022 and 2021, on which we have issued an unmodified opinion.
Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.
Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Group’s financial reporting process.
18
Auditors' Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the consolidated financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
-
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Group to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
-
Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
19
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditors’ report are Lily Lu and Min-Ju Chao.
KPMG
Taipei, Taiwan (Republic of China) March 30, 2023
Notes to Readers
The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.
The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.
20
(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Financial Position
December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars)
| Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Financial assets measured at fair value through profit and loss－current (note 6(d)) 1150 Notes receivable (notes 6(b) and (q)) 1160 Notes receivable－related parties (notes 6(b), (q) and 7) 1170 Accounts receivable, net (notes 6(b) and (q)) 1180 Accounts receivable－related parties (notes 6(b), (q), 7 and 9) 1200 Other receivables 1220 Current income tax assets 130x Inventories (note 6(c)) 1410 Prepayments 1479 Other current assets Total current assets Non-current assets: 1510 Financial assets measured at fair value through profit and loss－ non-current (note 6(d)) 1600 Property, plant and equipment (notes 6(g) and 8) 1755 Right-of-use assets (note 6(h)) 1780 Intangible assets (note 6(i)) 1840 Deferred tax assets (note 6(m)) 1915 Prepayments for equipment 1920 Refundable deposits (note 8) Total non-current assets 1xxx Total assets |
December 31, 2022 Amount % $ 464,257 15 - - 92,537 3 31,435 1 208,299 7 21,760 1 1,292 - 5,386 - 545,648 17 22,703 1 5,972 - |
December 31, 2021 Amount % 279,103 10 69,787 2 81,046 3 35,936 1 207,114 7 9,804 - 1,854 - 27,745 1 528,525 18 30,500 1 3,117 - 1,274,531 43 84,027 3 1,440,446 48 80,905 3 19,645 1 21,258 1 2,922 - 29,361 1 1,678,564 57 2,953,095 100 Liabilities and Equity Current liabilities: 2100 Short-term loans (note 6(j)) 2322 Current portion of long-term loans (notes 6(j) and 8) 2170 Accounts payable 2200 Other payables (notes 6(r), 7 and 9) 2230 Current income tax liabilities 2280 Current lease liabilities (note 6(k)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2540 Long-term loans (notes 6(j) and 8) 2570 Deferred tax liabilities (note 6(m)) 2580 Non-current lease liabilities (note 6(k)) 2640 Net defined benefit liability－non-current (note 6(l)) 2645 Guarantee deposits 2650 Credit balance of investments accounted for using equity method (notes 6(f) and 9) Total non-current liabilities Total liabilities 31xx Equity attributable to owners of parent (notes 6(n) and (o)): 3110 Common stock 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings Subtotal Other equity: 3410 Foreign currency translation differences for foreign operations Total equity Total liabilities and equity |
December 31, 2022 | December 31, 2022 | December 31, 2022 |
|---|---|---|---|---|---|
| Amount | % | Amount | |||
921,581 30 740,493 24 |
|||||
22,900 1 116,068 4 73,100 2 73,924 3 34,797 1 51,774 2 11,122 - 17,477 1 6,302 - 8,666 - 16,624 1 11,679 - |
|||||
1,399,289 45 |
|||||
75,097 2 1,496,625 48 58,761 2 15,967 1 21,122 1 6,864 - 19,814 1 |
|||||
164,845 5 279,588 10 |
|||||
1,086,426 35 1,020,081 34 |
|||||
857,391 28 857,391 29 871,174 28 903,755 31 |
|||||
74,519 3 63,848 2 37,371 1 37,283 1 188,497 6 108,108 4 |
|||||
1,694,250 55 |
|||||
300,387 10 209,239 7 |
|||||
(21,839) (1) (37,371) (1) |
|||||
2,007,113 65 1,933,014 66 |
|||||
| $ 3,093,539 100 |
$ 3,093,539 100 2,953,095 100 |
See accompanying notes to consolidated financial statements.
21
(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)
| 4000 Operating revenue (notes 6(q) and 7) 5000 Operating costs (notes 6(c), (l) and 9) 5900 Gross profit 6000 Operating expenses (notes 6(b), (l) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Impairment loss for expected credit loss Total operating expenses 6900 Operating income 7000 Non-operating income and expenses (notes 6(d), (f), (k) and (s)): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7370 Share of losses from joint ventures 7635 Loss on financial assets measured at fair value through profit and loss Total non-operating income and expenses Profit from continuing operations before tax 7950 Less: Income tax expenses (note 6(m)) Net income 8300 Other comprehensive income (loss) (notes 6(f), (l) and (m)): 8310 Items that will not be reclassified subsequently to profit or loss 8311 Gains on remeasurements of defined benefit plans 8349 Less: income tax related to items that will not be reclassified subsequently to profit or loss Total items that will not be reclassified subsequently to profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Foreign currency translation differences for foreign operations 8370 Share of other comprehensive income of joint ventures 8399 Less: income tax related to items that will be reclassified subsequently to profit or loss Total items that may be reclassified subsequently to profit or loss 8300 Other comprehensive income, net of tax Total comprehensive income Earnings per share (note 6(p)) 9710 Basic earnings per share (expressed in New Taiwan dollars) 9810 Diluted earnings per share (expressed in New Taiwan dollars) |
2022 | % 100 45 |
2021 | % 100 52 |
|---|---|---|---|---|
| Amount $ 2,398,648 1,080,052 |
Amount 1,901,211 989,073 |
|||
1,318,596 |
55 | 912,138 |
48 | |
422,151 233,907 248,496 78 |
18 10 10 - |
396,673 190,322 157,711 2,090 |
21 10 8 - |
|
| 904,632 | 38 | 746,796 |
39 | |
413,964 |
17 | 165,342 |
9 | |
1,793 20,812 6,288 (7,585) (8,181) (93,682) |
- 1 - - (1) (4) |
638 40,265 3,261 (14,681) (12,173) - |
- 2 - (1) (1) - |
|
(80,555) |
(4) |
17,310 | - | |
333,409 151,064 |
13 6 |
182,652 78,250 |
9 4 |
|
182,345 |
7 | 104,402 |
5 | |
6,038 1,207 |
- - |
2,886 577 |
- - |
|
4,831 |
- | 2,309 | - | |
12,296 3,236 - |
1 - - |
(118) 30 - |
- - - |
|
| 15,532 | 1 | (88) | - | |
20,363 |
1 | 2,221 |
- | |
$ 202,708 |
8 | 106,623 |
5 | |
$ |
2.13 | 1.32 | ||
| $ | 2.12 | 1.32 |
See accompanying notes to consolidated financial statements.
22
(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Equity
For the years ended December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars)
| Equity attributable to owners of parent | Equity attributable to owners of parent | Equity attributable to owners of parent | |||||||
|---|---|---|---|---|---|---|---|---|---|
| Foreign currency | |||||||||
| translation | |||||||||
| Retained | earnings | differences for | |||||||
| Common | Capital | Special | Unappropriated | foreign | |||||
| stock | surplus | Legal reserve | reserve | earnings | subtotal | operations | Total equity | ||
| Balance at January 1, 2021 | $ | 767,391 | 391,983 | 61,154 | 28,877 | 27,845 |
117,876 | (37,283) |
1,239,967 |
| Appropriation and distribution: | |||||||||
| Legal reserve | - | - | 2,694 | - | (2,694) | - | - | - | |
| Special reserve appropriated | - | - | - | 8,406 | (8,406) |
- | - | - | |
| Cash dividends | - | - | - | - | (15,348) | (15,348) | - |
(15,348) | |
| Cash dividends from capital surplus | - | (38,369) | - | - | - | - | - | (38,369) | |
| Net income for the year | - | - | - | - | 104,402 | 104,402 | - |
104,402 | |
| Other comprehensive income for the year | - | - | - | - | 2,309 | 2,309 | (88) |
2,221 | |
| Total comprehensive income for the year | - | - | - | - | 106,711 | 106,711 | (88) |
106,623 | |
| Issue of shares | 90,000 | 538,425 | - | - | - | - | - | 628,425 | |
| Share-based payments | - | 11,716 | - | - | - | - | - | 11,716 | |
| Balance at December 31, 2021 | 857,391 | 903,755 | 63,848 | 37,283 | 108,108 |
209,239 | (37,371) |
1,933,014 | |
| Appropriation and distribution: | |||||||||
| Legal reserve | - | - | 10,671 | - | (10,671) | - | - | - | |
| Special reserve appropriated | - | - | - | 88 | (88) |
- | - | - | |
| Cash dividends | - | - | - | - | (96,028) | (96,028) | - |
(96,028) | |
| Cash dividends from capital surplus | - | (32,581) | - | - | - | - | - | (32,581) | |
| Net income for the year | - | - | - | - | 182,345 | 182,345 | - |
182,345 | |
| Other comprehensive income for the year | - | - | - | - | 4,831 | 4,831 | 15,532 |
20,363 | |
| Total comprehensive income for the year | - | - | - | - | 187,176 | 187,176 | 15,532 |
202,708 | |
| Balance at December 31, 2022 | $ | 857,391 | 871,174 | 74,519 | 37,371 | 188,497 |
300,387 | (21,839) |
2,007,113 |
See accompanying notes to consolidated financial statements.
23
(English Translation of Consolidated Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars)
| Cash flows from operating activities: Income before tax Adjustments: Adjustments to reconcile profit and loss Depreciation expense Amortization expense Impairment loss for expected credit loss Net loss (gain) on financial assets measured at fair value through profit or loss Interest expense Interest income Dividend income Share-based payment transactions Share of losses of joint ventures accounted for using equity method (Gain) loss on disposal of property, plant and equipment Gain on lease modification Rent Concessions Total adjustments to reconcile profit and loss Changes in operating assets and liabilities relating: Net changes in operating assets: Financial assets mandatorily measured at fair value through profit or loss Notes receivable Notes receivable－related parties Accounts receivable Accounts receivable－related parties Other receivables Inventories Prepayments Other current assets Total changes in operating assets Changes in operating liabilities: Accounts payable Other payables Other current liabilities Net defined benefit liability Total net changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Income taxes paid Net cash flows from operating activities Cash flows from investing activities: Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (Increase) in refundable deposits Increase in prepayments for equipment Interest received Dividends received Net cash flows used in investing activities Cash flows from financing activities: Increase in short-term loans Decrease in short-term loans Proceeds from long-term loans Repayments of long-term loans Increase (decrease) in guarantee deposits Repayment of the principal portion of lease liabilities Cash dividends paid Proceeds from issue of common stock Interest paid Net cash flows used in financing activities Effect of movements in exchange rates on cash and cash equivalents held Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year |
2022 $ 333,409 159,451 4,096 78 93,682 7,585 (1,793) (2,980) - 8,181 (6,278) (614) - |
2021 182,652 139,526 4,097 2,090 (6,722) 14,681 (638) (6,378) 11,716 12,173 436 (142) (54) |
|---|---|---|
| 261,408 | 170,785 |
|
(29,964) (11,491) 4,501 2,258 (11,956) 567 (15,883) 9,632 (2,815) |
30,711 (14,806) 23,997 2 23,609 50,168 32,332 6,779 (2,617) |
|
(55,151) |
150,175 |
|
(5,692) 65,264 62 (317) |
(31,936) 4,885 1,826 (252) |
|
59,317 |
(25,477) |
|
4,166 |
124,698 |
|
265,574 |
295,483 |
|
598,983 (109,111) |
478,135 (76,910) |
|
489,872 |
401,225 |
|
15,000 - (191,913) 24,720 9,685 (6,731) 1,793 2,980 |
- (43,010) (153,058) - (9,047) (16,950) 638 6,378 |
|
(144,466) |
(215,049) |
|
1,705,000 (1,575,000) 22,900 (152,594) (2,432) (29,015) (128,609) - (7,638) |
1,930,590 (2,130,590) 54,380 (602,327) 1,974 (31,800) (53,717) 628,425 (14,695) |
|
(167,388) |
(217,760) |
|
7,136 |
575 |
|
185,154 279,103 |
(31,009) 310,112 |
|
$ 464,257 |
279,103 |
See accompanying notes to consolidated financial statements.
24
Independent Auditors ’ Report
To the Board of Directors of PANION & BF BIOTECH INC.:
Opinion
We have audited the accompanying parent company only financial statements of PANION & BF BIOTECH INC. ("the Company"), which comprise the statements of financial position as of December 31, 2022 and 2021, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the parent company only financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the accompanying financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
Basis for Opinion
We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Standards on Auditing of the Republic of China. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Parent Company Only Financial Statements section of our report. We are independent of the Company in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements for the year ended December 31, 2022. These matters were addressed in the context of our audit of the parent company only financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
- Revenue recognition
Please refer to notes 4(n) and 7(p) for the related disclosures on revenue recognition.
Description of key audit matter:
Revenue is one of the key performance indicators for evaluating the financial and operational performance of the Company. The risk for the revenue being recognized in an incorrect period or being recognized with incorrect amounts presents a material misstatement to the parent company only financial statements. Therefore, revenue recognition was considered one of the key audit matters in our audit.
25
How the matter was addressed in our audit:
Testing the effectiveness of the internal control over sales and receivable collection processes, including the evaluation of when to recognize the revenue from those significant contracts with customers; evaluating the sales to the top ten customers by considering the product type, the significant unusual changes in their receivables turnover ratio, and the changes, such as amount and ranking, in the current period to the last quarter, and to the same period in the prior year; selecting sales transactions throughout the year and within a period before and after the year-end, and vouching them with the related supporting documents to evaluate whether the revenue has been recognized in the correct accounting period and assess if the significant sales returns and allowances occur in the subsequent period.
- Subsequent measurement of inventories
Please refer to notes 4(g), 5 and 6(c) for the related disclosures on subsequent measurement of inventories.
Description of key audit matter:
The inventories of the Company are mainly pharmaceutical drugs, health supplements, chemical products and test reagents. The products may be outdated or no longer meet the market demand due to the rapid development of new products. In addition, the price competition in the same industry, and the demand on related products and their prices which may fiercely fluctuate, may result in a risk wherein the cost of inventories may exceed its net realizable value. The subsequent measurement of inventories relies on the management ’ s subjective judgment using internal and external evidences. Therefore, the subsequent measurement of inventories was considered one of the key audit matters in our audit.
How the matter was addressed in our audit:
Assessing the rationality of accounting policy for inventory subsequent measurement; obtaining the documents on inventory subsequent measurement to determine whether they are in compliance with the accounting policy; understanding the rationality of sales prices adopted by the management, selecting samples and verifying the accuracy of net realizable value of inventories by examining relevant documents, and determining the reasonableness of the inventory provision recognized by the management.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the parent company only financial statements, management is responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance (including members of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.
26
Auditors' Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the parent company only financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Standards on Auditing of the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these parent company only financial statements.
As part of an audit in accordance with the Standards on Auditing of the Republic of China, we exercise professional judgment and professional skepticism throughout the audit. We also:
-
Identify and assess the risks of material misstatement of the parent company only financial statements whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
-
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.
-
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
-
Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the parent company only financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
-
Evaluate the overall presentation, structure and content of the parent company only financial statements, including the disclosures, and whether the parent company only financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
-
Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on the parent company only financial statements. We are responsible for the direction, supervision and performance of the audit.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
27
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the parent company only financial statements for the year ended December 31, 2022 and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
The engagement partners on the audit resulting in this independent auditors’ report are Lily Lu and Min-Ju Chao.
KPMG
Taipei, Taiwan (Republic of China) March 30, 2023
Notes to Readers
The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China.
The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.
28
(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC.
Parent Company Only Statements of Financial Position
December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars)
| Assets Current assets: 1100 Cash and cash equivalents (note 6(a)) 1110 Financial assets measured at fair value through profit and loss－current (note 6(d)) 1151 Notes receivable (notes 6(b) and (p)) 1161 Notes receivable－related parties (notes 6(b), (p) and 7) 1170 Accounts receivable, net (notes 6(b) and (p)) 1181 Accounts receivable－related parties (notes 6(b), (p) and 7) 1200 Other receivables 1210 Other receivables－related parties (note 7) 1220 Current income tax assets 130x Inventories (note 6(c)) 1410 Prepayments (note 7) 1479 Other current assets Total current assets Non-current assets: 1510 Financial assets measured at fair value through profit and loss－ non-current (note 6(d)) 1550 Investments accounted for using equity method (note 6(e)) 1600 Property, plant and equipment (note 6(f)) 1755 Right-of-use assets (note 6(g)) 1780 Intangible assets (note 6(h)) 1840 Deferred tax assets (note 6(l)) 1915 Prepayments for equipment 1920 Refundable deposits (note 8) Total non-current assets 1xxx Total assets |
December 31, 2022 Amount % $ 331,616 12 - - 87,214 3 31,435 1 153,775 6 23,061 1 34 - - - 5,378 - 336,791 12 15,036 1 231 - |
December 31, 2021 Amount % 176,339 7 69,787 3 79,533 3 35,936 1 134,359 6 10,399 - 1,470 - 18,000 1 27,745 2 351,332 15 5,486 - - - 910,386 38 53,523 2 773,407 32 600,028 25 22,801 1 2,004 - 21,258 1 2,255 - 20,261 1 1,495,537 62 2,405,923 100 Liabilities and Equity Current liabilities: 2100 Short-term loans (notes 6(i) and 8) 2170 Accounts payable (note 7) 2200 Other payables (notes 6(l), (q), 7 and 9) 2230 Current tax liabilities 2280 Current lease liabilities (note 6(j)) 2399 Other current liabilities Total current liabilities Non-Current liabilities: 2570 Deferred tax liabilities (note 6(l)) 2580 Non-current lease liabilities (note 6(j)) 2640 Net defined benefit liability－non-current (note 6(k)) 2645 Guarantee deposits 2650 Credit balance of investments accounted for using equity method (notes 6(e) and 9) Total non-current liabilities Total liabilities 31xx Equity attributable to owners of parent (notes 6(m) and (n)): 3110 Common stock 3200 Capital surplus Retained earnings: 3310 Legal reserve 3320 Special reserve 3350 Unappropriated earnings Subtotal Other equity: 3410 Foreign currency translation differences for foreign operations Total equity Total liabilities and equity |
December 31, 2022 | December 31, 2022 | December 31, 2022 |
|---|---|---|---|---|---|
| Amount | % | Amount | |||
694,718 25 407,228 17 |
|||||
19,729 1 19,729 1 14,463 1 14,603 1 11,122 - 17,477 1 2,592 - 2,193 - 16,624 1 11,679 - |
|||||
| 984,571 36 |
|||||
| 35,193 1 1,014,921 37 664,743 24 24,500 1 1,444 - 21,122 1 6,750 - 13,117 - |
64,530 3 65,681 3 |
||||
759,248 28 472,909 20 |
|||||
857,391 31 857,391 36 |
|||||
871,174 31 903,755 37 |
|||||
74,519 3 63,848 3 37,371 1 37,283 2 188,497 7 108,108 4 |
|||||
300,387 11 209,239 9 |
|||||
| 1,781,790 64 |
(21,839) (1) (37,371) (2) |
||||
2,007,113 72 1,933,014 80 |
|||||
| $ 2,766,361 100 |
$ 2,766,361 100 2,405,923 100 |
See accompanying notes to parent company only financial statements.
29
(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC.
Parent Company Only Statements of Comprehensive Income
For the years ended December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars, Except for Earnings Per Common Share)
| 4000 Operating revenue (notes 6(p) and 7) 5000 Operating costs (notes 6(c), 7 and 9) Gross profit 5910 Less: Unrealized profit from intercompany sales 5900 Gross profit 6000 Operating expenses (notes 6(b) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 (Reversal of) impairment loss for expected credit loss Total operating expenses 6900 Operating income 7000 Non-operating income and expenses (notes 6(d), (e), (r) and 7): 7100 Interest income 7010 Other income 7020 Other gains and losses 7050 Finance costs 7375 Share of losses from subsidiaries and joint ventures 7635 Loss on financial assets measured at fair value through profit and loss Total non-operating income and expenses Profit from continuing operations before tax 7950 Less: Income tax expenses (note 6(l)) Net income 8300 Other comprehensive income (loss) (notes 6(e), (k) and (l)): 8310 Items that will not be reclassified subsequently to profit or loss 8311 Gains on remeasurements of defined benefit plans 8349 Less: income tax related to items that will not be reclassified subsequently to profit or loss Total items that will not be reclassified subsequently to profit or loss 8360 Items that may be reclassified subsequently to profit or loss 8361 Foreign currency translation differences for foreign operations 8380 Share of other comprehensive income of joint ventures 8399 Less: income tax related to items that will be reclassified subsequently to profit or loss Total items that may be reclassified subsequently to profit or loss 8300 Other comprehensive income, net of tax Total comprehensive income Earnings per share (note 6(o)) 9710 Basic earnings per share (expressed in New Taiwan dollars) 9810 Diluted earnings per share (expressed in New Taiwan dollars) |
2022 | % 100 39 |
2021 | % 100 45 |
|---|---|---|---|---|
| Amount $ 2,112,014 811,597 |
Amount 1,612,973 718,775 |
|||
1,300,417 (1,694) |
61 - |
894,198 (896) |
55 - |
|
1,302,111 |
61 | 895,094 |
55 | |
369,391 171,391 230,015 185 |
17 8 11 - |
339,587 132,133 150,683 (8) |
21 8 9 - |
|
| 770,982 | 36 | 622,395 |
38 | |
531,129 |
25 | 272,699 |
17 | |
1,499 34,311 10 (3,801) (128,216) (103,081) |
- 2 - - (6) (5) |
574 50,267 4,285 (7,359) (137,736) - |
- 3 - - (9) - |
|
(199,278) |
(9) |
(89,969) | (6) | |
331,851 149,506 |
16 7 |
182,730 78,328 |
11 5 |
|
182,345 |
9 | 104,402 |
6 | |
6,038 1,207 |
- - |
2,886 577 |
- - |
|
4,831 |
- | 2,309 | - | |
12,296 3,236 - |
1 - - |
(118) 30 - |
- - - |
|
| 15,532 | 1 | (88) | - | |
20,363 |
1 | 2,221 |
- | |
$ 202,708 |
10 | 106,623 |
6 | |
$ |
2.13 | 1.32 | ||
| $ | 2.12 | 1.32 |
See accompanying notes to parent company only financial statements.
30
(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC.
Parent Company Only Statements of Changes in Equity
For the years ended December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars)
| Foreign currency | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| translation | |||||||||
| Retained | earnings | differences for | |||||||
| Common | Capital | Special | Unappropriated | foreign | |||||
| stock | surplus | Legal reserve | reserve | earnings | subtotal | operations | Total equity | ||
| Balance at January 1, 2021 | $ | 767,391 | 391,983 | 61,154 | 28,877 | 27,845 |
117,876 | (37,283) |
1,239,967 |
| Appropriation and distribution: | |||||||||
| Legal reserve | - | - | 2,694 | - | (2,694) | - | - | - | |
| Special reserve appropriated | - | - | - | 8,406 | (8,406) |
- | - | - | |
| Cash dividends | - | - | - | - | (15,348) | (15,348) | - |
(15,348) | |
| Cash dividends from capital surplus | - | (38,369) | - | - | - | - | - | (38,369) | |
| Net income for the year | - | - | - | - | 104,402 | 104,402 | - |
104,402 | |
| Other comprehensive income for the year | - | - | - | - | 2,309 | 2,309 | (88) |
2,221 | |
| Total comprehensive income for the year | - | - | - | - | 106,711 | 106,711 | (88) |
106,623 | |
| Issue of shares | 90,000 | 538,425 | - | - | - | - | - | 628,425 | |
| Share-based payments | - | 11,716 | - | - | - | - | - | 11,716 | |
| Balance at December 31, 2021 | 857,391 | 903,755 | 63,848 | 37,283 | 108,108 |
209,239 | (37,371) |
1,933,014 | |
| Appropriation and distribution: | |||||||||
| Legal reserve | - | - | 10,671 | - | (10,671) | - | - | - | |
| Special reserve appropriated | - | - | - | 88 | (88) |
- | - | - | |
| Cash dividends | - | - | - | - | (96,028) | (96,028) | - |
(96,028) | |
| Cash dividends from capital surplus | - | (32,581) | - | - | - | - | - | (32,581) | |
| Net income for the year | - | - | - | - | 182,345 | 182,345 | - |
182,345 | |
| Other comprehensive income for the year | - | - | - | - | 4,831 | 4,831 | 15,532 |
20,363 | |
| Total comprehensive income for the year | - | - | - | - | 187,176 | 187,176 | 15,532 |
202,708 | |
| Balance at December 31, 2022 | $ | 857,391 | 871,174 | 74,519 | 37,371 | 188,497 |
300,387 | (21,839) |
2,007,113 |
See accompanying notes to parent company only financial statements.
31
(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) PANION & BF BIOTECH INC.
Parent Company Only Statements of Cash Flows
For the years ended December 31, 2022 and 2021
(Expressed in Thousands of New Taiwan Dollars)
| Cash flows from operating activities: Income before tax Adjustments: Adjustments to reconcile profit and loss Depreciation expense Amortization expense (Reversal of) impairment loss for expected credit loss Net loss (gain) on financial assets measured at fair value through profit or loss Interest expense Interest income Dividend income Share-based payment transactions Share of losses of joint ventures accounted for using equity method Loss on disposal of property, plant and equipment Unrealized profit from intercompany sales Total adjustments to reconcile profit and loss Changes in operating assets and liabilities relating: Net changes in operating assets: Financial assets mandatorily measured at fair value through profit or loss Notes receivable Notes receivable－related parties Accounts receivable Accounts receivable－related parties Other receivables Other receivables－related parties Inventories Prepayments Other current assets Total net changes in operating assets Net changes in operating liabilities: Accounts payable Other payables Other current liabilities Net defined benefit liability Total net changes in operating liabilities Total net changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Income taxes paid Net cash flows from operating activities Cash flows from investing activities: Proceeds from disposal of financial assets at fair value through profit or loss Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment (Increase) decrease in refundable deposits (Increase) decrease in other receivables－related parties Increase in prepayments for equipment Interest received Dividends received Net cash flows used in investing activities Cash flows from financing activities: Increase in short-term loans Decrease in short-term loans Repayments of long-term loans Increase in guarantee deposits Repayment of the principal portion of lease liabilities Cash dividends paid Proceeds from issue of common stock Interest paid Net cash flows from (used in) financing activities Effect of movements in exchange rates on cash and cash equivalents held Net increase in cash and cash equivalents Cash and cash equivalents, beginning of year Cash and cash equivalents, end of year |
2022 $ 331,851 94,076 560 185 103,081 3,801 (1,499) (1,541) - 128,216 280 (1,694) |
2021 182,730 68,803 561 (8) (6,147) 7,359 (574) (5,035) 11,716 137,736 - (896) |
|---|---|---|
325,465 |
213,515 |
|
(29,964) (7,681) 4,501 (19,601) (12,662) 1,436 - 14,541 (9,550) (231) |
30,711 (15,962) 23,997 (6,177) 23,652 21,658 38,126 (950) 14,700 191 |
|
(59,211) |
129,946 |
|
(5,815) 60,964 2,226 (317) |
(29,830) 17,733 521 (252) |
|
57,058 |
(11,828) |
|
(2,153) |
118,118 |
|
323,312 |
331,633 |
|
655,163 (103,762) |
514,363 (82,383) |
|
551,401 |
431,980 |
|
15,000 (347,559) (142,071) 202 7,144 18,000 (6,750) 1,499 1,541 |
- (42,157) (135,437) - (9,487) (18,000) (14,958) 574 5,035 |
|
(452,994) |
(214,430) |
|
1,395,000 (1,195,000) - 399 (11,175) (128,609) - (3,745) |
1,500,590 (1,700,590) (573,954) - (8,024) (53,717) 628,425 (7,335) |
|
56,870 |
(214,605) |
|
- |
983 |
|
| 155,277 176,339 |
3,928 172,411 |
|
$ 331,616 |
176,339 |
32
Appendix Ⅳ
Panion & BF Biotech Inc.
Earnings Distribution Table
for 2022
Unit: NT$
| Unit: NT$ | |||
|---|---|---|---|
| Item | Amount | ||
| Unappropriated Retained Earnings at beginning of period | 1,321,244 | ||
| Add: Net Income of 2022 | 182,344,351 | ||
| Add:Gain on remeasurements of defined benefit plans | 4,830,400 | ||
| Appropriable earnings | 188,495,995 | ||
| Less: | |||
| Legal Reserve (10%) | 18,717,475 | ||
| Distribution Item | |||
| Cash Dividends to Common Share Holders (NT$1.95 per share) |
167,191,075 | ||
| Unappropriated Retained Earnings at end of period | 2,587,445 |
Chairman: Chang,Li-Chiou
General Manager: Chiang, Chung-Ming Vice President of Finance: Wang, Feng-Jen Accounting Manager: Chiu, Mei-Lun
33
Appendix Ⅴ
Panion & BF Biotech Inc.
Articles of Incorporation
Chapter 1 General Provisions
Article 1 The Company is organized and incorporated as a company limited by shares in accordance with the Company Act of the Republic of China (Taiwan), and shall be named “寶齡富錦生技股份有限公司” in the Chinese language and “Panion & BF Biotech Inc.” in the English language.
Article 2 The scope of business engaged in by the Company is listed as follows:
-
I. C80204 Manufacture of Drugs and Medicines II. F108021 Wholesale of Western Pharmaceutical III. F208021 Retail Sale of Western Pharmaceutical
-
IV. F208050 Retail Over-the-counter Drugs Class B
-
V. CF01011 Medical Devices Manufacturing
-
VI. F108031 Wholesale of Medical Devices
-
VII. F208031 Retail Sale of Medical Apparatus VIII. C802100 Cosmetics Manufacturing
-
IX. F108040 Wholesale of Cosmetics
-
X. F208040 Retail sale of Cosmetics
-
XI. C801010 Basic Chemical Industrial
-
XII. C801990 Other Chemical Materials Manufacturing
-
XIII. F107200 Wholesale of Chemical Feedstock
-
XIV. F207200 Retail Sale of Chemical Feedstock
-
XV. C802990 Other Chemical Products Manufacturing
-
XVI. F107990 Wholesale of Other Chemical Products
-
XVII. F207990 Retail Sale of Other Chemical Products
-
XVIII. C802080 Environmental Agents Manufacturing
-
XIX. F107080 Wholesale of Environmental Agents
-
XX. F207080 Retail Sale of Environmental Agents
-
XXI. F401010 International Trade
-
XXII. C199990 Manufacture of Other Food Products Not Elsewhere Classified
XXIII. F102170 Wholesale of Foods and Groceries XXIV. F203010 Retail Sale of Food, Grocery and Beverage
34
XXV. F121010 Wholesale of Food Additives XXVI. F221010 Retail of Food Additives XXVII. C103050 Manufacturing of Canning, Freezing, Dehydration, Pickled of Food XXVIII. C106010 Grain Husking, Manufacture of Grain Mill Products, Starches and Starch Products XXIX. C110010 Beverage Manufacturing XXX. I101090 Food Consulting XXXI. C802090 Manufacture of Cleaning Preparations XXXII. F107030 Wholesale of Cleaning Supplies XXXIII. F207030 Retail Sale of Cleaning Supplies XXXIV. C201010 Feed Manufacturing XXXV. F103010 Wholesale of Animal Feeds XXXVI. F202010 Retail Sale of Feeds XXXVII. C802060 Veterinary Drug Manufacturing XXXVIII. F107070 Wholesale of Veterinary Drugs XXXIX. F207070 Retail Sale of Veterinary Drugs XL. C201020 Pet Food Processing XLI. F106060 Wholesale of Pet Food and Supplies XLII. F206050 Retail Sale of Pet Food and Supplies XLIII. J101020 Pest Control XLIV. IG01010 Biotechnology Services XLV. IC01010 Medicine Inspection XLVI. F199990 Other Wholesale Trade XLVII. F299990 Retail Sale of Other Products XLVIII. F399040 Retail Sale No Storefront XLIX. IZ06010 Tally Packaging L. F601010 Intellectual Property Rights LI. ZZ99999 All business activities that are not prohibited or restricted by law, except those that are subject to special approval.
Article 2-1 The Company may provide endorsements and guarantees for business needs in accordance with the Company’s Procedures for Endorsements and Guarantees.
Article 3 The Company has established its head office in Taipei City and may set up branches in other appropriate locations at home and abroad when necessary upon approval by the Board of Directors.
35
-
Article 4 The Company shall make announcements in accordance with Article 28 of the Company Act and the regulations promulgated by the competent authority in charge of securities management.
-
Article 4-1 When the Company intends to cancel the public offering of its shares, a resolution from the shareholders’ meeting shall be required in order to do so. No changes shall be made to this provision when the Company’s shares are listed on the emerging stock market, the stock exchange market or the over-the-counter market.
Chapter 2 Shares
-
Article 5 The total capital of the Company is NT$1,000,000,000, which is divided into 100 million shares at a par value of NT$10 per share. The Board of Directors shall be authorized to issue shares that are yet to be issued in installments. The issue price per share shall be determined by the Board of Directors in accordance with the Company Act or securities-related laws and regulations. Warrants may be issued within the total capital mentioned in the preceding paragraph for a total of five million shares amounting to NT$50 million at a par value of NT$10 per share. The Board of Directors shall be authorized to issue these warrants in installments depending on business needs. Shares purchased by the Company may be transferred to employees at its controlled and subordinate companies who meet certain conditions. The Board of Directors shall be authorized to decide on the conditions and transfer method involved therein.
-
The Company’s employee stock options may be distributed to employees at its controlled and subordinate companies who meet certain conditions. The Board of Directors shall be authorized to decide on the conditions and distribution method involved therein.
-
The Company’s restricted shares for employees may be allocated to employees at its controlled and subordinate companies who meet certain conditions. The Board of Directors shall be authorized to decide on the conditions and allocation method involved therein.
New shares issued by the Company via cash capital increase for subscription by employees may be offered for subscription by employees at its controlled and subordinate companies who meet certain conditions. The Board of Directors shall be authorized to decide on the conditions and subscription method involved therein.
-
Article 5-1 If the Company intends to issue employee stock options at a price lower than the market price (net asset value per share), these employee stock options may only be issued upon a resolution adopted by at least two-thirds of the shareholders present at the shareholders’ meeting, who represent a majority of the total number of issued shares.
-
Article 5-2 When the Company transfers shares to employees at a price lower than the average price of the repurchased shares, the Company shall, prior to the transfer of shares, request for approval from at least two-thirds of the shareholders present at the most recent shareholders’ meeting, who represent a majority of the total number of issued shares.
-
Article 6 The Company’s shares shall be issued, with the signature or stamp of the directors representing the Company affixed to them, in non-bearer form by the competent
36
authority or the issuing agency it authorizes. After the public offering of shares, the Company may issue shares without printing share certificates or print share certificates together based on the total number of shares issued each time, and shall contact the centralized securities depository for the registration and safekeeping of shares. The foregoing shall apply during the issuance of other marketable securities.
-
Article 7 (Deleted)
-
Article 8 No changes may be made to the Company’s shareholder register within 60 days prior to an annual general meeting, within 30 days prior to an extraordinary meeting or within 5 days prior to the date on which the Company decides to distribute dividends and bonuses or other benefits.
-
Article 9 Unless otherwise provided by law and securities-related rules and regulations, any transfer, pledging, loss, inheritance and gifting of shares, loss of seal, change or replacement of address and other stock-related matters conducted by the Company’s shareholders shall be governed by the Regulations Governing the Administration of Shareholder Services of Public Companies.
-
Chapter 3 Shareholders’ Meeting
-
Article 10 The Company’s shareholders’ meetings are divided into two types: annual general meetings, which are convened annually within six months after the end of each fiscal year, and extraordinary meetings, which are called when necessary in accordance with the law.
Shareholders shall be notified of the date and place of a shareholders’ meeting and the reason for convening the meeting 30 days before an annual general meeting is convened and 15 days before an extraordinary meeting is called.
The notice mentioned in the preceding paragraph may be sent via electronic means. The Shareholders’meeting may be held by means of video conference or any other means announced by the competent authority.
-
Article 11 Unless otherwise provided by the Company Act, the resolutions of a shareholders’ meeting shall be adopted by a majority of the shareholders present at the shareholders’ meeting, who represent a majority of the total number of issued shares.
-
Article 12 Any shareholder who is unable to attend a shareholders’ meeting in person for any reason may issue a proxy form prepared and printed by the Company that sets out the scope of authorization for the proxy, with the shareholder’s signature or stamp affixed to the form, and appoint a proxy to attend the meeting on his/her behalf. Except for trust enterprises, when a person serves as the proxy for two or more shareholders and the voting rights the person represents exceed three percent of the voting rights of all the issued shares, the excess voting rights shall not be exercised. The proxy form mentioned in the preceding paragraph shall be delivered to the Company at least five days before the shareholders’ meeting. In the event that multiple proxy forms are delivered, the first proxy form received by the Company shall prevail.
-
Article 13 A shareholders’ meeting shall be chaired by the Chairman. If the Chairman is absent for any reason, the Chairman shall designate a director to serve as the acting chair. In the absence of such a designation, the directors shall elect an acting chair from among
37
themselves.
-
Article 14 Each shareholder of the Company shall have one voting right for each share he/she holds, except for shares that are restricted and have no voting rights as provided by the Company Act. Electronic voting is listed as one of the channels for the Company’s shareholders to exercise their voting rights at a shareholders’ meeting, and the relevant operations shall be carried out in accordance with the rules and regulations promulgated by the competent authority.
-
Article 14-1 The resolutions of a shareholders’ meeting shall be recorded in the meeting minutes. The meeting minutes, with the signature or stamp of the meeting chair affixed to it, shall be distributed to each shareholder within 20 days after the meeting. The aforesaid meeting minutes may be distributed via public announcement. The meeting minutes shall record the date and location of the meeting, the full name of the meeting chair, the method for adopting resolutions, as well as the main points and outcomes of the proceedings and related results. The meeting minutes, together with the meeting attendance sheet containing the signatures of the shareholders present at the meeting and the proxy forms of the proxies present at the meeting, shall be kept at the Company.
Chapter 4 Directors and Audit Committee
-
Article 15 The Company has seven to 11 directors, who shall be elected using the candidate nomination system, in which shareholders elect directors from a list of director candidates. Each director shall hold office for a three-year term and is eligible for reelection. The Company shall purchase liability insurance for the directors after election with respect to the liabilities arising from performing their duties during their term of office.
-
Among the directors mentioned in the preceding paragraph, the Company shall also appoint independent directors. The number of independent directors shall be no less than three people and one-fifth of the total number of directors. Independent directors shall be elected by shareholders from the list of independent director candidates.
-
The method for accepting nominations, the announcement of nominations, and other matters related to director candidates, as well as the professional qualifications and shareholdings of independent directors and restrictions on concurrent employment for independent directors shall be governed by the relevant laws and regulations including the Company Act and the Securities and Exchange Act.
-
Article 15-1 The election of directors shall be conducted in a shareholders’ meeting based on the cumulative voting system. Each share shall have voting rights in number equal to the directors to be elected, and may be cast for a single candidate or split among multiple candidates. Candidates receiving ballots representing the highest numbers of voting rights shall be elected according to the number of votes they receive. When there is a need to amend the method for election of directors above, not only shall such amendments be made in accordance with Article 172 of the Company Act, but a comparison table for the method for election of directors before and after amendment shall also be attached to the notice for convening the meeting. Independent directors and non-independent directors shall be elected together, and the number of votes they receive shall be counted separately.
38
-
Article 15-2 The Company shall set up the Audit Committee in accordance with Article 14-4 of the Securities and Exchange Act. The Audit Committee shall be composed of all independent directors, with one of them serving as the convener and at least one of them specializing in accounting or finance. The resolutions of the Audit Committee shall be adopted by a majority of the committee members. The Audit Committee, which is established by the Company in accordance with the law, shall be responsible for exercising the functions and powers of a supervisor as provided by the Company Act, the Securities and Exchange Act and other laws and regulations.
-
Article 16 The Board of Directors shall be organized by the directors. The Chairman shall be elected from among the directors with the approval of more than half the directors present at a meeting attended by at least two-thirds of all the directors to represent the Company in the outside world.
Article 17 The functions and powers of the Board of Directors are listed as follows:
-
I. Convene shareholders’ meetings and execute their resolutions.
-
II. Deliberate on business policies, review and approve business plans, and examine implementation results.
-
III. Review and approve important contracts, rules, and regulations.
-
IV. Review and discuss organizational adjustment, budget and final accounts reports, and business reports.
-
V. Review and discuss earnings appropriation or loss recovery.
-
VI. Review and approve the establishment, addition, reduction, and abolition of branch offices.
-
VII. Handle the pledging of company property, creation of pledge, and review and approval of the acquisition and disposal of important property.
-
VIII. Study and propose capital increase and reduction.
-
IX. Deliberate on various important matters, such as the appointment and dismissal of the General Manager, Vice President Manager, and Assistant Vice President Manager, their salary and benefits, etc.
-
X. Discuss and approve major capital expenditure projects.
-
XI. Draw up and discuss the Articles of Incorporation or amendments thereto.
-
XII. Review and approve the Company’s investments in other companies or the transfer and sales of shares in the Company’s invested companies.
-
XIII. Handle matters related to endorsements and guarantees for others.
-
XIV. Handle matters related to the appointment, dismissal, and compensation of certified public accountants (CPAs).
-
XV. Set up the Remuneration Committee, the Audit Committee or other functional committees due to the needs of business operations.
-
XVI. Other functions and powers in accordance with the relevant laws and regulations and as assigned by the shareholders’ meeting.
-
Article 18 Unless otherwise provided by the Company Act, Board of Directors’ meetings shall be convened and chaired by the Chairman.
-
Article 18-1 When a Board of Directors’ meeting is to be convened, a notice stating the reason for convening the meeting shall be sent to each director seven days prior to the meeting. In case of emergency, a Board of Directors’ meeting may be convened at any time.
39
With the consent of the addressee, the notice may be delivered in writing and via electronic means such as fax and e-mail. A Board of Directors’ meeting may be conducted by video conferencing. Directors attending a video conference shall be deemed to have attended meeting in person.
-
Article 18-2 When the number of directors is less than one-third of the total number of directors, an extraordinary shareholders’ meeting shall be convened within 60 days from the date of occurrence to hold an election and fill the vacancies. When the number of independent directors is less than that required under the relevant laws and regulations, an election shall be held during the most recent shareholders’ meeting to fill the vacancies. When the independent directors are dismissed, an extraordinary shareholders’ meeting shall be convened within 60 days from the date of occurrence to hold an election and fill the vacancies.
-
Article 19 If the Chairman is on leave or is unable to exercise his/her functions and powers for any reason, the designation of an acting chair shall be governed by Article 208 of the Company Act.
-
Article 20 Unless otherwise provided by law, a majority of the directors shall constitute a quorum at all meetings of the Board of Directors, and a resolution shall be adopted by a majority of the directors present.
-
Article 21 If a director is unable to attend a Board of Directors’ meeting for any reason, the director may issue a proxy form stating the scope of authorization for the proxy with respect to the reason for convening the meeting and appoint a proxy to attend the meeting on his/her behalf. However, the director may appoint only one proxy to attend the meeting on his/her behalf.
Chapter 5 Managers
-
Article 22 The Company shall appoint a general manager and a number of vice president managers, who are charged with overseeing all the business of the Company under the orders of the Board of Directors. The appointment, dismissal, and remuneration of the General Manager and Vice president Manager shall be governed by Article 29 of the Company Act and the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Taiwan Stock Exchange or the Taipei Exchange.
-
Article 23 Other important employees of the Company shall be appointed and dismissed by the General Manager in accordance with the rules and regulations governing personnel management.
-
Chapter 6 Accounting
-
Article 24 The Company shall adopt the calendar year system, where a business year runs from January 1 to December 31 each year. Final accounts shall be prepared once at the end of each year.
-
Article 25 At the end of each fiscal year, the Board of Directors shall prepare the following statements in accordance with the law, and submit them to the shareholders’ meeting for adoption in accordance with the statutory procedures.
40
-
Business report. 2. Financial statements. 3. Earnings appropriation or loss recovery plan.
-
Article 26 If the Company records a profit in the current year, the Company shall first set aside no less than two percent and no more than five percent of the pre-tax net profit before deducting employee remuneration and director remuneration as employee remuneration and director remuneration, respectively. If the Company continues to record a cumulative loss, the profit shall first be used to make up for such loss.
Employee remuneration in the preceding paragraph may be paid in stock or cash to employees including those at the Company’s subordinate companies who meet the conditions set by the Board of Directors. On the other hand, director remuneration in the preceding paragraph shall be paid in cash only.
The provisions of the preceding two paragraphs shall be decided by the Board of Directors and reported to the shareholders’ meeting.
- Article 26-1 If the Company reports a surplus in the final accounts for the year, the Company shall first use the profit to pay taxes and make up for any cumulative loss before setting aside 10% of the remaining profit as legal reserve; however, this provision shall not apply if the legal reserve has reached the Company’s paid-in capital. In addition, a special reserve shall be set aside according to the Company’s operational needs and the relevant laws and regulations. If there is still a surplus left, the remaining profit shall be merged with any unappropriated earnings at the beginning of the year, and the Board of Directors shall propose an earnings appropriation plan. Any appropriation of earnings by issuance of new shares shall require a resolution adopted by the shareholders’ meeting; whereas any appropriation of earnings in the form of cash shall require a resolution adopted by a majority of the directors present at a meeting attended by at least two-thirds of all the directors, and shall be reported to the shareholders’ meeting.
The Company may carry out appropriation of earnings from its legal reserve and capital reserve in accordance with the relevant laws and regulations. Any appropriation of earnings from a legal reserve or capital reserve by issuance of new shares shall require a resolution adopted by the shareholders’ meeting; whereas any appropriation of earnings from a legal reserve or capital reserve shall require a resolution adopted by a majority of the directors present at a meeting attended by at least two-thirds of all the directors, and shall be reported to the shareholders’ meeting.
The Company shall adopt a dividend policy based on a prudent and balanced approach. Moreover, taking into account its profitability, financial structure, and future development, the Company shall distribute at least 40 percent of its accumulated appropriable earnings as shareholder dividends, of which at least 10 percent shall be distributed as cash dividends. However, the Board of Directors may adjust these proportions based on the Company’s overall operating conditions at the time.
- Article 26-2 Regardless of whether the Company records a profit or a loss, the Company shall pay remuneration to the directors when they perform their duties. Directors’ remuneration shall be determined by the Remuneration Committee based on the level of their participation in the Company’s operations and the value of their contributions, along
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with the typical pay levels adopted by industry players at home and abroad before it is submitted to the Board of Directors for resolution.
Chapter 7 Supplementary Provisions
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Article 27 The Company’s foreign investments are not subject to the provision of the Company Act, which stipulates that the total amount of investments may not exceed 40 percent of the Company’s paid-in capital.
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Article 28 Any matters not covered in these Articles of Incorporation shall be governed by the provisions of the Company Act.
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Article 29 These Articles of Incorporation were established on November 11, 1975. The 1st amendment was made on December 21, 1976. The 2nd amendment was made on September 14, 1977. The 3rd amendment was made on October 13, 1977. The 4th amendment was made on June 23, 1978. The 5th amendment was made on November 26, 1981. The 6th amendment was made on November 2, 1982. The 7th amendment was made on November 30, 1982. The 8th amendment was made on March 28, 1983. The 9th amendment was made on May 4, 1983. The 10th amendment was made on January 16, 1984. The 11th amendment was made on March 19, 1984. The 12th amendment was made on April 9, 1984. The 13th amendment was made on August 11, 1984. The 14th amendment was made on July 23, 1988. The 15th amendment was made on June 4, 1993. The 16th amendment was made on August 1, 1994. The 17th amendment was made on September 7, 1994. The 18th amendment was made on August 31, 1995. The 19th amendment was made on March 10, 1997. The 20th amendment was made on March 31, 1997. The 21st amendment was made on February 1, 1998. The 22nd amendment was made on May 20, 2000. The 23rd amendment was made on October 7, 2000. The 24th amendment was made on May 18, 2001. The 25th amendment was made on August 24, 2001. The 26th amendment was made on May 24, 2002. The 27th amendment was made on May 23, 2003. The 28th amendment was made on May 14, 2004. The 29th amendment was made on May 14, 2004. The 30th amendment was made on May 27, 2005. The 31st amendment was made on May 26, 2006. The 32nd amendment was made on June 1, 2007. The 33rd amendment was made on June 13, 2008. The 34th amendment was made on June 18, 2010. The 35th amendment was made on June 17, 2011. The 36th amendment was made on June 29, 2012. The 37th amendment was made on June 28, 2013. The 38th amendment was made on June 4, 2014. The 39th amendment was made on June 10, 2015. The 40th amendment was made on June 3, 2016. The 41st amendment was made on May 30, 2018. The 42nd amendment was made on June 6, 2019. The 43rd amendment was made on June 9, 2020. The 44th amendment was made on June 8, 2022.
Panion & BF Biotech Inc.
Chairman: Chang, Li-Chiou
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Appendix Ⅵ
Panion & BF Biotech Inc.
Rules of Procedure for Shareholders’ Meetings
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Article 1 These Rules are formulated in accordance with Article 5 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies, with the purpose of establishing a strong governance system and enhancing the supervisory capabilities and management function of the Company’s shareholders’ meetings.
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Article 2 Unless otherwise provided by laws and regulations as well as the Company’s Articles of Incorporation, the rules of procedure for shareholders’ meetings at the Company shall be governed by these Rules.
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Article 3 Unless otherwise provided by laws and regulations, shareholders’ meetings at the Company shall be convened by the Board of Directors.
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The Company shall prepare electronic versions of the shareholders’ meeting notice and proxy form, and the origins of and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors or supervisors, and upload them to the Market Observation Post System (MOPS) 30 days prior to an annual general shareholders’ meeting or 15 days prior to an extraordinary shareholders’ meeting. The Company shall prepare electronic versions of the shareholders’ meeting agenda and supplemental meeting materials, and upload them to MOPS 21 days prior to an annual general shareholders’ meeting or 15 days prior to an extraordinary shareholders’ meeting. In addition, the Company shall also have prepared the shareholders’ meeting agenda and supplemental meeting materials 15 days prior to a shareholders’ meeting, and made them available for review by shareholders at any time. The meeting agenda and supplemental materials shall also be on display at the Company and the premise of the professional shareholder services agent designated, and distributed on-site at the meeting location.
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The reason for convening a shareholders’ meeting shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be delivered via electronic means.
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Matters related to the election or dismissal of directors and supervisors, changes to the Articles of Incorporation, capital reduction, application for suspension of public offering, permission for directors to engage in competitive conduct, capital increase by retained earnings or capital reserve, dissolution, mergers, and demergers, or any matters stipulated in Article 185, Paragraph 1 of the Company Act as well as Article 26-1 and Article 43-6 of the Securities and Exchange Act shall be specified in the notice for convening a shareholders’ meeting and may not be brought up as extempore motions. The main content of these matters may be placed on the website designated by the competent authority in charge of securities or the Company, and the website address shall be included in the notice.
When election of directors and supervisors and their inauguration date are specified in the
notice for convening a shareholders’ meeting, change of inauguration date may not be brought up as an extempore motion or via other means at the same meeting after the completion of election at the shareholders’ meeting.
A shareholder who holds at least one percent of the total number of issued shares may put
forward a proposal to the Company for discussion at an annual general shareholders’
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meeting, where the proposal may contain one item only. Any proposal containing more than one item shall not be included in the meeting agenda. However, the Board of Directors may still include shareholder proposals containing recommendations aimed at urging the Company to promote public interests or fulfill its social responsibilities in the meeting agenda. In addition, the Board of Directors may exclude shareholder proposals containing any of the circumstances stipulated in Article 172-1, Paragraph 4 of the Company Act in the meeting agenda.
Prior to the book closure date before an annual general shareholders’ meeting is convened, the Company shall announce the acceptance of shareholder proposals in writing or via electronic means, as well as the location and period for submission of shareholder proposals. The period for submission of shareholder proposals may not be less than 10 days.
A proposal submitted by a shareholder shall contain no more than 300 words. Any proposal containing more than 300 words shall not be included in the meeting agenda. A shareholder who has submitted a proposal shall attend, either in person or by proxy, the annual general shareholders’ meeting and take part in discussion about his/her proposal. Prior to the date of issuance of the notice of shareholders’ meeting, the Company shall notify the shareholders who have submitted a proposal of the proposal screening results, and include the proposals that comply with the provisions of this article in the meeting notice. For shareholder proposals that have not been included in the meeting agenda, the Board of Directors shall explain the reasons for excluding these proposals at the shareholders’ meeting.
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Article 4 At each shareholders’ meeting, a shareholder may issue a proxy form prepared and printed by the Company that sets out the scope of authorization for the proxy, and appoint a proxy to attend the meeting on his/her behalf.
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A shareholder may issue one proxy form and appoint one proxy only, and shall deliver the proxy form to the Company five days prior to the shareholders’ meeting. In the event that multiple proxy forms are delivered, the first proxy form received by the Company shall prevail. However, the foregoing shall not apply when a declaration is made to cancel the previous proxy appointment.
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If a shareholder wishes to attend a shareholders’ meeting in person or exercise his/her voting rights either in writing or via electronic means after the proxy form is delivered to the Company, the shareholder shall send a written notice of proxy cancellation to the Company two days prior to the shareholders’ meeting. If the notice of proxy cancellation is submitted after that period, the voting rights exercised by the proxy at the meeting shall prevail.
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Article 5 A shareholders’ meeting shall be held at the premise of the Company or a location that is convenient for shareholders and suitable for convening a shareholders’ meeting. A shareholders’ meeting may begin no earlier than 9.00 a.m. or no later than 3.00 p.m. Independent directors shall be fully consulted on the location and time for convening a shareholders’ meeting.
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Article 6 The Company shall specify in the meeting notice the time and location for registration of shareholder attendance as well as other matters to be noted.
The time for registration of shareholder attendance in the preceding paragraph shall begin
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30 minutes before the meeting commences. Noticeable signage shall be set up at the location for registration of shareholder attendance, and appropriate personnel shall be assigned in sufficient numbers to carry out registration of shareholder attendance.
A shareholder or a proxy appointed by a shareholder (hereinafter referred to as “shareholder”) shall attend a shareholders’ meeting with an attendance card, a sign-in card or other certificates of attendance. A solicitor who solicits proxy forms is required to bring his/her identification document for verification.
The Company shall prepare an attendance book for the attending shareholders to sign in, or the attending shareholders may hand in a sign-in card in lieu of signing in. The Company shall provide the shareholders attending the shareholders’ meeting with a meeting handbook, an annual report, an attendance card, a speaker’s slip, voting slips, and other meeting materials. In the event of election of directors, ballot papers shall be provided to the attending shareholders.
When a government organization or a juristic person is a shareholder, the attending shareholder may have more than one representative. When a juristic person is appointed to attend the shareholders’ meeting as a proxy, the juristic person may designate only one representative to attend the meeting on its behalf.
- Article 7 When the Board of Directors convenes a shareholders’ meeting, the meeting shall be chaired by the Chairman. If the Chairman is on leave or unable to exercise his/her functions and powers for any reason, the Vice Chairman shall serve as an acting chair. If there is no Vice Chairman or the Vice Chairman is on leave or unable to exercise his/her functions and powers for any reason, the Chairman shall designate a managing director as an acting chair. If there is no managing director, the Chairman shall designate a director as an acting chair. If the Chairman does not designate anyone as an acting chair, the managing directors or directors shall appoint an acting chair from among themselves. When a managing director or director is designated as an acting chair as mentioned in the preceding paragraph, the managing director or director shall be one who has held office for at least six months and understands the Company’s financial and business conditions. The foregoing shall apply if the representative of a corporate director is designated as an acting chair.
It is advisable that shareholders’ meetings convened by the Board of Directors be attended by a majority of the members of the Board of Directors.
If a shareholders’ meeting is convened by a party other than the Board of Directors, the meeting shall be chaired by the convening party. When there are two or more convening parties, a chair shall be appointed from among themselves.
The Company may appoint its attorneys, certified public accountants or related persons to sit in on a shareholders’ meeting.
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Article 8 The Company, beginning from the time it opens for registration of shareholder attendance, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders’ meeting, as well as the voting and vote-counting procedures. The recorded materials mentioned in the preceding paragraph shall be retained for at least one year. However, if a shareholder files a lawsuit in accordance with Article 189 of the Company Act, the ballots shall be retained until the conclusion of the lawsuit.
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Article 9 Attendance at a shareholders’ meeting shall be taken based on the number of shares. The
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number of shares in attendance shall be calculated based on the number of shares indicated in the attendance book or the number of sign-in cards handed in plus the number of shares whose voting rights are exercised in writing or via electronic means.
The chair shall call the meeting to order at the designated meeting time and announce relevant information such as the number of non-voting shares and the number of shares represented by the attending shareholders. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one-third of the total number of issued shares, the chair shall declare the meeting adjourned.
If the quorum is not met after two postponements as mentioned in the preceding paragraph but the attending shareholders represent at least one-third of the total number of issued shares, a tentative resolution may be adopted in accordance with Article 175, Paragraph 1 of the Company Act. Each shareholder shall be notified of the tentative resolution, and another shareholders meeting shall be convened within one month.
When the attending shareholders represent a majority of the total number of issued shares prior to conclusion of the meeting, the chair may resubmit the tentative resolution for a vote at the shareholders’ meeting in accordance with Article 174 of the Company Act.
- Article 10 If a shareholders’ meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. Votes shall be cast separately on each proposal in the meeting agenda (including extempore motions and amendments to original proposals set out in the meeting agenda). The meeting shall proceed in the order set by the meeting agenda, which may not be changed without a resolution of the shareholders’ meeting. The provisions of the preceding paragraph shall apply mutatis mutandis to a shareholders’ meeting convened by a party other than the Board of Directors.
The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda as set forth in the preceding two paragraphs (including extraordinary motions), except by a resolution adopted by the shareholders’ meeting. If the chair declares the meeting adjourned in violation of the rules of procedure, other members of the Board of Directors shall promptly assist the attending shareholders in electing a new chair according to statutory procedures with approval from a majority of the votes represented by the attending shareholders, and then continue the meeting.
During the meeting, the chair shall give ample opportunity to explain and discuss proposals, amendments or extempore motions put forward by shareholders. When the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call for a vote.
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Article 11 Before speaking, an attending shareholder must specify on a speaker’s slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak shall be determined by the chair.
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An attending shareholder who has submitted a speaker’s slip but does not actually speak shall be deemed to have not spoken. When the content of the shareholder’s speech does not correspond to the subject provided on the speaker’s slip, the content of his/her speech shall prevail.
Unless otherwise consented to by the chair, a shareholder may not speak more than
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twice on the same proposal, and a single speech may not exceed five minutes. If the shareholder’s speech violates the rules or exceeds the scope of the agenda item, the chair may terminate his/her speech.
When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder who has the floor. The chair shall interrupt any such infringement. When a corporate shareholder appoints two or more representatives to attend a shareholders’ meeting, only one of its representatives may speak on the same proposal. After an attending shareholder has spoken, the chair may respond in person or direct the relevant personnel to respond.
- Article 12 Votes cast at a shareholders’ meeting shall be calculated based on the number of shares. With regards to resolutions of a shareholders’ meeting, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.
When a shareholder is an interested party in relation to an agenda item, and it is likely that such a relationship may undermine the interests of the Company, the shareholder may not vote on that item, and may not exercise his/her voting rights thereon as a proxy for any other shareholder.
The number of shares for which voting rights may not be exercised as mentioned in the preceding paragraph shall not be calculated as part of the total number of voting rights represented by the attending shareholders.
With the exception of a trust enterprise or a shareholder service agent approved by the competent authority in charge of securities, when a person is concurrently appointed as a proxy by two or more shareholders, the voting rights represented by the proxy may not exceed three percent of the voting rights represented by the total number of issued shares. If this percentage is exceeded, the voting rights in excess of this percentage shall not be included in the calculation.
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Article 13 A shareholder shall be entitled to one vote for each share held; however, the foregoing shall not apply to shareholders with restricted shares or those with non-voting shares as stipulated in Article 179, Paragraph 2 of the Company Act.
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When a shareholders’ meeting is convened, the Company shall adopt exercise of voting rights via electronic means and may adopt exercise of voting rights in writing. When voting rights are exercised in writing or via electronic means, the method for exercising voting rights shall be specified in the notice of shareholders’ meeting. A shareholder who exercises his/her voting rights in writing or via electronic means shall be deemed to have attended the meeting in person. However, the shareholder shall also be deemed to have abstained from voting on extempore motions and amendments to original proposals. Hence, it is advisable for the Company to avoid the submission of extempore motions and amendments to original proposals.
A shareholder who intends to exercise his/her voting rights in writing or via electronic means as mentioned in the preceding paragraph shall deliver a written declaration of intent to the Company two days prior to the shareholders’ meeting. In the event that multiple declarations of intent are delivered, the first one received by the Company shall prevail. However, the foregoing shall not apply when a declaration is made to cancel the previous declarations of intent.
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If a shareholder wishes to attend the shareholders’ meeting in person after exercising his/her voting rights in writing or via electronic means, the shareholder’s declaration of intent to retract the voting rights exercised in the preceding paragraph shall be made known to the Company two days prior to the shareholders’ meeting via the same means of which voting rights are exercised. If the declaration of intent is submitted after that period, the voting rights exercised in writing or via electronic means shall prevail. When a shareholder exercises his/her voting rights in writing or via electronic means and appoints a proxy to attend the shareholders’ meeting on his/her behalf, the voting rights exercised by the proxy at the meeting shall prevail.
Unless otherwise provided by the Company Act and the Company’s Articles of
Incorporation, a resolution shall be adopted by a majority of the shareholders present at the meeting.
When voting on a proposal, the chair or the person designated by the chair shall first announce the total number of voting rights represented by the attending shareholders before putting the proposal to a vote by the shareholders. After the conclusion of the shareholders’ meeting, the voting results for each proposal, including the number of votes for and against the proposal and the number of abstentions, shall be uploaded onto MOPS.
In the event of an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal along with the original proposal and decide on the order in which these proposals are put to a vote. When any of these proposals are approved, the other proposal shall be deemed to be rejected with no further voting required. Vote-monitoring and vote-counting personnel shall be designated by the chair; however, all vote-monitoring personnel have to be shareholders of the Company.
Vote counting for proposals or elections at a shareholders’ meeting shall be conducted in public at the location of the shareholders’ meeting. Immediately after vote counting is completed, the voting results, including the numbers of votes counted, shall be announced on-site at the meeting, with a record of the voting results made as well.
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Article 14 The election of directors at a shareholders’ meeting shall be conducted in accordance with the relevant election and appointment rules adopted by the Company. The chair or the master of ceremonies shall announce the voting results on-site, including the list of candidates elected as directors and the number of votes they receive, as well as the list of candidates not elected as directors and the number of votes they receive.
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Ballots for the election mentioned in the preceding paragraph shall be sealed with the signatures of the vote-monitoring personnel and kept for at least one year. However, if a shareholder files a lawsuit in accordance with Article 189 of the Company Act, the ballots shall be retained until the conclusion of the lawsuit.
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Article 15 Resolutions adopted at a shareholders’ meeting shall be recorded in the meeting minutes, with the signature or seal of the chair affixed to it. The meeting minutes shall be distributed to each shareholder within 20 days after the meeting. The meeting minutes may be produced and distributed via electronic means.
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The Company may distribute the meeting minutes mentioned in the preceding paragraph by means of a public announcement made on MOPS.
The meeting minutes shall accurately record the year, month, day, and location of the meeting, the full name of the meeting chair, the method for adopting resolutions, a summary of the proceedings, and voting results (including the number of voting rights),
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and disclose the number of voting rights won by each candidate in the event of an election of directors. The meeting minutes shall be kept permanently throughout the duration of the Company’s existence.
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Article 16 On the day of a shareholders’ meeting, the Company shall compile in the prescribed format a statistical statement of the number of shares solicited by proxy solicitors and the number of shares represented by proxies, and shall make a clear disclosure of the aforesaid information at the location of the shareholders’ meeting.
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If the agenda items put to a vote for resolution at a shareholders’ meeting constitute material information under the relevant laws and regulations or under the regulations set forth by Taiwan Stock Exchange Corporation (and Taipei Exchange), the Company shall upload the content of these resolutions onto MOPS within the prescribed time period.
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Article 17 The personnel in charge of handling administrative affairs at a shareholders’ meeting shall put on an identification card or an armband.
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The chair may direct the proctors (or security personnel) to help maintain order at the meeting location. The proctors (or security personnel) shall put on an armband bearing the word “Proctor” when helping to maintain order at the meeting location.
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At a location equipped with public address equipment, the Chair may stop a shareholder speaking using any device that is not provided by the Company.
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When a shareholder violates the rules of procedure and defies the chair’s directives, obstructing the proceedings and refusing heeds to stop, the chair may direct the proctors or security personnel to escort the shareholder off the meeting location.
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Article 18 When a meeting is in progress, the chair may announce a break at his/her discretion based on time considerations. In the event of a force majeure event, the chair may rule to temporarily suspend the meeting and, depending on situation, announce the time to resume the meeting.
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If the meeting location is no longer available for continued use and not all of the items (including extempore motions) on the meeting agenda have been addressed, the shareholders’ meeting may adopt a resolution to resume the meeting at another location. The shareholders’ meeting may, in accordance with Article 182 of the Company Act, adopt a resolution to postpone or resume the meeting within five days.
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Article 19 These Rules shall take effect upon approval by the shareholders’ meeting. The foregoing shall also apply to any amendments thereto.
Article 20 These Rules were established on May 24, 2002. The 1st amendment was made on June 28, 2013. The 2nd amendment was made on June 10, 2015. The 3rd amendment was made on May 30, 2018. The 4th amendment was made on June 9. 2020.
The 5th amendment was made on August 12, 2021.
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Appendix Ⅶ
Panion & BF Biotech Inc.
Breakdown of Directors’ Shareholdings
As of May 1, 2023
| Number of shares | Shareholding |
||
| Title | Name | ||
| held | percentage | ||
| Chairman | Chang, Li-Chiou | 0 | 0.00% |
| Director | Representative of Panion Investment Co., Ltd.: Chiang, Chung-Ming |
15,844,336 | 18.479% |
| Director | Representative of Panion Investment Co., Ltd.: Hsieh, De-Fu |
||
| Director | Representative of Panion Investment Co., Ltd.: Lin, Jyh-Ming |
||
| Director | Huang, Weng-Houng | 0 | 0.00% |
| Director | Chen, Po-Chuan | 0 | 0.00% |
| Independent Director |
Chang, Ryh-Yan | 0 | 0.00% |
| Independent Director |
Liao, Chi-Chou | 0 | 0.00% |
| Independent Director |
Chen, Jiin-Shian | 0 | 0.00% |
| Total | 15,844,336 | 18.50% |
Note: As of May 1, 2023, the Company has issued a total of 85,739,013 shares.
According to the law, all the directors of the Company shall hold a minimum of 6,859,121 shares in total. As of May 1, 2023, all the directors of the Company held a total of 15,844,336 shares, which has exceeded the minimum number of shares held as required by law.
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