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TBB AGM Information 2021

Aug 13, 2021

52201_rns_2021-08-13_47613490-bf57-4a63-8de0-ac5305cc788f.pdf

AGM Information

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Stock Code: 2834

Taiwan Business Bank Co., Ltd. 2021 Annual Shareholders' Meeting

Meeting Handbook

The Company will postpone the Annual General Shareholders' Meeting in accordance with the instructions of FSC.

Due to “Measures for public companies to postpone shareholders' meetings for pandemic prevention”, the Company suspended the convening of a shareholders’ meetings from 24 May to 30 June 2021.The Company will postpone the shareholders’ meeting to dates between 1 July and 31 August 2021 through the passage of a resolution by the board of directors.

Meeting Time: 9:00 a.m., June 25, 2021 Venue: 17F., No. 30, Tacheng St., Datong Dist., Taipei City

Table of Contents

Page I. Meeting Agenda ----------------------------------------------------------- 1 II. Bank Reports -------------------------------------------------------------- 2 III. Proposals ----------------------------------------------------------------- 5 IV. Discussions --------------------------------------------------------------- 43 V. Election Matters ---------------------------------------------------------- 49 VI. Other Matters ------------------------------------------------------------ 55 VII. Questions and Motions ------------------------------------------------ 57 VIII. Appendices ------------------------------------------------------------- 58 1. Rules of Procedures for Shareholders' Meeting of the Bank --- 58 2. Article of Association of the Bank ---------------------------------- 65 3. Rules for Election of the Directors --------------------------------- 76 4. Shareholding of Directors of the Bank ----------------------------- 79

I.Meeting Agenda

for the 2021 Annual Shareholders' Meeting of Taiwan Business Bank Co., Ltd.

Meeting Time: 9:00 a.m. on Friday, June 25, 2021

Venue: Auditorium, 17F., No.30, Tacheng St., Datong Dist., Taipei City Attendance: (Please refer to the register of attendance)

Chairman: Acting Chairman, Chih-Chien Chang

  • 1.Report Number of Shares in Attendance and Call the Meeting to Order

  • 2.Chairman Remarks

  • 3.Bank Reports

  • (I) The Bank’s 2020 Operating Report

  • (II) The Audit Committee's Review Report on the 2020 financial statements of the Bank

  • (III) Report on Distribution of the 2020 Remuneration for Employees and Directors

4.Proposals

  • (I) Adoption of the 2020 financial statements of the Bank

  • (II) Adoption of the earnings distribution from the final accounts for 2020

5.Discussions

  • (I) Resolution to carry out a capital increase via transferred earnings in accordance with the earnings distribution for 2020

  • (II) Amendment to the Article of Association of the Bank

  • 6.Election Matters

Election of the Bank's 16th term of the Directors of the Board

  • 7.Other Matters

Proposal for lifting the non-competition ban on the Directors of the Board

8.Questions and Motions

  • 9.Adjournment

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II.Bank Reports

Report I

Explanation: The Bank’s 2020 Operating Report

Description: Please refer to Page 6 ~ 24 of this Handbook for the Bank’s 2020 Operating Report.

Resolution:

Report II

Explanation: The Audit Committee's Review Report on the 2020 financial statements of the Bank

Description: Please refer to Page 3 of this Handbook for said Review Report.

Resolution:

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Report III

Explanation: Report on Distribution of the 2020 Remuneration for Employees and Directors

Description:

  1. Pursuant to Article 235-1 of the Company Act, the distribution was approved at the 17th meeting of the 4th Remuneration Committee and the 20th meeting of the 15th Board of Directors of the Bank.

  2. Remuneration of employees and Directors for 2020 were

  3. distributed in cash and distributed as follows:

  4. (1) Employee remuneration (3.865%): NT$217,392,749.

  5. (2) Director remuneration (0.6%): NT$33,747,904.

    • The above proposed distributions of employee and Director remuneration are included in the current year's expenses in accordance with the regulations.

Resolution:

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III. Proposals

Proposal I (Proposed by the Board of Directors) Explanation: Adoption of the 2020 financial statements of the Bank Description: The 2020 financial statements of the Bank, including the

operating report, balance sheet, consolidated statement of profit or loss, statement of changes in equity, and statement of cash flow (please refer to Page 6 ~ 40 of the Handbook) have been submitted to and passed by the 20th meeting of the 15th Board of Directors.

Resolution:

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Taiwan Business Bank Co., Ltd. 2020 Business Report

In 2020, the global economic performance was deeply affected by the outbreak of COVID-19. At the end of 2019, a severe outbreak of COVID-19 occurred in Mainland China. In March 2020, the epidemic spread from Asia to Europe and the U.S.; countries across the world implemented lockdown measures to contain the spread of the epidemic, resulting in an immediate halt of the global economy and transportations. The supply and demand of crude oil experienced serious imbalances in the international market, which led to a sharp drop in its price on an ongoing basis, and triggered substantial fluctuation in the global financial market. The Lockdown measures implemented by countries to contain the spread of the outbreak materially affected the performance of the transportation industry, tourism service industry, and import/outport business. Fortunately, countries rolled out corporate and personal burden alleviation measures and easing monetary policies to slow down the panic sentiments in the financial market and mitigate liquidity risks.

On March 3 and 15, 2020, the U.S. Federal Reserve (Fed) significantly cut down the Federal Funds Rate by 150 basis points, returning to the zero-interest rate policy that has been ceased since the financial crisis in 2008. In March 2020, the U.S. stock market experienced setbacks due to the panicking sentiments of investors resulted from the outbreak, triggering constant circuit breakers. The Fed upgraded the quantitative easing (QE) program of US$700 billion just implemented to an unprecedented limitless QE in a short period of time, and initially include investment-grade corporate bonds and investment-grade listed ETF into the scope of purchases. Central banks in Europe and Japan soon followed up on canceling their QE policies with purchase ceilings. In the meantime, the People's Bank of China adopted the targeted Reserve Requirement Ratio (RRR) cuts in response, the central banks and governments of major and emerging countries across the world adopted easing policies one after another and rolled out various burden alleviation programs shortly to maintain the drivers for the economy and employment, and stabilize the confidence of corporates and citizens.

As countries maintain their easing monetary policies, Central Bank in Taiwan also had an interest cut of 25 basis points in March, with a rediscount rate at 1.125%. With respect to the currency rates, the U.S. monetary easing policy weakened U.S. Dollars (USD), coupled with the repatriated funds from the Taiwanese businesses, the currency rate of New Taiwan Dollars (NTD) against USD appreciated from NT$30.114 at the beginning of 2020 to NT$28.508 at the end of 2020. In aggregate, the currency rate appreciation amounted to NT$1.606 for NTD throughout 2020, representing an increase of 5.63%.

Under the impacts of COVID-19 and the trade war between the U.S. and the PRC, multinational enterprises reduced the production ratio in the PRC or moved production bases out of the PRC. Taiwan possesses comparative advantage to other countries in manufacturing technology and has relatively better control for the

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epidemic. It, therefore, become a stronghold for Taiwanese businesses and multinational enterprises when making such transfers, contributing to the domestically economic performance.

According to the figure marked up by the Directorate General of Budget, Accounting and Statistics (DGBAS), the economic growth rate in Taiwan was 2.54% for 2020, and it is estimated that the economic growth rate in Taiwan for 2021 will increase to 3.83%. According to the forecast made by the DGBAS, the economic performance in 2021 will surpass that of 2020. According to ITRI's IEKCQM, it is estimated that the output value of the manufacturing industry in Taiwan will reach NT$19.68 trillion in 2021 with an output value growth of 4.75%.

As the Fed implied that mark-up of the interest rate would not occur by 2023, the probability of interest rate increase by the Central Bank of Taiwan is low with the backdrop that the probability of interest rate increase by Fed of the U.S. is low. As the interest rate in Taiwan is at the low range historically, the probability of interest rate decrease is low, unless another global trend of interest rate decrease occurred. Therefore, it is estimated that bank interest rate differential for banks funded by the government is unlikely to experience further significant shrinkage and the impacts arising from the shrinking interest rate differential will also decline. Regarding the exchange rate performance, with the continuous weakening of USD, the exchange rate for NTD against USD is maintained at approximately USD 1: NTD 28, which may become the new norm as indicated by the Central Bank.

The return trend of Taiwanese businesses created demands for investments, capital utilization, and plant establishment, which benefit the potential opportunities for financing, loans, and wealth management businesses of the banking industry. Suppliers turn to Southeast Asia for establishing their production capacity also brought chances for banks in Taiwan to promote overseas businesses, including margin purchase businesses such as wealth management planning, plant establishing and land purchase, and equipment investment. It is estimated that such conditions will contribute to the business volume of banks in Taiwan regarding deposits, loans, and wealth management in 2021.

In terms of industry development trends, the isolation policy in response to COVID-19 materially minimized the chances of consumers entering real outlets, generating significant impacts on the retail service industry. Transaction models and operating methods of merchants may be significantly changed due to the safe distance. The low-contact payment model will become the key innovative development for the financial service models after the outbreak. In 2021, it is expected that there will be more banks continue to optimize their mobile banking service platform and increase the cross-field operations with different industries to build scenario finance, create the financial ecosystem, and put focus on the non-high-end asset customer groups that received minor services in the past, so as to expand their businesses to general citizens and bring new business opportunities for the banking industry. In terms of internal management, to develop new financial services, the banking industry has strengthened their online credit investigation/loan

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supervision, legal compliance, risk management, performance management techniques, while considering the rise of sustainable finance in the aftermath of the pandemic, the banking industry has also increasingly placed emphasis on climate change and natural disasters, systemic risks of plague, and financial disclosures.

In the future, the Bank will continue to develop the loan supervision optimization program by carrying through the internal controls using three lines of defense and strengthening the overall risk control and reinforce FinTech development as well as information security controls. Furthermore, from the perspective of a professional financial institution, the Bank will grasp the business opportunities upon the return of Taiwanese businesses and proactively assist the small and medium enterprises (SMEs) in transformation and second-generation inheritance in accordance with government policies. Meanwhile, the Bank will provide financial products and services integrated with environmental protection and social welfare that correspond to social requirements, proactively strengthening and assisting in the sustainable growth of Taiwanese SMEs, thus fulfilling its corporate social responsibility (CSR) initiatives. The Bank will endeavor to turn the Bank into a leading brand in the field of SME financing and establish a solid foundation for the sustainable development of the Bank upon stepping into the next century

The Bank's operation results in 2020 and the business plan for 2021 are summarized as below:

I. Operation Results in 2020

(1)Implementation summary and the operation results

A. Profitability:

The Bank carried out a capital increase of NT$3.566 billion via transferred earnings, and issued stock and cash dividends of NT$0.50 per share and NT$0.20 per share, respectively, for the previous year (2019). Net income after tax for 2020 amounted to NT$4.702 billion (net income before tax was NT$5.374 billion).

B. Corporate Governance: Reinforcement of information disclosure channels and improvements in transparency in corporate governance

  • a. The Bank has long strived to enhance its corporate governance and ranked in the "Top 6%-20% of the Listed Companies Group" in the 2019 Corporate Governance Evaluation held by the Taiwan Stock Exchange.

  • b.The Bank actively increased communication channels for domestic and overseas investors, and an online investor conference was respectively held

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on August 28, 2020 and December 4, 2020. Each investor has immediate access to information on the Market Observation Post System, and can obtain the same information simultaneously on the TBB official website. The Bank also issues press releases on an irregular basis, giving investors multiple channels for acquiring TBB information.

C. Core Businesses:

  • a. Corporate Banking

  • 1)The Bank was recognized as an "Outstanding Bank" under the "Program to Encourage Loan Projects by Domestic Banks to SMEs (Group A)" organized by the Financial Supervisory Commission (FSC).

  • 2)The Bank was recognized as a "Level A Bank" under the "Program to Encourage Loan Projects by Domestic Banks to Key Innovative Industries (Group A)" organized by the FSC.

  • 3)The Bank received a total of three awards from phase 1 "Program of Banks in Taiwan to Accelerate the Processing of Burden Alleviation and Revitalization Loans" (base date: June 30, 2020) organized by FSC, including "Amount (Ratio of Burden Alleviation under the Government Policy to the Total Balance of Credit Loans) - 2nd Prize," "Number of Cases (Burden Alleviation by the Financial Institution) - 2nd Prize," and "Efficiency (Burden Alleviation under the Government Policy - New Revitalization Loans) - 3rd Prize."

  • 4)The Bank received a total of eight awards from phase 2 "Program of Banks in Taiwan to Accelerate the Processing of Burden Alleviation and Revitalization Loans" (base date: December 31, 2020) organized by FSC, including "Amount for Burden Alleviation under the Government Policy

    • 2nd Prize," "Amount for Ratio of Burden Alleviation under the Government Policy to the Total Balance of Credit Loans - 2nd Prize," "Number of Cases for Burden Alleviation under the Government Policy - 2nd Prize," "Number of Cases for Burden Alleviation by the Financial Institution - 3rd Prize," "Efficiency for Burden Alleviation under the Government Policy (New Revitalization Loans) - 2nd Prize," "Efficiency

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for Burden Alleviation under the Government Policy (Extension of Old Loans) - 3rd Prize," "Efficiency for Burden Alleviation under the Government Policy (New Operating Capital Loans) - 3rd Prize," and "Efficiency for Burden Alleviation under the Government Policy (New Cases) - 3rd Prize."

  • 5)In recognition of the Bank's outstanding performance in assisting SMEs, it received the "Policy Facilitation Award" and "Direct Guarantee Performance Award" from the Small and Medium Enterprise Credit Guarantee Fund. The Bank also received the "Certificate of Appreciation for the 100 Billion Guarantee Project" and "Certificate of Appreciation for the Interface of Loans Transferred for Guarantee," showing that the efforts of the Bank in promoting national policies are well recognized by the competent authority and within the industry.

  • 6)The Bank actively promoted the "Micro Women Start-up Loan" and the "Unemployment Start-up Loan for Employment Insurance" and received a certificate of appreciation from the Ministry of Labor.

  • 7)The Bank received the "Best of Innovative Products" from the Excellence Magazine under the category of non-financial holding for the "2020' 6th Best Bank."

  • 8)The Bank received the "Best SMEs Finance Award" in the 10th "Taiwan Banking and Finance Best Practice Awards" hosted by the Taiwan Academy of Banking and Finance.

  • 9)In the extension of SME loans, the Bank ranked No. 1 in Taiwan in total amount of guarantee and ratio of loans transferred for guarantees to the Small and Medium Enterprise Credit Guarantee Fund.

b.Foreign Exchange Business

In 2020, the Bank focused on the active promotion of expansion measures for different foreign currency businesses. In 2020, the Bank's accumulated average balance of foreign currency deposits was NT$233.803 billion, representing an increase of NT$18.084 billion or a growth of 8.38% as compared with the average balance of NT$215.719 billion in 2019. In 2020,

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the Bank's accumulated average balance of foreign currency loans was NT$134.264 billion, representing an increase of NT$0.988 billion or a growth of 0.74% as compared with the average balance of NT$133.276 billion in 2019.

  • c. Wealth Management

  • 1)In 2020, the Bank focused on strengthening its wealth-management business by vigorously expanding fee income from the insurance, fund, and foreign bond businesses, with boosting revenue and generating profit as the priority goal. With the vigorous promotion of a special program aimed at the marketing of designated products, fee income from the wealth-management (including insurance agent) business amounted to approximately NT$1.350 billion in 2020.

  • 2)The Insurance Agent Department was established on January 2, 2020 to concurrently operate life insurance and property insurance. It proactively implements regulatory requirements imposed by the competent authority in relation to the consistency between authority and responsibility. By doing so, benefits are created for the Bank in aspects of risk management for businesses, customers, employees, finance, and operations, and the Bank may achieve its objective to improve the protection of customers' interests in a comprehensive and complete manner.

  • d.Engagement in Burden Alleviation Loan Business for the Outbreak

  • 1)Since the outbreak of COVID-19, all members of the Bank were called to action. The "Burden Alleviation and Revitalization Steering Group for the Outbreak" was immediately established at the headquarters to provide various burden alleviation and revitalization programs organized by the government to our fellow colleagues and customers of our branches first. Meanwhile, the Bank simplified relevant investigation and review operating procedure for burden alleviation loans and set up the "COVID-19 Burden Alleviation" section on its website to provide exclusive online services, so as to accelerate the operating time for cases, ease the short-term capital pressure of corporates, and help them survive

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through the operating difficulties.

  • 2)For the year ended December 31, 2020, the number of approved loan cases for burden alleviation and revitalization under the policy and organized by the Bank was 46,677, with an amount approved amounted to NT$219.459 billion.

  • 3)For the year ended December 31, 2020, in response to the "Labor Relief Loans" operates by the Ministry of Labor, the Bank assisted local workers who were affected by the outbreak of COVID-19 to obtain capital for riding through the difficulties. In accumulation, the Bank assisted 23,041 people, and the amount of loan approved was NT$2.303 billion.

D. Innovative Products:

a.Continue developing innovative products to provide more convenient

services

  • 1)Introduced the 1D barcode credit card collection services of Taiwan Pay to respond to the diverse receipts and reimbursements scenarios at large-scale chain merchants.

  • 2)Released the Taiwan PAY bonus service to provide instant bonus collection and exchange services for customers, and in turns improve the will of use.

  • 3)Opened the online application for the Labor Relief Loan, which allows customers to submit applications and understand different burden alleviation measures via the burden alleviation section of the Bank.

  • 4)The Bank launched "E-Loan," a one-stop personal online credit loan service, to provide loan applications, progress inquiries, and identity verification services.

  • 5)The financial blockchain confirmation services adopted API for automatic responses; the operation was adjusted to be regulated under the headquarters.

  • 6)Added new functions where Taiwan PAY may be used in paying 44

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payment items, including land value increment tax, fines for violating regulations, and deed tax to improve the convenience of tax payment.

  • 7)The Bank carried out business cooperation with JKOS Network Co., Ltd. to allow the Bank's customers to use their deposit account with the Bank as the designated deposit account for payment. The service was formally launched in January 2021.

  • 8)The Bank cooperated with iPass and LINE PAY to allow the Bank's customers to use their deposit account with the Bank as the "LINE PAY MONEY e-Payment Account" to make deposits or withdrawals. The service was formally launched in January 2021.

b.Develop products according to the social trend and provide diversified

services to customers

  • 1)To improve our service quality, the Bank added and amended its time deposits operations, opened the inter-branch services for the announcement of lost or replacement regarding the seal used for customers' certificate/deposit accounts in NTD, canceling the announcement of lost for seals, settlement and account closing for certificate/deposit accounts. The Bank also added the interlocking execution service for the announcement of lost/replacement for seals in its time deposit system and added a designated automatic carry-over system. Upon settlement or account closing by customers, the system would lift the designation of "time deposit automatic carry-over" for the account.

  • 2)To satisfy the demand of customers in rapid order placing, the Bank has updated its securities electronic trading host system to comprehensively improve the quality of digitalized services. Furthermore, in response to the energy-saving and carbon emission reduction policy implemented by the government, as well as the reduction in printing and delivering expenses for paper-based statements, the Bank officially launched its "Electronic Monthly Statement System for Securities" in February 2020. The system offers online applications for customers to improve the

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digitalized services for securities.

  • 3)In line with the government's pronatalist policy, the Bank organized consumption loans of "Gold Pregnancy" and "Luck Pregnancy," hoping to increase the fertility rates of nationals. As of December 31, 2020, the cumulative number of loan disbursement was 1,601, amounted to NT$616 million.

c. Strengthen the supports for the financing of urban renewal and green finance via the "Innovative Finance Project Office."

  • 1)Financing of urban renewal: In accordance with the urban renewal policies and accelerated reconstruction of hazardous and old buildings policies implemented by the government, the Bank promulgated the "Regulations for Urban Renewal Loans" and "Regulations for Reconstruction of Hazardous and Old Buildings Loan" to assist the private sector in raising funds for rebuilding, and in turns improve the living environments of the public and enhance building safety and living quality. In 2020, a total of 26 loan cases related to urban renewal, hazardous and old buildings, and relevant marketing were approved, and the total loan approved was NT$18.612 billion.

  • 2)To continue communicating knowledge related to urban renewal and hazardous and old buildings, the Bank jointly organized the 2nd "Urban Renewal Expo" with the Wealth Magazine and Land Agent on September 19 and 20, 2020. The Ministry of Interior, Taipei City Government, and New Taipei City Government also provided their guidance to the event. Parties from government agencies, financial institutions, and industries related to hazardous and old buildings and urban renewal all gathered at the event to build an information communication platform in the name of the "Nation Team for Urban Renewal." There were over 12,500 participants at the exposition, over 1,622 participants at the seminar, and over 5,000 joined the online streaming.

  • 3)Green finance: To promote the development of the green energy industry

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and establish an economic model with low carbon emission, the Bank launched the "Green Energy Sustainable Project Loan," with enterprises with capital requirements for the purchase of equipment related to renewable energy, pollution prevention, and energy-saving set as financing targets. In 2020, a total of 82 loan disbursement cases were approved for green energy loans, and the total loan amounted to NT1.862 billion.

d.Assist in industry innovation and provided intangible asset financing

To assist in the industry innovation, the Bank established the "Regulations for Financing and Loan on Intangible Assets with Revenue Mezzanine."Leveraging on the expertise of the Industrial Technology Research Institute in the valuation of intangible assets, the Bank referred to the professional valuation report provided by the Institute to determine the development potentials and market values of intangible assets in the future and worked with the SMEG to provide collateral margin with high credit.

e.Endorse innovative industries and promote intellectual property financing

With the government endorsing cultural creativity and key innovative industries, the Bank expanded its business of intellectual property financing. In December 2020, the Bank set up the "Innovation + Intellectual Property Invigoration Loan" to help companies of cultural creativity and innovative R&D obtain working capital, encourage enterprises in developing new products and new technologies, and valuing the use of intellectual properties to improve citizens' living quality.

E. Expansion of the Scope of Channel Services:

  • 1) Make adjustments on the location distribution of the Bank's branches for the increase in value regarding physical channels, so as to provide better and more comprehensive financial services. The Hsin Chu Branch reallocation was completed and re-opened on August 17, 2020.

  • 2) To align with the "Blueprint for Developing Taiwan into a Bilingual Nation by 2030" promulgated by the government, the Bank aims to provide a

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bilingual-friendly environment for financial services. In 2020, the total of 17 bilingual branches was established in Northern, Central, and Southern Taiwan. In 2021, the Bank intends to expand 15 more bilingual branches. It is estimated that all branches shall become bilingual by 2028.

F.Information Operations and Information Security:

  • a.Established the SYSPLEX system with local HA for central billing to improve service capacities

  • 1)Established the SYSPLEX system with local HA for central billing to improve the usability of the system and reinforce data security, ensuring the undisrupted operation of the system.

  • 2)Procured programs for the current central billing mainframe and purchased software usage authorization ("Corporate Software and Services - IBM Program Authorization and Relevant Program Services" Case). It is estimated that the Bank may save an expense of approximately NT$294,372 thousand in the next decade.

  • 3)Received the Global Payments Innovation (GPI) service certification from the Society for Worldwide Interbank Financial Telecommunication (SWIFT). The Bank provides real-time inquiry services for cross-border remittance to customers and effectively helps customers in gaining comprehensive remittance information.

  • 4)Established a brand-new e-banking system to swiftly, safely, and flexibly respond to business requirements. The system horizontally expands equipment and serial services and data to provide a secure and stable transaction environment for customers.

  • 5)Established the digital video surveillance system and storage equipment for all branches. The Bank also established its network segment partition system and reinforced the DDoS defense ability to strengthen its cybersecurity protection system.

b. Reinforce the security control mechanism for the information system

  • 1)Completed the assessment on the information security of its computer

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system in November 2020, according to the "Assessment Regulations for the Information Security of the Computer System of Financial Institutions."

  • 2)According to the Letter (Tai-cai-ku-zi No. 10803628820) from the Ministry of Finance on February 25, 2019, as doubts were casted on the cybersecurity of communication and information products from the PRC, where using such information products may threaten citizens' safety of use, the Bank supervised its overseas branches to replace the products from Hikvision.

  • 3)Self-assessment was carried out in accordance with SWIFT Customer Security Programme (CSP) specifications and was filed on the website of SWIFT in December 2020.

  • 4)To reinforce the verification system for conflict of interests of internal personnel and the control on related customers, the Bank has established a system to carry out the verification for "same-direction purchase and sales for the same securities within 5 minutes before and after" and "same order-placing IP examination" regarding internal personnel and its customers. Any anomaly shall be reported and explained immediately to effectively prevent the occurrence of risk events.

c. Continuous promotion of the digital banking business

  • 1)Actively promoted the Taiwan Pay acquiring businesses, endeavored to increase the rate of adopting the QR Code common payment service by established merchants, such as large-scale chained stores, business area, and night markets, and organized marketing discount events to facilitate the inclusive finance and the penetration rate of e-payment.

  • 2)In response to the service of the Triple Stimulus Voucher binding with mobile payment promoted by the government, the Bank organized events related to the Triple Stimulus Voucher. The discounts included extra cash returns from the Bank, early-bird bonus, churning presents for new customers, returns from designated merchants, and extra prize draw.

  • 3)Strived to obtain business dealings regarding the ACH distribution of

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dividends on behalf of listed companies, cooperated with major hospitals to introduce medical payment machine, to provide customers with diversified payment collection on behalf/payment service, so as to increase fee income of electronic finance business. 

  - 4)For digital marketing development and social media operations, the Bank newly opened its LINE official account; meanwhile, to improve the number of fans and friends and interaction frequency on its Facebook page - My Dream+, the Bank designed a series of marketing activities to boost its share of voice on social media, which effectively attracted internet communities of different ages to participate.

  • G.Implementation of Compliance and Anti-Money Laundering Operations:

  • a.Implementation of compliance and anti-money laundering in line with the regulations of the competent authority

    • 1)Due to the practical operations and changes in relevant laws and regulations, the Bank continued to amend its rules for anti-money laundering and combatting the financing of terrorism.

    • 2)The Bank performed its compliance risk assessment (CRA) operation for 2019 and reported to the FSC for filings after being approved by the Board.

    • 3)With regards to anti-money laundering and combatting the financing of terrorism, the Bank performed its institutional risk assessment (IRA) operation for 2020 and reported to the FSC for filings after being approved by the Board.

    • 4)In view of anti-money laundering and combatting the financing of terrorism, the Bank released and implemented the automatic scanning for sanction list regarding NTD domestic inward remittance and name list of terrorists.

b. Holding of regular compliance and anti-money laundering training

  • 1)In response to the outbreak of COVID-19, the Bank organized the online learning program "2020 Seminar for Anti-money Laundering and

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Combatting the Financing of Terrorism" on its digital learning website to increase the number of employees being trained, and performed a post-program test.

  • 2)A "Compliance Officer Seminar" was held in each of the first and second halves of 2020.

c. Strengthening of the monitoring mechanism for compliance follow-up

  • 1)According to the "Compliance Follow-up Cases Control System," the letters regarding relevant laws and regulations from external parties and changes in laws and regulations that the Bank shall comply, include them in the "Compliance Follow-up Cases" for control. The Bank compiles the subsequent implementation of "Compliance Follow-up Cases" each month according to the competent authorities and reports to the Chief Compliance Officer.

  • 2)To reinforce the control system of the second line, the Chief Compliance Officer (also the director delegated for anti-money laundering and combatting the financing of terrorism) led the business management department and the supervisor of the delegated department to reinforce the site visits and sampling inspection for compliance and anti-money laundering prevention regarding domestic branches with a higher number of deficiencies found during the internal and external audit for 2020 selected by the Bank.

  • d. Engaged CPAs to carry out the project audits for anti-money laundering and combatting the financing of terrorism for 2019 in accordance with the "Implementation Rules of Internal Audit and Internal Control System of Financial Holding Companies and Banking Industries."

  • e. Ranked within the top 20% among companies by the FSC in "Evaluation on the Principles for Fair Treatment of Customers in Financial Service Industry" organized by the FSC.

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H.Enhance Risk Control and Improve Assets Quality:

Under the influences of the external economic environment, the integrity of representatives, poor operations, and unsatisfactory financial positions, the Bank occasionally has overdue credit loans in the large amount. To improve the quality of credit loans, reinforce the risk control ability, and initiate loan supervision optimization programs, the Bank adopted a level-to-level administration for credit loans and investigation. It optimized and adjusted operating procedures such as investigation and review, appraisal, and credit loan review, focused on the re-examination and follow-up for large amount credit loans after the disbursement and strengthened the forewarning system to protect the asset quality of the Bank.

I.Corporate Social Responsibility:

  • a.Active implementation of corporate social responsibility and realization of the value of the sustainable operation

  • 1)The Bank’s "CSR Report" passed two stages of verification by the British Standards Institution (BSI) for five consecutive years, and BSI issued to the Bank an Independent Assurance Opinion Statement.

  • 2)The Bank received the Golden Award in the financial and insurance group of corporate sustainability report division under the "13th TCSA Taiwan Corporate Sustainability Awards of 2020" organized by the Taiwan Institute for Sustainable Energy and received the "Social Empowerment Award" from its initial participation in the "Asia Responsible Enterprise Awards (AREA)." In addition, the Bank was selected as one of the top 100th in "Excellence in Corporate Social Responsibility" organized by the CommonWealth Magazine for two consecutive years in 2020. Such achievements help upgrade the Bank's visibility and its corporate image for CSR implementation.

  • 3)The Bank continued to optimize the design of its website for the general public to obtain and understand the information on the corporate social responsibility of the Bank through its website more conveniently, to effectively strengthening the communicating function of the Bank

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regarding corporate social responsibility.

b. Continual implementation of senior caring policy, donations to vulnerable groups, and active participation in public benefit affairs

  • 1)The Bank carried on the "Project of Senior Dining & Learning Center Sponsorship" to improve the living and care quality for vulnerable seniors in communities. In 2020, additional sponsorships were made to six community organizations (including Chumen Community Development Association in Baihe District, Tainan City; Chiayi Country Sustainable Development Association; Zhongjue Community Development Association in Xihu Township, Changhua County; Guoxing Community Development Association in Qingshui District, Taichung City; Taitung County Aboriginals Culture Association; and Shitan Community Development Association in Qionglin Township, Hsinchu County) for the establishment of Senior Learning Centers. The Bank has set up 18 Senior Learning Centers across Taiwan, and the accumulated sponsorship has amounted to more than NT$15 million. The accumulated number of benefitted seniors is approximately 0.3 million per year.

  • 2)Extended the appropriation purpose and usage regarding the public welfare funds from the "Silver Love Credit Card." The Bank exclusively allocated 0.3% of the general card consumption as the public welfare funds to help seniors to dine and learn together. By doing so, the Bank may spread love to every corner of Taiwan to support vulnerable groups and people with physical/mental disabilities and realize community care and social relief.

  • 3)The Bank continued to promote the property trust for the seniors and the disabled, recorded outstanding results for a consecutive four years and received the award for recognition from the FSC.

  • c. Fulfilling responsibility for environmental protection and continued energy conservation and carbon emission reduction efforts

  • 1)The Environmental Protection Administration of the Executive Yuan and

  • 14 -

the Department of Environment Protection of the Taipei City Government cited t nine years in a row for outstanding performance in green procurement.

  • 2)The Taipei City Government publicly cited the Bank for receiving ISO 50001 Energy Management Systems certification and the designation of its headquarters as an energy-saving-label building.

  • 3)Chu Bei Branch of the Bank participated in the "Outstanding Assessment Award for Energy-saving by the Service Industry in Hsinchu County for 2020" and received the High Distinction Award for Commercial Buildings.

  • 4)The Bank implemented its "Energy Policies" and "Measures for Water and Electricity Conservation" with scheduled follow-up on the status of water and electricity conservation by different units and inclusion of the results in business performance assessments. Various energy conservation improvement programs were vigorously implemented in order to enhance the energy efficiency of equipment and save on electricity costs.

(2)Budget Implementation

  • A. The annual average balance of deposits was NT$1,439.740 billion, for an achievement rate of 97.69%.

  • B.The annual average balance of outstanding loans was NT$1,168.459 billion, for an achievement rate of 98.35%.

  • C.The foreign exchange transactions amounted to US$56.145 billion, for an achievement rate of 108.05%.

  • D. The securities brokerage business amounted to NT$474.360 billion, for an achievement rate of 107.56%.

(3)Revenues, Expenditures, and Profitability

  • A.Net income for 2020 amounted to NT$21.774 billion; bad debt expense, commitment, and provision for guarantee liabilities totaled NT$4.072 billion; operating expenses were NT$12.328 billion; before-tax net income from

  • 15 -

continuing operations was NT$5.374 billion; net profit after tax was NT$4.702 billion; return on assets ratio (after-tax) amounted to 0.27%; return on equity ratio (after-tax) amounted to 4.84%; net profit margin (after-tax) was 21.59%, and earnings per share (after-tax) was NT$0.63.

  • B.Net income before taxes (excluding provisions) in 2020 amounted to NT$9.446 billion, a decrease of NT$960 million over 2019. NT$4.072 billion was allocated as an allowance for bad debts in order to strengthen risk appetite. Before-tax net profit for 2020 amounted to NT$5.374 billion, a decrease of NT$2.683 billion over 2019, primarily due to the increase in allowances for bad debts.

  • C.The non-performing loan (NPL) ratio at the end of 2020 stood at 0.50%, an increase of 0.18% compared with the end of 2019; the bad-debt coverage ratio was 233.60%, a decrease of 134.17% over the end of 2019.

(4)Research and Development

  • A. Establishment of an Exclusive Unit for Industry Research

  • a.A total of 120 industry analysis reports were published in the Bank's E-Library in 2020 for colleagues to peruse.

  • b.Elite professionals from industry, government, and academia are invited to speak on an occasional basis to update the Bank's employees on the latest trends in industrial development.

  • B.Encouragement of Innovation and Professionalism in Line with Business Development Needs

  • Business lectures are held on a scheduled basis and a wide variety of digital learning courses are offered to encourage employees to engage in further on-the-job studies and absorb new knowledge that will strengthen their competitiveness and enhance their professional know-how.

II.Business Plans for 2021

(1)Operating Directions and Policies

A. Strengthen the positioning and responsibility as a specialized bank for SMEs

  • 16 -

a.Build a solid foundation

  • Under the trend of significant changes in the external environment, the Bank will reinforce its information infrastructure engineering and construction and focus on developing its digital transformation ability to support the future development of the Bank. While expanding its businesses, the Bank will concurrently implement legal compliance, establish a healthy corporate culture, strengthen its risk control, and implement its three lines of defense for internal control to achieve comprehensive corporate governance.

  • b.Continue to promote the "Youngster first, seniors second, and start-ups third" program

  • Combine the core competencies of the Bank with issues concerned in society to integrate our business with social welfare. Implement the "Youngster first, seniors second, and start-ups third" program to help solve the problems of youth startup and employment, promote senior financing and the acceleration of renewal for hazardous and old buildings, and support the development of innovation, creation, and startup.

  • c."Financing, Guidance, Investment" in trinity to create a complete financial ecosystem:

  • 1)To secure SME customers, the Bank will actively explore the blue ocean market based on its express pass mechanism with "active exploration, simplified procedures, rapid review, and audit incentives." Together with its guidance and investment plan, the Bank will improve the depth and width of its services to SMEs.

  • 2)The Bank will spare no effort to transfer the loan business for SMEs to the SMEG for guarantees, thus minimizing the risk of credit loans; together with external counseling resources from SMEG and SMECF, the Bank will assist enterprises in improving their operating management capacities and counseling their transformation and upgrade.

  • 17 -

  • d.Grasp the green business opportunities and promote sustainable operations:

  • 1)Promote green energy and sustainable operations

    • To slow down climate change and respond to energy-saving and carbon emission reduction, the Bank continues to promote relevant loans to help customers in acquiring the capital required for purchasing equipment related to renewable energy, pollution prevention, and energy-saving. This is to contribute to the development of green enterprise to attain the goal of sustainable operations.

  • 2)Promote "Urban Renewal Finance 2.0"

    • To help improve two seniority issues (old buildings and aging population) and two insufficiency issues (land insufficiency and electricity insufficiency), the Bank combined various innovative methods of "Financing, Trust, Green Energy, Silver Care," alongside the professional management by building agent company and continuing construction systems, the Bank shall establish an urban renewal ecosystem where banks actively exert their functions.

B.Expand customer-oriented businesses

  • a.Focus on innovative projects and products of SMEs:

  • Setting the core business of SMEs as the center, the Bank will promote differentiated corporate finance loan operations to secure the existing customer relationships, explore new business opportunities, and develop diverse application channels for financing to provide assistance to enterprises during various development stages.

  • b.Create wealth management business model with features of SMEs: Leverage on the strong foundation of SME customers, the Bank willcreate a wealth management business models with features of SMEs, plan for integrated wealth management, supplemented by the trust business, to achieve objectives of profiting and growth.

  • c."Double A" strategy for comprehensive digital transformation:

  • Initiate the Double A (AI and OPEN API) strategy to create digital life

  • 18 -

scenarios for customers to improve the development of the Bank's digital ecosystem and establish digitalized banking services with customers as its core, data as its foundation, and customer experiences as its primary considerations.

(2)Operating Policies

Facing the ever-changing financial environment and in response to the upsurge of FinTech and the development of digital banking, the Bank will adhere to its core value of "SME Specialized Bank" and utilize the four aspects on its strategy map with a bottom-up approach, to enhance risk control and improve assets quality. Furthermore, in line with the aspects of learning & growth, internal procedures, customers, and finance, the Bank will establish a five-year strategy structure with specified directions and centralized resources for its departments, so as to reinforce the adjustments in its three major structures of labor, channels, and capital. The Bank will achieve its goal of sustainable development by realizing our operating concept and become a premium bank with comprehensive financial services.

A. Learning & Growth

  • a.Improve the professional competencies of our employees: Establish a talent database through human resource inventory; deploy human resources of the entire the Bank with plans; enhance cultivation of professional talent for SMEs, digital finance, and international finance; strengthen physical and digital learning content and function; establish financial and industrial digital academies.

  • b.Establish a successor scheme: Reinforce key position management and talent cultivation; establish a successor cultivation scheme; enhance the successor system; plan to cultivate successor candidates with potentials for the benefit of the Bank's sustainable operations.

  • c.Optimize the labor structure: Revitalize retired human resources to enhance the inheritance of experience; diversify employment channels; connect with the tertiary education sector for industry-academia cooperation; participate in the youth employment pilot program; recruit outstanding personnel to enrich the talent database of the Bank.

  • 19 -

  • d.Improve the performance of information systems: Increase investment in IT building and integrate it closely with our business; enhance the overall efficiency of the information system; improve diversity and innovative capacities of our IT team; reinforce the cultivation and motivation of key IT personnel to lay a solid foundation for information technology.

  • e.Enhance cybersecurity defense and monitoring capacity: Continue to improve the Bank's cybersecurity management system and maintenance plan; optimize the joint defense system; continue to organize its cybersecurity upgrade and improvement measures; enhance cybersecurity training to reinforce cybersecurity protection ability and realize cybersecurity compliance.

  • f.Optimize the accountability mechanism: Establish a comprehensive accountability mechanism and cultivate the culture of accountability; abolish the parochialism and strengthen cross-department cooperation; form the organization and value that allows our fellow colleagues to internalize it as their mission, vision, and core values, so as to strive toward the Bank's goal of sustainable development.

  • g.Realize the corporate culture of learning and sharing: Build a "learning" experience inheritance system based on the concept of "learning by doing and doing by learning" and encourage internal innovation by young employees to invigorate corporate human resources.

B.Internal Procedures

  • a.Improve the management by objectives: Establish the goal and realize the execution, optimize the evaluation management system, reinforce the connection between evaluation, and rewards to stimulate boosted performance.

  • b.Optimize the procedures for better efficiency: Improve AI technologies application, promote the reformation of business procedures, and continue to optimize artificial intelligence customer service;develop innovative FinTech and promote the digital transformation to improve service quality and optimize customer experiences; value the management for the internal and operating process, regularly examine the SOP for continuous creation

  • 20 -

for the best working process; develop the application of data center and utilize the information system to assist in the manual examination; create optimized workflows with continuous efforts to improve operating efficiency and manage quality, reducing errors arising from manual procedures.

  • c.Enhance risk management: Enhance risk control through understanding, managing, and reducing risks; focus on business development and risk control to safeguard the quality of assets.

  • d.Adopt integrated marketing to increase customer contribution: Integrate digital marketing resources to increase dealings with customers, increase overall customer contribution, and provide comprehensive financial services according to the requirements for the business development of customers.

  • e.Provide premium services to build customer loyalty: Bearing customers' interests in mind, design comprehensive financial services based on customers' requirements to meet their expectations and demands, in turn, building customer loyalty.

  • f.Strengthen customer relationships with the second generation upon the succession of the family business: Strengthen the customer relationship with the younger generation or the second generation upon the succession of the family business to improve SME customers' support to the Bank after generational changes.

  • g.Adopt a clicks-and-mortar method to reinforce digital financing: Adopt innovative thinking to enhance financial products and services, optimize the trading environment for the clicks-and-mortar channel, and reinforce the digital financial landscape.

  • h.Differentiated products and marketing: Apply Big Data analysis to understand customer behavior patterns and requirements; carry out cross-field cooperation to nurture the Bank ecosystem to provide customized services and precise marketing services.

  • i.Adhere to rigorous compliance: Establish a top-down culture of compliance; continue to implement compliance and duly comply with the

  • 21 -

monitoring measures of the competent authorities; uphold provisions for anti-money laundering and combating the financing of terrorism; implement whistle-blower protection and uphold customer interests; thereby forming a corporate culture that prioritizes compliance.

  • j.Strengthen corporate governance: Improve Board of Directors' functions, corporate governance mechanisms, and operations of functional committees; disclose material information regarding corporate governance to improve transparency for information disclosure and shape the culture of corporate governance.

  • k.Fulfill corporate social responsibility: Attach importance to the ESG valuation; focus on the "Youngster first, seniors second, and start-ups third program with our core business to promote the integration of corporates and society; and internalize the fulfillment of social responsibility as its corporate spirit.

C. Customers

  • a.Improve channel service quality and integrate customer views from all channels: Improve the value of physical channels; expand the service scope for virtual channels; enhance the control on business opportunities regarding clusters of SMEs to meet the mission of the Bank to provide services for SMEs; establish a data market with the cross-business omnidirectional single view of customers to fully present customer preferences and service channels, optimizing service and experiences for customers.

  • b.Focus on the niche market of SMEs and reinforce the brand image of a specialized bank: Specify positioning as an SME specialized bank and focus on the core business of SMEs; commit to policy financings such as micro-to-small enterprises, startups, urban renewal for hazardous and old buildings, intangible assets, and placemaking to shape the brand image of a specialized bank; focus on customer management and assist in succession and inheritance to provide drivers for both financing and guidance.

  • 22 -

  • c.Enhance wealth management services and gain trust from custoemrs: Focus on the three major keys of customization, segmentation, and digitization to deepen the wealth management services and enhance customers' trust; satisfy customers' demands through professional financial planning and assistance in the wealth inheritance between generations; undertake deep-rooted support for investment analysis in order to provide financial planning services for owners and high-asset customers.

D. Finance

  • a.Increase operating performance and respond to risks of climate change: Expand operating scale, increase the profit margins of overseas branches, improve interest rates and diversify the income sources of service charges to enhance profitability; focus on risk management and minimize the pressure arising from the increase in allowances for bad debts; include risks of climate change into the Bank's strategies of operating management and carry out responsible investments to proactively engage in the new environment.

  • b.Enhance capital, uphold shareholders' interests, and pursue the sustainable operations of the corporation: Comply with the monitoring requirements of the competent authority regarding authorized capital; ensure a healthy capital structure and the goal of optimized resource allocation; strengthen the risk appetite to expand the growth of operating income; achieve the goal of maximized shareholders' value; develop based on the future strategies and improve the utilization efficiency of resources.

E.Loan Supervision Optimization Program

To comply with governmental policies and assist in creating a favorable finance environment for SMEs, the Bank will strengthen its risk control, improve asset quality, and develop loan supervision optimization programs. The Bank also keeps abreast of risks for credit loans, safeguards asset quality, and improves the efficacy for approved cases for achieving the objectives of reinforcing asset quality for credit loans, improving professional audit functions, and enhancing the professional foundation for

  • 23 -

credit loans.

F.Strengthen Internal Audit and Control

Communicate with fellow colleagues and allow them to internalize the concept of legal compliance as their personal ethics and implement legal compliance with regard to ordinary businesses. Meanwhile, enhance the management for internal control, risk management, and risk compliance through the first and second lines of defense. Establish a whistleblowing system for anomalies, reinforce monitoring transactions between accounts of wealth management specialists and customers; continue to follow up on the improvements for deficiencies and the effectiveness of control measures to effectively minimize the possibility of fraudulence cases.

(3)Business Targets

To give equal weight to the protection of shareholder interests, improve the capital structure, and enhance asset quality, the Bank has set the following targets in consideration of the Directorate General of Budget, Accounting and Statistics for 2021.

  • 1.Annual average deposit balance: NT$1,523.520 billion.

  • 2.Annual average balance of loans outstanding: NT$1,236.645 billion.

  • 3.Total foreign exchange transactions: US$56.549 billion.

3. Results of Latest Credit Rating

Date of
Rating		 Rating Institution Ratings Ratings Outlook
Long-term
Credit		 Short-term
Credit
110.1.22 Taiwan Ratings twAA- twA-1+ Stable
110.1.22 Standard & Poor's BBB+ A-2 Stable

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Chairman: Prsident: SVP & GM of the Accounting Dept:

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Proposal II (Proposed by the Board of Directors) Explanation: Adoption of the earnings distribution from final accounts of the Bank for 2020.

Description:

  1. After an audit, the Bank's 2020 earnings available for distribution amounted to NT$3,367,693,823.39, as described below:

  2. (1) The opening undistributed earnings for 2020 amounted NT$192,753,320.24.

  3. (2) Items added:

After reviewed and approved by Accountant Tan-Tan Chung and Jeff Chen from KPMG, the after-tax net income for 2020 was NT$4,701,775,424.21.

  • (3) Items deducted:

    • A. NT$164,796,800 was set aside as the "Recognized Actuarial Gains and Losses for Defined Benefit Plans."

    • B. "Gains (losses) from Investments in Equity Instruments Measured at Fair Value through other Comprehensive Income" amounted to NT$1,349,334.

    • C. Legal reserve appropriated: NT$1,360,688,787.06.

  • (4) Distribution of shareholders' bonus - cash dividends (NT$0.10 per share): NT$748,858,346; the minimum distribution of cash dividend made to shareholders shall be round up to NT$1, and fraction cash dividend less than NT$1 shall be accounted as other income.

  • (5) Distribution of shareholders' bonus - stock dividends (NT$0.34 per share): NT$2,546,118,380.

  • (6) Closing undistributed earnings: NT$72,717,097.39.

  • Please refer to Page 42 of this Handbook for the "Disposition of Earnings for 2020."

Resolution:

  • 41 -
Taiwan Business Bank Co., Ltd.
Disposition of Earnings
Year 2020
Unit: NT$		 Taiwan Business Bank Co., Ltd.
Disposition of Earnings
Year 2020
Unit: NT$
Item Amount
Opening undistributed earnings 192,753,320.24
Add: After-tax net income for 2020 4,701,775,424.21
Less: Recognized actuarial gains and losses
for defined benefit plans		 (164,796,800.00)
Less: Gains (losses) from Investments in
equity instruments measured at fair value
through other comprehensive income		 (1,349,334.00)
Less: Legal reserve appropriated (1,360,688,787.06)
Earnings available for distribution 3,367,693,823.39
Items of distribution:
Shareholders' bonus - cash dividends
(NT$0.10 per share)		 748,858,346.00
Shareholders' bonus - stock dividends
(NT$0.34 per share)		 2,546,118,380.00
Closing undistributed earnings 72,717,097.39

Note:

  • 1.The calculation of shareholders' bonus per share was based on 7,488,583,457 shares.

  • 2.The distribution shall initially be appropriated from the undistributed earnings in the latest year.

Chairman: Prsident:

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SVP & GM of the Accounting Dept:

  • 42 -

IV.Discussion

Proposal I (Proposed by the Board of Directors) Explanation: In response to the earnings distribution of stock dividends for 2020, the Bank intends to carry out a capital increase via transferred earnings for the issuance of new shares, hereby proposed for approval.

Description:

  • 1.In response to the requirements on the inclusion of common equity under the new Basel III to improve its capital structure, and in turns increase the profitability, the Bank intends to carry out a capital increase via transferred earnings for the issuance of 254,611,838 new shares according to the requirements under Article 240 of the Company Act.

  • 2.Total amount of the new shares for capital increase and the conditions for issuance:

  • (1) A capital increase of NT$2,546,118,380 is proposed, with the par value of NT$10 per share, for the issuance of 254,611,838 new registered common shares.

  • (2) The capital increase via transferred earnings shall be submitted to the competent authority for approval after being approved by the shareholders' meeting. The Board may otherwise determine the date of ex-rights for the allotment of new shares, and, based on the shareholding ratio stated in the Shareholders' registrar on the date of ex-rights, allot 34 shares for every thousand shares without compensation. Allotment of fraction shares less than one share; the Shareholder may present at the stock affairs agency of the Bank within 5 days from the date of ex-rights for aggregation. A cash distribution may be paid for fraction shares less than one share upon aggregation (round up to NT$1); the Board may assign

  • 43 -

chairman by specific person to subscribe the overdue unaggregated number of fraction shares at the par value. 

  - (3) Subsequently, if the repurchase of Bank's shares, or the transfer, conversion, and cancellation of treasury shares or otherwise affected the number of total issued shares, resulting in changes in share distribution rate of Shareholders, hereby proposed to the Shareholders' meeting to authorize the Board for handling the changes

  - (4) The new shares issued under the capital increase via transferred earnings shall rank pari passu in all respects with the originally issued shares.

  • 3.Impact of the proposed stock dividend payment by the shareholders' meeting on the business performance and earnings per share of the Bank

    • Pursuant to the provisions in the "Regulations Governing the Publication of Financial Forecasts of Public Companies" and "Taiwan Stock Exchange Corporation Standards for Determining Whether a TWSE Listed Company Shall Publish Complete Financial Forecasts" that govern the publication of financial forecasts of public companies, the Bank therefore cannot disclose the forecast information on the Bank's operating income, profit or loss and earnings per share as a result of the above proposed share allotment scheme without compensation.

  • 4.After this capital increase, the total paid-in capital is

    • NT$77,431,952,950, falling within the total capital of NT$80 billion of the Bank.

  • 5.We propose to authorize the Board of Directors to exercise its full powers in respect of the matters not covered in this proposal.

  • Resolution:

  • 44 -

Proposal II (Proposed by the Board of Directors) Explanation: Amendments to the Article of Association, hereby proposed for approval.

Description:

  • 1.The amendments to the Article of Association are highlighted as follows:

  • (1) The wording is adequately revised to reflect that the appointment and dismissal of important staff employees is amended to be considered by the Board of Directors based on their positions, and is not subject to the revision of the titles of supervisors. (Article 22)

  • (2) The wording is adequately revised to reflect that pursuant to the scoring requirements of the Corporate Governance Evaluation Indices issued by the Taiwan Stock Exchange, the Banks' Article of Association need to disclose a clear and specific dividend policy to strengthen corporate governance. (Article 42)

  • 2.For the "Comparison Table of the Drafted Amendments to Article of Association" of the Bank, please refer to Page 46 ~ 48 of the Handbook.

Resolution:

  • 45 -

Comparison Table of the Drafted Amendments to Provisions of Article of Association of Taiwan Business Bank Co., Ltd.

Association of Taiwan Business Bank Co.,Ltd.
Amended Provisions Current Provisions Explanation
Article 22
Functions of the Board of Directors
are as follow:
I.
To determine significant
regulations and rules.
II.
To determine and review the
overall operating strategies and
significant policies.
III.
To determine the business plan.
IV.
To determine the internal
control system.
V.
To prepare for the capital
increase or reduction.
VI.
To determine the establishment,
cancellation, or alteration of
branches.
VII. To determine the significant
contracts.
VIII. To determine budgets and
discuss the final accounts.
IX.
To determine the purchases and
sales of real properties.
X.
To determine investments in
other companies.
XI.
To prepare for surplus earning
distribution or loss
appropriation.
XII. To approve the significant
businesses.
XIII. To determine the appointment
and dismissal of major
employees such as President,
Vice President, Chief Auditor,
and Unit Heads of the head
office and branch offices.
XIV. Matters handed down by the
Chairman.
XV. Other functions authorized		 Article 22
The Board of Directors shall have the
following powers and duties:
I.
To determine significant
regulations and rules.
II.
To determine and review the
overall operating strategies and
significant policies.
III.
To determine the business plan.
IV. To determine the internal control
system.
V.
To prepare for the capital
increase or reduction.
VI. To determine the establishment,
cancellation, or alteration of
branches.
VII. To determine the significant
contracts.
VIII. To determine budgets and
discuss the final accounts.
IX. To determine the purchases and
sales of real properties.
X.
To determine investments in
other companies.
XI. To prepare for surplus earning
distribution or loss
appropriation.
XII. To approve the significant
businesses.
XIII. To determine the appointment
and dismissal of major
employees such as President,
Executive Vice President, Chief
Auditor, Consultant, Chief
Secretary, Senior Vice President,
department managers, divisional
managers, center managers,
branch managers,and managers		 The wording is
adequately
revised to
reflect that the
appointment
and dismissal
of important
staff employees
is amended to
be considered
by the Board of
Directors based
on their
positions, and
is not subject to
the revision of
the titles of
supervisors.
  • 46 -
Amended Provisions Current Provisions Explanation
according to the laws and
regulations and the
shareholders meeting.		 of representative offices.
XIV. Matters handed down by the
Chairman.
XV. Other functions authorized
according to the laws and
regulations and the shareholders
meeting.
Article 42
Shall the Bank have any surplus after
the final accounts of the year, after
paying all taxes and making up for
previous losses according to the law,
the Bank shall allocate 30% as the
legal reserve and provide for or
reverse the special reserve according
to other laws and regulations. After
such, the Bank shall include the
accumulated undistributed surplus
from the previous years as the
distributable surplus and appropriate
30% to 100% of said distributable
surplus for the distribution of the
dividends and bonuses to
shareholders, which shall be
submitted by the Board to the
shareholders' meeting for resolution.
In order to continually expand the
scale and improve the profitability of
the Bank, based on the plan for our
future capital budgeting, the Bank
adopts the residual dividend policy to
comply with the principle of
distributing stock dividends for
keeping the capital required, and the
remaining portion may be distributed
in cash dividends. However, the cash
dividends shall not be lower than
10% of the total dividend
distribution. Where the cash
dividends distributed for per share is
less than NT$0.1,except for		 Article 42
Shall the Bank have any surplus after
the final accounts of the year, after
paying all taxes and making up for
previous losses according to the law,
the Bank shall allocate 30% as the
legal reserve and provide for or
reverse the special reserve according
to other laws and regulations. After
such, the Bank shall include the
accumulated undistributed surplus
from the previous years as the
distributable surplus and distribute the
dividends and bonuses to
shareholders, which shall be
submitted by the Board to the
shareholders' meeting for resolution.
In order to continually expand the
scale and improve the profitability of
the Bank, based on the plan for our
future capital budgeting, the Bank
adopts the residual dividend policy to
comply with the principle of
distributing stock dividends for
keeping the capital required, and the
remaining portion may be distributed
in cash dividends. However, the cash
dividends shall not be lower than 10%
of the total dividend distribution.
Where the cash dividends distributed
for per share is less than NT$0.1,
except for otherwise resolved by the
shareholders' meeting, such dividends		 The wording is
adequately
revised to
reflect that
pursuant to the
scoring
requirements of
the Corporate
Governance
Evaluation
Indices issued
by the Taiwan
Stock
Exchange, the
Banks' Article
of Association
need to
disclose a clear
and specific
dividend policy
to strengthen
corporate
governance.
  • 47 -
Amended Provisions Current Provisions Explanation
otherwise resolved by the
shareholders' meeting, such dividends
will not be distributed.
The Bank is prohibited from
distributing cash surplus or buying
back shares under the circumstances
set out in Paragraph 1, Article 44-1 of
the Banking Act.
Unless and until the accumulated
legal capital reserve equals the Bank's
paid-in capital, the maximum cash
surplus which may be distributed
shall not exceed 15% of the Bank's
paid-in capital.		 will not be distributed.
The Bank is prohibited from
distributing cash surplus or buying
back shares under the circumstances
set out in Paragraph 1, Article 44-1 of
the Banking Act.
Unless and until the accumulated
legal capital reserve equals the Bank's
paid-in capital, the maximum cash
surplus which may be distributed shall
not exceed 15% of the Bank's paid-in
capital.
  • 48 -

V. Election Matters

(Proposed by the Board of Directors)

Explantion: Proposal for the election of the Bank's 16th term of the Directors of the Board

Description:

  • 1.The election of Directors will be held at this annual shareholders' meeting as the 15th term of office of the Bank's Directors will expire on June 28, 2021.

  • 2.Pursuant to the Article 20 of the Bank's Article of Association, the number of the Bank's Directors is 15 and the term of office of the Directors is 3 years. Consequently, 15 Directors (including 5 Independent Directors) are to be elected for the 16th term of office of three years starting from June 25, 2021 to June 24, 2024.

  • 3.The Bank adopts a candidate’s nomination system for the election of Directors. The list of candidates for election as Directors has been submitted to the Board for review and approval at the 21st meeting of the 15th term of the Board of Directors on May 5, 2021 as attached (please refer to Pages 50 ~ 54 of this Handbook.)

  • Resolution:

  • 49 -

Taiwan Business Bank Co., Ltd.

List of Directors and Independent Director Candidates for the 16th Term of Office

Serial
Number
Candidates' names
Candidates' names		 Academic
Background		 Experiences Shareholding
(Unit: share)
1 Director Ministry of
Finance
Representative:
Chien-Hao Lin		 B.S., Laws
National
Taiwan
University		 Acting Chairman, Director
and President, First
Financial Holding Co.,
Ltd.; Managing Director,
First Commercial Bank;
Vice President and Director
of Strategic Planning
Department, General
Auditor, First Financial
Holding Co., Ltd.; Manager
of Hong Kong Branch,
Manager of Shimao
Branch, First Commercial
Bank; Director of
Administration
Management, First
Financial HoldingCo.,Ltd.


155,514,786
2 Director Ministry of
Finance
Representative:
Chih-Chien
Chang		 MBA, National
Taiwan
University of
Science and
Technology
Acting Chairman,
President, Deputy
President, Manager of Loan
Supervision Department,
Manager of Credit
Checking Department,
Manager of Wugu Branch,
and Manager of Sung Nan
Branch, Taiwan Business
Bank Co.,Ltd.
155,514,786
3 Director Ministry of
Finance
Representative:
Shiu-Yen Lin		 Master’s
degree of the
Department of
Economics
National
Taiwan
University		 Director of the 14th and
15th Board of Directors,
TBB
Deputy Director, National
Treasury Administration,
Ministry of Finance
Chief Secretary, National
Treasury Administration,
Ministryof Finance		 155,514,786
4 Director Ministry of
Finance
Representative:
Hung-Sheng Yu		 Executive
Master of
Business
Administrator
of Ling Tung
University		 Representative of the 1st to
8th Board of Directors,
TBB Corporate Union
Director and Managing
Director of the 6th to 8th
Board of Directors, TBB
Corporate Union		 155,514,786
  • 50 -
Serial
Number
Candidates' names
Candidates' names		 Academic
Background		 Experiences Shareholding
(Unit: share)
Chairperson of the 7th and
8th Board of Directors,
TBB Corporate Union
Director of the 13rd,14th
and 15th Board of
Directors, TBB
Managing Director of the
6th and 7th Board of
Directors, Taiwan
Confederation of Trade
Unions
Vice Chairperson of the 7th
Board of Directors, Taiwan
Confederation of Trade
Unions
Member of the 27th the
Board of Supervisors,
Taiwan Federation of Labor
Member of Basic Wage
Commission, Ministry of
Labor
Member of the 3rd and 4th
Arbitration Committee of
Labor-Management
Disputes,Ministryof Labor
5 Director Ministry of
Finance
Representative:
Chin-Wen
Huang		 Ph.D. in
Economics,
Soo Chow
University		 Section Chief, Deputy
Section Chief, Senior
Executive Officer and
Division Chief, National
Treasury Administration,
Ministryof Finance		 155,514,786
6 Director Bank of Taiwan
Representative:
Shih-Yuan Tai		 Bachelor,
Department of
Mechanical
Engineering,
National
Taiwan
University of
Science and
Technology		 Director, Deputy Director,
Assistant Director, Division
Chief and Deputy Chair of
Training Institute,
Department of Human
Resources, Bank of Taiwan
1,214,173,562
7 Director Bank of Taiwan
Representative:
Wen-Chieh
Wang		 Ph.D., College
of Law,
National
Chengchi
University		 Director of the 13rd, 14th
and 15th Board of
Directors, TBB; Visiting
Scholar, Harvard Law
School, USA; Dean,
College of Law, NCCU;
Chief Secretary,
Secretariat,NCCU;Chair,		 1,214,173,562
  • 51 -
Serial
Number
Candidates' names
Candidates' names		 Academic
Background		 Experiences Shareholding
(Unit: share)
Graduate Institute of Law
and Interdisciplinary
Studies,NCCU
8 Director Bank of Taiwan
Representative:
Tzu-Hao Tsai		 Ph.D.,
Department of
Finance,
National
Taiwan
University		 Associate Professor,
Assistant Professor,
Department of Quantitative
Finance, NTHU; Director
of the 15th Board of
Directors,TBB		 1,214,173,562
9 Director Representative
of National
Development
Fund, Executive
Yuan:
Chun-Hsien Yeh

Ph.D. in
Economics,
University of
Rochester		 Jointly Appointed
439,330,543
Professor, Department of
Economics, NCU
Jointly Appointed
Professor, Graduate
Institute of Industrial
Economics, NCU
Adjunct Research Fellow,
Institute of Economics,
Academia Sinica
Visiting Assistant
Professor, Department of
Economics, SMU,
Singapore
Associate Professor, School
of Economics, NCU
Assistant Research Fellow,
Institute of Economics,
Academia Sinica
10 Director TBB Corporate
Union
Representative:
Ming-Huei
Chen		 Master of
Department of
Finance,
Shu-Te
University		 Bank Clerk, TBB; 4,026,193
Managing Director, TBB
Corporate Union
11 Director Che-Nan Wang Department of
Business
Administration,
Faculty of
Business
Administration,
Kindai
University,
Japan

Director of the 13rd, 14th
and 15th Board of
Directors; Member,
Overseas Community
Affairs Council, ROC
(Taiwan); Director,
Taichung Commercial
Bank Co., Ltd.; Honorary
President, Alumni
Association of R.O.C. in
Kindai University,Japan		 13,200,194
12 Independent
Director
Xin-Wu Lin		 PH.D.,
Department of
Economics,
National
Taiwan		 Adjunct Research Fellow,
Research Fellow/Deputy
Chair, Chair, Taiwan
Institute of Economic
Research		 0
  • 52 -
Serial
Number
Candidates' names
Candidates' names		 Academic
Background		 Experiences Shareholding
(Unit: share)
University Commissioner of the 6th
Term, Fair Trade
Commission, Executive
Yuan
Top Executive of Antitrust
Compliance, AU Optronics
Corporation
Independent Director, Land
Bank of Taiwan
13 Independent
Director
Yung-Cheng
Chuang		 Doctor of
Juridical
Science
(S.J.D.),
Indiana
University,
Bloomington,
USA		 Director of the 20th Board
of Directors, Taiwan Stock
Exchange Corporation
Director of the 4th and 5th
Board of Directors,
Securities and Futures
Investors Protection Center
(SFIPC)
Director of the 3rd and 4th
Board of Directors, Taiwan
Insurance Guaranty Fund
Chairperson of
Ombudsman Committee &
President, Financial
Ombudsman Institution
Management Committee
Member, Securities and
Futures Institute
Director of the Board,
Taiwan Insurance Law
Association
Independent Director,
Fubon Hyundai Life
Insurance Co., Ltd.
Member of the Labor
Funds Supervisory
Committee, Ministry of
Labor,Executive Yuan		 0
14 Independent
Director
Jin-Long Liu		 PhD in
Economics,
North Carolina
State
University,
USA		 Chair, Graduate Institute of
Industrial Economics,
School of Management,
NCU
Associate Professor,
Graduate Institute of
Industrial Economics,
School of Management,
NCU
Visiting Associate
Professor, Duke University,
USA
0
  • 53 -
Serial
Number
Candidates' names
Candidates' names		 Academic
Background		 Experiences Shareholding
(Unit: share)
Fulbright Visiting Scholar,
USA
Supervisor, Integrated
Service TechnologyInc.
15 Independent
Director
Shao-Yuan
Chang		 Master's
Degree in Land
Economics,
National
Chengchi
University
Deputy Mayor, Tainan City
Government
Director, Finance and Local
Tax Bureau, Tainan City
Government
Director, Department of
Finance, Tainan City
Government
Deputy Director,
Department of Finance,
TainanCity Government
0
16 Independent
Director
Chiou-Mien Lin
Ph.D. of Urban
& Regional
Planning,
National Taipei
University
Secretary-General, The
Chinese Institute of Land
Appraisal
Chairperson, The Chinese
Institute of Land Appraisal
Lecturer, Department of
Real Estate & Built
Environment,NTPU		 0
  • 54 -

VI.Other Matters

(proposed by the Board of Directors)

Explanation: Proposal for lifting the non-competition ban on the Directors of the Board. Please proceed to discuss.

Description:

  1. Pursuant to Paragraph 1, 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."; and the explanation given by the Letter Ri-Shang-Zi No. 89206938 dated April 24, 2000 sent from the Ministry of Economy reads that, "If a representative authorized by a government agency or a juristic person acting as a shareholder is elected as a Director, both said government agency or said juristic person, and its authorized representative shall be subject to the non-competition ban on the Directors of the Board."

  2. 2.In consideration of the Directors (including Independent Directors) of the Banks' 16th Board of Directors and the juristic persons they represent may act for themselves or for others in acts and positions within the scope of the Bank's business, the Bank intends to seek the approval of the shareholders' meeting to lift the non-competition ban on said Directors of the Board.

  3. 3.In order to allow shareholders to exercise their voting rights electronically, a schedule of lifting the non-competition ban on the Directors of the Board is therefore included in this handbook (please refer to Page 56 of this Handbook), provided that said ban lifting applies only to the actual elected Directors (including Independent Directors).

  4. 55 -

Schedule of Lifting the Non-competition Ban on the Directors of the Board, Taiwan Business Bank Co., Ltd.

List of Directors of the 16th Board of Directors to be Lifted from the Non-competition Ban

Director candidates
and the shareholders
of juristic persons
they represent		 Director assuming posts in other companies that engage in the
same businesses with the Bank and its subsidiaries.		 Director assuming posts in other companies that engage in the
same businesses with the Bank and its subsidiaries.
Companies participated Posts assumed
Ministry of Finance Taiwan Financial Holdings Co., Ltd. Director
Land Bank of Taiwan Director
First Financial HoldingCo., Ltd. Director
Hua Nan Financial Holdings Co., Ltd. Director
Mega Financial HoldingCompanyLtd. Director
Taiwan Cooperative Financial Holding Co.,
Ltd.		 Director
Chang Hwa Commercial Bank, Ltd. Director
Bank of Taiwan First Financial Holding Co., Ltd. Director
Hua Nan Financial Holdings Co., Ltd. Director
Mega Financial Holding Company Ltd. Director
Taiwan Fire & Marine Insurance Company,
Ltd.		 Director
United Taiwan Bank Director
Taipei Forex Inc. Director
TAIYI Real Estate Management Co., Ltd. Director
Bank Taiwan Insurance Brokers Co., Ltd. Director
Taiwan Urban Regeneration & Financial
Services Co.,Ltd.		 Director
Taiwan Financial Asset Service Corporation Director
Shih-Yuan Tai
(Representative,
Bank of Taiwan)		 Bank of Taiwan Director,
Department of
Human
Resources
  • 56 -

VII.Questions and Motions

  • 57 -

VIII.Appendices

1. Rules of Procedures for Shareholders' Meetings of Taiwan Business Bank Co., Ltd.

The annual shareholders' meeting passed the Rules of Procedures on November 16, 1996. The 1st amendment was made by the annual shareholders' meeting on December 19, 1998. The 2nd amendment was made by the annual shareholders' meeting on May 18, 2001. The 3rd amendment was made by the annual shareholders' meeting on May 24, 2002. The 4th amendment was made by the annual shareholders' meeting on June 23, 2010. The 5th amendment was made by the annual shareholders' meeting on May 25, 2012. The 6th amendment was made by the annual shareholders' meeting on June 21,2013. The 7th amendment was made by the annual shareholders' meeting on May 29,2020.

Article 1 (Applying principle)

To establish a strong governance system and sound supervisory capabilities for the Bank's shareholders' meetings, and to strengthen management capabilities, the Bank established the Rules for compliance.

Except for otherwise required by the laws and regulations as well as the Bank's articles of incorporation, the rules of procedures for shareholders' meeting of the Bank shall be subject to the "Rules."

Article 2 (Convening and notice for shareholders' meeting)

Except for otherwise required by laws and regulations, the shareholders' meeting shall be convened by the Board.

A notice shall be provided to all shareholders for the convening of the annual shareholders' meeting 30 days prior to the meeting. The Bank may notify shareholders holding less than 1,000 inscribed stock by way of entering the information into the Market Observation Post System as announcement 30 days prior to the meeting. A notice shall be provided to all shareholders for the convening of the extraordinary general meeting 15 days prior to the meeting. The Bank may notify shareholders holding less than 1,000 inscribed stock by way of entering the information into the Market Observation Post System as announcement 15 days prior to the meeting.

The notice and announcement shall set out the reason for the meeting. When approved by the respondent, the notice may be made via electronic methods.

Article 3 (Preparation for documents such as the sign-in book)

The Bank shall set out registration time, registration location, and other notes for shareholders in the letter of advice for the meeting.

The registration time for shareholders in the previous paragraph shall be at least 30 minutes prior to the beginning of the meeting. The registration location shall have clear signs as well as enough and eligible personnel for registration.

The Bank shall prepare the sign-in book for attending shareholders or proxies of shareholders to sign-in, or use sign-in cards from the shareholders or proxies of shareholders to substitute signing in.

The Bank shall deliver the meeting handbook, annual report, attendance card, speech slip, voting ticket, and supplemental information of the meeting to the shareholders or proxies of shareholders attending the shareholders' meeting.

  • 58 -

Election tickets shall be otherwise enclosed when there is election involved. Shareholders or proxies of shareholders shall attend the shareholders' meeting with the presence of the attendance card, sign-in card, or other attendance certificates. The solicitors for soliciting proxies shall bring the identity document for verification.

When the government or a corporate juristic person is a shareholder, it may be represented by more than one representative at a shareholders' meeting. When a corporate juristic person has been delegated to attend the shareholders' meeting, only one person should be delegated as the proxy.

Article 4 (Principles for the convening venue and time)

The convening venue of the shareholders’ meeting shall be at the location of the Bank or a location where is convenient for shareholders to present at and suitable for the convening of the shareholders’ meeting. The starting time of the meeting shall not be earlier than 9:00 am or later than 3:00 pm.

Article 5 (Calculation for the number of presenting shares and the meeting)

The attendance of the shareholders' meeting shall be based on the shares. The number of presenting shares shall be based on the sign-in book or the sign-in cards provided, plus the number of shares with voting right exercised in written or electronic form.

The Chairman shall declare the start of the meeting upon the meeting time where the number of shares represented by the attending shareholders has exceeded half of the issued shares. However, the Chairman may declare delaying the meeting when the attending shareholders are less than the quota, and the number of time for such delay shall be limited to two times. The total time of delaying shall not exceed one hour. After delaying for two times, if there are still insufficient shareholders presenting but shareholders presenting who represent one-third or more of the total number of issued shares, a tentative resolution may be made when receiving consent from the majority attending shareholders' voting rights according to Paragraph 1, Article 175 of the Company Act.

Before the closure of the meeting, if the attending shareholders represent more than half of the total issued shares, a tentative resolution may be made by the Chairman, and re-submitted to the shareholders’ meeting for approval according to Article 174 of the Company Act.

Article 6 (Discussion on proposals)

Where a shareholders’ meeting is convened by the Board, the meeting agenda shall be determined by the Board. The meeting shall be carried out according to the scheduled agenda, and the agenda shall not be altered unless being resolved by the shareholders’ meeting.

Where a shareholders’ meeting is convened by other conveners entitled for calling the meeting, the requirements in the previous paragraph shall apply.

The Chairman may not declare adjournment before the closure of proceedings (including extemporaneous motions) for the scheduled agenda. When the Chairman

  • 59 -

declared adjournment in violation with the Rules, one person may be elected as the Chairman with the consent from the attending shareholders who represent the majority of the voting rights and continue the meeting.

The Chairman shall provide enough time for sufficient illustration and discussion on the proposal and amendment or extemporaneous motions proposed by the shareholders, where the Chairman considers the discussion has been carried out to the extent that a vote shall be conducted, the Chairman may declare and stop the discussion and proceed through the vote.

Article 7 (Audio/video recording of the entire proceedings)

The Bank shall provide audio/video recording of the entire proceedings from the registration process of shareholders, meeting process, voting and counting process. The audio/video recording mentioned in the previous paragraph shall be preserved for at least one year. However, if a shareholder files a suit under Article 189 of the Company Act, they shall be kept until the conclusion of the litigation.

Article 8 (Chairman and attending personnel at the shareholders' meeting)

Where a shareholders' meeting is convened by the Board, the meeting shall be chaired by the Chairman. When the Chairman is on leave or for any reason unable to exercise the powers, the Chairman shall designate a Managing Director as the proxy. When there is no designation made, a Managing Director shall be elected among themselves.

Where the Director is represented by a managing Director, the managing Director shall have been a managing Director for more than six months and shall have in-depth knowledge regarding the financial and business condition of the Company. A shareholders' meeting convened by the Board shall be attended by a majority of the Directors and at least one member of each functional committee on behalf of the committee. The attendance shall be recorded in the meeting minutes.

Where a shareholders' meeting is convened by other conveners entitled to calling the meeting other than the Board, the meeting shall be chaired by the convener. Where there are two or more conveners, one of the conveners shall be elected among themselves.

The lawyer, accountant, or relevant personnel engaged by the Company may attend the shareholders’ meeting.

Article 9 (Speech of Shareholders)

Before the speech, the attending shareholders shall complete the speech slip and state the purpose of such speech, shareholders account number (or attendance card number) and account name; the Chairman may determine the speech order. Attending shareholders who submitted the speech slip without giving the speech shall be deemed as no such speech. Where the speech content deviates from the speech slip, the speech content shall prevail.

During the speech of an attending shareholder, except for receiving the consent from the Chairman and the speaking shareholder, other shareholders shall not speak out and interrupt. The Chairman shall stop such shareholders who violate the

  • 60 -

requirement.

Without the consent from the Chairman, each shareholder shall not speak more than two times regarding the same proposal, and each time shall not exceed five minutes. Where the speech of a shareholder violates the requirement in the previous paragraph, the Chairman may stop the speech.

When a corporation shareholder assigned more than two representatives to attend the shareholders’ meeting, only one person may give a speech regarding the same proposals.

After the speech of an attending shareholder, the Chairman may, in person or designate relevant personnel to, respond.

Article 10 (Ballot, scrutinize balloting, and abstaining system for related parties)

Except for otherwise required by the Taiwan Company Act and the Company's articles of incorporation, the ballot for a proposal shall be approved by the attending shareholders who represent half of the voting rights. At the time of a vote, for each proposal, the Chairman or a person designated by the Chairman shall first announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS.

A shareholder shall be entitled to one vote for each share held, except when the shares are deemed as non-voting shares under Article 179, Paragraph 2 of the Taiwan Company Act.

For the resolutions of the shareholders' meeting, the number of shares of the non-voting shareholders is not included in the total number of issued shares. Except for otherwise required by the law, regarding the proxy engaged by the shareholder for attending the shareholders' meeting, when one proxy is engaged by two or more shareholders, the voting right of such proxy shall not exceed 3% of the number of total issued shares. In the case of exceeding 3%, the exceeding portion of voting rights will not be counted.

For the convening of the Bank’s shareholders’ meeting, the electronic method shall be deemed as one of the exercising channels for voting rights; also, the written method shall also be adopted for exercising voting rights. The exercising method shall be set out in the convening notice for shareholders' meeting. Shareholders who exercise their voting rights via written or electronic methods shall be deemed as attending the shareholders' meeting in person. However, they shall be deemed as abstaining from the extemporaneous motions and the amendment on the original proposal at the shareholders' meeting.

Shareholders who exercised their voting rights via written or electronic methods as set out in the previous paragraph, such shareholders shall deliver their instruction to the Bank two days prior to the convening of the shareholders' meeting. Shall there be duplicate instructions, the instruction delivered earlier shall prevail. However, where the shareholder declared to cancel the previous instruction shall not be subject to the requirements.

  • 61 -

After shareholders exercised their voting rights via written or electronic methods, if such shareholders wish to attend the shareholders' meeting in person, they shall cancel the instruction for exercising their voting rights in the previous paragraph in the same manner adopted for exercising their voting rights at least two days before the convening of the shareholders' meeting. For canceling made after the past due, the voting right exercised via written or electronic methods shall prevail. Where shareholders exercised their voting rights via written or electronic methods and engaged proxies for attending the shareholders' meeting with power of attorney, the voting right exercised by the attending proxies shall prevail.

Shall there be any revision or substitute for the same proposal, the Chairman shall combine such revision or substitute to the original proposal and determine the voting sequence. If any of the proposals are deemed obsolete, the other proposals shall be deemed as being rejected, and exempted from the vote.

Where a shareholder has personal interests in the matter of the meeting that may endanger the interests of the Bank, the shareholder shall not participate in the ballot, and shall not exercise voting rights on behalf of other shareholders.

The number of shares for which voting rights may not be exercised under the preceding Paragraph shall not be calculated as part of the voting rights represented by attending shareholders

The scrutineers and counting personnel for the ballot of the proposal shall be designated by the Chairman, but the scrutineers shall be shareholders. The ballot or the counting process for elective proposals shall be carried out publicly at the venue of the shareholders' meeting. Also, upon the completion of counting, the results of the ballot shall be announced at the scene, including the statistical number of votes, and made a record accordingly.

Article 11 (Maintain the order of the meeting venue)

The meeting staff organizing the shareholders' meeting shall wear the identification card or armband.

The Chairman may instruct disciplinary officers or security personnel to help keep the order of the meeting. Disciplinary officers or security personnel shall wear armbands or have the identification card with "Disciplinary Officer" texts when help keep the order of the meeting.

For meeting venue equipped with an amplification system, the Chairman may stop the speech of a shareholder who fails to use the system prepared by the Bank. Where a shareholder violates the Rules of Procedures and disagrees with the correction from the Chairman, or obstructs the meeting process and fails to obey after being stopped, the Chairman may instruct disciplinary officers (or security personnel) to escort the shareholder leaving the meeting venue.

Article 12 (Delegation and authorization principles for shareholders)

A shareholder may present a power of attorney printed and issued by the Bank that sets out the scope of authorization to engage a proxy for attending the shareholders' meeting at each shareholders' meeting.

One shareholder may only present one power of attorney to engage one proxy. The

  • 62 -

power of attorney shall be delivered to the Bank five days prior to the convening of the shareholders' meeting. Shall there be duplicate power of attorney, the power of attorney delivered earlier shall prevail. However, where the shareholder declared to cancel the previous power of attorney shall not be subject to the requirements. After delivered the power of attorney to the Bank, if the shareholders wish to attend the shareholders' meeting in person or wish to exercise their voting rights via written or electronic methods, they shall cancel the power of attorney in writing to the Bank two days before the convening of the shareholders' meeting. For canceling made after the past due, the voting right exercised by the attending proxies shall prevail.

Article 13 (External announcement)

Regarding the number of shares solicited by solicitors and the number of shares represented by proxies, the Bank shall prepare a statistic statement on the date of the shareholders' meeting and make clear disclosures at the venue of the shareholders' meeting.

Regarding the resolutions at the shareholders' meeting, where such resolutions involve significant information required by the laws and regulations or required by the Taiwan Stock Exchange Corporation, the Bank shall transmit such content to the Market Observation Post System within the prescribed time.

Article 14 (Meeting minutes and signed matters)

A minute book shall be prepared for the discussions at shareholder' meetings, and the minute book shall be dispatched to all shareholders within 20 days from the meeting after being signed by or affixed seal by the Chairman.

The dispatch of the minute book in the previous paragraph may be carried out via electronic or announcement methods.

The minute book shall be duly recorded based on the year, month, date, name of the Chairman, resolution method, the summary of the discussion process, and its results, and shall be permanently preserved during the existence of the Bank.

Regarding the resolution method in the previous paragraph, if the Chairman puts the matter before all shareholders and none voices an objection, "the proposal is passed after the Chairman put the matter before all attending shareholders and none voiced an objection." However, where there is an objection from shareholders, set out the method of voting by poll and the ratio of the number of passing votes to the total voting rights.

Article 15 (Election)

Where there is a Director election at the shareholders' meeting, the election shall be carried out according to the Procedures for Directors' Election of the Bank, and the election results shall be announced at the scene, including the name list of the elected Directors and the number of passing votes thereof.

The election votes for the election matter in the previous paragraph shall be sealed and signed by the scrutinizers, and shall be kept for at least one year. However, if a shareholder files a suit under Article 189 of the Company Act, they shall be kept until the conclusion of the litigation.

  • 63 -

Article 16 (Break and reconvening of the meeting)

During the course of the meeting, the Chairman may determine the time to declare breaks on his/her discretion. In the case of force majeure, the Chairman may determine to suspend the meeting and declare the time of the reconvening of the meeting subject to the condition.

Before the closure of the discussion (including extemporaneous motions) under the agenda scheduled by the shareholders' meeting, if no continuous usage of the venue of the meeting, the shareholders' meeting may resolve to seek another venue for the reconvening of the meeting.

The shareholders' meeting may resolve to adjourn or reconvene the meeting within 5 days according to the requirements under Article 182 of the Company Act.

Article 17 (Implementation)

The Rules of Procedures was implemented upon receiving the approval from the shareholders’ meeting, and shall do the same upon any amendment thereto.

  • 64 -

2. Article of Association of Taiwan Business Bank Co., Ltd.

Established by the extraordinary general meeting on April 12, 1976 Approved by the Letter (65) Tai-cai-chien No. 15056 issued by the Ministry of Finance on May 8, 1976 The 1st amendment was made by the 3rd annual shareholders' meeting on September 19, 1978 Approved by the Letter (67) Tai-cai-chien No. 23084 issued by the Ministry of Finance on December 11, 1978 The 2nd amendment was made by the 4th annual shareholders' meeting on September 12, 1979 Approved by the Letter (68) Tai-cai-chien No. 24747 issued by the Ministry of Finance on December 24, 1979 The 3rd amendment was made by the 5th annual shareholders' meeting on October 8, 1980 Approved by the Letter (70) Tai-cai-rong No. 13472 issued by the Ministry of Finance on March 26, 1981 The 4th amendment was made by the 6th annual shareholders' meeting on October 14, 1981 Approved by the Letter (70) Tai-cai-rong No. 24142 issued by the Ministry of Finance on November 23, 1981 The 5th amendment was made by the 8th annual shareholders' meeting on September 13, 1983 Approved by the Letter (73) Tai-cai-rong No. 15728 issued by the Ministry of Finance on April 27, 1984 The 6th amendment was made by the 9th annual shareholders' meeting on September 24, 1984 Approved by the Letter (74) Tai-cai-rong No. 17496 issued by the Ministry of Finance on June 13, 1985 The 7th amendment was made by the 1st extraordinary shareholders' meeting in 1985 on June 5, 1985 Approved by the Letter (74) Tai-cai-rong No. 27088 issued by the Ministry of Finance on December 31, 1985 The 8th amendment was made by the 10th annual shareholders' meeting on September 24, 1985 Approved by the Letter Tai-cai-rong No. 7561189 issued by the Ministry of Finance on July 31, 1986 The 9th amendment was made by the 12th annual shareholders' meeting on September 24, 1987 Approved by the Letter Tai-cai-rong No. 770174351 issued by the Ministry of Finance on June 3, 1988 The 10th amendment was made by the 13th annual shareholders' meeting on October 17, 1988 Approved by the Letter Tai-cai-rong No. 780040823 issued by the Ministry of Finance on February 23, 1989 The 11th amendment was made by the 16th annual shareholders' meeting on October 19, 1991 Approved by the Letter Tai-cai-rong No. 810268921 issued by the Ministry of Finance on July 21, 1991 Approved by the Letter Tai-cai-rong No. 811214231 issued by the Ministry of Finance on October 8, 1992 Approved by the Letter Tai-cai-rong No. 810502770 issued by the Ministry of Finance on November 18, 1992 The 12th amendment was made by the 17th annual shareholders' meeting on December 5, 1992 Approved by the Letter Tai-cai-rong No. 821153565 issued by the Ministry of Finance on August 11, 1993 The 13th amendment was made by the 18th annual shareholders' meeting on November 29, 1993 Approved by the Letter Tai-cai-rong No. 832297402 issued by the Ministry of Finance on June 2, 1994 The 14th amendment was made by the 19th annual shareholders' meeting on October 15, 1994 Approved by the Letter Tai-cai-rong No. 8470900 issued by the Ministry of Finance on March 17, 1995 The 15th amendment was made by the 20th annual shareholders' meeting on November 25, 1995 Approved by the Letter Tai-cai-rong No. 85526951 issued by the Ministry of Finance on June 14, 1996 The 16th amendment was made by the 21st annual shareholders' meeting on November 16, 1996 Approved by the Letter Tai-cai-rong No. 86092674 issued by the Ministry of Finance on April 9, 1997 The 17th amendment was made by the 1st extraordinary shareholders' meeting in 1998 on May 12, 1998 The 18th amendment was made by the 24th annual shareholders' meeting in 2000 on June 3, 2000 The 19th amendment was made by the 25th annual shareholders' meeting in 2001 on May 18, 2001 Received and acknowledged through the Letter Tai-cai-rong No. 9022900 issued by the Ministry of Finance on June 12, 2001 The 20th amendment was made by the 26th annual shareholders' meeting in 2002 on May 24, 2002 Approved by the Letter Jing-shou-shang-zi No. 09101207880 issued by the Ministry of Economic Affairs on June 19, 2002 The 21st amendment was made by the 27th annual shareholders' meeting in 2003 on June 6, 2003 Approved by the Letter Jing-shou-shang-zi No. 09201255440 issued by the Ministry of Economic Affairs on August 25, 2003 The 22nd amendment was made by the 1st extraordinary shareholders' meeting in 2004 on February 6, 2004 The 23rd amendment was made by the 28th annual shareholders' meeting in 2004 on June 11, 2004 Approved by the Letter Jing-shou-shang-zi No. 093011111210 issued by the Ministry of Economic Affairs on July 2, 2004 The 24th amendment was made by the 1st extraordinary shareholders' meeting in 2005 on March 2, 2005 Approved by the Letter Jing-shou-shang-zi No. 09401118120 issued by the Ministry of Economic Affairs on June 30, 2005 The 25th amendment was made by the annual shareholders' meeting of the Bank in 2006 on June 9, 2006 Approved by the Letter Jing-shou-shang-zi No. 09501187220 issued by the Ministry of Economic Affairs on August 22, 2006 The 26th amendment was made by the annual shareholders' meeting of the Bank in 2008 on June 13, 2008 Approved by the Letter Jing-shou-shang-zi No. 09701181380 issued by the Ministry of Economic Affairs on July 21, 2008 The 27th amendment was made by the annual shareholders' meeting of the Bank in 2010 on June 23, 2010 Approved by the Letter Jing-shou-shang-zi No. 09901217300 issued by the Ministry of Economic Affairs on September 29, 2010 The 28th amendment was made by the annual shareholders' meeting of the Bank in 2011 on June 24, 2011 Approved by the Letter Jing-shou-shang-zi No. 10001151580 issued by the Ministry of Economic Affairs on July 12, 2011 The 29th amendment was made by the annual shareholders' meeting of the Bank in 2012 on May 25, 2012 Approved by the Letter Jing-shou-shang-zi No. 10101116160 issued by the Ministry of Economic Affairs on June 25, 2012 The 30th amendment was made by the annual shareholders' meeting of the Bank in 2013 on June 21, 2013 Approved by the Letter Jing-shou-shang-zi No. 10201129360 issued by the Ministry of Economic Affairs on July 8, 2013 The 31st amendment was made by the annual shareholders' meeting of the Bank in 2015 on June 26, 2015 Approved by the Letter Jing-shou-shang-zi No. 10601116160 issued by the Ministry of Economic Affairs on August 23, 2017 The 32nd amendment was made by the annual shareholders' meeting of the Bank in 2016 on June 24, 2016 Approved by the Letter Jing-shou-shang-zi No. 10501158980 issued by the Ministry of Economic Affairs on July 12, 2016 The 33rd amendment was made by the annual shareholders' meeting of the Bank in 2017 on June 16, 2017 The 34th amendment was made by the annual shareholders' meeting of the Bank in 2018 on June 29, 2018 Approved by the Letter Jing-shou-shang-zi No. 10701087000 issued by the Ministry of Economic Affairs on July 18, 2018

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The 35th amendment was made by the annual shareholders' meeting of the Bank in 2019 on June 14, 2019 Approved by the Letter Jing-shou-shang-zi No. 10801142640 issued by the Ministry of Economic Affairs on November 1, 2019 The 36th amendment was made by the annual shareholders' meeting of the Bank in 2020 on May 29, 2020 Approved by the Letter Jing-shou-shang-zi No. 10901098430 issued by the Ministry of Economic Affairs on June 11, 2020

Chapter I General

  • Article 1: The purpose of the Bank is to comply with the national fiscal policies, provide credits for the public and SMEs, and help SMEs improving their production facilities, financial structures, and ensure the healthy operations and management.

  • Article 2: The Bank is incorporated in accordance with the Banking Act and the Company Act, a limited liability company named as TAIWAN BUSINESS BANK (or TBB) in English.

  • Article 3: The headquarter of the Bank is in Taipei City and may establish subsidiaries at appropriate domestic or overseas locations based on the requirements of its business.

  • Article 4: Except for otherwise required by the competent authority for securities, the Bank shall publish its announcements on newspapers or e-mail newsletter.

Chapter II

  • Article 5: The total capital amount of the Bank is NT$100 billion only, and has been divided into 10 billion shares with a nominal value of NT$10 each. The Board is authorized to resolve and issue the un-issued shares in batches.

  • Article 6: The Bank is exempted from printing any share certificate for the shares issued; however, the Bank shall register the issued shares with a centralized securities depository enterprise, and shall be handled according to the requirements of the enterprise.

  • Article 7: Shareholders of the Bank shall complete and provide their signature specimen for the Bank or the shareholder service agent of the Bank for keeping, and shall do the same upon any changes thereto. The receipt of shareholder’s bonus or exercising shareholder's rights in writing or written contact with the Bank shall use such signature as evidence.

  • Article 8: Transfer of share certificates shall not be set up as a defense against the Bank unless an application for such transfer was made to the Bank or the shareholder service agent of the Bank, and the name/title and residence/domicile of the transferee have been recorded in the shareholders' registrar.

  • The entries in the shareholders' registrar referred to in the preceding paragraph shall not be altered within 60 days prior to the convening date of an annual shareholders' meeting, or within 30 days prior to the convening date of an extraordinary shareholders' meeting, or within 5 days prior to the target date fixed for distribution of dividends, bonus or other benefits.

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  • Article 9: Shareholder services of the Bank shall be carried out according to Regulations Governing the Administration of Shareholder Services of Public Companies promulgated by the competent authorities.

  • Article 10: Application of transfer and change of name for shareholders, reissue or renewal of new share certificates and other shareholder service matters shall be subject to service charges.

Chapter III Scope of business

  • Article 11: Scope of business of the Bank is as follow:

  • I. H101081 Small and Medium Business Banking.

  • II.H408011 Futures Exchange Supporting Services.

III.H601011 Life Insurance Agency.

  • IV. H601021 Property Insurance Agency

  • Article 11-1: Scope of business of the Bank is as follow:

I. To accept deposits.

II.To issue financial debts.

III.To discount bills and notes and provide loans.

IV. To invest in marketable securities.

V. To handle domestic and foreign remittances.

VI. To accept commercial drafts.

VII.To issue domestic and overseas letter of credits.

VIII.To guarantee the issuance of corporate bonds.

IX. To guarantee domestic and foreign transactions.

X. To act as collecting and paying agent.

XI. To handle marketable securities agency business, trading, margin purchase and short sale businesses.

XII.To handle operation of futures introducing broker business.

XIII.To conduct warehousing, custody and proxy in relation to the businesses.

XIV.To conduct safe deposit boxes rental business.

XV. To engage in credit card business.

XVI.To sell and trade gold bars, gold coins, and silver coins.

XVII.To engage in credit activities and auxiliary activities approved by the competent authorities.

XVIII.To engage in the short-term note agency business, trading, attesting, and underwriting business.

XIX.To engage in public welfare lottery agency business authorized by the competent authorities.

XX. To engage in bonds, beneficial securities, or asset-backed securities trading business.

XXI. To engage in the life insurance agency business.

XXII.To engage in the property insurance agency business.

XXIII. To engage in other related business approved by the competent authorities.

XXIV.

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Chapter IV Shareholders’ meetings

  • Article 12: Shareholders' meetings of the Bank are categorized into annual meetings and extraordinary meetings. Annual meetings shall be convened at least once a year, and it shall be convened by the Board according to the laws within 6 months after each accounting year. Except for otherwise required by the Company Act, extraordinary meetings shall be convened by the Board when necessary. Any or a plural number of shareholder(s) of who has (have) continuously held 3% or more of the total number of outstanding shares for a period of one year or longer time may, by filing a written proposal setting forth therein the subjects for discussion and the reasons, request the Board to call an extraordinary meeting of shareholders. Any or a plural number of shareholder(s) of who has (have) continuously held more than half (50%) of total issued shares for a period of three months may call upon an extraordinary meeting.

  • Article 13: A notice to convene an annual meeting of shareholders shall be given to each Shareholder no later than 30 days prior to the scheduled meeting date and notice to convene an extraordinary meeting of shareholders, a meeting notice shall be given to each shareholder no later than 15 days prior to the scheduled meeting date to notify shareholders regarding the date, venue, and reason for the meeting. The Bank may notify shareholders holding less than 1,000 shares for the convening notice of the shareholders' meeting by way of an announcement.

  • Article 14: Shareholders may present a power of attorney printed (signed or affixed seal) and issued by the Bank that sets out the scope of authorization, deliver to the Bank five days prior to the convening date of the shareholders' meeting to engage a proxy for attending the shareholders' meeting when the shareholder is unable to attend for other causes. One shareholder may only present one power of attorney to engage one proxy.

  • Except for otherwise required by the Company Act, when one proxy is engaged by two or more shareholders in the preceding paragraph, the voting right of such proxy shall not exceed 3% voting rights of the number of total issued shares. In the case of exceeding 3%, the exceeding portion of voting rights will not be counted.

  • Article 15: Where a shareholders’ meeting is convened by the Board, the meeting shall be chaired by the Chairman. When the Chairman is unable to present himself/herself, the Chairman shall designate a Managing Director as the proxy. When there is no designation made, a Managing Director shall be elected among themselves.

  • Where a shareholders’ meeting is convened by other conveners entitled for calling the meeting other than the Board, the meeting shall be chaired by the convener. Where there are two or more conveners,

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one of the conveners shall be elected among themselves.

  • Article 16: Resolved matters by the shareholders' meeting are as follow:

  • I. To determine and amend the Articles of Association of the Bank.

  • II.Appointment and removal of Directors.

  • III.To examine the statistical forms and report prepared by the Board and the Audit Committee respectively. In order to conduct the examination, the shareholders' meeting may select and appoint inspectors as required.

  • IV. To resolve the capital increase or reduction.

  • V. To resolve on surplus earning distribution or loss appropriation. VI. To resolve on other significant matters.

  • Article 17: Except for otherwise required by the Company Act, the resolution may be adopted by half of the voting rights exercised by the shareholders present at the shareholders’ meeting who represent a majority of the total outstanding shares.

  • When the number of shareholders present does not constitute the quorum prescribed in the preceding paragraph, but those present represent one-third or more of the total number of issued shares, a tentative resolution may be passed by a majority of those who presented. A notice of such tentative resolution shall be given to each of the shareholders, and reconvene a shareholders’ meeting within one month.

In the aforesaid meeting of shareholders, if the tentative resolution is again adopted by a majority of those present who represent one-third or more of the total number of issued shares, such tentative resolution shall be deemed to be a resolution under the first paragraph.

  • Article 18: A shareholder is entitled to one vote with each share held. However, the shares shall have no voting power under any of the circumstances prescribed in the second paragraph under Article 179 of the Company Act.

  • Article 19: A minute book shall be prepared for the discussions at shareholder' meetings, and the minute book shall be dispatched to all shareholders within 20 days from the meeting after being signed by or affixed seal by the Chairman.

The dispatch of the minute book in the previous paragraph may be carried out via electronic or announcement methods.

The minute book shall set out the year, month, date, name of the Chairman, resolution method, the summary of the discussion process, and its results.

The minute book shall be permanently preserved, the sign-in book (or sign-in) of the attending shareholders and the power of attorney for engaging proxies shall be kept for at least one year. However, if a shareholder institutes a suit under Article 189 of the Company Act,

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they shall be kept until the conclusion of the litigation.

Chapter V Board

  • Article 20: The Bank has 15 Directors, of which, there shall be no less than 3 Independent Directors, and the Board shall not be established with less than one-fifth of the seat for Directors being taken.

  • The term of the Director shall be three years; however, where a government and a corporate shareholder or its representative is elected as a Director, owing to the change of his/her functional duties, may be replaced by a person.

A candidate nomination system was adopted for the election of the Bank’s Directors (including Independent Directors). Shareholders shall elect Directors from the relevant candidate list thereof.

The elections for both Independent Directors and non-Independent Directors are carried out at once, with the elected number of seats accounted for separately.

The professional qualification, shareholding, concurrent serving restrictions, nomination, and election method, as well as other matter to be complied with regarding independent Directors, shall be based on the relevant requirements from competent authorities.

The total number of shares held by all Directors shall comply with requirements from competent authorities.

The by-election for filling the vacancies of Directors and Independent Directors shall be based on the requirements under the Company Act and the Securities and Exchange Act. Regarding the term of Directors elected through a by-election and the replacement based on Paragraph 2 is limited to fulfilling the unexposed term of office of the predecessor.

  • Article 21: A Board meeting shall be attended by two-thirds of the Directors, and five Managing Directors shall be elected when receiving the consent from the majority of the attending Directors among themselves. Among the Managing Directors, there shall be at least one independent Director, and the one-fifth of the seats of the Managing Directors shall be taken by independent Directors. A Chairman shall be elected when receiving the consent from the majority of the attending Managing Directors among themselves at a meeting where two-third of Managing Director present. The Chairman shall be the chair of shareholders' meetings, Board meetings, and Managing Director meetings, internally; while represents the Bank, externally. When the Chairman is unable to present himself/herself when he/she is on leave or due to other causes, the Chairman shall designate a Managing Director as the proxy. When there is no designation made, a Managing Director shall be elected among themselves.

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The Board is authorized by the shareholders' meeting to determine the remuneration of Directors, which shall be discussed in accordance with the general standards within the industry.

The remuneration of the Chairman shall be calculated by multiplying the remuneration of the President by 1.25.

Requirements in relation to the retiring employees of the Bank shall apply to the pension of the Chairman, which shall not be subject to age and year of experience.

The Bank may enter into liability insurance contracts with insurance companies for Directors and major employees with respect to liabilities resulting from performing their duties according to the law.

Article 22: Functions of the Board of Directors are as follow:

I. To determine significant regulations and rules.

  • II.To determine and review the overall operating strategies and significant policies.

III.To determine the business plan.

IV. To determine the internal control system.

V. To prepare for the capital increase or reduction.

  • VI. To determine the establishment, cancellation, or alteration of branches.

VII.To determine the significant contracts.

VIII.To determine budgets and discuss the final accounts.

IX. To determine the purchases and sales of real properties.

  • X. To determine investments in other companies.

  • XI. To prepare for surplus earning distribution or loss appropriation.

XII.To approve the significant businesses.

XIII.To determine the appointment and dismissal of major employees

such as President, Vice President, Chief Auditor, and Unit Heads of the head office and branch offices.

XIV.Matters handed down by the Chairman.

  • XV. Other functions authorized according to the laws and regulations and the shareholders meeting.

  • Article 23: When investing in other companies, except for otherwise required by the Banking Act, the Bank shall not be subject to the limit of 40% of the Bank's paid-up capital regarding the total investments in other companies under Paragraph 2, Article 13 of the Company Act.

  • Article 24: The organization of the Board of the Bank shall be separately determined by the Board.

The Bank has an Auditing Department subordinated to the Board and has a Chief Auditor that manages the audit business of the entire Bank and regularly reports to the Board and the Audit Committee.

  • Article 25: A regular meeting of the Board shall be held every two months. Shall there be an emergency, or if the majority of the Directors request so,

  • 71 -

an extraordinary meeting may be held. Except for otherwise required by the Company Act, all meetings shall be convened by the Chairman in writing and may send out the electronic notice upon receiving the consent from the counterparty.

  • The Board shall establish the "Rules of Procedures for Board Meeting" and submit to the shareholders' meeting, so as to improve the operating efficiency and decision-making abilities of the Board meeting.

To reinforce the corporate governance abilities, the Board may establish functional committees and the rules for exercising their functions shall be separately determined by the Board.

  • Article 26: For Board meetings, if a Director is unable to attend due to other causes, the Director may engage other Director as a proxy to attend on behalf of him/her; however, the Director shall present the power of attorney and set out the scope of authorization concerning the reason for convening the meeting.

  • The proxy in the previous paragraph may only be engaged by one Director.

  • Article 27: Regarding the resolution at a Board meeting, except for otherwise required by the Company Act, the resolution shall receive the consent from the majority of the attending Directors at the meeting attended by the majority of Directors.

  • Article 28: A minute book shall be prepared for the discussions at Board meetings, and the minute book shall be dispatched to all Directors within 20 days from the meeting after being signed by or affixed seal by the Chairman of the meeting and the recorder. The minute book shall set out the year, month, date, name of the Chairman, resolution method, the summary of the discussion process, and its results, and shall be permanently preserved throughout the existence of the Bank. The sign-in book of the attending Directors and the power of attorney for engaging proxies shall be permanently preserved throughout the existence of the Bank.

  • Article 29: The President, Executive Vice Presidents, Chief Auditor, and the managers of the departments and divisions at the headquarters shall be invited to Board meetings as observers with no voting rights.

  • Article 30: During the recess of the Board, the Managing Directors shall regularly exercise the power and authority of the Board in accordance with the laws and regulations, the Articles of Association, and the resolutions adopted by the shareholders' meetings and the Board, and the Board meetings to be called from time to time by the Chairman; such meetings shall be chaired by the Chairman.

  • The scope of power and authority of the Board exercised by the Managing Board mentioned in the previous Paragraph refer to matters

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other than the significant matters required to be considered by the shareholders' meeting or submitted to the Board meeting for discussion according to the laws and articles of association or prescribed by the competent authority, and the determination of business scope other than the Bank's Articles of Association, overall operating strategies, significant policies, or significant risk management.

When the Chairman is unable to present himself/herself, the Chairman shall designate a Managing Director as the proxy. When there is no designation made, a Managing Director shall be elected among themselves.

  • Article 31: For a resolution at the Managing Directors meeting, except for otherwise required by the Company Act, the resolution shall receive the consent from the majority of the attending Managing Directors at the meeting attended by the majority of Managing Directors. The minute book shall be signed or affixed seal by the Chairman of the meeting and the recorder.

  • Article 32: For a Managing Directors meeting, the President, Executive Vice Presidents, Chief Auditor, and the managers of the departments and divisions at the headquarters shall be invited to attend, with no voting rights.

Chapter VI Audit Committee

  • Article 33: The Bank has established an Audit Committee comprised of all Independent Directors and the term of the member shall be the same as the term of the independent Director. The number of members shall not be less than three persons, and at least one of them shall specialize in accounting or finance. The functions, rules of procedures, and other matters to be complied with for the Audit Committee shall be based on relevant laws and regulations as well as the "Regulations for the Audit Committee" of the Bank.

  • Article 34: (Deleted)

  • Article 35: (Deleted)

  • Article 36: (Deleted)

Chapter VII Managers

  • Article 37: The Bank has one President, who follows the resolution of the Board meetings to manage the business, and several Executive Vice Presidents, who assist the President to manage affairs. Their appointment and removal shall be proposed by the Chairman and shall receive the consent from the majority of the attending Directors at a Board meeting attended by the majority of Directors.

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  • Article 38: When the President is unable to perform its duties due to other causes, the Chairman shall appoint one person among the Executive Vice Presidents to perform its duties after being submitted to and approved by the Board.

Chapter VIII Accounting

  • Article 39: The fiscal year of the Bank shall commence from January 1 and end on December 31 each year whereas the current fiscal year shall be given the title of the current calendar year of the Republic of China. Settlement shall be carried out based on the first half and the second half of each year. The account day for the first half shall be June 30 while the account day for the second half shall be December 31, and a final account shall be carried out at the end of the year.

  • Article 40: After the end of the accounting year, the Bank shall prepare the following statements and books, submit to the Audit Committee and the Board meeting for approval, and propose to the shareholders' meeting for ratification.

  • I. Operating Report.

  • II.Financial Statements.

  • III.Resolution for surplus earning distribution or loss appropriation. Regarding the statements and books in the previous paragraph, within 15 days from receiving the approval of the annual shareholders' meeting, the statements and books shall be combined with the annual report and report to the competent authority and the central bank for future reference, respectively. The Bank shall also announce its financial statements and other items required by the competent authority on the circulating daily newspaper where the headquarter of the Bank locates or in the manner prescribed by the competent authority. However, for those complying with the requirements under Article 36 of the Securities Exchange Act shall be exempted from such announcements.

  • Article 41: Shall there be general final accounts surplus, the Bank shall allocate such surplus to taxation payment and accumulated losses coverage first and then the remaining balances shall be utilized as follow:

  • I. Allocate 1% to 6% as employee remuneration (accounted for as expenses).

  • II.Allocate 0.6% as Director remuneration (accounted for as expenses).

Employee remuneration shall be provided in share certificates or cash, and such resolution shall receive the consent from the majority of attending Directors at a Board meeting attended by the two-thirds of the Directors, and report to the shareholders' meeting.

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  • Article 42: Shall the Bank have any surplus after the final accounts of the year, after paying all taxes and making up for previous losses according to the law, the Bank shall allocate 30% as the legal reserve and provide for or reverse the special reserve according to other laws and regulations. After such, the Bank shall include the accumulated undistributed surplus from the previous years as the distributable surplus and appropriate 30% to 100% of said distributable surplus for the distribution of the dividends and bonuses to shareholders, which shall be submitted by the Board to the shareholders' meeting for resolution.

  • In order to continually expand the scale and improve the profitability of the Bank, based on the plan for our future capital budgeting, the Bank adopts the residual dividend policy to comply with the principle of distributing stock dividends for keeping the capital required, and the remaining portion may be distributed in cash dividends. However, the cash dividends shall not be lower than 10% of the total dividend distribution. Where the cash dividends distributed for per share is less than NT$0.1, except for otherwise resolved by the shareholders' meeting, such dividends will not be distributed.

The Bank is prohibited from distributing cash surplus or buying back shares under the circumstances set out in Paragraph 1, Article 44-1 of the Banking Act.

Unless and until the accumulated legal capital reserve equals the Bank's paid-in capital, the maximum cash surplus which may be distributed shall not exceed 15% of the Bank's paid-in capital.

Chapter IX Appendices

  • Article 43: The Board shall be authorized to institute the Organization Code, Gate Approval Along the Corporate Hierarchy, and other internal regulations of The Bank.

  • Article 44: Unaddressed matter in the Articles of Association shall be based on the requirements under the Banking Act, the Company Act, and other related laws and regulations.

  • Article 45: The Articles of Association was implemented upon receiving the approval from the shareholders’ meeting, and shall do the same upon any amendment thereto.

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3. Rules for Election of the Directors -- Taiwan Business Bank Co., Ltd.

The Rules were approved at the seventh annual shareholders' meeting held on September 14, 1982. The Rules were amended at the annual shareholders' meeting held on June 6, 2003. The Rules were amended at the annual shareholders' meeting held on June 13, 2008. The Rules were amended at the annual shareholders' meeting held on May 25, 2012.

Article 1

Except as otherwise provided by laws and regulations or by the Company's Article of Association, elections of Directors shall be conducted in accordance with the Rules.

Article 2

The term of office of the Company's Directors and the number of seats to be elected are prescribed by laws and regulations, as well as the Company's Article of Association.

Article 3

The election of the Company's Independent Directors shall comply with the provisions of the Securities and Exchange Act and "Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies."

Elections of both kinds of Directors at the Company shall be conducted in accordance with the candidate nomination system and procedures set out in Article 192-1 of the Company Act. The shareholders shall elect said Directors from the list of Director candidates.

Article 4

The cumulative voting method shall be used for election of the directors at the Company. Each share will 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. Attendance card numbers printed on the ballots may be used instead of recording the names of voting shareholders.

Article 5

The number of Directors will be as specified in the Company's Article of Association. Those receiving ballots representing the highest numbers of voting rights will be elected sequentially according to their respective numbers of votes. When two or more persons receive the same number of votes, thus exceeding the specified number of positions, they shall draw lots to determine the winner, with the chair drawing lots on behalf of any person not in attendance.

The election of Independent Directors and Non-independent Directors shall be held concurrently, provided that the number of Independent Directors and Non-independent Directors elected are calculated separately.

Article 6

The Board of Directors shall prepare separate ballots for Directors in numbers corresponding to the Directors to be elected. The number of voting rights associated

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with each ballot shall be specified on the ballots.

Article 7

If a candidate is a shareholder, voters must enter the candidate's account name and shareholder account number in the "candidate" column of the ballot received; and if a candidate is not a shareholder, voters shall enter the candidate's full name and identity card number. However, when a candidate is a governmental organization or corporate juristic-person shareholder, the name of said governmental organization or corporate juristic-person shall be entered in the column for the candidate's account name of the ballot received, or both the name of the governmental organization or corporate juristic-person shareholder and the name of its representative may be entered. When there are multiple representatives, the names of each respective representative shall be entered.

Article 8

Before the election begins, the chair shall appoint a certain number of ballot inspectors and counters to perform the respective duties of vote monitoring and counting personnel.

Article 9

The ballot boxes shall be prepared by the Company and publicly checked by the ballot inspectors before the voting commences. Upon the completion of the voting, only the ballot inspectors and counters are allowed to open the ballot boxes.

Article 10

A ballot is invalid under any of the following circumstances:

  1. The ballot received is not the one stipulated in Article 6 of the Rules.

  2. A blank ballot is casted into the ballot box.

  3. The writing on the ballot is unclear and indecipherable or has been altered.

  4. The candidate whose name is entered in the ballot is a shareholder, but the candidate's account name and shareholder account number do not conform with those given in the shareholder register, or the candidate whose name is entered in the ballot is not a shareholder, and a cross-check shows that the candidate's name and identity card number do not match.

  5. The number of candidates whose names are entered in the ballot exceeds the number of Independent Directors and Non-independent Directors to be elected in accordance with the Company's Article of Association.

  6. The total number of voting rights allocated to the candidates exceeds the number of voting rights on the ballot.

  7. A ballot is entered with other words or marks in addition to the words and the number of voting rights allocated which are stipulated in accordance with Article 7 of the Rules.

  8. The name of the candidate entered in the ballot is identical to that of another shareholder, but no shareholder account number or identity card number is provided in the ballot to identify such individual.

Article 11

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Upon the completion of the voting, the ballots shall be opened on the spot and the results will be announced by the chair or by the master of ceremonies on behalf of the chair.

Article 12

The Rules, and any amendments hereto, shall implemented upon approval by a shareholders' meeting.

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4. Shareholding of Directors of the Bank

Taiwan Business Bank Co., Ltd.

Shareholding of Directors Book closure date: April 27, 2021

Title Name Number of shares Shareholding ratio
(%)
Director Ministry of Finance
Representative: Chien - Hao Lin		 155,514,786
2.08
Managing
Director		 Ministry of Finance
Representative: Chih-Chien
Chang		 155,514,786
2.08
Managing
Director		 Bank of Taiwan Co. Ltd.
Representative: Shih-Yuan Tai		 1,214,173,562
16.21
Managing
Director		 Ministry of Finance
Representative: Lien-Wen Liang		 155,514,786
2.08
Managing
Director
(Independent
Director)		 Xin-Wu Lin 0
0
Director Ministry of Finance
Representative: Wen-Chieh Wang		 155,514,786
2.08
Director Ministry of Finance
Representative: Hung-ShengYu		 155,514,786
2.08
Director Ministry of Finance
Representative: Shiu-Yen Lin		 155,514,786
2.08
Director Bank of Taiwan Co. Ltd.
Representative: Li-LingLin		 1,214,173,562
16.21
Director Bank of Taiwan Co. Ltd.
Representative: Tzu-Hao Tsai		 1,214,173,562
16.21
Director Land Bank of Taiwan Co., Ltd.
Representative: Shu-Huan Yang		 171,123,975
2.29
Director Che-Nan Wang 13,200,194
0.18
Director TBB Industry Union
Representative: Ching-Yu Liu		 3,965,503
0.05
Independent
Director		 Jin-Long Liu 0
0
Independent
Director		 Wei-Sheng Huang 0
0
Total 1,558,038,710
20.81

Notes:

1.Based on the 7,488,583,457 issued shares of the Bank, according to the requirements under Article 2 of the "Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies," the minimum shareholding ratio for all Directors shall be 2% (149,771,670 shares). As of the book closure date (April 27, 2021) for the annual shareholders' meeting, the share held by all Directors of the Bank is 1,558,038,710 shares.

2.The Bank has an Audit Committee; therefore, no applicable minimum shareholding ratio for supervisors is applicable.

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