TBB — AGM Information 2014

Jul 24, 2014

Stock Code: 2834

Taiwan Business Bank Handbook for 2014 Annual Meeting of Shareholders

DATE: June 20, 2014, Friday, at 9:00 a.m. VENUE: 17[th] Floor, No. 30, Ta-Cheng Street, Taipei

Taiwan Business Bank

Year 2014

Agenda of Annual Meeting of Shareholders

Date: June 20, 2014, Friday, at 9:00 a.m. Venue: 17[th] Floor, No. 30, Ta-Cheng Street, Taipei Auditorium of the Headquarter, Taiwan Business Bank Attendees: (to refer to the register of attendance)

Chairman: Tsan Chang Liao, Chairman of the Board of Directors, Taiwan Business Bank

Meeting Procedure

• I. Call the Meeting to Order

• II. Chairman Remarks

III.Report Matter

• (1)2013 Business Report

• (2)Audit Committee’s Review Report on the 2013 Financial Statements

• (3)Article 25 of the Banking Act

IV. Recognition Matter

• (1)Adoption of the 2013 Financial Statements

• (2)Adoption of the Proposal for Distribution of 2013 Profits

V. Discussion Matter

• (1) Proposal for a new share issue through capitalization of earnings

• (2) Amendments to the Procedures for Acquisition and Disposal of Assets

• (3) Proposal of Release the Prohibition on Directors from Participation in Competitive Business

VI. Questions and Motions

VII. Adjournment

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Report Matter

Report No. 1

2013 Business Report

Explanation:

Please refer to the Handbook.

Report No.2

Audit Committee’s Review Report on the 2013 Financial Statements

Explanation:

Please refer to the Handbook.

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Report No.3 Proposed by the Board Article 25 of the Banking Act

Explanation:

• 1.According to the letter dated January 31, 2012 from Financial Supervisory Commission, with the issuing number 10060005191, in order to implement Article 25 of the Banking Act, the bank should remind the relevant provisions at shareholder meeting.

• 2.The main contents are as follows:

• (1) According to Paragraph 2, Article 25 of the Banking Act, The same person or same concerned party who singly, jointly or collectively acquires more than five percent (5%) of a Bank’s outstanding voting shares shall report such fact to the Competent Authority within ten (10) days from the day of acquisition; the preceding provision applies to each cumulative increase or decrease in the shares of the same person or same concerned party by more than one percent (1%) thereafter

• (2) According to Paragraph 3, Article 25 of the Banking Act, The same person or same concerned party who intends to singly, jointly or collectively acquire more than ten percent (10%), twenty-five percent (25%) or fifty percent (50%) of a Bank’s outstanding voting shares shall apply for prior approval of the Competent Authority.

• (3) According to Paragraph 4, Article 25 of the Banking Act, A third party who holds shares of the Bank on behalf of the same person or same concerned party in trust, by mandate or through other types of contract, agreement or authorization shall fall within the purview of a concerned party

• (4) According to Paragraph 5, Article 25 of the Banking Act, The same person or same concerned party who singly, jointly or collectively holds shares of the Bank representing more than five percent (5%) but less than fifteen percent (15%) of a Bank’s outstanding voting shares prior to the implementation of the amendment to the Act on December 9, 2008 shall report such fact to the Competent Authority within six (6) months from the implementation date of the said amendment. Those who report to the Competent Authority within the said prescribed period may maintain their shareholding at the time of reporting. However, those whose original shareholding exceeds ten percent (10%) shall apply for the prior approval of the Competent Authority when they intend to increase their shareholding for the first time thereafter.

• (5) According to Paragraph 8, Article 25 of the Banking Act, If the total number of a Bank’s shares held by the same person or by the principal, his/her spouse and children under twenty (20) years of age exceeds one percent (1%) of the Bank’s outstanding voting shares, such principal shall notify the Bank thereof.

• (6) According to Article 25-1 of the Banking Act, The term “same concerned

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party” as used in the preceding article shall mean parties related to the same natural or juristic person, including:

• A.Parties related to the same natural person:

• a.The principal, his/her spouse and relatives by blood within the second degree of kinship.

• b.An enterprise in which the persons referred to in the preceding subparagraph hold more than one third (1/3) of its outstanding voting shares or more than one third of its capital.

• c.An enterprise or a foundation in which the persons referred to in subparagraph a. hereof act as its chairman, president or directors representing the majority of directors.

• B.Parties related to the same juristic person:

• a. The same juristic person and its chairman and president as well as the spouse and relatives by blood within second degree of kinship of the chairman and president.

• b. Enterprises in which the same juristic person and natural persons referred to in the preceding subparagraph hold more than one third (1/3) of their outstanding voting shares or more than one third of their capital, or enterprises or foundations in which the same juristic person and natural persons referred to in the preceding subparagraph act as their chairman, president or directors representing the majority of directors.

• (7) In the event that a shareholder of a Bank violates Paragraphs 2, 3 or 5 , Article 25 of Banking Act herein by failing to file a report with the Competent Authority with respect to his/her shareholding, or failing to acquire the approval of the Competent Authority to hold shares of the Bank, the excess shares held by such same person or same concerned party shall not have voting rights and shall be disposed of within the given period prescribed by the Competent Authority. Besides, according to paragraph 3 of article 128, such shareholder shall be imposed of an administrative fine of not less than Two Million New Taiwan Dollars (NT$2,000,000) and not more than Ten Million New Taiwan Dollars (NT$10,000,000). Financial supervisory commission will consider as dishonest or improper activities which indicate that she/he is unfit to serve as a responsible person of a bank based on the paragraph 13 of article 3 of Regulations Governing Qualification Requirements and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of Banks

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Recognition Matter

No.1 Proposed by the Board

Proposal:

Adoption of the 2013 Financial Statements

Explanation:

Taiwan Business Bank’s Financial Statements, include business report, balance sheets, income statements, statements of changes in stockholders’ equity, and statements of cash flows (please refer to the Handbook) have been approved by the 14th Board of Directors Meeting of the 13th Term Board of Directors.

Resolution:

7

No.2 Proposed by the Board

Proposal:

Adoption of the Proposal for Distribution of 2013 Profits

Explanation:

• (1) The undistributed earnings at the beginning of 2013 was NT$ (same as below) 80,990,357.52, minus NT$1,607,328,477.58 of “IFRS recognition and measurement conversion effect” for Jan.1 2013 and NT$55,082,950 of ”Defined benefit plans actuarial gains(losses)”, the undistributed earnings after adjustment is negative NT$1,581,421,070.06, plus NT$3,610,202,111.55 of the net income after tax in the fiscal year of 2013, the statements of which were audited by Tan-Tan Chung, CPA and Fung-Huei Lee, CPA of KPMG.. The undistributed earnings are NT$2,028,781,041.49 and the distribution of profits is conducted in conformity with The Articles of Incorporation of Taiwan Business Bank and related laws as follows:

• A. NT$608,634,312.45 is to be set aside to Legal Reserve.

• B. NT$674,723,844.53 is to be set aside to Special Reserve.

• a. According to the letter dated April 6, 2012 from Financial Supervisory Commission with the issuing number 1010012865: After entities adopted International Financial Reporting Standards for preparing financial statements, when distributing undistributed earnings in term of net debit amount of owner’s equity on book (such as the difference of foreign exchange in translating financial statements of foreign operating units, unrealized valuation gains on available-for-sale financial assets and the cumulative balance of gains and losses on the hedging instrument's effective hedge, etc.), Accumulated amounts in reduction of other owner’s equity are special reserve for undistributed earnings from previous financial years and retained earnings in the current financial year. Therefore, special reserve for undistributed earnings from previous financial years cannot be distributed; however, if the company has been proceeding in accordance with the special reserve requirements, special reserve shall include the difference between the amounts already set aside with other interests. Subsequently, if debit to other owner's equity is reversed, the reversed amount is allowed to distribute.

• b. The debit amount of shareholders’ equity on book as of December 31, 2013 was negative NT$96,237,577.42 : “Unrealized valuation gains on available-for-sale financial assets” was negative NT$111,235,196.59 , “Unrealized losses on financial instrument” was NT$14,997,619.17 and need to be set aside special earnings reserve NT$96,237,577.42. Since NT$ 770,961,421.95 had been set aside in previous years according to the letter dated January 27, 2006 from Financial Supervisory Commission, with the issuing number 0950000507, therefore 674,723,844.53 could be reversed for

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undistributed earnings.

• C. Shareholders’ bonus – stock dividend (NT$0.40 per share): NT$2,037,659,260

• D. NT$57,211,313.57 is be set aside to undistributed earnings.

• E. Employee bonus and remuneration to directors

• Employee bonus (8%): NT$167,589,645.

Remuneration to directors (1%): NT$20,948,706

The above proposed of employee bonus and remuneration to directors had been recognized as expenses of current year in accordance with regulations.

• (2) The 2013 Profit Distribution Table is attached. (please refer to the handbook)

Resolution:

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Discussion Matter

No.1 Proposed by the Board

Proposal:

Proposal for a new share issue through capitalization of earnings

Explanation:

• (1) Response to the requirement of common equity of Basel III to reinforce the capital structure and increase the profitability. In accordance with Article 240 of the Company Act, the management plans to withdraw NT$2,037,659,260 from distributable earnings to issue dividends stocks of 203,765,926 shares.

• (2) The total amount and conditions of new shares issuing:

• A.It is proposed to inject capital NT$ (same as below) 2,037,659,260 at ten dollars each, divided into 203,765,926 shares. They are all registered common shares.

• B. After approval of competent authority for this capital injection by earnings recapitalization submitted upon approval of shareholders meeting, the Board of Directors is authorized to determine ex-dividend date otherwise. The stock dividend is 40 shares over each thousand in accordance with shareholding ratio specified in the stock ledger as of the ex-dividend date. For share less than one, shareholders may apply to stock service agent for combining the fractional stock within five days from ex-dividend date. For failure to combine by deadline or there is still fractional stock after combination, the fractional stock will be distributed by cash (rounded to dollar). The cumulative number of fractional shares to authorize the Chairman to contact specific people to subscribe at par.

• C.If the shareholders’ stock dividend ratio is altered due to buyback of shares or transfer, conversion and cancellation of treasury stocks or other circumstances, it is proposed to be authorized the Board of Directors by shareholders’ meeting for affairs regarding modification.

• D.The shareholders’ rights and obligations of the new shares are the same as those of existing shares.

• (3) The effect on performance and EPS of the stock dividends distribution: the EPS of 2013 is NT$0.71, the EPS after dividend distribution is NT$ 0.68, the difference is minor and there’s no effect on the performance.

• (4) The paid-in capital after this capital injection shall be NT$52,979,140,600, which is still under the total capital NT$60 billion.

• (5) For anything not mentioned in this proposal, the Board of Directors is duly authorized for management.

Resolution:

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No.2 Proposed by the Board

Proposal:

Amendments to the Procedures for Acquisition and Disposal of Assets

Explanation:

• (1) In accordance with the revision of the “Regulations Governing the Acquisition and disposal of Assets by Public Companies” as per the Financial Supervisory Commission’s approval letter with issuing number 1020053073, the Bank amended “Procedures for the Acquisition and Disposal of Assets”:

• (2) The major revisions made are as follows:

• A.The part of revisions in accordance with the adaptation of IFRS

  • a. Define the scope of real property including land, houses and buildings, investment property, rights to use land. Other fixed assets and machinery equipment are defined as equipment.(No.2 paragraph 1 of Article 2, No. 4 paragraph 1 of Article 3, paragraph 1 of Article 5, paragraph 3 of Article 11 and No.4 paragraph 1 of Article 33)

  • b. The definition of party or subsidiary should refer to the Regulations Governing the Preparation of Financial Reports by Securities Issuers.(No.3 paragraph 1 of Article 3)

  • c. After the adoption of International Financial Reporting Standards, the consolidated financial statements is announced publicly. Considering the risk caused from the acquisition or disposition of assets transaction risk applicable between the parties is borne by the Bank, it specifies the evaluation of the related party’s transaction up to 10% of total assets.(Article 44-2)

• B.According to Article 5 of the procedure for the Acquisition and Disposal of Assets. Transaction with a government agency no longer obtain an appraisal report from a professional appraiser. Hence, it specified that acquisition or disposal of membership or intangible assets with a government agency, a PCA’s opinion is not required.(Article 7)

• C.In view of trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds with the related party is to gain stable interest. The risk of such transaction is lower, hence the relevant information no longer submitted to the Audit Committee and approved by the Board under the revision of the regulation, but still should comply with the rules of NT capital operation procedure and security investment operation. (paragraph 1 of Article 11)

• D.The property is acquired through engaging a related party to build real property, either on the company's own land or on rented land. Its nature is similar to a joint

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development contract with the related party. The real property acquired through engaging a related party to build real property, either on the company's own land or on rented land under the relation is not applicable to evaluate the reasonableness of the transaction costs from the acquirement of real property with the related party. (No.3 paragraph 4 of Article 12)

• E. Exclusive cases about announcement

  • a. Considering investment of domestic money market funds is to gain the stable interest, the nature is similar to the investment of bonds under repurchase and resale agreements. Hence, such investment applies to the exclusive cases of announcement in accordance with the regulation of bonds under repurchase and resale agreement.(No.1 paragraph 1 of Article 33)

  • b. Securities trading by securities firm in the primary market are regular business practices. It is not required to announce publicly while securities firm sell such securities in the secondary market. The advantage of information disclosure about the security subscription by securities firm is slight. Hence, security subscription by securities firm or by regulation applied to the exclusive cases of announcement. (No.4 paragraph 1 of Article 33)

• (3) Please refer to the Handbook for details.

Resolution:

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No.3 Proposed by the Board

Proposal:

Proposal of Release the Prohibition on Directors from Participation in Competitive Business

Explanation:

1. According to regulations set forth in paragraph 1 of Article 209 of the Company Act “A director who does anything for himself or on behalf of another person that is within the scope of the company's business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.”

2. List of directors who do anything for himself or on behalf of another person that is within the scope of the company's business since 2013 annual meeting of shareholders is attached. It is proposed to release the prohibition on directors from participation in competitive business.

Resolution:

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Questions and Motions

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Appendix

1. The Rules of Procedure for Taiwan Business Bank Shareholder Meetings

• (1) Article 1 (Applicable Principles)

• (2) Article 2 (Convention and Notice of Shareholders’ Meeting)

• (3) Article 3 (Preparation for Sign in Book such Documents)

• (4) Article 4 (Principle of Meeting Place and Time)

• (5) Article 5 (Calculation of Attending Shares and Call for Meeting)

• (6) Article 6 (Discussion)

• (7) Article 7 (Taperecording and Videotaping of the Meeting Process as Evidence)

• (8) Article 8 (Chairman and Observers of Shareholders’ Meeting)

• (9) Article 9 (Speak of Shareholders)

• (10) Article 10 (Voting, Voting Supervision and Avoidance of Conflict of Interest)

• (11) Article 11 (Meeting Order Maintenance)

• (12) Article 12 (Proxy and Authorization of Shareholders)

• (13) Article 13 (Announcement)

• (14) Article 14 (Meeting Minute and Signature)

• (15) Article 15 (Election)

• (16) Article 16 (Rest, Resume the Meeting)

• (17) Article 17 (Implementation)

2. Articles of Incorporation of Taiwan Business Bank

• (1) Chapter 1 (Applicable Principles)

• (2) Chapter 2 (Shares)

• (3) Chapter 3 (Business)

• (4) Chapter 4 (Meeting of Shareholders)

• (5) Chapter 5 (Board of Directors)

• (6) Chapter 6 (Supervisor)

• (7) Chapter 7 (Manager)

• (8) Chapter 8 (Accounting)

• (9) Chapter 9 (Appendix)

3. Procedures for Acquisition and Disposal of Assets of Taiwan Business Bank

• (1) Article 1 (Applicable Principles)

• (2) Article 2 (Assessment and Operation)

• (3) Article 3 (Announcement and Reporting)

• (4) Article 4 (Procedure for Acquisition and Disposal of Assets of subsidiary)

• (5) Article 5 (Penalty )

• (6) Chapter 6 (Appendix)

The amendment for the comparison table of the Procedures for Acquisition and Disposal of Assets of Taiwan Business Bank is attached.

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4. Shareholding of Directors:

Title	Name	Current shareholding	Current shareholding
		Number of Shares	Shareholding Ratio (%)
Chairman of the Board	Tsan-Chang Liao	112,382,885	2.21
Managing Director	Tien-Chang Huang	(112,382,885)	(2.21)
Managing Director	Sen-Yi Chang	877,423,478	17.22
Managing Director	Ling-Lee Lin	(877,423,478)	(17.22)
Independent ManagingDirector	Len-Yu Liu	0	0
Director	Hsiu-Yen Lin	(112,382,885)	(2.21)
Director	Hong-Yen Lee	(112,382,885)	(2.21)
Director	Representative of the Ministryof Finance	(112,382,885)	(2.21)
Director	Wan-Fu Lin	(877,423,478)	(17.22)
Director	Hung- Sheng Yu	1,886,200	0.04
Director	Jong-Jyr Kau	1,463,288	0.03
Director	Che Nan Wang	(1,463,288)	(0.03)
Director	Huang Chung-Min	123,662,877	2.43
Independent Director	Chau-Chen Yang	0	0
Independent Director	Chih-Yu, Cheng	0	0
TOTAL		1,116,818,728	21.93

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