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T.C.C.B. AGM Information 2014

Aug 1, 2014

52197_rns_2014-08-01_29664457-c6c0-4262-99f3-42a7cea4ae48.pdf

AGM Information

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Stock Code: 2812

Taichung Commercial Bank Co., Ltd.

Handbook for the 2014 Annual Meeting of Shareholders

Meeting Time: 9:00 a.m. on June 19, 2014 Venue: 10F, No. 87, Min Chuan Road, West District, Taichung City

  • （ This document is prepared in accordance with the Chinese version and is for reference only.In the event of any

  • inconsistency between the English version and the Chinese version,the Chinese version shall prevail. ）

Table of Contents

I. Meeting Agenda ................................................................................................... 2
II. Management Presentations ................................................................................... 3
III. Proposals ............................................................................................................. 18
IV. Discussions ......................................................................................................... 23
V. Elections ............................................................................................................. 46
VI. Questions and Motions
VII. Appendices
(I)
Auditor’s Report and Finacial Statements ............................................ 49
(II) Rules of Procedure for Shareholder Meetings ........................................... 69
(III) Articles of Incorporation ............................................................................ 76
(IV) Rules for Director Elections ...................................................................... 87
(V) Current Shareholding of Directors and Supervisors .................................. 89
(VI) The Board endorsed the proposed distribution of cash dividends to
employees and remunerations for directors and supervisors ................... 90

- 1 -

Taichung Commercial Bank Co., Ltd.

Agenda of the 2014 Annual Meeting of Shareholders

  • I. Report the number of shares represented by the attending shareholders and Call the Meeting to Order.

  • II. Chairperson Remarks.

  • III. Management Presentations:

  • (I) The 2013 Business Reports

  • (II) Supervisor’s Review Report on the 2013 Financial Statements

  • (III) The 2013 Financial Asset Impairment Recognized.

  • (IV)The issuance of subordinated financial bonds approved in 2013.

  • (V) Adjustments to the Company’s distributable earnings and the appropriation of special reserves after the adoption of IFRSs.

  • IV. Proposals:

  • (I) The 2013 Business Report and the Financial Statements

  • (II) The 2013 Profit Distribution Proposal

  • V. Discussions:

  • (I) Proposing to have new shares issued through capitalization of earnings.

  • (II) Amendment to the Operational Procedures for the Acquisition and Disposal of Assets.

  • (III) Amendments to the Articles of Incorporation.

  • VI. Elections:

  • (I) The 22[nd] Election of Directors.

  • VII. Questions and Motions.

  • VIII. Adjournment.

(The above proposals were presented by the Company’s relevant units to the Board for consideration)

- 2 -

Management Presentation Report No. 1

The 2013 Business Report (Please refer to Page 4~9 of the Annual Meeting Handbook.)

- 3 -

The 2013 Business Report

  • A. Operating performance in 2013

  • a. Domestic and foreign financial environment

  • International economic performance remained stable in 2013 along with the alleviation of the U.S. financial problems, the gradual recovery from recession of EURO community, and the improvement of global economy. Observing the situation of the major economies at the end of 2013, the strength of the U.S. economic growth strengthened, the EURO community index bounced back from the bottom, “Abenomics” of Japan stimulated the economy effectively, and China’s economic restructuring started showing good results to activate the positive development of global economy and the domestic economic upturn. Directorate-General of Budget, Accounting and Statistics, Executive Yuan, R.O.C. (Taiwan) predicts our economic growth to reach 2.82% in 2014.

  • b. Changes to the organization

  • “Taichung Commercial Bank Securities Co., Ltd.” is setup for the operation of securities business and with 100% shareholding held directly by the Bank to expand the scope of operations through cross-marketing and to exercise co-promotion for operating synergies.

  • The Division of Compliance was setup in 2013 to establish a well-defined and appropriate a law and regulation conveying, consultation, coordination, and communication system. The “Regulatory of Compliance Department” was setup in January 2014 to substantiate the execution of law and regulations compliance system.

  • Adjust the delinquent account collection function of each original district center. The overdue loan is to be coordinated and handled by the Dept. of Debt Collection and Asset Recovery in order to simplify the collection of the delinquent account process and to exercise the effect of a centralized operation. The “Division of Precaution” is established under the Dept. of Debt Collection and Asset Recovery to execute the precautionary process of loan operations and to exercise the credit risk control mechanism.

  • c. Implementation results of business plans and strategies

  • Although domestic economic growth indicator had been adjusted down several times in 2013, the Bank’s overall business development and performance was as outstanding as the year of 2012 with the operating performance achieved, including 12% growth of deposit and loan in the scale of operation, 17% growth of foreign exchange business volume, 26% growth of wealth management service fee income, and 28% growth of net income.

- 4 -

  1. The bank was performed exceedingly well in “SME finance” and “Regional finance” and was rated by the Financial Supervisory Commission(FSC) as the top-performing bank in “Strengthening of SME Loans by Domestic Banks(8th Term)” and ranked in the first place of the special award for balanced regional development in Central Taiwan.

  2. Committed to the development of “diversified finance” enterprise value. After sixty years of operation, the Bank has invested to have “Taichung Commercial Bank Leasing (Suzhou) Co., Ltd.” and “Taichung Commercial Bank Securities Co., Ltd.” established to construct an overall financial organization, branch out into the Greater China market, and root the foundation for a sustainable operation.

  3. For enhancing resilience in response to adverse economy and substantiating risk-based loan management, strengthen the Bank’s Tier I loan assets ratio, lower NPL ratio, and improve the Capital Adequacy ratio in accordance with the supervision standards of the “Regulations Governing the Enhancement of Domestic Bank Loan Risk” of the government.

  4. Compete to deploy the ninth branch in Taipei Metropolitan with the use and adjustment of the existing channel. The “Fuxing Branch” is established in Taipei that helps add one more business station in northern Taiwan.

  5. Construct the “second generation E-commerce” system, enhance personal convenient e-financial services and corporate cash flow management, and arrange credit card business and mobile banking APP software online service in accordance with the concept of product innovation, in which, the mobile banking allows customers to access to online banking account, credit card, and investment and wealth management services by Smartphone or tablet PC in order to closely link with customer’s lifestyles and create business value.

  6. d. Budget execution in 2013

  7. The average deposit balance (including foreign currency) amounted to NTD 427.464 billion. The budget achievement rate was 101.51%, representing 11.92% growth from the NTD 381.938 billion in 2012.

  8. The average deposit balance (including foreign currency) amounted to NTD 362.926 billion. The budget achievement rate was 101.75%, representing 13.21% growth from the NTD 320.567 billion in 2012.

  9. Foreign exchange amounted to US$12.309 billion. The budget achievement rate was 109.58%, representing 17.21% growth from the US$10.502 billion in 2012.

  10. Wealth management service fees amounted to NTD 0.819 billion, representing 26.58% growth from the NTD 0.647 billion in 2012.

- 5 -

  • e. Financial income and expenditure, and profitability analysis:

  • The earnings before taxation in 2013 amounted to NTD 3.537 billion, which was an increase of 5.38% from the same period of 2012. Corporate earnings in the same period amounted to NTD 3.060 billion, which was an increase of 9.13% from the same period of 2012.

  • KPI: Key Performance Indicator

KPI: KeyPerformance Indicator
Indicators 2013
Capital adequacyratio (BIS) 11.91％
Return on Assets (ROA) 0.65％
Return on Equity(ROE) 10.38％
Earnings Per Share (EPS) NTD1.23
NPL ratio 0.58％
Coverage ratio 209.71％
  1. Information about the most recent credit rating
Rating agency Date of rating Credit rating
Long-term Short-term Outlook
Fitch Ratings Limited Taiwan
Branch		 2013.10.7 A-(twn) F2(twn) Negative

  • f. Research and development status

  • Substantiate the well management of client’s assets, strengthen personal information management system, introduce the “BS10012: 2009 Personal Information Management System (PIMS)” international standard operation, and promote information security technology for international connection.

  • Add an integrated “credit precautionary mechanism” system check function, work with the credit precautionary account classification mechanism, substantiate the initiative pre-assessment management, take immediate relative measures, and exercise precautionary mechanism to reduce credit risk.

  • For enhancing the operating efficiency of the job processing center, update the “notes collection system” to integrate the coherent treatment of management and billing, enhance the active management capabilities and strengthen compliance with information security standards in order to dramatically reduce operational risk.

  • Optimize the “credit investigation management system” to shorten the operating procedures in order to accelerate the credit review timeliness and improve the information supplementary tool processing efficacy.

  • B. Impact of the external competitive environment, regulatory environment, and macroeconomic

- 6 -

environment

  • a. External competitive environment

Financial environment is constantly under the pressure of competition. The problems of low interest spreads and profitability structure are also frequently experienced. With the continuous relaxation of cross-strait cooperation and domestic financial deregulation, the question is how to maintain a sound operation and financial structure, and reduce duplication of resources deployment and exercise organizational efficiency in order to readily adjust the operational direction in response to the rapidly changing financial environment. With the Economic Cooperation Framework Agreement (ECFA) and Cross-Strait Service Trade Agreement signed by Taiwan and China, and the commitments made by China that are broader than the scope defined by the World Trade Organization (WTO), it will help the Bank handle RMB business and provide more quality financial services to SMEs Taiwan businessmen in China. In addition, our government has relaxed the business scope of financial institutions to provide financial services to the non-resident and the professional investors. The Bank will integrate the structure and development of RMB instruments and create new engine of profitability for developing the Bank’s wealth and assets management business.

  • b. Regulatory environment

    1. In response to the implementation of Personal Information Protection Law and its enforcement rules, establish a personal information management system, substantiate the protection of privacy in the working process, and demonstrate the determination for good faith management and customer interest protection.

    2. In order to protect the interests of consumers, comply with financial consumer protection law, and substantiate the Bank’s “consumer protection policy” for having financial consumption disputes resolved fairly, reasonably, and effectively, the standard contract terms are set based on the principle of equality, reciprocation, and good faith in order to improve consumer’s confidence in the Bank and promote the sound development of the financial market.

    3. Set the “Guidelines for Handling Internal Material Information” to establish the Bank’s excellent internal information handling and disclosure mechanisms, and ensure the consistency and correctness of the information released to the public.

  • c. Macroeconomic environment

    1. Despite the global economic recovery back on track, we should move cautiously. The monetary policy of the United States that is the world leader, the fiscal reformation measures of Japan, and the subsequent success of China’s economic policies will affect the economic performance of the world and Taiwan.

    2. The establishment of cross-strait currency settlement mechanism and the initiation of various RMB business is not only a significant progress in the history of the cross-strait communication but also brings new business opportunities to the financial industry in Taiwan. In this regard, the Bank will expand the scope of cross-strait exchange business and enhance the extent of financial internationalization. The business development and profitability of the Bank within the year is promising.

  • C. Development strategies

  • In response to the challenge of facing a severe and constantly changing financial environment, the mid-term and long-term development is based on the principle of “steady volume and increasing profit” and “stable growth,” and implement the business strategies of “structural adjustment,” “interest spreads increase,” “cash flows,” and “revenue increase” to maintain a sound business development and gradually expand the scale of operations domestically and internationally.

  • a. Adjust the source of earnings structure and improve the reasonable level of deposit and loan interest spreads.

- 7 -

  • b. Ensure stable growth of operation in scale and optimize the quality of credit asset.

  • c. Enhance asset and liability management and enhance risk management and control ability.

  • d. Improve the capital adequacy ratio and expand credit assets coverage ratio.

  • e. Secure SMEs financial advantage and expand the scope of business.

  • f. Enhance the functionality of electronic financial products and plan cross-border business platform.

  • g. Actively promote the parent company and subsidiary integrated marketing and enhance operating synergy.

  • h. Follow in the footsteps of Taiwan investors and strengthen the overseas market deployment and territory.

  • i. Demonstrate dedications and devotions and pursue excellent service and charity.

  • j. Construct a comprehensive compliance system and create a good corporate image.

  • D. Highlights of business operation plans for 2014

  • Adjusting business structure and qualitative and quantitative profit model, substantiating capital structure and risk management mechanism, and developing E-commerce and expanding the scale of foreign exchange operation are the three primary objectives. Operational policies as follows:

  • a. Diversify the development of new money flow channels, stably enhance demand deposit ratio, enrich foreign exchange working capital, and expand the scale of foreign exchange business.

  • b. Substantiate credit policies and pricing strategies, maintain the scale of loans with “steady volume and increasing profit,” emphasize sound banking supervision data and credit indicators balanced development, and ensure the quality of loan assets.

  • c. Observe the relaxation of cross-industry marketing specifications by the competent authorities, exercise the existing advantages of the organization, enhance the integrated marketing of the parent company and subsidiary and develop wealth management business, root reinvestment business and product operating synergies, realized the “We do our best to manage” and fulfill the multi-faceted asset allocation demand of customers.

  • d. Uphold the stability and flexibility of the financial operation, pursue maximize efficiency of the fund utilization, and enhance the overall investment operating efficiency.

  • e. Construct the “second generation E-commerce” system platform in accordance with the “corporate banking” “personal banking” and “e-ATM” service demand model and plan to connect corporate money flow management and comprehensive collection system for enhancing the advantage of online banking channel.

  • f. Expected business objectives

ected business objectives
Scope of business Objective bythe end of 2014
Deposits (including foreign currencies) Average balance amounted to NTD
445.044 billion.
Lending (including foreign currencies) Average balance amounted to NTD
377.94 billion.
Foreign Exchanges Operations Annual amount USD12.72 billion
Trust Operations The average balance of trust assets
amounted to NTD 38.7 billion

After sixty years of dedication to the business operation, in the year of 2013 that is the turning point of diversified operation, in addition to “Taichung Commercial Bank Insurance Broker Co., Ltd.” and “Reliance Securities Co., Ltd.,” were also invested and established “Taichung Commercial Bank Securities Co., Ltd.,” “Taichung Commercial Bank Lease Enterprise,” and “Taichung Commercial Bank Leasing (Suzhou) Co., Ltd.” ,to construct the quasi-holding organizational structure and achieve the extension of overseas deployment and territory. In the

- 8 -

future, the Bank will continue to grow steadily and realize a triple-win situation for shareholders, employees, and customers; also, will strive to achieve the vision of becoming a regional bank in the Greater China market.

Best regards,

  • To All Shareholders

May I wish you all good health and good luck.

President

Chairman

- 9 -

Management Presentation Report No. 2

Supervisor’s Review Report on the 2013 Financial Statements (Please refer to Page 11 of the Annual Meeting Handbook.)

- 10 -

Supervisors’ Audit Report

The board drafted the business report, proposal for earnings distribution, and financial statements (including balance sheet,statement of comprehensive income , statement of changes in equity, and statement of cash flows) for year 2013. Of these, the financial statements (including financial statements consolidated with subsidiaries) have been ratified by the board. The board believes that they represent fairly the financial position of the company as of Dec. 31, 2013 and the results of operation and cash flows in 2013. The Supervisors have reviewed the above-mentioned statement in accordance with Article 219 of the Company Act and Article 36 of the Securities and Exchanges Act and hereby provide such audit report. Please review the information.

To:

2014 Shareholders’ meeting, Taichung Commercial Bank Co. Ltd.

Supervisor: Institutional Representative to Xin Rui Investment Co., Ltd.

Supervisor: Institutional Representative to Xin Rui Investment Co., Ltd.

Supervisor: Institutional Representative to Xin Rui Investment Co., Ltd.

Supervisor: Institutional Representative to Tai Jiunn Enterprise Co., Ltd.

March 12, 2014

- 11 -

Management Presentation Report No. 3

The 2013 Financial Asset Impairment Recognized. Explanation: 1. It is processed in accordance with Jin-Guan-Chen (VI) No. 0940001669 Letter dated April 15, 2005 of the Financial Supervisory Commission and FSC (VI) 09570100218 Letter dated April 4, 2006.

  1. The impairment of financial assets is recognized in accordance with International Accounting Standards No. 39: The Company’s other financial assets include the insurance assets issued by the PEM Group. The asset valued by an external rating agency was with financial asset impairment losses of NTD34,666 thousand recognized in 2013.

- 12 -

Management Presentation Report No. 4

The issuance of subordinated financial bonds approved in 2013. (Please refer to Page 14~15 of the Annual Meeting Handbook)

- 13 -

Taichung Commercial Bank had issued subordinated financial bond that was approved by the FSC in 2013.

I. Reasons for issuance:

  • Applied to the FSC in 2013 for issuing subordinate financial bonds to strengthen financial structure, improve capital adequacy ratio and have normal business development. The FSC approved the issuance of subordinate financial bonds for NTD6 billion with the Jin-Guan-Yin-Piao-Tzu No. 10200089330 Letter issued. The Company had financial bonds issued by installments, including NTD2.5 billion on June 25, 2013 and NTD3 billion on December 16, 2013, respectively.

II. Bond Information:

2013, respectively.
II.
Bond Information:
2013
Bondissues 1~~st~~ termof 2013 2~~nd~~ termof 2013
Bond code G13010 G13011
Issue Date 102/6/25 102/12/16
Duration 7years 6years
Maturity date 109/6/25 108/12/16
Placement Underwriters
are
not
commissioned for public
offering		 Underwriters
are
not
commissioned for public
offering
Bond listing OTC OTC
Listing/ issuinglocation Taiwan R.O.C. Taiwan R.O.C.
Issuingcurrency NTD NTD
Total Issued 2.5 billion 3 billion
ListingDate 102/6/25 102/12/16
Bond abbreviation 02 Taichung Commercial
Bank 1		 02 Taichung Commercial
Bank 2
Coupon rate Fixedinterestrate:2.10% Fixedinterestrate:2.10%
Interest bearing and payment
method		 Simple interest bearing
twice per year and interest
payments twice ayear		 Simple interest bearing
twice per year and interest
payments twice ayear
The interest rate reset date - -
The next interest rate reset date - -

*Annual interest payable:

.

Subordinated financial bonds annual interestpayment Subordinated financial bonds annual interestpayment
Bond issues 1~~st~~term of 2013 2~~nd~~term of 2013
Total Issued 2.5 billion 3 billion
Coupon rate 2.10% 2.10%
The total annual interestpayment 52 million 63 million

- 14 -

III. Subscription object:

Natural persons and juridical persons.

  • Number of subscriber ratio:
bscription object:
atural persons and juridical persons.
er of subscriber ratio:		 bscription object:
atural persons and juridical persons.
er of subscriber ratio:		 bscription object:
atural persons and juridical persons.
er of subscriber ratio:
Number of subscriber ratio: Natural persons and juridical persons
Bond issues 1stterm of 2013 2ndterm of 2013
Natural persons (%) 0(0%) 146(63.76%)
Juridical persons (%) 2(100%) 83(36.24%)
Total 2(100%) 229(100%)
  • IV. Issuance results:

The subordinate financial bonds approved by FSC for NTD6 billion was issued in installments, including NTD2.5 billion on June 25, 2013 and NTD3 billion on December 16, 2013, respectively to improve the Company’ capital adequacy ratio of 1.59% and with the Company’s financial structure effectively improved.

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Management Presentation Report No. 5

Adjustments to the Company’s distributable earnings and the appropriation of special reserves after the adoption of IFRSs.

  • Explanation: 1. Report the adjustments to the distributable earnings and the special reserve cumulative amounts for the information of the shareholders in accordance with Jin-Guan-Chen-Far Zi No. 1010012865 Letter dated April 6, 2012 of the Financial Supervisory Commission.

  • The Company’s unappropriated earnings in the comparative period of January 1, 2012 (hereinafter referred to as the “conversion date”) and 2012 was increased by NTD10,177,390 and decreased by NTD91,955,574, respectively, after the adoption of the International Financial Reporting Standards (hereinafter referred to as IFRSs).

  • At the IFRSs conversion date, the Company’s booked unrealized land revaluation increment of NTD283,743,465 was transferred to the unappropriated earnings due to the adoption of the International Financial Reporting Standards No. 1; also, unappropriated earnings debit of NTD273,566,075 (based on an actuarial report to appropriate employee benefit liabilities of NTD274,550,734 and recognized the associate other adjustment benefits of NTD984,659) was recognized. According to the provisions of the FSC, the special reserve was appropriated for the increase of retained earnings for NTD10,177,390 due to the adoption of IFRSs on January 1, 2012.

  • The unappropriated earnings in the 2012 was decreased

comparative period by

- 16 -

NTD91,955,574 mainly due to the recognition of employee benefit liabilities.

  1. In summary, the adoption of IFRSs on January 1, 2013 caused the decrease of unappropriated earnings by NTD91,955,574 as follows:

  2. (1) The adjustment amount decreased by NTD81,778,184 due to the adoption of International Financial Reporting Standards approved by the FSC.

  3. reserve of

  4. (2) Appropriated special NTD10,177,390 for the first-time adoption of IFRSs approved by the FSC.

- 17 -

Proposal No. 1

Proposal: The 2013 Business Report and the Financial Statements are presented for adoption.

  • Explanation: The Company’s 2013 Business Report and the individual and consolidated financial statements, including balance sheet, statement of comprehensive income, statement of changes in equity, and statement of cash flows (please refer to the page 4~9 and 49~68 of Annual Meeting Handbook) have already been audited and attested by Deloitte and Touche and approved by the Company’s Board of Directors, and presented to the supervisors for admission.

Resolution:

- 18 -

Proposal No. 2

Proposal: The 2013 Profit Distribution Proposal is presented for adoption.

  • Explanation: 1. A legal reserve was appropriated for an amount of NTD891,809,065.52 equivalent to (30%) of the Company’s 2013 net income NTD3,060,270,513.27(same currency hereinafter), plus adjusted unappropriated earnings (NTD136,887,423.2). In addition, the special reserve of NTD61,223,584.36 was reversed for the decrease of “Debited to other shareholders’ equity;” therefore, the distributable earnings of NTD2,092,797,608.91 is to be distributed as follows:

    • (1) Shareholder dividends are distributed as follows:

      1. Shareholder dividends – stock dividends (About NTD0.615 per share):NTD1,579,240,650

      2. Shareholder dividends – cash dividends (About NTD0.2 per share): NTD513,556,958.91

    • (2) Employee bonus of NTD209,280 and compensation for directors and supervisors of NTD104,640 are distributed in cash in accordance with the Company’s Corporate Charter (Articles of Incorporation).

  • If the Company has new shares issued for the conversion of the convertible financial bond causing changes in the total outstanding shares on the cash dividend and stock dividend record date, the distribution of dividends per share will be adjusted. However, the total distribution

- 19 -

amount remains unchanged. It is proposed that the Board of Directors be authorized in the Annual Meeting of Shareholders to calculate and adjust the distribution amount per share in accordance with the outstanding shares on the ex-dividend and ex-rights date.

  1. Taichung Commercial Bank 2013 Profit Distribution Statement (please refer to page 21~22 of the Annual Meeting Handbook.

Resolution:

- 20 -

Taichung Commercial Bank

Profit Distribution Statement

2013

Unit: NTD

Unappropriated earnings - beginning $4,381,945.80 Adjustments due to the adoption of $ (81,778,184.00) IFRSs Special reserve appropriated due to the (10,177,390.00) (91,955,574.00) first-time adoption of IFRSs Adjusted unappropriated earnings - (87,573,628.20) beginning Retained earnings adjustment due to 177,235.00 long-term equity investment Actuarial gain (loss) included in retained (49,491,030.00) earnings Adjusted unappropriated earnings (136,887,423.20) Net income 3,060,270,513.27 Legal reserve appropriated (891,809,065.52) Reversal of legally appropriated special 61,223,584.36 reserve Current distributable earnings 2,092,797,608.91 Distributions Shareholder dividends – stock (About NTD0.615/share) (1,579,240,650.00) Shareholder dividends – cash (513,556,958.91) (About NTD0.2/share)[(2,092,797,608.91) ] Unappropriated earnings - ending 0.00

- 21 -

[Explanation]

  • I. Current shareholder dividends are distributed with net income with priority.

  • II. Reversal of special reserve

  • (I) According to the Jin-Guan-Chen-Far Zi No. 1010012865 Letter dated April 6, 2012 of the Financial Supervisory Commission, the listed/OTC companies should have a special reserve appropriated in an amount equivalent to the net amount debited to shareholder’s equity. If the amount debited to the other shareholders’ equity is reversed subsequently, the reversed amount can be distributed.

  • (II) Special reserve was appropriated in an amount of NTD34,176,323.68 proportionally to the Company’s “Available-for-sale unrealized earnings” debited to other shareholders’ equity of (NTD58,918,647.25), plus “Exchange differences of foreign operations” of NTD24,742,323.57. Therefore, the special reserve of NTD61,223,584.36 was reversed after deducting the special reserve appropriated in previous years of NTD95,399,908.04.

  • III. Shareholder dividends of NTD2,092,797,608.91 were distributed in accordance with the outstanding 2,567,784,555 shares on February 27, 2014.

  • IV. For the impact of the stock dividends distributed currently on the Company’s operating performance and earnings per share, it is not applicable since the 2014 financial forecast is not disclosed.

  • V. Employee bonus and compensation of directors and supervisors

  • (I) Employee bonus of NTD209,280 and compensation for directors and supervisors of NTD104,640 are distributed in cash in accordance with the Company’s Corporate Charter (Articles of Incorporation).

  • (II) Difference between the employee bonuses and compensation for directors and supervisors distributed and the estimated amount of the current year and its handling:

    1. Amount of difference: The current estimated employee bonus of NTD197,221 and the compensation for directors and supervisors of NTD98,611 are different from the actual amount of distributions by NTD12,059 and NTD6,029, respectively.

    2. Reason for the difference: It is due to the estimated earnings available for distribution that is different from the actual settlement amount.

    3. Handling: The amount of difference is handled as change in accounting estimate of 2014.

- 22 -

Discussion No. 1

Proposal: Proposing to have new shares issued through capitalization of earnings, please proceed to discuss.

  • Explanation: 1. The Company for business needs plans to appropriate stock dividends of NTD1,579,240,650 from the 2013 distributable earnings with 157,924,065 shares issued at the ratio of 61.5 shares distributed per thousand shares at NTD10 par.

  • The earnings distribution is calculated in accordance with the shareholders and their respective shareholding ratio in the register of shareholders. Fractional share distribution is to be consolidated by shareholders and registered with the Company’s Stock Department for stock consolidation within five days from the record date. Fractional share that is not consolidated or remains a fractional share after consolidation should be paid with an equivalent cash amount (rounded up to the dollar). Fractional shares will be purchased by persons arranged by the Chairman as authorized by the Board. In the event that the total number of outstanding shares in circulation and the shareholders’ dividend ratio are affected as a result of the company’s issuing new shares or financial bonds conversion through capitalization, employee’s exercising warrants, repurchasing shares of the Company or transferring treasury shares to employees and canceling treasury shares, it is proposed to authorize the Board of Directors in the meeting of shareholders to arrange the necessary adjustments.

- 23 -

  1. It is proposed that the Board of Directors be authorized in the meeting of shareholders to take any action that may be required in connection with scheduling the dividend record date after the approval the concerned authorities.

  2. It is proposed that the Board of Directors be authorized in the meeting of shareholders to take any action that may be required in connection with the subsequent matters related to the amendments of the essential requirements instructed by the concerned authorities.

  3. The shareholder’s rights and obligations for the new shares are the same as those of the existing shares.

  4. The new shares issued through capitalization in accordance with Article 10 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers are without a delivered printed stock but by a book-entry delivery.

Resolution:

- 24 -

Discussion No. 2

Proposal: Amendment to the Operational Procedures for the Acquisition and Disposal of Assets, please proceed to discuss.

  • Explanation: 1. The Company has the Operational Procedures for Acquisition and Disposal of Assets amended in accordance with Jin-Guan-Chen-Far Zi No. 1020053073 Order “Regulations Governing the Acquisition and the Disposal of Assets by Public Companies” amended and announced by the Financial Supervisory Commission on December 30, 2013 upon the notice of the Taiwan Stock Exchange Corporation with the Tai-Chen-Sun (I) Zi No. 1020027282 Letter dated December 31, 2013 issued.

  • The comparison table of the Operational Procedures for the Acquisition and Disposal of Assets before and after amendments. (Please refer to Page 26~43 of the Annual Meeting Handbook.)

Resolution:

- 25 -

Taichung Commercial Bank Co., Ltd.

The comparison table of the Operational Procedures for Acquisition and Dis osal of Assets before and after amendments. p

Clauses after the amendment Clauses after the amendment Clauses before the amendment Remark
Article 1: Taichung Commercial
Bank (hereinafter referred to as
“the
Company)
for
assets
management
has
the
“Operational Procedures for the
Acquisition and Disposal of
Assets” (hereinafter referred to
as “the Procedures”) regulated in
accordance
with
the
“Regulations Governing the
Acquisition and Disposal of
Assets by Public Companies”
announced by the competent
authorities.
Article 2: Omitted.
Article 3: The scope of application
for the assets referred to in
the Procedures
1. Stocks, bonds, corporate
bonds,
financial
bonds,
fund-based
securities,
depositary
receipts,
call
(put) warrants, beneficiary
certificate,
asset-based
securities, etc.
2. Property(including land,
buildings
and
architecture,
investment
property
and
land-use
rights) and equipment.
3. Membership card.
4. Intangible assets, including
patents,
copyrights,
trademarks, licenses and
others.


























Article 1: Taichung Commercial
Bank (hereinafter referred to as
the
Company)
for
assets
management
has
the
Operational
Procedures
for
Acquisition and Disposal of
Assets (hereinafter referred to as
the
Procedures)
defined
in
accordance withArticle 36.1 of
the Securities and Exchange
Act, the Securities and Futures
Commission
(91)
Tai-Tsai-Chen
(I)
No.
0910006105
Letter
dated
12.10.2002, the Jin-Guan-Chen
(I) Zi No. 0960001463 Letter
dated
1.19.2007
of
the
Financial
Supervisory
Commission of the Executive
Yuan (hereinafter referred to
as
FSC),
and
Jin-Guan-Chen-Far
Zi
No.
1010004588
Letter
dated
2.13.2012.
Article 2: Omitted.
Article 3: The scope of application
for the assets referred to in
the Procedures
1. Stocks, bonds, corporate
bonds,
financial
bonds,
fund-based
securities,
depositary
receipts,
call
(put) warrants, beneficiary
certificate,
asset-based
securities, etc.
2. Property andother fixed
assets.
3. Membership card.
4. Intangible assets, including
patents,
copyrights,
trademarks, licenses and
others.


































Simplify the governing
law
to
specifically
stipulate the Company’s
operating procedures in
accordance
with
the
“Regulations Governing
Acquisition and Disposal
of
Assets
by
Public
Companies” published by
the competent authorities.
1. With the adoption of
the
International
Financial
Reporting
Standards, investment
property
and
land
rights are included in
the
definition
of
property.
2. The other fixed asset is
reclassified
as
equipment.

architecture,
investment

property
and
land-use

rights) and equipment.
Membership card.
Intangible assets, including
patents,
copyrights,
trademarks, licenses and
others.

- 26 -

Clauses after the amendment Clauses before the amendment Remark
5. Claims
(including
receivables,
foreign
exchange purchase discount
and loans, and delinquent
loans)
of
financial
institutions.
6. Derivatives.
7. The
assets
acquired
or
disposed of by legal merger,
division,
acquisition
or
transfer of shares.
8. Other important assets.
Article
4:
Terminology
in
the Procedures
1. Derivatives: Refers to the
value
of
the
forward
contracts, options contracts,
futures contracts, leveraged
margin
contracts,
swap
contracts and compound
contracts
of
the
aforementioned instruments
derived from assets, interest
rate, exchange rate, index
or
other
benefits.
The
so-called forward contracts
exclude
insurance
contracts,
performance
contracts, after-sale service
contracts, long-term lease
contracts
and
long-term
purchases (sales) contracts.
2. The assets acquired or
disposed
of
by
legal
merger,
division,
acquisition or transfer of
shares: Refers to the assets
acquired or disposed of
through merger, division or
acquisition in accordance
with the Business Merger
Act,
Financial
Holding
Company Act, Financial
Institution Merger Act or
any other law; or the
issuance of new shares in
exchange for the stock
shares of other companies
in accordance with Article










































5. Claims
(including
receivables,
foreign
exchange purchase discount
and loans, and delinquent
loans)
of
financial
institutions.
6. Derivatives.
7. The assets acquired or
disposed
of
by
legal
merger,
division,
acquisition or transfer of
shares.
8. Other important assets.
Article
4:
Terminology
in
the Procedures
1. Derivatives: Refers to the
value
of
the
forward
contracts, options contracts,
futures contracts, leveraged
margin
contracts,
swap
contracts and compound
contracts
of
the
aforementioned instruments
derived from assets, interest
rate, exchange rate, index
or
other
benefits.
The
so-called forward contracts
exclude
insurance
contracts,
performance
contracts, after-sale service
contracts, long-term lease
contracts
and
long-term
purchases (sales) contracts.
2. The assets acquired or
disposed
of
by
legal
merger,
division,
acquisition or transfer of
shares: Refers to the assets
acquired or disposed of
through merger, division,
or
acquisition
in
accordance
with
the
Business
Merger
Act,
Financial
Holding
Company Act, Financial
Institution Merger Act or
any other law; or issuance
of new shares in exchange
for the stock shares of other
companies in accordance











































1. Amend
the
text
of Paragraph 1 Section
2 in accordance with
Article 156 of the
Company
Act
in
response
to
the
adjustment
of
the
clause order.
2. Recognize
the
definition of related
party and subsidiaries
in accordance with the
International Financial
Reporting
Standards.
The
clause
of Paragraph 1 Section
3 and Section 4 are
combined as Section 3
and the text of Section
4 is amended in order
to comply with the
International Financial
Reporting Standards.
3. Adjustment of clause
order.

- 27 -

Clauses after the amendment Clauses after the amendment Clauses before the amendment Clauses before the amendment Clauses before the amendment Remark
3.
4.
5.
6.		 156 Paragraph8 of the
Company Act (hereinafter
referred to as “transfer of
shares”).
Related
party
and
subsidiaries: It should be
































3.
4.		 with Article 156 Paragraph
6 of the Company Act
(hereinafter referred to as
“transfer of shares”).
Related
party:
It
is
regulated in accordance










































recognized in accordance

with
the
Regulations
with the Statement of

Governing
the
Preparation
of		 Auditing
Standards

(SFAS) No. 6 of the ROC

Financial
Reports
by
Accounting Research and


Securities Issuers.
Professional
appraiser:
Refers
to
real
estate
appraisers
or
other
individuals engaged in real
estate
and
equipment
appraisal
business
in
accordance
with
the
governing laws.
Date of event: Refers to the
transaction contract signing
date,
payment
date,
commission Closing Date,
transfer date and the Board
resolution date or the date
the
counterparty
and
transaction
amount
sufficiently
determined
whichever is earlier or
sooner.
For
investments
that are subject to the
approval of the competent
authorities, one of the dates
of event referred to above
or the date of approval by
the competent authorities
whichever is earlier or
sooner shall prevail.
Investment
in
Mainland
Development Foundation

(hereinafter referred to as

the Accounting Research

and
Development

Foundation).
Subsidiaries:
It
is
5.
6.		 regulated in accordance

with the Statement of
Auditing
Standards

(SFAS) No. 5 and No. 7 of

the Accounting Research

and
Development

Foundation.
Professional
appraiser:
Refers
to
real
estate
appraisers or individuals
who can engage in real
estate andother fixed
assets appraisal business by
law.
Date of event: Refers to the
transaction contract signing
date,
payment
date,
commission Closing Date,
transfer date, the Board
resolutions date or the date
the
counterparty
and
transaction
amount
sufficiently
determined
whichever is earlier or
sooner.
For
investments
that are subject to the
approval of the competent
authorities, one of the dates
of event referred to above
or the date of approval by
the competent authorities
whichever is earlier or
sooner shall prevail.

- 28 -

Clauses after the amendment Clauses before the amendment Remark
China:
Refers
to
the
investments
engaged
in
Mainland China approved
by
the
Investment
Commission
of
the
Ministry
of
Economic
Affairs
Investment
or
conducted in accordance
with
the
Technical
Cooperation
Licensing
Requirements.
Article 5: Omitted.
Article 6: The assessment and
operating
procedure
of
the
Company’s
acquisition
or
disposal of assets is as follows:
1. For
the
Company’s
acquisition or disposal of
assets, the organizing unit
shall
have
the
reason,
underlying
subject,
counterparty, transfer price,
collection
and
payment
terms, and price reference
presented for approval in
accordance
with
the
Company’s
decentralization
of
responsibility.
2. If
the
Company’s
acquisition or disposal of
assets must be approved by
the Board in accordance
with the Procedures or
other legal requirements
and if any of the director’s
objections is recorded or
expressed in writing, the
Company shall have the
objections
of
directors
forwarded
to
each
supervisor.
3. When the acquisition or
disposal
of
assets
is
proposed to the Board for
discussion in accordance
with Paragraph 2, should
fully consider the views of









































7. Investment
in
Mainland
China:
Refers
to
the
investments
engaged
in
Mainland China approved
by
the
Investment
Commission
of
the
Ministry
of
Economic
Affairs
Investment
or
conducted in accordance
with
the
Technical
Cooperation
Licensing
Requirements.
Article 5: Omitted.
Article 6: The assessment and
operating
procedure
of
the
Company’s
acquisition
or
disposal of assets is as follows:
1. For
the
Company’s
acquisition or disposal of
assets, the organizing unit
shall
have
the
reason,
underlying
subject,
counterparty, transfer price,
collection
and
payment
terms, and price reference
presented for approval in
accordance
with
the
Company’s
decentralization
of
responsibility.
2. If
the
Company’s
acquisition or disposal of
assets must be approved by
the Board in accordance
with the Procedures or
other legal requirements
and if any of the director’s
objections is recorded or
expressed in writing, the
Company shall have the
objections
of
directors
forwarded
to
each
supervisor.
3. When the acquisition or
disposal
of
assets
is
proposed to the Board for
discussion in accordance
with Paragraph 2, should









































1. The Audit Committee
is
established
in
accordance
with
Jin-Guan-Chen-Far Zi
No.
10200531121
Order dated December
31,
2013
of
the
Financial Supervisory
Commission with the
Regulations amended
lawfully.
2. Adjustment of clause
order.

- 29 -

Clauses after the amendment Clauses after the amendment Clauses after the amendment Clauses before the amendment Remark
the independent directors.
The
objections
or
reservations of independent
directors, if any, should be
stated in the minutes of the
Board meeting.
4. The
establishment
or
amendment
of
the
“Operational Procedures
for
Acquisition
and
Disposal of Assets” must
be with the consent of the
majority members of the
Audit
Committee
and
presented to the Board
for resolution.
5. The
establishment
or
amendment
of
the
“Operational Procedures
for
Acquisition
and
Disposal
of
Assets”
referred to above that is
without the consent of the
majority members of the
Audit Committee must be
with the consent of more
than two-thirds of all the
directors
and
the
resolution of the Audit
Committee shall be stated
in the minutes of the
Board meeting.
6. The members of the Audit
Committee
referred
to
in Paragraph 4 and the
directors alleged in the
preceding
paragraph
refer to the incumbents.
7. The acquisition or disposal
of the asset is to be
processed in accordance
with the relevant provisions
of the Company’s internal
control
system.
The
offending personnel of a
severe violation should be
penalized accordingly.
Article 7: The decision-making
procedures of the Company’s
acquisition or disposal of assets		 4. the independent directors.
The
objections
or
reservations of independent
directors, if any, should be
stated in the minutes of the
Board meeting.
The
establishment
or











































fully consider the views of
the independent directors.
The
objections
or
reservations of independent
directors, if any, should be
stated in the minutes of the
Board meeting.
4. The acquisition or disposal
of the asset is to be
processed in accordance
with the relevant provisions
of the Company’s internal
control
system.
The
offending personnel of a
severe violation should be
penalized accordingly.
Article 7: The decision-making
procedures of the Company’s
acquisition or disposal of assets
















With the adoption of the
International
Financial
ReportingStandards,the
5. amendment
of
the
“Operational Procedures

for
Acquisition
and

Disposal of Assets” must

be with the consent of the
majority members of the

Audit
Committee
and
presented to the Board

for resolution.
The
establishment
or
6. amendment
of
the
“Operational Procedures

for
Acquisition
and

Disposal
of
**Assets” **

referred to above that is
without the consent of the
majority members of the

Audit Committee must be
with the consent of more
than two-thirds of all the
directors
and
the
resolution of the Audit
Committee shall be stated
in the minutes of the
Board meeting.
The members of the Audit
Committee
referred
to
in Paragraph 4 and the

directors alleged in the

preceding
paragraph

- 30 -

Clauses after the amendment Clauses before the amendment Remark
(including price determination,
reference, authorization levels
and execution units):
1. Marketable securities: It
should be processed in
compliance
with
the
Banking
Act
and
the
Company’s
“Investment Policy.” Also,
the Company’s Investment
Department shall set a
reasonable investment price
and quota within the scope
authorized in the General
Board meeting or the Board
meeting by referring to
market practices.
2. Property:
It
should
be
processed in compliance
with the Banking Act and
the Company’s “Property
Management Rules.” The
General Affairs Department
is
to
collect
market
information and seek the
underlying subject for the
Company’s
Audit
Department to appraise in
accordance
with
the
Company’s
“Rules
Governing
Property
Collateral
Appraisal”
in
order to determine the
bottom price for the review
and approval of the Board
of Directors.
3.Equipment:
Shall
take
market
conditions
into
consideration to determine
the reasonable bottom price
and
arrange
purchase
matters in accordance with
the
classification
of
responsibility and rights of
the
Company’s
“Rules
Governing
Construction
Engineering
and
Property
Purchase,
Custom-made and Sales.”
4. Acquisition or disposal of
propertyandequipment











































(including price determination,
reference, authorization levels
and execution units):
1. Marketable securities: It
should be processed in
compliance
with
the
Banking
Act
and
the
Company’s
“Investment Policy.” Also,
the Company’s Investment
Department shall set a
reasonable investment price
and quota within the scope
authorized in the General
Board meeting or the Board
meeting by referring to
market practices.
2. Property:
It
should
be
processed in compliance
with the Banking Act and
the Company’s “Property
Management Rules.” The
General Affairs Department
is
to
collect
market
information and seek the
underlying subject for the
Company’s
Audit
Department to appraise in
accordance
with
the
Company’s
“Rules
Governing
Property
Collateral
Appraisal”
in
order to determine the
bottom price for the review
and approval of the Board
of Directors.
3.Other fixed assets:Shall
take market conditions into
consideration to determine
reasonable
bottom
price
and
arrange
purchase
matters in accordance with
the
classification
of
responsibility and rights of
the
Company’s
“Rules
Governing
Construction
Engineering
and
Property
Purchase,
Custom-made, and Sales.”
4. Acquisition or disposal of
propertyandother fixed












































text
of
Paragraph
1
Section 3 and Section 4
regarding the other fixed
assets is hereby amended.

- 31 -

Clauses after the amendment Clauses before the amendment Remark
should be processed in
accordance
with
parity,
negotiations or tender.
5. Derivatives:
The
Company’s
Derivatives
Investment Department is
to have a reasonable price
determined in accordance
with the market price and
to
conduct
investment
transaction within the scope
of investment and quota
authorized by the Board.
6. The acquisition or disposal
of other assets should be
handled in accordance with
the relevant provisions of
the Company.
Article 8: Omitted.
Article 9: Omitted.
Article
10:
The
Company’s
acquisition
or
disposal
of
property orequipment, except
for
the
transactions
with
government
agencies,
proprietary-land
construction,
leased-land construction or the
acquisition
or
disposal
of
operating equipment, for an
amount exceeding 20% of the
Company’s paid-in capital or
NTD300 million should be with
a
professional
appraiser’s
appraisal report obtained prior to
the
date
of
the
event
in
compliance with the following
requirements:
1. When the particular price,
specific price, or special
price
is
applied
as
a
reference for determining
the transaction price due to
special
reasons,
the
transactions
should
be
resolved by the Board of
Directors in advance, so do
the
changes
in
trading
conditions.
2. Transactions amountingto









































assets should be processed
in accordance with parity,
negotiations or tender.
5. Derivatives:
The
Company’s
Derivatives
Investment Department is
to have a reasonable price
determined in accordance
with the market price and
to
conduct
investment
transaction within the scope
of investment and quota
authorized by the Board.
6. The acquisition or disposal
of other assets should be
handled in accordance with
the relevant provisions of
the Company.
Article 8: Omitted.
Article 9: Omitted.
Article
10:
The
Company’s
acquisition
or
disposal
of
property orother fixed assets,
except for the transactions with
government
agencies,
proprietary-land
construction,
leased-land construction, or the
acquisition
or
disposal
of
operatingmachinery equipment,
for an amount exceeding 20% of
the Company’s paid-in capital or
NTD300 million should be with
a
professional
appraiser’s
appraisal report obtained prior to
the
date
of
the
event
in
compliance with the following
requirements:
1. When the particular price,
specific price, or special
price
is
applied
as
a
reference for determining
the transaction price due to
special
reasons,
the
transactions
should
be
resolved by the Board of
Directors in advance, so do
the
changes
in
trading
conditions.
2. Transactions amountingto









































1. With the adoption of
the
International
Financial
Reporting
Standards,
the
text
of
Paragraph
1
regarding
the
other
fixed
assets
and
machinery equipment
is hereby amended.
2. With the amendment
of Article 4 Paragraph
1 Section 3, the text
of Paragraph 1 Section
3 is hereby amended.

- 32 -

Clauses after the amendment Clauses after the amendment Clauses after the amendment Clauses before the amendment Clauses before the amendment Clauses before the amendment Remark
3.
4.		 NTD1
billion
or
more
should have two or more
professional
appraisers
invited to appraise.
If
the
professional
appraiser’s appraisal result
falls under one of the
following
circumstances,
except for the valuation of
the acquired asset is higher
than the transaction amount
or the valuation of the
disposed asset is lower than
the transaction amount, a
CPA should be contracted
to have it processed in
accordance
with
the
Statement
of
Auditing
Standards (SFAS) No. 20
of theROC Accounting
Research and Development
Foundation
(hereinafter
referred
to
as
the












































3.
4.		 NTD1
billion
or
more
should have two or more
professional
appraisers
invited to appraise.
If
the
professional
appraiser’s appraisal result
falls under one of the
following
circumstances,
except for the valuation of
the acquired asset is higher
than the transaction amount
or the valuation of the
disposed asset is lower than
the transaction amount, a
CPA should be contracted
to have it processed in
accordance
with
the
Statement
of
Auditing
Standards (SFAS) No. 20
of
the
Accounting
Research
and









































and
Development Foundation

as
the
with an opinion issued on
the
reasons
for
the
difference
and
the
adequacy of the transaction
price:
(1) The difference between
the appraisal results and
the transaction amount
exceeds 20% of the
transaction amount.
(2) The
appraisal
difference of two or
more
appraisers
exceeds 10% of the
transaction amount.
The difference between the
reporting
date
of
the
professional appraiser and
the contract date may not
be more than three months.
However, if it is subject to
the
announced
present
value of the same period
and that is not more than
six
months
away,
an
opinion can be issued by
Accounting Research and

Development Foundation)

with an opinion issued on
the
reasons
for
the
difference
and
the
adequacy of the transaction
price:
(1) The difference between
the appraisal results and
the transaction amount
exceeds 20% of the
transaction amount.
(2) The
appraisal
difference of two or
more
appraisers
exceeds 10% of the
transaction amount.
The difference between the
reporting
date
of
the
professional appraiser and
the contract date may not
be more than three months.
However, if it is subject to
the
announced
present
value of the same period
and that is not more than
six
months
away,
an
opinion can be issued by

- 33 -

Clauses after the amendment Clauses before the amendment Remark
the original appraiser.
Article 11: The Company for the
acquisition
or
disposal
of
securities shall obtain prior to the
date of event the underlying
company’s most recent financial
statements audited, attested or
reviewed by CPAs as reference
in assessing the transaction price.
In addition, for a transaction
amount exceeding 20% of the
paid-in
capital
or
NTD300
million,
a
CPA
should
be
contracted prior to the date of the
event to express an opinion on
the
reasonableness
of
the
transaction price. The CPA that
needs to adopt the report of an
expert shall have it processed in
accordance with the Statement of
Auditing Standards (SFAS) No.
20 published by the Research
and Development Foundation.
However, exceptions are made if
the marketable securities are
with a quote in an active market
or it is otherwise regulated by the
Financial
Supervisory
Commission
(hereinafter
referred to as FSC).
Article
12:
The
Company’s
acquisition
or
disposal
of
membership card or intangible
assets for an amount exceeding
20% of the paid-in capital or
NTD300 million,except for
transactions with government
agencies,should have a CPA
contracted to express an opinion
on the reasonableness of the
price prior to the date of the
event. The CPA should have it
processed in accordance with the
Statement of Auditing Standards
(SFAS) No. 20 published by the
Research
and
Development
Foundation.
Article 12.1: Omitted.











































the original appraiser.
Article 11: The Company for the
acquisition
or
disposal
of
securities shall obtain prior to the
date of event the underlying
company’s most recent financial
statements audited, attested or
reviewed by CPAs as reference
in assessing the transaction price.
In addition, for a transaction
amount exceeding 20% of the
paid-in
capital
or
NTD300
million,
a
CPA
should
be
contracted prior to the date of the
event to express an opinion on
the
reasonableness
of
the
transaction price. The CPA that
needs to adopt the report of an
expert shall have it processed in
accordance with the Statement of
Auditing Standards (SFAS) No.
20 published by the Research
and Development Foundation.
However, exceptions are made if
the marketable securities are
with a quote in an active market
or it is otherwise regulated by the
Financial
Supervisory
Commission.
Article
12:
The
Company’s
acquisition
or
disposal
of
membership card or intangible
assets for an amount exceeding
20% of the paid-in capital or
NTD300 million should have a
CPA contracted to express an
opinion on the reasonableness of
the price prior to the date of the
event. The CPA should have it
processed in accordance with the
Statement of Auditing Standards
(SFAS) No. 20 published by the
Research
and
Development
Foundation.
Article 12.1: Omitted.








































Financial
Supervisory
Commission,
Executive
Yuan has been reformed
as Financial Supervisory
Commission since July 1,
2012 with the text of this
Article
is
amended
accordingly.
Government
agencies
must have the sale of
assets
arranged
in
accordance
with
the
relevant
provisions
of
bidding or competitive
auction and government
agencies shall have the
bottom price of the tender
appraised in accordance
with
the
relevant
provisions in advance in
order to minimize the
possibility
of
price
manipulation. According
to Article 10, the opinion
of
a
CPA
on
the
reasonableness
of
the
price is not necessaryfor

- 34 -

Clauses after the amendment Clauses after the amendment Clauses before the amendment Remark
Article 13: Omitted.
Article 14: Omitted.
Article 15: For the Company’s
acquisition
or
disposal
of
property or assets other than
property with the related parties
for an amount exceeding 20% of
the paid-in capital, 10% of the
total assets, or NTD300 million,
except for bond trades, RP and
RS bonds, and purchase or
redemption of domestic money
market funds, the following
information should be submitted
to the Board of Directors for
approval and to the Supervisors
for admission before signing a
trade
contract
and
making
payment:
1. The purpose, necessity, and
expected benefits of the
acquisition or disposal of
assets.
2. Reason for choosing the
concerned party as trading
counterpart.
3. Assess the reasonableness
of
the
planned
trading
conditions for the property
acquired from the related
party pursuant to Article 16
and Article 17.
4. The
original
acquisition
date and price of the related
party, the counterparty and
its relationship with the
Company
and
related
parties, etc.
5. Expected
monthly
cash
income
and
expense
statement within one year
from the contracted month,
and assessing the necessity
of the transactions and the
reasonableness of the funds
application.
6. Obtain an appraisal report
issued by a professional
appraiser
in
accordance
with theprovisions referred









































Article 13: Omitted.
Article 14: Omitted.
Article 15: For the Company’s
acquisition
or
disposal
of
property or assets other than
property with the related parties
for an amount exceeding 20% of
the paid-in capital, 10% of the
total assets, or NTD300 million,
the following information should
be submitted to the Board of
Directors for approval and to the
Supervisors for adoption before
signing a contract and making
payment:
1. The purpose, necessity, and
expected benefits of the
acquisition or disposal of
assets.
2. Reason for choosing the
concerned party as trading
counterpart.
3. Assess the reasonableness
of
the
planned
trading
conditions for the property
acquired from the related
party pursuant to Article 16
and Article 17.
4. The
original
acquisition
date and price of the related
party, the counterparty and
its relationship with the
Company
and
related
parties, etc.
5. Expected
monthly
cash
income
and
expense
statement within one year
from the contracted month,
and assessing the necessity
of the transactions and the
reasonableness of the funds
application.
6. Obtain an appraisal report
issued by a professional
appraiser
in
accordance
with theprovisions referred





































the trade of intangible
assets with government
agencies.
1. The
risk
of
the
Company’s
bond
trade,
RP
and
RS
bond, and the purchase
and
redemption
of
domestic
money
market
funds
with
related party is low;
therefore,
the
authorization
of
exemption
in
Paragraph
1
is
amended
in
accordance
with
Article 31.
2. Correction
of
the
“part” to “portion” in
text.
3. With the adoption of
the
International
Financial
Reporting
Standards,
the
text
of
Paragraph
3
regarding
operating
machinery equipment
is hereby amended.
4. Amend
the
text
of
Paragraph
4
accordingly.
5. The Audit Committee
is
established
in
accordance
with
Jin-Guan-Chen-Far Zi
No.
10200531121
Order dated December
31,
2013
of
the
Financial Supervisory
Commission with the
Regulations amended
lawfully.

RS bonds, and purchase or

redemption of domestic money

market funds, the following
information should be submitted
to the Board of Directors for
approval and to the Supervisors
for admission before signing a
trade
contract
and
making
payment:
1. The purpose, necessity, and
expected benefits of the
acquisition or disposal of
assets.
2. Reason for choosing the
concerned party as trading
counterpart.
3. Assess the reasonableness
of
the
planned
trading
conditions for the property
acquired from the related
party pursuant to Article 16
and Article 17.
4. The
original
acquisition
date and price of the related
party, the counterparty and
its relationship with the
Company
and
related
parties, etc.
5. Expected
monthly
cash
income
and
expense
statement within one year
from the contracted month,
and assessing the necessity
of the transactions and the
reasonableness of the funds
application.
6. Obtain an appraisal report
issued by a professional
appraiser
in
accordance
with theprovisions referred

- 35 -

Clauses after the amendment Clauses before the amendment Remark
to above or a CPA’s
opinion.
7. Restrictive conditions and
other important stipulations
of the transaction.
The transaction amount referred
to
above
is
calculated
in
accordance
with
Article
31 Paragraph 2, and the so-called
within one year is the year prior
to the date of the event; also, the
portion that has been submitted
under the Procedures to the
Board of Directors for approval
and to Supervisors for admission
needs
not
be
included
for
calculation.
For the operating equipment
acquired or disposed of between
the Company and the parent
company or subsidiary, the Board
may, in accordance with Article
7,
Paragraph
1,
Section
3,
authorize the Chairman to decide
and execute within a specified
quota and then report it to the
most recent Board meeting for
ratification afterwards.
When reported to the Board for
discussion
in
accordance
withParagraph 1,it should fully
consider
the
views
of
the
independent
directors.
The
objections or reservations of
independent directors, if any,
should be stated in the minutes of
the Board meeting.
The matters to be admitted by
the supervisors in accordance
with
the
requirements
in Paragraph 1 must be with
the consent of the majority
Audit
Committee
members
that is set up by the Company
lawfully before presenting it to
the Board for resolution. The
provisions
of
Article
6 Paragraph 1 Section 5 and
Section 6 are applicable.
Article 16: For the transactions		 to above or a CPA’s
opinion.
7. Restrictive conditions and
other important stipulations
of the transaction.
The transaction amount referred
to
above
is
calculated
in
accordance
with
Article
31 Paragraph 2, and the so-called
within one year is the year prior
to the date of the event; also, the
portion that has been submitted
under the Procedures to the
Board of Directors for approval
and to Supervisors for admission
needs
not
be
included
for
calculation.
For the operating equipment
acquired or disposed of between
the Company and the parent
company or subsidiary, the Board
may, in accordance with Article
7,
Paragraph
1,
Section
3,
authorize the Chairman to decide
and execute within a specified
quota and then report it to the
most recent Board meeting for
ratification afterwards.
When reported to the Board for
discussion
in
accordance
withParagraph 1,it should fully
consider
the
views
of
the
independent
directors.
The
objections or reservations of
independent directors, if any,
should be stated in the minutes of
the Board meeting.
The matters to be admitted by











































to above or a CPA’s
opinion.
7. Restrictive conditions and
other important stipulations
of the transaction.
The transaction amount referred
to
above
is
calculated
in
accordance
with
Article
31 Paragraph 2, and the so-called
within one year is the year prior
to the date of the event; also, the
portion that has been submitted
under the Procedures to the
Board of Directors for approval
and
to
the
Supervisors
for
admission need not be included
for calculation.
For the operatingmachinery
equipment acquired or disposed
of between the Company and the
parent company or subsidiary,
the Board may, in accordance
with Article 7, Paragraph 1,
Section
3,
authorize
the
Chairman to decide and execute
it within a specific quota and then
report it to the most recent Board
meeting
for
ratification
afterwards.
When reported to the Board for
discussion in accordance withthe
paragraph referred to above,
should fully consider the views
of the independent directors. The
objections or reservations of
independent directors, if any,
should be stated in the minutes of
the Board meeting.
Article 16: For the transactions






























The
nature
of
the

the supervisors in accordance

with
the
requirements

in Paragraph 1 must be with

the consent of the majority

Audit
Committee
members
that is set up by the Company

lawfully before presenting it to

the Board for resolution. The
provisions
of
Article

6 Paragraph 1 Section 5 and

- 36 -

Clauses after the amendment Clauses before the amendment Remark
between the Company and the
related
parties,
the
reasonableness of the transaction
cost should be assessed in
accordance with the following
methods:
1. Based on the related party
transaction price plus the
necessary capital interest
and the cost of the buyer by
legally.
The
so-called
necessary capital interest
cost
is
calculated
in
accordance
with
the
weighted average interest
rate of the loans in the year
the assets are acquired by
the Company; however, it
may not be higher than the
non-financial
industry
maximum loan interest rate
as
announced
by
the
Ministry of Finance.
2. If the underlying subject is
used by the related party as
collateral
to
financial
institutions for loans, the
lending financial institution
is to assess the total lending
value of the underlying
subject.
However,
the
cumulative loan amount
granted by the lending
financial institution for the
underlying subject should
exceed 70% of the total
lending value and for over
one year. However, it is not
applicable if the financial
institution
and
the
counterparty are related to
one another.
The transaction cost of the same
underlying land and building
purchased can be assessed in
accordance with any of the cost
methods listed in the preceding
paragraph.
The Company may have the
property cost of the transactions
conducted with relatedparties














































between the Company and the
related
parties,
the
reasonableness of the transaction
cost should be assessed in
accordance with the following
methods:
1. Based on the related party
transaction price plus the
necessary capital interest
and the cost of the buyer by
legally.
The
so-called
necessary capital interest
cost
is
calculated
in
accordance
with
the
weighted average interest
rate of the loans in the year
the assets are acquired by
the Company; however, it
may not be higher than the
non-financial
industry
maximum loan interest rate
as
announced
by
the
Ministry of Finance.
2. If the underlying subject is
used by the related party as
collateral
to
financial
institutions for loans, the
lending financial institution
is to assess the total lending
value of the underlying
subject.
However,
the
cumulative loan amount
granted by the lending
financial institution for the
underlying subject should
exceed 70% of the total
lending value and for over
one year. However, it is not
applicable if the financial
institution
and
the
counterparty are related to
one another.
The transaction cost of the same
underlying land and building
purchased can be assessed in
accordance with any of the cost
methods listed in the preceding
paragraph.
The Company may have the
property cost of the transactions
conducted with relatedparties














































proprietary-land
construction
and
leased-land construction
commissioned
to
the
related party is similar to
the
joint
construction.
Hence
the
text
of Paragraph 4 Section 3
is hereby amended. For
the property acquired by
having the proprietary
land
or
leased
land
constructed by a related
party, Article 16 16~18
regarding the requirement
of
assessing
the
reasonableness
of
the
transaction cost for the
property acquired from
the related party are not
applicable; however, it
should be handled in
accordance with Article
14~15.

- 37 -

Clauses after the amendment Clauses before the amendment Remark
assessed
in
accordance
with Paragraph 1 and Paragraph
2; also, should have it reviewed
by a CPA with an opinion issued.
The
Company’s
transactions
conducted with related parties
that fall in any of the following
circumstances must comply with
Article 15 without applying the
three
paragraphs
referred
to
above:
1. Related party has acquired
property by inheritance or
gift.
2. Related party has a contract
signed to acquire property
for more than five years
ago from this transaction.
3. Acquire
property
by
signing with the related
party
a
construction
contract, including joint
construction
contract,
proprietary-land
construction,
or
leaded-land construction.
Article 17: Omitted.
Article 18: Omitted.
Article 19: Omitted.
Article 20: Omitted.
Article 21: Omitted.
Article 22: The Board supervision
of the management principles:
1. Designated
senior
management personnel to
monitor
the
risks
of
derivatives transactions.
2. Periodically assess whether
the
performance
of
derivative transactions are
in compliance with the
established
business
strategy or not.
3. Periodically assess whether
the risks of derivatives
trading
are
within
the
Company’s tolerable range
or not.
4. The
designated

































assessed
in
accordance
with Paragraph 1 and Paragraph
2; also, should have it reviewed
by a CPA with an opinion issued.
The
Company’s
transactions
conducted with related parties
that fall in any of the following
circumstances must comply with
Article 15 without applying the
three
paragraphs
referred
to
above:
1. Related party has acquired
property by inheritance or
gift.
2. Related party has a contract
signed to acquire property
for more than five years
ago from this transaction.
3. The acquisition of property
by
signing
a
joint
construction contract with
the concerned party.
Article 17: Omitted.
Article 18: Omitted.
Article 19: Omitted.
Article 20: Omitted.
Article 21: Omitted.
Article 22: The Board supervision
of the management principles:
1. Designated
senior
management personnel to
monitor
the
risks
of
derivatives transactions.
2. Periodically assess whether
the
performance
of
derivative transactions are
in compliance with the
established
business
strategy or not.
3. Periodically assess whether
the risks of derivatives
trading
are
within
the
Company’s tolerable range
or not.
4. The
designated






























According
to
the
“Regulations Governing
the
Acquisition
and
Disposal
of
Assets
by Public Companies,”
the Company engaged in
derivative
transactions
should regulate the time
period of reporting it to
the
Board
afterwards;
therefore,
the
text
of Paragraph 2 is hereby
amended.

- 38 -

Clauses after the amendment Clauses before the amendment Remark
management
personnel
shall
periodically
assess
whether the derivatives risk
management measures are
adequate and conducted in
compliance
with
the
requirements.
5. The
designated
management
personnel
should supervise trading
and profit and loss; also,
should take the necessary
measures in response to any
nonconformity
identified
and immediately report it to
the
Board.
Independent
directors should attend the
Board meeting to express
their opinions.
The Company when having
personnel authorized to engage
in
derivatives
trading
in
accordance with the Derivative
Transaction Procedures shall
report the process in the most
recent
Board
meeting
afterwards.
Article 23: Omitted.
Article 24: Omitted.
Article 25: Omitted.
Article 26: Omitted.
Article 27: Omitted.
Article 28: Omitted.
Article 29: Omitted.
Article 30: Omitted.
Article 31: The announcement and
reporting
standards
are
applicable to the Company’s
acquisition or disposal of assets
in
any
of
the
following
circumstances.
It
should
be
announced and reported in the
FSC website within two days
from the date of the event in
accordance with the nature and
the prescribed format:
1. The Company has acquired
or disposed of property or
assets other thanproperty		 management
personnel
shall
periodically
assess
whether the derivatives risk
management measures are
adequate and conducted in
compliance
with
the
requirements.
5. The
designated
management
personnel
should supervise trading
and profit and loss; also,
should take the necessary
measures in response to any
nonconformity
identified
and immediately report it to
the
Board.
Independent
directors should attend the
Board meeting to express
their opinions.
The Company when having



































management
personnel
shall
periodically
assess
whether the derivatives risk
management measures are
adequate and conducted in
compliance
with
the
requirements.
5. The
designated
management
personnel
should supervise trading
and profit and loss; also,
should take the necessary
measures in response to any
nonconformity
identified
and immediately report it to
the
Board.
Independent
directors should attend the
Board meeting to express
their opinions.
Article 23: Omitted.
Article 24: Omitted.
Article 25: Omitted.
Article 26: Omitted.
Article 27: Omitted.
Article 28: Omitted.
Article 29: Omitted.
Article 30: Omitted.
Article 31: The announcement and
reporting
standards
are
applicable to the Company’s
acquisition or disposal of assets
in
any
of
the
following
circumstances.
It
should
be
announced and reported in the
FSC website within two days
from the date of the event in
accordance with the nature and
the prescribed format:
1. The Company has acquired
or disposed of property or
assets other thanproperty




























1. The
investment
in
domestic
money
market funds is mainly
for obtaining a stable
interest that is similar
in nature with RP and
RS bond; therefore, it
is
included
in
the
provision exempting it
from the mandatory
announcement
by
referring
to
the
provision of RP and
RS bond and with the

personnel authorized to engage

in
derivatives
trading
in

accordance with the Derivative
Transaction Procedures shall
report the process in the most

recent
Board
meeting

- 39 -

Clauses after the amendment Clauses after the amendment Clauses after the amendment Clauses before the amendment Remark
from or to the related
parties
for
an
amount
exceeding
20%
of
the
paid-in capital, 10% of the
total assets or NTD300
million.
However,
bond
trades, RP and RS bonds
and
purchase
or
redemption of domestic
money market fundsare
not
subject
to
this
restriction.
2. Handling merger, division,
acquisition or transfer of
shares.
3. Derivative trading losses
amounting
to
the
total
contract
loss
limit
or
individual
contract
loss
limit
defined
in
the
handling procedures.
4. The assets trade, financial
institution’s
disposal
of
claims or the investments
engaged in Mainland China
other than the transactions
stated
in
the
three
paragraphs
referred
to
above are for an amount
exceeding
20%
of
the
paid-in capital or NTD300
million.
However,
the
following
conditions are not subject to
this restriction:
(1) Bond trades;
(2) Specialized investment
includes the marketable
securities
trade
in
domestic and foreign
security
exchange
corporation
or
securities firms,or the
marketable securities
subscribed
by
securities firms at the
preliminary market in
accordance with the
provisions;
(3) RP and RS bonds trade
and
purchase
or		 from or to the related
parties
for
an
amount
exceeding
20%
of
the
paid-in capital, 10% of the
total assets or NTD300
million.
However,
bond
trades, RP and RS bonds
and
purchase
or
redemption of domestic











































from or to the related
parties
for
an
amount
exceeding
20%
of
the
paid-in capital, 10% of the
total assets or NTD300
million. However, the bond
tradeor RP and RS bond
trade are not subject to this
restriction.
2. Handling merger, division,
acquisition or transfer of
shares.
3. Derivative trading losses
amounting
to
the
total
contract
loss
limit
or
individual
contract
loss
limit
defined
in
the
handling procedures.
4. The assets trade, financial
institution’s
disposal
of
claims or the investments
engaged in Mainland China
other than the transactions
stated
in
the
three
paragraphs
referred
to
above are for an amount
exceeding
20%
of
the
paid-in capital or NTD300
million.
However,
the
following
conditions are not subject to
this restriction:
(1) Bond trades;
(2) Specialized investment
includes the marketable
securities trade at a
domestic and foreign
security
exchange
corporation
or
securities firms;
(3) RP and RS bond trade;
































text of Paragraph 1
Section 1 and Section
4
Subparagraph
3
amended.
2. Securities
firm’s
acquiring securities in
the primary market is a
recurring
business
behavior.
Also,
a
securities
firm
is
required
to
arrange
announcements when
selling the marketable
securities that were
acquired
in
the
primary market in the
secondary
market.
Under
the
consideration of the
information disclosure
effect
and
its
consistency, the text
of Paragraph 1 Section
4 Subparagraph 2 is
amended,
excluding
securities firms from
the
requirement
of
announcing
the
subscription
of
marketable
securities
in the primary market.
3. In
addition,
a
securities
firm
has
emerging
stocks
subscribed
in
accordance
with
Article
8
of
the
“GreTai
Securities
Market
Rules
Governing the Review
of Emerging Stocks
for Trading on the
GTSM”
or
has
marketable
securities
subscribed from the
reserve
of
an
underwriting
transaction
in
accordance
with
Article
4.1
of
the
“Taiwan
Securities
subscribed
by

securities firms at the
preliminary market in

accordance with the
provisions;
RP and RS bonds trade
and
purchase
or

- 40 -

Clauses after the amendment Clauses before the amendment Remark
redemption
of
domestic
money
market funds;
(4) The
acquisition
or
disposal
of
the
operating
equipment
with
the
non-related
party for an amount not
exceeding
NTD500
million;
(5) The Company intends
to invest not more than
NTD500
million
in
acquiring property by
proprietary-land
construction,
leased-land
construction,
building-sharing
construction,
percentage-sharing
construction
or
sale-sharing
construction.
The transaction amount referred
to
above
is
calculated
in
accordance with the following
methods:
1. The
amount
of
each
transaction.
2. The cumulative amount of
the acquisition or disposal
of the same underlying
subject
with
the
same
counterparty
within
one
year.
3. The cumulative amount of
the property acquired or
disposed
(amount
accumulated separately) of
the
same
underlying
development project within
one year.
4. The cumulative amount of
the
same
marketable
securities
acquired
or
disposed
of
(amount
accumulated
separately)
within one year.
The so-called within one year
referred to above is theyearprior		 redemption
of

































(4)
The
acquisition
or
disposal
of
the
operating
machinery
equipment
with
the
non-related party for an
amount not exceeding
NTD500 million;
(5) The Company intends
to invest not more than
NTD500
million
in
acquiring property by
proprietary-land
construction,
leased-land
construction,
building-sharing
construction,
percentage-sharing
construction
or
sale-sharing
construction.
The transaction amount referred
to
above
is
calculated
in
accordance with the following
methods:
1. The
amount
of
each
transaction.
2. The cumulative amount of
the acquisition or disposal
of the same underlying
subject
with
the
same
counterparty
within
one
year.
3. The cumulative amount of
the property acquired or
disposed
(amount
accumulated separately) of
the
same
underlying
development project within
one year.
4. The cumulative amount of
the
same
marketable
securities
acquired
or
disposed
of
(amount
accumulated
separately)
within one year.
The so-called within one year
referred to above is the year prior
to the date of the event; also, the
portion that has been announced

































Association
Rules
Governing
Underwriting
and
Resale of Securities by
Securities
Firms”
without the benefit of
information disclosure;
therefore,
the
text
of Paragraph 1 Section
4 Subparagraph 2 is
amended accordingly
for the announcement
exemptions.
4. With the adoption of
the
International
Financial
Reporting
Standards,
the
text
of Paragraph 1 Section
4
Subparagraph
4
regarding
operating
machinery equipment
is hereby amended.

domestic
money

- 41 -

Clauses after the amendment Clauses before the amendment Clauses before the amendment Remark
to the date of the event; also, the
portion that has been announced
under the Procedures need not be
included for calculation.
The Company should have the
derivative transactions of the
Company and the non-public
domestic subsidiaries up to the
end of the last month published
in the FSC website monthly in
accordance with the prescribed
format before the 10thday of
each month.
For the mandatory items to be
announced and reported with the
occurring error or omission, the
Company shall have the entire
project
re-announced
and
re-reported for correction.
For
the
assets
acquired
or
disposed of, the Company should
have had the related contracts,
minutes
of
meeting,
memorandum, appraisal reports
and the opinions of the CPA,
lawyers or securities underwriters
ready at the Company for at least
5
years,
unless
otherwise
provided by law.
Article 32: Omitted.
Article 33: Omitted.
Article 34: Omitted.
Article 34.1: Article 6, Article 15,
Article 18, Article 21, and
Article 36 of the Procedures
regarding supervisors cease to
be
applicable
after
the
Company establishes the Audit
Committee.
Article 35: Omitted.
Article 36: The Procedures with the
approval of the Board should be
forwarded to each supervisor and
presented in the meeting of the
shareholders for resolution, so do
the amendments.



































under the Procedures need not be
included for calculation.
The Company should have the
derivative transactions of the
Company and the non-public
domestic subsidiaries up to the
end of the last month published
in the FSC website monthly in
accordance with the prescribed
format before the 10thday of each
month.
For the mandatory items to be
announced and reported with the
occurring error or omission, the
Company shall have the entire
project
re-announced
and
re-reported for correction.
For
the
assets
acquired
or
disposed of, the Company should
have had the related contracts,
minutes
of
meeting,
memorandum, appraisal reports
and the opinions of the CPA,
lawyers or securities underwriters
ready at the Company for at least
5
years,
unless
otherwise
provided by law.
Article 32: Omitted.
Article 33: Omitted.
Article 34: Omitted.
Article 35: Omitted.
Article 36: The Procedures with the
approval of the Board should be
forwarded to each supervisor and
presented in the meeting of the
shareholders for resolution, so do
the amendments.If any of the
director’s
objections
is
recorded
or
expressed
in
writing, the Company shall































The
requirements
regarding
supervisors
ceased to be applicable
after
the
Company
established
the
Audit
Committee.
The
relevant
specifications
are
stipulated in Article 6 of
the Procedures without
the need to repeat the
provisions hereinafter.

recorded
or
expressed
in

writing, the Company shall

- 42 -

Clauses after the amendment Clauses before the amendment Remark
have the objections of the












directors forwarded to each
supervisor.
When
the

acquisition or disposal of assets

is proposed to the Board of

Directors for discussion in
accordance with the paragraph

referred to above, it should

fully consider the views of the

independent
directors.
The

objections or reservations of

the independent directors, if

any, should be stated in the

minutes of the Board meeting.

- 43 -

Discussions No. 3

  • Proposal: Amendment to the Articles of Incorporation.Please proceed to discuss.

  • Explanation: 1. The motion for the amendment of Article 35 of the Articles of Incorporation was proposed for discussion and approved at the 5[th] Remuneration Committee meeting of the 1[st] Term on December 2, 2013.

  • For the amendment to Article 35 of the Articles of Incorporation regarding the appropriation rate of employee bonus and compensation of directors and supervisors: The original “appropriating an amount equivalent to 0.01% of the remaining balance as employee bonus and an amount equivalent to 50% of the employee bonus as compensation for directors and supervisors” is amended as “appropriating an amount not more than 1.5% of the remaining balance as employee bonus and compensation for directors and supervisors.”

  • The company hereby proposes to amend the Articles of Incorporation.Please refer to page 45 for details.

Resolution:

- 44 -

Taichung Commercial Bank’s Articles of Incorporation amended before and after

and after
Clauses after the amendment Clauses before the amendment Remark
Article 35
The Bank’s annual earnings, if
any, in addition to paying for the
income tax in accordance with
law, shall be applied to offset prior
year losses, appropriate 30% of the
remaining amount as legal reserve
and
with
special
reserve
appropriated
and
reversed
accordingly. Then, appropriate an
amount equivalent tonot more
than 1.5% of the remaining
balance as employee bonusand
compensation of directors and
supervisors,
respectively.
The
remaining balance, if any, plus the
prior
year’s
unappropriated
retained earnings are for the
distribution
of
earnings
as
proposed.
The Board is to propose the
distribution ratio of cash dividends
and stock dividends in accordance
with the changes in the business
environment,
operational
and
investment fund demands and
capital reserve for the resolution in
the meeting of shareholders:
I.
Cash dividends should not be
less than 10% of the total
dividends
and
bonus
distributed to shareholders.
II.
However, the stock dividends
can be distributed fully when
the stock dividend per share
is below NTD0.3 (inclusive).
When the capital adequacy
ratio is below the legal ratio,
earnings distribution should be
handled in accordance with the
Banking Act and the requirements
of the competent authorities.


































Article 35
The Bank’s annual earnings,
if any, in addition to paying for
income tax in accordance with
the law, shall be applied to offset
the
prior
year’s
losses,
appropriate 30% of the remaining
amount as legal reserve, with the
special reserve appropriated and
reversed
accordingly.
Then,
appropriate an amount equivalent
to~~0.01%~~of the remaining
balance asemployee bonus and
~~an amount equivalent to 50%~~
~~of the employee bonus as~~
compensation for directors and
supervisors.
The
remaining
balance, if any, plus the prior
year’s unappropriated retained
earnings are for the distribution
of earnings as proposed.
The Board is to propose the
distribution
ratio
of
cash
dividends and stock dividends in
accordance with the changes in
the
business
environment,
operational and investment fund
demands and capital reserve for
the resolution in the meeting of
shareholders:
I.
Cash dividends should not be
less than 10% of the total
dividends
and
bonus
distributed to shareholders.
II.
However, the stock dividends
can be distributed fully when
the stock dividend per share
is below NTD0.3 (inclusive).
When the capital adequacy
ratio is below the legal ratio,
earnings distribution should be
handled in accordance with the
Banking Act and the requirements
of the competent authorities.











1. The
original
“appropriating
an
amount equivalent to
0.01%
of
the
remaining balance as
employee bonus and
an amount equivalent
to
50%
of
the
employee bonus as
compensation
for
directors
and
supervisors”
is
amended
as
“appropriating
an
amount not more than
1.5%
of
the
remaining balance as
employee bonus and
compensation
of
directors
and
supervisors.”
2. The
appropriation
ratio of the listed
companies
is
as
follows:
(1) Employee bonus is
0.01% ~ 15%.
(2) Compensation for
directors
and
supervisors
is
0.5% ~ 5%.

- 45 -

Elections No. 1.

Proposal:The 22[nd] Election of Directors.

  • Explanation: 1. The 22[nd] election of 15 directors (including 3 independent directors) is handled in accordance with Article 21 and Article 22 of the Articles of Incorporation for a 3-year term from the date of the election and with the reelection handled in accordance with the Company’s Rules for Director Elections.

  • To elect three independent directors in the number of the directors mentioned above adopting the nomination system by the Shareholder Meeting from the independent director candidate list is handled in accordance with Article 14.2 Paragraph 2 of the Securities and Exchange Act and the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”.

  • In accordance with the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and Article 192-1 of the Company Act,any shareholder holding 1% or more of the total number of outstanding shares issued by the company may submit to the company in writing a roster of independent director candidates. The roster of independent director candidates has been approved by the 20[th] meeting of the 21[st] Board on May 7, 2014.And the personal information of the three nominees is as follows ： (1) Name: Hsi-Rong Huang

- 46 -

Education:Department of Agricultural Economics,National Chung Hsing University

Experience:Manager of Consumer Finance Department of Chang Hwa Bank head office,Manager of Los Angeles Branch of Chang Hwa Bank,and Representative of Taipei Representative Office of Public Bank （ Hong Kong ）. Shareholding: 0

(2) Name: Chen-Le Liu Education:Department of Transport Management,National Cheng Kung University Experience:V.P. of Taiwan Cooperative Bank, Chairman of Cooperative Insurance Brokers Co., Ltd., and advisor of Taiwan Cooperative Bills Finance Corp. Shareholding: 0

(3) Name: Jin-Yi Lee

Education: Harvard Business School

Experience:Managing Director of JPMorgan Chase Bank,Managing Director of BNP Paribas, Chief Executive Officer of Fubon Bank (Hong Kong) Limited,and Chief Executive Officer of Cathay International Holdings Limited. Shareholding: 0

Voting results ：

- 47 -

Appendices

- 48 -

Appendix 1

Auditor’s Report

To: Taichung Commercial Bank Co., Ltd.

We have audited the accompanying individual balance sheet of Taichung Commercial Bank Co., Ltd. as of December 31, 2013 and 2012, and statement of individual comprehensive income, individual statement of changes in equity and individual statement of cash flows for the years then ended. Said Individual financial statement is the responsibility of the management. Our responsibility is to express an opinion on the individual financial statement based on our audits. We did not audit the 2012 financial statements prepared by Reliance Securities Investment Trust Co., Ltd., investees of the Company recognized under the equity method of evaluation, as stated in the aforementioned financial statements. The opinions of these statements were presented by third party auditors. The opinions and the financial figures on the 2012 financial statements of the aforementioned investees so presented are based on the audit opinions of the third party auditors. The investment under the equity method pursuant to the audit report of other auditors was NTD 132,769 thousand and NTD 133,796 thousand as of December 31 and January 1, 2012, respectively, accounting for 0.03% of the total assets. The shareholdings in affiliated company and joint venture – subsidiaries under equity method were (NTD 1,027 thousand) in 2012, accounting for (0.03%) of the net income before taxes.

We conducted our audit in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants”, and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the individual financial statement is free of material misstatement. An audit includes examining, through random sampling, evidence supporting the amounts and disclosures in the individual financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall individual financial statement presentation. We believe that our audit and the other auditors' report may provide a reasonable basis for our opinion.

- 49 -

In our opinion, based on our audit result and the other auditors’ report, the individual financial statements referred to in the first paragraph present fairly, in all material respects, the Financial Status of the Bank as of December 31, 2013 and 2012, and its financial performance and cash flows of December 31, 2013 and 2012 in conformity with the generally accepted accounting principles in the Republic of China.

The statement of important accounting titles of the individual financial statement for 2013 was provided to supplement the analysis only, and has been audited by us in accordance with the procedure referred to in Paragraph 2 herein. In our opinion, the statement of such titles is consistent with the relevant information provided in the financial statement referred to in Paragraph 1 herein in all material respects.

Deloitte & Touche Min-Xian Yang, CPA Tzu-Chun Wang, CPA

Securities and Futures Bureau Approval Securities and Futures Bureau Approval Document No. Document No. Tai-Cai-Jheng (6) No. 0920123784 Tai-Cai-Jheng (6) No. 0920123784

Date: March 12, 2014

- 50 -

Taichung Commercial Bank Co., Ltd. Individual Balance Sheet

December 31, 2013 and December 31, January 1 2012

Unit: NTD thousand

Unit: NTD thousand Unit: NTD thousand
Code
11000

11500

12000

12500

13000

13200

13300

13500

14000

14500

15000

15500

18500

19000

19300

19500

10000

Code
21000

21500

（Continued		 Assets
Cash and cash equivalents

Due from CBC and lend to banks
Financial assets at fair value through profit or loss
Bonds and securities sold under repurchase agreements
Receivable- net
Current income tax asset
Assets held for sale
Discounts and loans, net

Available-for-sale financial assets
Held-to-maturity financial assets
Investments under the equity method - net
Other financial assets - net
Property, and equipment – net
Intangible assets - net
Deferred tax assets - net
Other assets

Total assets

Liabilities and equity
Deposits of CBC and other banks

Funds borrowed from CBC and other banks
on next page）		 December 31,2013
Amount
%
$ 5,360,170
1

75,496,734
15
12,057,223
2
4,550,801
1
2,769,426
1
56,589
-
-
-
362,450,039
73

19,008,479
4
3,340,584
1
2,694,057
1
1,158,259
-
3,371,423
1
90,231
-
389,465
-
770,353

-

$ 493,563,833
100

$ 8,341,508
2

2,086,000
1		 December 31,2012
Amount
%
$ 9,848,878
2

66,803,349
15
6,545,279
2
-
-
2,899,507
1
56,589
-
-
-
324,029,419
73

18,519,719
4
8,782,945
2
1,301,748
-
905,934
-
3,440,175
1
64,398
-
308,454
-
1,134,008

-

$ 444,640,402
100

$ 5,151,548
1

1,887,600
1		 January1,2012
Amount
$ 5,360,170
75,496,734
12,057,223
4,550,801
2,769,426
56,589
-
362,450,039
19,008,479
3,340,584
2,694,057
1,158,259
3,371,423
90,231
389,465
770,353

$ 493,563,833

$ 8,341,508
2,086,000		 Amount
$ 9,848,878
66,803,349
6,545,279
-
2,899,507
56,589
-
324,029,419
18,519,719
8,782,945
1,301,748
905,934
3,440,175
64,398
308,454
1,134,008

$ 444,640,402

$ 5,151,548
1,887,600		 Amount
$ 8,349,890
74,317,724
1,096,769
-
2,880,873
237,088
41,639
277,756,366
4,211,580
9,439,040
222,955
850,396
3,429,227
57,230
480,112
1,000,702

$ 384,371,591

$ 3,439,998
2,877,550		 %












2
20
-
-
1
-
-
72
1
3
-
-
1
-
-

-
100
1
1

51

（Continued from previous page）
22000
Financial liabilities at fair value through profit or loss
22500
Bills and bonds sold under repurchase agreements
23000
Payables
23200
Current income tax liability
23500
Deposits and remittances

24000
Financial bonds payable
25500
Other financial liabilities
25600
Liability reserve
29300
Deferred tax liabilities
29500
Other liabilities

20000
Total liabilities

Equity
31100
Capital stock
31500
Capital surplus
Retained earnings
32001
Legal reserve
32003
Special reserve
32011
Accumulated earnings
32500
Other equity
(
30000
Total equity

Total Liabilities and Equity
 74,800
-
358,769
-
3,964,393
1
266,823
-
430,698,048
87

16,042,869
3
7,605
-
348,829
-
111,021
-
225,578

-

462,526,243

94

25,345,339
5
675,435
-
1,993,524
-
134,085
-
2,923,384
1

34,177)

-

31,037,590

6

$ 493,563,833
100
 91,591
-
264,045
-
9,059,246
2
263,278
-
385,862,841
87

13,548,277
3
17,208
-
261,451
-
111,021
-
213,977

-

416,732,083

94

23,187,442
5
675,537
-
1,160,137
-
88,647
-
2,704,214
1
92,342

-

27,908,319

6

$ 444,640,402
100
 51,804
-
-
-
7,926,536
2
-
-
333,832,631
87
10,512,559
2
22,521
-
134,800
-
111,021
-
209,543

-
359,118,963

93
22,338,576
6
675,537
-
723,937
-
37,599
-
1,466,019
1
10,960

-
25,252,628

7
$ 384,371,591
100

Chairman: Jin-Fong Soo

Manager: Chun-Sheng Lee

Chief accountant: Yi-Ying Chung

52

Taichung Commercial Bank Co., Ltd. Individual Statement of Comprehensive Income

Years Ended December 31,2013 and 2012

Unit: NTD thousand, except Earnings Per Share (NTD)

Code
41000 Interest revenues

51000 Interest expenses

49010 Net interest income

Net income (loss) other than
interest income
49100
Net income from service
fees, Net
49200
gain (loss) on financial
assets
and
liabilities
measured at fair value
through profit or loss
49300
Net realized gain (loss) on
available-for-sale financial
assets
49600
Exchange gain (loss)
49700
Net gain (loss) on reversal
of asset impairment
49750
Profit
or
loss
of
the
subsidiaries,
affiliated
companies
and
joint
ventures under the equity
method
49800
Net income (loss) other
than interest income
4xxxx Net revenue

58200 Bad debt expense and guaranty
reserve		 2013 %
110

40)


70

15

2

-

2

10

2

1)

100


21)
 2012

(







(

(

(Continued on next page)

53

(Continued from previous page)

Code
Operating expenses
58500
Employee
benefits
expenses
59000
Depreciation
and
amortization expenses
59500
Business
and
administrative expenses
58400
Total
operating
expenses
61001 Income
before
taxation
of
continued operations
61003 Income tax expenses

64000 Current year net profit after
taxation
Other comprehensive income
65001
Exchange differences from
the translation of financial
statements
of
foreign
operations
65011
Available-for-sale financial
assets unrealized valuation
gains (losses)
65031
Defined
benefit
plan
actuarial gains and losses
65043
Other comprehensive profit
or loss of the subsidiary
and
affiliated
company
under the equity method
65091
The other comprehensive
income related income tax
65000
Other comprehensive
net income (after tax)
66000 Current
year
total
comprehensive income (after
tax)
EPS
Business
units
in
continuing operation
67501
Basic

67701
Diluted
 2013 %
(
25 )
(
2 )
(
12)

(
39)


40
(
5)


35


-
(
1 )
(
1 )

-

-

(
2)


33


 2012
%
(
31 )
(
2 )
(
15)
(
48)

49
(
8)


41

-

1
(
2 )

-

-

(
1)

40		 Percentage
of
Variation
(%)
Amount
( $ 2,193,557 )
(
173,538 )
(1,131,491)

(3,498,586)

3,502,321
(
442,050)

3,060,271

2,653
(
144,313 )
(
59,627 )
23,793

1,663

(
175,831)

$ 2,884,440

$ 1.23
$ 1.14		 Amount
( $ 2,087,461 )
(
163,031 )
(1,044,399)

(3,294,891)

3,335,823
(
531,653)

2,804,170


-

80,905
(
142,371 )

477

24,203

(
36,786)

$ 2,767,384

$ 1.13
$ 1.05

5

6
8
6

5
(
17 )
9

-
(
278 )
(
58 )
4,888
(
93 )
378
4

Chairman: Jin-Fong Soo

Manager: Chun-Sheng Lee

Chief accountant: Yi-Ying Chung

54

Taichung Commercial Bank Co., Ltd.

Individual Statement of Changes in Equity Years Ended December 31, 2013 and 2012

Unit: NTD thousand

Unit: NTD thousan
Code
A1
Balance as of January 1, 2012
The
2011
appropriation
and
distribution of earnings
B1
Legal reserve
B3
Special reserve
B5
Cash dividends
B9
Stock dividends
D1
2012 net income
D3
Other comprehensive net income in
2012 (after tax)
D5
Other comprehensive income in
2012
Z1
Balance as of December 31, 2012
B3
Appropriation of special reserve
The
2012
appropriation
and
distribution of earnings
B1
Legal reserve
B3
Special reserve
B5
Cash dividends
B9
Stock dividends
D1
2013 net income
D3
Other comprehensive net income in
2013 (after tax)
D5
Total comprehensive income in 2013
I1
Conversion of convertible financial
bonds
Z1
Balance as of December 31, 2013		 Capital stock
Common stock
$ 22,338,576
-
-
-
848,866
-

-

-
23,187,442
-
-
-
-
1,681,090
-

-


-

476,807
$ 25,345,339		 Capital surplus
$ 675,537
-
-
-
-
-

-

-
675,537
-
-
-
-
-
-

-

-
(
102)
$ 675,435		 Retained earnings
Accumulated
earnings
$ 1,466,019
(
436,200 )
(
51,048 )
(
111,693 )
(
848,866 )
2,804,170
(
118,168)

2,686,002
2,704,214
(
10,178 )
(
833,387 )
(
35,260 )
(
231,874 )
(
1,681,090 )
3,060,271
(
49,312)

3,010,959

-
$ 2,923,384		 Other equity
Exchange differences
from the translation
of
financial
statements of foreign
operations
Unrealized gain on
available-for-sale
financial instruments
$ -
$ 10,960
-
-
-
-
-
-
-
-
-
-

477

80,905

477

80,905
477
91,865
-
-
-
-
-
-
-
-
-
-
-
-

24,265
(
150,784)

24,265
(
150,784)

-

-
$ 24,742
($ 58,919)		 Total equity
Exchange differences
from the translation
of
financial
statements of foreign
operations
$ -
-
-
-
-
-

477

477
477
-
-
-
-
-
-

24,265

24,265

-
$ 24,742
Legal reserve
$ 723,937
436,200
-
-
-
-
-
-
1,160,137
-
833,387
-
-
-
-
-
-
-
$ 1,993,524		 Special reserve
$ 37,599
-
51,048
-
-
-

-

-
88,647
10,178
-
35,260
-
-
-

-

-

-
$ 134,085













(




















(
(

(		 $ 25,252,628
-
-
(
111,693 )
-
2,804,170
(
36,786)

2,767,384
27,908,319
-
-
-
(
231,874 )
-
3,060,271
(
175,831)

2,884,440

476,705
$ 31,037,590

Chairman: Jin-Fong Soo

Manager: Chun-Sheng Lee

Chief accountant: Yi-Ying Chung

55

Taichung Commercial Bank Co., Ltd. Individual Statement of Cash Flows

Years Ended December 31, 2013 and 2012

Unit: NTD thousand

Code
Cash flow from operating activities
A10000
Current year net profit before taxation

Income, expense and loss that do not affect
the cash flows
A20100
Depreciation expenses
A20200
Amortization expenses
A20300
Appropriation of bad debt expense
A20400
Gain (loss) on financial assets and
liabilities at fair value through profit
or loss
A22500
Disposal and obsolescence loss (gain)
of property and equipment
A23000
Loss on disposal of the held-for-sale
assets
A20900
Interest expenses
A21200
Interest revenue

A21300
Free-Gratis Dividends revenue

A22400
The profit or loss in the subsidiary,
affiliated company and joint ventures
recognized under the equity method
A23100
Loss (gain) on disposal of investments
A23500
Financial
assets
impairment
loss
(reversal gain)
A23700
Non-financial assets impairment loss
(reversal gain)
A24100
Unrealized foreign currency exchange
(gain) loss
A24400
Loss on disposal of collateral

A20010
Total income, expense and loss
that do not affect the cash flows
Changes in operating activities related
assets/liabilities
A41110
Due from Central Bank of China and
lend to Banks
A41120
Financial assets at fair value through
profit or loss
A41150
Accounts receivable

A41160
Discounts and loans

A41190
Other financial assets

A41990
Other assets

A42110
Deposits of CBC and other banks
A42120
Financial liabilities at fair value
through profit or loss

(Continued on next page)

56

(Continued from previous page)

(Continued from previous page)
Code
A42140
Bills and bonds sold under repurchase
agreements
A42150
Payables

A42160
Deposits and remittances

A42170
Other financial liabilities

A42180
Employee benefit liabilities reserve

A42990
Other liabilities

A40000
Total
changes
in
operating
activities related assets/liabilities
A33000
Cash (outflow) inflow generated from
operations
A33100
Interest received
A33200
Dividends received
A33300
Interest payment

A33500
Income tax payment

AAAA
Net cash inflow (outflow) from
operating activities
Cash flow from investing activities
B00300
Acquisition of available-for-sale financial
assets
B00400
Disposition of available-for-sale financial
assets
B00900
Acquisition of held-to-maturity financial
assets
B01000
Disposition of held-to-maturity financial
assets
B01100
Redemption of held-to-maturity financial
assets
B01400
De-capitalization
refunded
monies
of
financial assets carried at cost
B01800
Acquisition of investment under the equity
method
B02600
Disposal of assets held for sale
B02700
Acquisition of Property and equipment

B02800
Disposal of Property and equipment
B03700
Increase in refundable deposits

B04500
Acquisition of Intangible assets

B04700
Disposal of Collateral accepted

BBBB
Net cash inflow (outflow) from
investing activities
Cash flow from financing activities
C00300
Decrease in funds borrowed from CBC and
other banks
C01400
Issuance of financial bonds
C01500
Repayment of financial bonds

C04500
Cash dividend released

CCCC
Net cash inflow from financing
activities		 2013
$ 94,724

(
4,485,714 )
44,835,207

(
9,603 )

(
27,490 )


14,272

(
4,938,201)

(
6,830,658 )
9,784,261
18,841
(
3,611,995 )

(
517,853)

(
1,157,404)

(
3,545,627 )

2,842,748
-

5,802,240
550,000
1,090
(
516,429 )

-
(
105,729 )

2,190
(
66,973 )

(
59,873 )


102,281


5,005,918

198,400

5,500,000
(
2,561,664 )
(
231,874)


2,904,862
 2012
$ 264,045
1,013,080
52,030,210
(
5,313 )
(
29,920 )

4,434

6,680,133
4,895,144
8,566,860
19,956
(
2,978,307 )

-
10,503,653
( 22,594,500 )
8,325,936
(
504,586 )
-
763,848
-
(
1,000,000 )
50,012
(
188,258 )
1,073
(
20,545 )
(
19,206 )

38,762
(15,147,464)
(
989,950 )
3,000,000
-
(
111,693)

1,898,357

(Continued on next page)

57

(Continued from previous page)

Code
2013
DDDD
Impact of changes in exchange rate on cash and
cash equivalents
$ 2,653
EEEE
Current cash and cash equivalents increase
(decrease)
6,756,029
E00100 Balance of cash and cash equivalents, beginning
of period
65,451,695
E00200 Balance of cash and cash equivalent, end of
period
$ 72,207,724
Ending cash and cash equivalents adjustment
Code
December
31,
2013

E00210 Cash and cash equivalents on the balance
sheet
$ 5,360,170

E00220 The “Due from Central Bank of China and
other banks” in compliance with the
definition of cash and cash equivalents
under
the
International
Accounting
Standards No. VII
62,296,753

E00230 The “bonds and securities sold under
repurchase agreements” in compliance with
the definition of cash and cash equivalents
under
the
International
Accounting
Standards No. VII
4,550,801

E00200 Balance of cash and cash equivalent, end of
period
$72,207,724
 2013 2012
$ -
(
2,745,454 )
68,197,149
$ 65,451,695
December
31,
2012
$ 9,848,878
55,602,817

-
$65,451,695		 2012



Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

58

Auditor’s Report

To: Taichung Commercial Bank Co., Ltd.

We have audited the accompanying consolidated balance sheet of Taichung Commercial Bank Co., Ltd. and its subsidiaries as of December 31, 2013 and 2012, and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the years then ended. Said consolidated financial statement is the responsibility of the management. Our responsibility is to express an opinion on the consolidated financial statement based on our audits. Among the investees evaluated under the equity method as identified in said financial statements, the financial statements were audited by a third party auditor instead of by our firm. Therefore, our opinion on the values stated in said financial statements was made based on another auditor’s report. The long-term equity investment under the equity method based on the audit report issued by the other CPA amounted to NTD 132,769 thousand as of December 31, 2012, representing 0.03% of the total consolidated assets. The profit or loss of the affiliated companies under the equity method and joint venture for the period January 1 to December 31, 2012 amounted to (NTD 1,027 thousand), representing (0.03%) of the consolidated net income before taxes.

We conducted our audit in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants”, and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statement is free of material misstatement. An audit includes examining, through random sampling, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit and the other auditors' report may provide a reasonable basis for our opinion.

59

In our opinion, based on our audit results and the other auditor’s report, the financial statements referred to in the first paragraph present fairly, in all material respects, the consolidated financial status of Taichung Commercial Bank and its subsidiaries as of December 31, 2013 and 2012, and their consolidated operations results and cash flows for the years then ended are in conformity with the “Rules Governing the Preparation of Financial Statements of Public Issued Banks,” the “Rules Governing the Preparation of Financial Statements of Securities Firms” and the International Financial Reporting Standards, International Accounting Standards, Interpretation and Notice (IFRSs).

We have also audited the individual financial statements of the Bank for 2013 and 2012, and have expressed a standard unqualified and modified unqualified opinion on such financial statements.

Deloitte & Touche Min-Xian Yang, CPA Tzu-Chun Wang, CPA

Securities and Futures Bureau Approval Securities and Futures Bureau Approval Document No. Document No. Tai-Cai-Jheng (6) No. 0920123784 Tai-Cai-Jheng (6) No. 0920123784

Date: March 12, 2014

60

Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Balance Sheet

December 31, 2013 and December 31, January 1 2012

Code
11000

11500

12000

12500

13000

13200

13300

13500

14000

14500

15000

15100

15500

18500

19000

19300

19500

10000

Code

21000

（Continued		 Assets
Cash and cash equivalents

Due from CBC and lend to banks
Financial assets at fair value through profit or loss
Bonds and securities sold under repurchase agreements
Receivable-net
Current income tax asset
Assets held for sale
Discounts and loans-net

Available-for-sale financial assets
Held-to-maturity financial assets
Investments under the equity method - net
Restricted assets - net
Other financial assets - net
Property and equipment – net
Intangible assets - net
Deferred tax assets - net
Other assets

Total assets

Liabilities and equity
Deposits of CBC and other banks

on next page）		 December 31,2013
Amount
%
$ 5,590,728
1

75,496,734
15
12,195,016
3
4,550,801
1
6,485,651
1
57,372
-
-
-
362,916,674
73

19,197,158
4
3,340,584
1
142,654
-
164,290
-
1,158,259
-
3,416,335
1
97,380
-
391,478
-
1,011,621

-

$ 496,212,735
100

$ 8,341,508
2
 December 31,2012
Amount
%
$ 10,264,038
2

66,803,349
15
6,545,279
2
-
-
3,910,270
1
57,466
-
-
-
324,029,419
73

18,519,719
4
8,782,945
2
132,769
-
24,122
-
905,934
-
3,445,166
1
64,696
-
308,454
-
1,147,646

-

$ 444,941,272
100

$ 5,151,548
1
 Unit: NTD thousand
January1,2012		 Unit: NTD thousand
January1,2012
Amount
$ 5,590,728
75,496,734
12,195,016
4,550,801
6,485,651
57,372
-
362,916,674
19,197,158
3,340,584
142,654
164,290
1,158,259
3,416,335
97,380
391,478
1,011,621

$ 496,212,735

$ 8,341,508		 Amount
$ 10,264,038
66,803,349
6,545,279
-
3,910,270
57,466
-
324,029,419
18,519,719
8,782,945
132,769
24,122
905,934
3,445,166
64,696
308,454
1,147,646

$ 444,941,272

$ 5,151,548		 Amount
$ 8,349,905
74,317,724
1,096,769
-
2,860,695
237,572
41,639
277,756,366
4,211,580
9,439,040
133,796
-
850,396
3,431,343
57,230
480,112
1,004,311

$ 384,268,478

$ 3,439,998		 %












2
20
-
-
1
-
-
72
1
3
-
-
-
1
-
-

-
100
1

61

（Continued form previous page）
21500
Funds borrowed from CBC and other banks
22000
Financial liabilities at fair value through profit or loss
22500
Bills and bonds sold under repurchase agreements
23000
Payables
23200
Current income tax liability
23500
Deposits and remittances

24000
Financial bonds payable
25500
Other financial liabilities
25600
Liability reserve
29300
Deferred tax liabilities
29500
Other liabilities

20000
Total liabilities

Equity of the parent company
31100
Capital stock
31500
Capital surplus
Retained earnings
32001
Legal reserve
32003
Special reserve
32011
Accumulated earnings
32500
Other equity
(
31000
Total shareholder’s equity in the parent company

30000
Total equity

Total Liabilities and Equity
 4,968,239
1
74,800
-
358,769
-
4,420,341
1
292,018
-
429,704,469
87

16,042,869
3
111,741
-
348,829
-
111,021
-
400,541

-

465,175,145

94

25,345,339
5
675,435
-
1,993,524
-
134,085
-
2,923,384
1

34,177)

-

31,037,590

6

31,037,590

6

$ 496,212,735
100
 2,414,205
1
91,591
-
264,045
-
9,148,347
2
274,962
-
385,510,895
87

13,548,277
3
17,208
-
261,451
-
111,021
-
239,403

-

417,032,953

94

23,187,442
5
675,537
-
1,160,137
-
88,647
-
2,704,214
1
92,342

-

27,908,319

6

27,908,319

6

$ 444,941,272
100
 2,877,550
1
51,804
-
-
-
7,964,462
2
-
-
333,691,650
87
10,512,559
2
22,521
-
134,800
-
111,021
-
209,485

-
359,015,850

93
22,338,576
6
675,537
-
723,937
-
37,599
-
1,466,019
1
10,960

-
25,252,628

7
25,252,628

7
$ 384,268,478
100

Chairman: Jin-Fong Soo

Manager: Chun-Sheng Lee

Chief accountant: Yi-Ying Chung

62

Taichung Commercial Bank Co., Ltd. and subsidiaries

Consolidated Statement of comprehensive Income Statement

Years Ended December 31, 2013 and 2012

Unit: NTD thousand, except Earnings Per Share (NTD)

Code
41000 Interest revenue

51000 Interest expenses

49010 Net interest income
Net income (loss) other than
interest income
49100
Net income from service
fees
49200
Net gain on financial assets
and liabilities measured at
fair value through profit or
loss
49300
Net realized gain (loss) of
the
available-for-sale
financial assets
49600
Exchange gain (loss)
49700
Net gain (loss) on reversal
of asset impairment
49750
Profit
or
loss
of
the
affiliated companies and
joint ventures under the
equity method
49800
Net income (loss) other
than interest income
4xxxx Net revenue

58200 Bad debt expense and guaranty
reserve		 2013 %
107

39)


68

19

2

-

2

10

-

1)

100


20)
 2012

(







(

(

(Continued on next page)

63

(Continued from previous page)

Code
Operating expenses
58500
Employee benefits expenses
59000
Depreciation
and
amortizationexpenses
59500
Businessandadministrative
expenses
58400
Total operatingexpenses

61001 Income before taxation of
continued operations
61003 Income tax expenses

64000 Current year net profit after
taxation
Other comprehensive income
65001
Exchange differences from
the translation of financial
statements
of
foreign
operations
65011
Unrealized valuation gains
and
losses
of
available-for-sale
financial
assets
65031
Defined
benefit
plan
actuarial gains and losses
65041
Other comprehensive profit
or loss of the affiliated
company under the equity
method
65091
The
other
comprehensive
profit or loss related income
tax
65000
Other
comprehensive
net income (after tax)
66000 Current
year
total
comprehensive income (after
tax)
Consolidated EPS
Business
units
in
continuing operation
67501
Basic

67701
Diluted
 2013 %
(
26 )
(
2 )
(
14)

(
42)


38
(
5)


33


-
(
1 )
(
1 )

-

-

(
2)


31


 2012
%
(
31 )
(
2 )
(
16)
(
49)

48
(
8)


40

-

1
(
2 )

-

-

(
1)

39		 Percentage
of
Variation
(%)
Amount
( $ 2,350,543 )
(
185,328 )
(
1,327,229)

(
3,863,100)

3,536,979
(
476,708)


3,060,271

24,265
(
142,309 )
(
59,627 )
177

1,663

(
175,831)

$ 2,884,440

$ 1.23
$ 1.14		 Amount
( $ 2,173,810 )
(
164,177 )
(
1,111,911)

(
3,449,898)


3,356,248
(
552,078)


2,804,170


477

80,905
(
142,371 )

-

24,203

(
36,786)

$ 2,767,384

$ 1.13
$ 1.05

8

13
19
12

5
(
14 )
9
4,987
(
276 )
(
58 )

-
(
93 )
378
4

Chairman: Jin-Fong Soo

Manager: Chun-Sheng Lee

Chief accountant: Yi-Ying Chung

64

Unit: NTD thousand

Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Statement of Changes in Equity Years Ended December 31, 2013 and 2012

Code
A1
Balance as of January 1, 2012
The 2011 appropriation and distribution of earnings
B1
Legal reserve
B3
Special reserve
B5
Cash dividends
B9
Stock dividends
D1
2012 net income
D3
Other comprehensive net income in 2012 (after tax)
D5
Other comprehensive income in 2012
Z1
Balance as of December 31, 2012
B3
Appropriation of special reserve
The 2012 appropriation and distribution of earnings
B1
Legal reserve
B3
Special reserve
B5
Cash dividends
B9
Stock dividends
D1
2013 net income
D3
Other comprehensive net income in 2013 (after tax)
D5
Total comprehensive income in 2013
I1
Conversion of convertible financial bonds
Z1
Balance as of December 31, 2013		 Equityof the company Other equity
Exchange differences
from the translation
of
financial
statements of foreign
operations
Unrealized gain on
available-for-sale
financial instruments

$ -
$ 10,960
-
-
-
-
-
-
-
-
-
-

477

80,905

477

80,905
477
91,865
-
-
-
-
-
-
-
-
-
-
-
-

24,265
(
150,784)

24,265
(
150,784)

-

-
$ 24,742
($ 58,919)		 Other equity
Exchange differences
from the translation
of
financial
statements of foreign
operations
Unrealized gain on
available-for-sale
financial instruments

$ -
$ 10,960
-
-
-
-
-
-
-
-
-
-

477

80,905

477

80,905
477
91,865
-
-
-
-
-
-
-
-
-
-
-
-

24,265
(
150,784)

24,265
(
150,784)

-

-
$ 24,742
($ 58,919)		 Total equity Total equity
Capital stock
Common stock
$22,338,576
-
-
-
848,866
-

-

-
23,187,442
-
-
-
-
1,681,090
-

-

-

476,807
$25,345,339		 Capital surplus
$ 675,537
-
-
-
-
-

-

-
675,537
-
-
-
-
-
-

-

-
(
102)
$ 675,435		 Retained earnings
Accumulated
earnings
$ 1,466,019
(
436,200 )
(
51,048 )
(
111,693 )
(
848,866 )
2,804,170
(
118,168)
2,686,002
2,704,214
(
10,178 )
(
833,387 )
(
35,260 )
(
231,874 )
( 1,681,090 )
3,060,271
(
49,312)
3,010,959

-
$ 2,923,384
Exchange differences
from the translation
of
financial
statements of foreign
operations
$ -
-
-
-
-
-

477

477
477
-
-
-
-
-
-

24,265

24,265

-
$ 24,742
Legal reserve
$ 723,937
436,200
-
-
-
-

-

-
1,160,137
-
833,387
-
-
-
-

-

-

-
$ 1,993,524		 Special reserve
$ 37,599
-
51,048
-
-
-

-

-
88,647
10,178
-
35,260
-
-
-

-

-

-
$ 134,085













(













(
(
(
(

(


(
(
(
(
(

(








(
(

(
(

(


(

(


 $25,252,628
-
-

111,693 )
-
2,804,170
36,786)
2,767,384
27,908,319
-
-
-

231,874 )
-
3,060,271
175,831)
2,884,440
476,705
$31,037,590

Chairman: Jin-Fong Soo

Manager: Chun-Sheng Lee

Chief accountant: Yi-Ying Chung

65

Taichung Commercial Bank Co., Ltd. and subsidiaries Consolidated Statements of Cash Flow

Years Ended December 31, 2013 and 2012

Unit: NTD thousand

Code
Cash flow from operating activities
A10000
Current year net profit before taxation

Income, expense and loss that do not affect
the cash flows
A20100
Depreciation expenses
A20200
Amortization expenses
A20300
Appropriation of bad debt expense
A20400
Gain (loss) on financial assets and
liabilities at fair value through profit
or loss
A22500
Disposal and obsolescence loss of
property and equipment
A20900
Interest expenses
A21200
Interest revenue

A21300
Free-Gratis Dividends revenue

A22300
(Profit) Loss of the affiliated company
under the equity method
A23000
Loss on disposal of the held-for-sale
assets
A23100
Loss (gain) on disposal of investments
A23500
Financial
assets
impairment
loss
(reversal gain)
A23800
Non-financial assets impairment loss
(reversal gain)
A24100
Unrealized foreign currency exchange
(gain) loss
A24400
Loss on disposal of collateral

A20010
Total income, expense and loss
that do not affect the cash flows
Changes in operating activities related
assets/liabilities
A41110
Due from Central Bank of China and
lend to Banks
A41120
Financial assets at fair value through
profit or loss
A41150
Accounts receivable

A41160
Discounts and loans

A41190
Other financial assets

A41990
Other assets

A42110
Deposits of CBC and other banks

(Continued on next page)

66

(Continued from previous page)

Code
A42120
Financial liabilities at fair value
through profit or loss
A42140
Bills and bonds sold under repurchase
agreements
A42150
Payables

A42160
Deposits and remittances

A42170
Other financial liabilities

A42180
Employee benefit liabilities reserve

A42990
Other liabilities

A40000
Total
changes
in
operating
activities related assets/liabilities
A33000
Cash inflow (outflow) from operating
activities
A33100
Interest received
A33200
Dividends received
A33300
Interest payment

A33500
Income tax payment

AAAA
Net cash inflow (outflow) from
operating activities
Cash flow from investing activities
B00300
Acquisition of available-for-sale financial
assets
B00400
Disposition of available-for-sale financial
assets
B00900
Acquisition of held-to-maturity financial
assets
B01000
Disposition of held-to-maturity financial
assets
B01100
Redemption of held-to-maturity financial
assets
B01400
De-capitalization
refunded
monies
of
financial assets carried at cost
B02600
Disposal of assets held for sale
B02700
Acquisition of Property and equipment

B02800
Disposal of Property and equipment
B03700
Increase in refundable deposits

B04500
Acquisition of Intangible assets

B04700
Disposal of Collateral accepted

BBBB
Net cash inflow (outflow) from
investing activities
Cash flow from financing activities
C00300
Increase in funds borrowed from CBC and
other banks
C00400
Decrease in funds borrowed from CBC and
other banks
C00700
Increase in commercial papers payable
C01400
Issuance of financial bonds		 2013
( $ 436,659 )

94,724
(
4,662,238 )
44,193,574

(
9,603 )

(
27,490 )


161,138

(
8,278,341)

( 10,075,636 )
9,951,168
18,379
(
3,639,685 )

(
540,919)

(
4,286,693)

(
3,545,627 )

2,842,748
-

5,802,240
550,000
1,090
-
(
124,208 )

2,190
(
98,891 )

(
62,600 )


102,281


5,469,223

2,554,034
-

104,136
5,500,000		 2012
( $ 366,365 )
264,045
1,063,826
51,819,245
(
5,313 )
(
29,920 )

29,918

5,464,973
3,771,181
8,586,432
19,157
(
2,976,603 )

-

9,400,167
( 22,594,500 )
8,325,936
(
504,586 )
-
763,848
-
50,012
(
192,251 )
1,073
(
24,660 )
(
19,549 )

38,762
(14,155,915)
-
(
463,345 )
-
3,000,000

(Continued on next page)

67

(Continued from previous page)

Code
C01500
Repayment of financial bonds

C04500
Cash dividend released

CCCC
Net cash inflow (outflow) from
financing activities
DDDD
Impact of changes in exchange rate on cash and
cash equivalents
EEEE
Current cash and cash equivalents increase
(decrease)
E00100 Balance of cash and cash equivalents, beginning
of period
E00200 Balance of cash and cash equivalent, end of
period
Ending cash and cash equivalents adjustment
Code

E00210 Cash and cash equivalents on the balance sheet

E00220 The “Due from Central Bank of China and
Banks” in compliance with the definition of cash
and cash equivalents under the International
Accounting Standards No. VII
E00230 The “bonds and securities sold under repurchase
agreements” in compliance with the definition of
cash and cash equivalents under the International
Accounting Standards No. VII
E00200 Balance of cash and cash equivalent, end of
period		 2013
( $ 2,561,664 )

(
231,874)


5,364,632


24,265

6,571,427

65,866,855

$ 72,438,282

December31,2013
$ 5,590,728

62,296,753


4,550,801

$ 72,438,282
 2012
$ -
(
111,693)

2,424,962

477
(
2,330,309 )
68,197,164
$ 65,866,855
December31,2012






$ 10,264,038
55,602,817
-
$ 65,866,855

Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

68

Appendix 2

Taichung Commercial Bank Co., Ltd.

Rules of Procedure for Shareholder Meetings

Resolved in the Annual Meeting of Shareholders on June 20, 1998 Resolved in the Annual Meeting of Shareholders s on June 13, 2013

  • Article 1 The rules for compliance are stipulated in accordance with Article 5 of the “Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies” for establishing the Company’s excellent meeting of shareholders governance system, substantiating supervisory function, and enhancing management functions.

  • Article 2 The Rules of Procedure for Shareholder Meetings is processed in accordance with the Rules, unless otherwise provided by law or Articles of Incorporation.

  • Article 3 The Company’s meeting of shareholders shall be convened by the Board, unless otherwise provided by law.

  • The Company shall have the Annual Meeting of Shareholders notice, proxy and the proposal and information on admission, discussions and directors and supervisors election or dismissal compiled into electronic files and uploaded to the M.O.P.S. thirty days prior to the annual meeting of shareholders or fifteen days prior to the extraordinary meeting of shareholders. Also, the Annual Meeting Handbook and the supplementary information are compiled into electronic files and uploaded to the M.O.P.S. twenty one days prior to the Annual Meeting of Shareholders or fifteen days prior to the extraordinary meeting of shareholders. The Annual Meeting Handbook and the supplementary information are made available to shareholders fifteen days prior to the annual meeting of shareholders; also, on display at the Company’s and its Stock Agent’s and distributed to shareholders at the meeting place.

The reasons for convening the meeting should be stated in the notice and announcement. The notice with the consent of the counterparty can be issued electronically.

The election or dismissal of directors, supervisors, amendments to the Articles of Incorporation, dissolution, merger, division or the clauses of Article 185 Paragraph 1 of the Company Act, the matters stated in Article 26.1 and Article 43.6 of the Securities and Exchange Act shall be stated in the reasons for convening the meeting not in the motion.

Shareholders who have over 1% shareholdings in the Company’s total number of shares issued may propose to the Company in writing to convene the Annual Meeting of Shareholders. But it is limited to one proposal and the additional proposals will not be included in the meeting agenda. In addition, the Board may have the proposals of shareholders that fall under the circumstances stated in Article 172.1 Paragraph 4 of the Company Act excluded from meeting discussions.

The Company shall announce the proposals admitted, the premises and

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the admission period before the stock stop-transfer date prior to the Annual Meeting of Shareholders is convened; also, the admitting period may not be less than 10 days.

Motion proposed by shareholders is limited to three hundred words. A proposed motion of more than three hundred words will not be included in the proposal. The proposing shareholders must attend the Annual Meeting of Shareholders in person or by proxy and must participate in the proposal discussion.

The Company shall have the proposing shareholder notified about the proposal results before the date of the meeting notice and must have the proposals in compliance with this provision included in the meeting notice. The Board shall state the reasons for not including the proposal of shareholders in the meeting agenda.

  • Article 4 Shareholders may attend the meeting of shareholders by proxy that is printed and issued by the Company with the scope of authorization detailed.

It is limited to one proxy per shareholder and one proxy only that should be served to the Company five days prior to the meeting of shareholders. When the proxy is issued in duplicate, whichever is served first shall prevail. The proxy referred to above that was announced to be revoked is not subject to this restriction.

After serving the proxy to the Company, the shareholders who wish to attend the meeting of the shareholders in person or to vote in writing or by electronic means shall notify the Company in writing to revoke the proxy two days prior to the meeting of the shareholders. If the proxy is not revoked before the deadline, the vote by proxy shall prevail.

  • Article 5 The place of meeting of shareholders should be at the Company’s or any suitable location or for shareholders to attend the meeting conveniently; also, the meeting of shareholders shall not be started before 9:00 or after 15:00.

  • Article 6 The Company should have the attendance registry ready for the signature of the attending shareholders or the shareholder’s representative (hereinafter referred to as the Shareholders), or the attending shareholders may have the signature card submitted as an alternative to the signature.

  • The Company should have the Annual Meeting Handbook, annual reports, attendance pass, speech slip, voting ballots, and other meeting materials delivered to the attending shareholders; also, the electoral ballots should be distributed for the election of directors and supervisors, if applicable.

Shareholders should attend the meeting of shareholders with the presentation of the attendance pass, attendance card or other attendance documents. Proxy solicitors should have identity documents with them

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for examination.

When the government or juridical person is a shareholder, the shareholder attending the meeting by proxy is not limited to one representative. The juridical person that has attended the meeting of shareholder by proxy can authorize only one representative to attend the meeting.

  • Article 7 If the meeting of shareholders is convened by the Board, the Chairman of the Board is to chair the meeting. If the Chairman is on leave or is unable to exercise his powers for certain reasons, the Vice Chairman is to chair the meeting. If a Vice Chairman is not appointed or the Vice Chairman is also on leave or is unable to perform his duties for certain reasons, the Chairman is to appoint one of the general directors to chair the meeting. If a general director is not appointed, one of the directors is appointed to chair the meeting. If a representative is not appointed by the Chairman, one of the general directors or directors should be elected among the board members to chair the meeting.

  • The Company may assign the appointed attorney, CPA, or responsible personnel to attend the meeting of the shareholders.

  • Article 8 The Company should have the entire meeting of shareholders taped in audio or video recording and stored for at least one year. However, for the litigation filed by the shareholders in accordance with Article 189 of the Company Act, it should be reserved until the end of the proceedings.

  • Article 9 Attendance of the meeting of shareholders should be calculated in accordance with the shareholdings. The shareholding attendance is based on the attendance registry or the signature cards submitted, plus the votes exercised in writing or by electronic means.

  • The Chairman shall call the meeting to order at the meeting time. If the shareholding of the attending shareholders is not more than half of the total number of shares issued, the Chairman may announce the meeting postponed, which is limited to two postponements and for less than one-hour in total. If the shareholding of the attending shareholders remaining do not constitute more than one third of the total number of shares issued after the two postponements, the Chairman may announce to have the meeting aborted.

  • If the shareholdings of the attending shareholders are not more than half of the total number of shares issued after two postponements but more than one third of the total number of shares issued, a pseudo-resolution can be resolved in accordance with Article 175 Paragraph 1 of the Company Act; also, shareholders should be informed regarding the pseudo-resolution with another meeting of shareholders to be convened within one month.

If the shareholdings of the attending shareholders are more than one half of the total number of shares issued before the end of the meeting, the

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Chairman may have the pseudo-resolution presented again in the next meeting of the shareholders for resolution in accordance with Article 174 of the Company Act.

  • Article 10 If the meeting of shareholders is convened by the Board, the agenda is scheduled by the Board; also, the meeting should be conducted in accordance with the agenda scheduled and it may not be amended without the resolution reached in the meeting of shareholders.

  • If the meeting of shareholders is convened by an authorized person other than the Board, the provision referred to above is applicable.

  • The Chairman may not have the meeting adjourned at his discretion before the proposals (including motions) resolved in the two agendas referred to above. If the Chairman has the meeting adjourned in violation of the Rules of Procedure for Shareholder Meetings, the other Board members shall promptly assist the attending shareholders in accordance with the legal procedures to have one shareholder elected as the Chairman with the majority votes of the attending shareholders to continuously chair the meeting.

  • A Chairman who believes that the proposal under discussion is ready for voting may at his discretion stop the discussion and call for a vote.

  • Article 11 Attending shareholders before speaking on the subject must fill out the speech slip, shareholder account number, and account name (or attendance pass number) in detail, and then the Chairman is to determine the order of speakers.

  • Attending shareholders who have speech slips submitted but not speak shall be deemed as silent shareholders. If there is a discrepancy found between the text of the speech and the speech slip submitted, the contents of the speech shall prevail.

  • Each shareholder may not speak more than twice on the same motion for 5 minutes each time without the consent of the Chairman. However, the Chairman may have the speaking shareholders who violate the rules or speak beyond the scope of those issues silenced. Attending shareholders may not interfere with the speaking shareholders without the consent of the Chairman and the speaking shareholders. The Chairman will have the violating shareholders stopped.

If the juridical person shareholder has more than two representatives assigned to attend the meeting of shareholders, only one of the two representatives may speak on the same proposal.

The Chairman may reply to the speaking shareholders personally or by the designated personnel.

  • Article 12 Resolutions of the meeting of shareholders should be based on their shareholdings.

For the resolutions in the meeting of shareholders, the shares of the shareholders without votes are not included in the calculation of

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outstanding shares.

Shareholders who have a conflict of interest with the proposals that are detrimental to the Company’s interests shall not vote, and cannot vote by proxy on behalf of the other shareholders.

The shares without votes referred to above are not included in the calculation of the attending shareholders’ votes.

Except for Trust agencies or stock agencies approved by the securities regulatory authorities, the votes of the representative delegated by two or more shareholders shall not exceed 3% of the total votes representing the total number of shares issued; also, the votes exceeding the threshold shall not be counted.

Article 13 Shareholders are entitled to one vote per share; except for those subject to restrictions or the non-voting matters illustrated in Article 179 Paragraph 2 of the Company Act.

The Company’s meeting of shareholders can be convened with the votes cast in writing or by electronic means. When the vote is cast in writing or by electronic means, the election method should be stated in the notice of meeting of shareholders. Shareholders who have their votes cast in writing or by electronic means are deemed as attending the meeting in person. However, with respect to motions and original proposal amendments of the meeting of shareholders, it is deemed as a waiver.

For the votes exercised in writing or by electronic means referred to above, the intention should be delivered to the Company two days prior to the meeting of shareholders. For the intention expressed in duplicate, whichever is delivered first shall prevail. The intention referred to above that was announced to be revoked is not subject to this restriction.

Shareholders after exercising their votes in writing or by electronic means wish to attend the meeting of shareholders in person shall have the intension of exercising votes in writing or by electronic means revoked the same way of exercising their votes two days prior to the meeting commencement date. For overdue revocations, the votes exercised in writing or by electronic means shall prevail. If the vote is exercised in writing or by electronic means and a representative is to attend the meeting of shareholders by proxy, the votes exercised by the representative in person shall prevail.

For the resolution of proposals, unless otherwise provided in the Company Act and the Articles of Incorporation, the consent of a majority vote of the attending shareholders shall prevail. The motion resolved by the Chairman’s consulting the attending shareholders without dissent is deemed as passed and with the same effect as voting.

When there is an amendment or alternative for the same motion, the Chairman shall have the order of vote, including the original proposal, determined accordingly. If one of the motions has been passed, the other

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motions shall be deemed as rejected without the need for further resolution.

Chairman is to appoint the scrutineers and counting officers who must be shareholders.

  • Ballot counting should be held at the meeting place with the ballot counting result announced immediately and records kept.

  • Article 14 The election of directors and supervisors held at the meeting of shareholders should be arranged in accordance with the Company’s election specifications and with the election results announced immediately at the meeting place.

  • Electoral ballots referred to above shall be sealed and signed by the scrutineers and reserved for at least one year. However, for the litigation filed by the shareholders in accordance with Article 189 of the Company Act, it should be reserved until the end of the proceedings.

  • Article 15 The resolutions reached in the meeting of shareholders should be documented in the minutes of meeting and signed or sealed by the Chairman; also, it should be uploaded to the M.O.P.S. within 20 days after the meeting adjournment.

  • The minutes of meeting should be prepared in accordance with the year, month, date, place, name of the Chairman, the resolution method, meeting procedure and the results, and shall be permanently reserved throughout the duration of the Company.

  • Article 16 The Company shall have the statistical report for the number of shares solicited by the solicitor and the number of shares by proxy prepared in the specific format during the meeting of the shareholders commencement date and disclosed in the meeting.

  • For the resolutions reached in the meeting of shareholders that involved laws and regulations or the material information defined by the Taiwan Stock Exchange Corporation, the Company shall, within the specified time, have the information uploaded to M.O.P.S.

  • Article 17 The staff responsible for organizing the meeting of shareholders shall wear identification badges or armbands.

  • The Chairman may direct disciplinary personnel or security personnel to help keep the meeting place in order. The disciplinary personnel or security personnel that help keep the meeting place in order should wear an armband with “Marshal” affixed or an identification card.

When the meeting place is equipped with amplifying equipment, the Chairman may stop shareholders who do not use the speaking device provided by the Company from speaking.

The Chairman may instruct the disciplinary personnel or security personnel to have shareholders who violate the Rules of Procedure for Shareholder Meetings, disobey the instructions of the Chairman, intervene in the meeting proceedings and fail to comply with the

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disciplinary act escrowed to leave the meeting place.

  • Article 18 The Chairman may announce the meeting in recess. The Chairman may rule to have the meeting suspended temporarily under unruly circumstance and have the meeting resume depending on the situation.

  • If the meeting place cannot be used continuously before the proposals (including motions) resolved in the agendas scheduled, it can be resolved to be continued in the meeting of shareholders to find another venue for the meeting.

The meeting of shareholders may, in accordance with Article 182 of the Company Act, resolve to have the meeting postponed or resumed in five days.

  • Article 19 The Rules of Procedure for Shareholder Meetings is implemented after the resolution reached in the meeting of shareholders, so is the amendment and revocation.

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Appendix 3

Taichung Commercial Bank Articles of Incorporation

Chapter 1 General Provisions

  • Article 1 The Bank was incorporated in accordance with the Banking Act and Company Act, known as “Taichung Commercial Bank” (hereinafter referred to as “Taichung Bank”)

  • Article 2 The mission of the Bank is cope with the national financial policy, provide financial services to the public, support economic development and develop industrial and commercial business.

  • Article 3 The Bank’s head office is in Taichung City, and set-up domestic or foreign branch offices accord to business operations. The incorporation, revocation, or amendment of branch offices are reported to the competent authorities for approval and are registered with the Ministry of Economic Affairs in accordance with the resolutions of the board of directors.

  • Article 4 The Bank has announcements made by publishing it in the local daily newspaper where the head office of the Bank is located or by the instructions of the competent authorities.

Chapter 2 Stock shares

  • Article 5 The Bank’s authorized capital amounted to NTD43.2 billion with 4.32 billion common stock shares issued at NTD10 par, in which, the board of directors is authorized to have the unissued shares issued by installments.

  • Article 6 The Bank’s shares are ordered with the signature or seal of at least three directors affixed for lawful issuance.

The Bank may have new shares issued by a book-entry in accordance with the Company Act.

  • Article 7 The Bank’s dividend distribution is proposed by the board of directors for resolution in the meeting of stockholders, but the Bank shall not pay dividends, if there is no surplus earnings.

  • Article 8 The shareholder services of the Bank in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies” published by the competent authorities and

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other relevant laws and regulations.

  • Article 9 The Bank shall not handle any requests for transfers of shares within 60 days prior to the shareholders meeting, 30 days prior to the special shareholders meeting, or 5 days prior to the record date for the distribution of dividends, bonuses or other interests.

  • Article 10 Each director of The Bank shall, after having been elected, declare to the competent authority the number of the shares of The Bank being held by him/her at the time when he/she is elected. In case a director of The Bank whose shares are issued to the public that has transferred, during the term of office as a director, more than one half of The Bank's shares being held by him/her at the time he/she is elected, he/she shall, ipso facto, be discharged from the office of director.

If the number of The Bank's shares held by a director is increased or reduced during his/her term of office as a director, he/she shall declare such change to the competent authority and shall place a public notice of such a fact.

The director who is reelected prior to the tenure expired and has shares transferred before inauguration for over one half of the shareholding at the time of election, or has shares transferred during the stop-transferring period before the meeting of shareholders convened will be disqualified.

Chapter 3 Business operation

  • Article 11 The Bank’s business operation is as follows:

  • H101021 Commercial banking.

  • H301011 Securities firms.

  • H408011 Futures introducing brokers.

It is limited to the businesses authorized by the competent authorities referred to above.

  • Article 12 The scope of other business of the bank shall be approved by the Central Competent Authority.

Chapter 4 Meeting of shareholders

  • Article 13 The meeting of shareholders shall be of two kinds, includes the regular meeting and special meeting. The regular meeting of shareholders shall be convened by the Board of Directors once a year, within 6 months after close of each fiscal year. The special meeting of shareholders shall be convened by the Board of supervisors when

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necessary. Shareholders who have continuously held 3% or more of the total number of outstanding shares for a period of one year, by filing a written proposal setting forth therein the subjects for discussion and the reasons, request the board of directors to call a special meeting of shareholders.

  • Article 14 Shareholders should be informed of the meeting date, place and subject 30 days in advance for the regular meeting of Shareholders and 15 days in advance for the interim meeting of shareholders.

  • Article 15 Shareholders who are unable to attend the meeting of shareholders may issue the Bank’s proxy with the scope of authorization detailed and signed or sealed to commission the representative attending the meeting, A shareholder may only execute one power of attorney and appoint one proxy only, and shall serve such written proxy to the company no later than 5 days prior to the meeting date of the shareholders' meeting. In case two or more written proxies are received from one shareholder, the first one received by the company shall prevail; unless an explicit statement to revoke the previous written proxy is made in the proxy which comes later.

    • Other pending matters are to be processed in accordance with the “Regulations Governing the Use of Proxies for Attendance at Shareholder Meeting of Public Companies” published by the competent authorities.

  • Article 16 The resolutions reached in the meeting of shareholders and the executions are as follows:

  • Drawing up and amending the Bank’s Company Corporate Charter (Articles of Incorporation).

  • Resolutions to company's capital increase or reduce.

  • Election of directors and supervisors.

  • Examine the statements and books prepared and submitted by the board of directors and the auditing reports submitted by the supervisors. In order to conduct the examination set forth in the preceding paragraph, the shareholders' meeting may select and appoint inspectors as required.

  • Resolutions reached on the earning distribution and shareholder bonus.

  • Resolutions reached on the other important matters.

Article 17 Resolutions at a shareholders' meeting shall, unless otherwise

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provided by the Company Act, be adopted by a majority vote of the shareholders present, who represent more than one-half of the total number of voting shares.

  • Article 18 When the number of shareholders present does not constitute the quorum prescribed in the preceding article, 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 present. A notice of such tentative resolution shall be given to each of the shareholders, and reconvene a Shareholders' meeting within one month. If bearer share certificates have been issued, such tentative resolution shall also be publicly announced.

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 preceding article.

Article 19 Shareholders are entitled to one vote per share, unless otherwise provided by law.

  • Article 20 The minutes of shareholders' meeting shall record the date and place of the meeting, the name of the chairman, the method of adopting resolutions, and a summary of the essential points of the proceedings and the results of the meeting. The minutes shall be kept persistently throughout the life of the company. The attendance list bearing the signatures of shareholders present at the meeting and the powers of attorney of the proxies shall be kept by the company for a minimum period of at least one year. However, if a lawsuit has been instituted by any shareholder in accordance with the provisions of Article 189 hereof, the minutes of the shareholders' meeting involved shall be kept by the company until the legal proceedings of the foregoing lawsuit have been concluded.

Chapter 5 Directors and the Board of Directors

  • Article 21 The board of directors of a company shall have 9~15 directors who shall be elected by the shareholders' meeting from among the persons with disposing capacity and in accordance with Article 198 of the Company Act. The term of office of a director shall for three years,

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but may be eligible for reelection. The total registered shares owned by the directors shall comply with the requirements of the “Rules and Review Procedures for Directors and Supervisor Share Ownership Ratios at Public Companies.”

In the preceding paragraph for the directors, the number of independent directors shall not be less than two seats, and one-fifth (1/5) or more of the board of directors, the nomination system is adopted to have independent directors elected from the list of candidates. Non-independent directors and independent directors should be elected at the same time, receiving ballots representing the highest numbers of voting rights will be elected according to their respective numbers of votes.

The professional qualifications, shareholding and part-time job restrictions, definition of independence, nomination method, proxy and other compliance matters of the independent directors shall be handled in accordance with the relevant provisions.

The Bank has the Audit Committee organized by all independent directors in accordance with Article 14.4 of the Securities Exchange Act. Members of the Audit Committee, the exercise of powers, and other compliance matters should be handled in accordance with the relevant laws and regulations or the Company Corporate Charter (Articles of Incorporation). The organizational rules are to be prescribed by the Board separately.

Article 22

The board of directors shall have 3~5 managing director positions elected by voting with the consent of the majority attending directors and the attendance of two thirds of the directors. According to the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”, the managing directors shall include not less than one independent director member, and not less than one-fifth of the managing director seats shall be held by independent directors. The Vice Chairman and Managing General Director will be appointed, if necessary, by a resolution of the board of directors.

The chairman, the vice chairman and managing directors of the board shall be elected from the managing directors in accordance with the same manner set forth in the preceding Paragraph. The chairman of the board of directors shall internally preside the shareholders'

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meeting, the meeting of the board of directors, and the meeting of the managing directors; and shall externally represent the company. In case the chairman of the board of directors is on leave or absent or can not exercise his power and authority for any cause, the vice chairman shall act on his behalf. In case there is no vice chairman, or the vice chairman is also on leave or absent or unable to exercise his power and authority for any cause, the chairman of the board of directors shall designate one of the managing directors. In the absence of such a designation, the managing directors shall elect from among themselves an acting chairman of the board of directors.

If the credibility of the Bank or the person in charge is damaged by the spreading rumors or fraud, the chairman of the bank should immediately file a lawsuit to the prosecution office according to laws.

During the recess of the board of directors, the managing directors shall regularly exercise the power and authority of the board of directors in accordance with the provisions of laws and regulations and the Articles of Incorporations of the company, and the resolutions adopted by the shareholders' meetings and the meetings of the board of directors by conferences to be called from time to time by the chairman of the board of directors; with the resolutions to be adopted by a majority of managing directors present at such conferences attended by a majority of managing directors.

Article 23 The functions and responsibilities of the Board of Director are as follows:

  1. Approve important operation rules.

  2. Approve annual business plans and supervise its implementation.

  3. Approve various of important contracts.

  4. Approve budget and review the results at year-end.

  5. Propose earnings distribution.

  6. Propose capital increase or decrease.

  7. Decide the establishment, revocation or reincorporation of the Bank’s branches.

  8. The real estate transactions and investment decisions.

  9. Auditing management and execution.

  10. The appointment and dismissal of the managers.

  11. Perform such other duties and responsibilities prescribed by law or

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authorized by shareholder’s meetings. Article 24 The Board of Directors shall meet at least once every three months. An extraordinary meeting can be convened for urgent matters or upon the request of a majority of the directors, unless otherwise provided by the Company Law; it is to be convened by the Chairman. To strengthen the management functions, the Board may set up any other Functional Committees. Functional committees shall adopt an organizational charter to be approved by the Board of Directors. Article 25 Each director shall attend the meeting of the board of directors in person, In case a director who are unable to attend the meeting for reasons appoints another director to attend in his/her behalf, issue a written proxy and state therein the scope of authority with reference to the subjects to be discussed at the meeting.

  • A director may accept the appointment to act as the proxy referred to in the preceding Paragraph of one other director only.

  • Article 26 Unless otherwise provided for in the Company Act, resolutions of the Board of Directors shall be adopted by a majority of the directors at a meeting attended by a majority of the directors. The minutes of meeting should be signed or sealed by the Chairman.

  • Article 27 When the number of vacancies in the board of directors of a company equals to one third of the total number of directors, the board of directors shall call a special meeting of shareholders to elect succeeding directors to fill the vacancies. The newly reelected directors are to serve the remaining tenure of the former directors.

  • Article 27.1 The remuneration of the Chairman is for an amount equivalent to 1.25 times of the total remunerations paid to the President.

  • The Board of directors is authorized to pay the compensation of the Vice Chairman, Managing Director and independent Directors by referring to the payment level of the industry, but the payment amount is limited to 1.1 times the total remunerations paid to the President.

  • Independent directors do not participate in distributions from the earnings of the Bank.

The bank may take out liability insurance for the Directors and the Supervisors with respect to their liabilities resulting from exercising their duties during their terms of occupancy.

  • Article 28 The President and Executive Vice President may attend to the meeting of the Board of directors or the Board of managing directors for consultation.

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Chapter 6 Supervisors

  • Article 29 The Bank shall have 3~5 supervisors who shall be elected by the shareholders' meeting from among the persons with disposing capacity and in accordance with Article 198 of the Company Act. The supervisors shall elect from among themselves a managing supervisors. The term of supervisors shall for three years, but may be eligible for reelection. The total registered shares owned by the supervisors shall comply with the requirements of the “Rules and Review Procedures for Directors and Supervisor Share Ownership Ratios at Public Companies”.

The Articles of Incorporation regarding supervisors ceased to be applicable after the Company established the Audit Committee.

  • Article 29.1 The Board of Directors is authorized to pay the remuneration of the Managing supervisors by referring to the payment level of the industry, but the payment amount is limited to 1.1 times of the total remunerations paid to the President.

  • Article 30 The supervisors shall perform the following functions and responsibilities:

  • Investigate the business and financial conditions of the Bank;

  • Investigate the books, records and documents of the Bank;

  • Monitoring the business performance of the Bank’s staff and reporting any violations of the law and dereliction of duty;

  • The other powers entrusted in accordance with the laws and regulations and in the meeting of shareholders; Supervisors when performing the powers in Paragraph 1 and Paragraph 2 referred to above may request the Board or the management to issue reports.

  • Article 31 The Supervisors may attend the meeting of the Board of Directors ； The general supervisors may attend the meeting of the Board of Managing Directors, but without the right to vote.

Chapter 7 The Manager

Article 32 The bank has the president appointed to manage the overall business per the instructions of the board of directors, several vice presidents and assistant vice presidents are appointed to assist the president in business operations of the appointment and dismissal powers resolved by the majority of directors. The president have a number of managers of the appointment and dismissal powers resolved by the majority of directors.

The bank has one chief auditor of the appointment resolved by the

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two thirds of directors, whose power should be equal to the vice presidents; also, the appointment, dismissal, or transfer of the chief auditor should be reported to the competent authorities in advance.

Chapter 8 Accounting

  • Article 33 The Bank has the business operations settled at the end of each month and the annual settlement scheduled on December 31.

  • Article 34 The Bank shall have the following statements and records prepared after the annual settlement for the review of the board of directors and the audit of the supervisors; also, submitted to the meeting of shareholders for admission and reported to the competent authorities and the Central Bank for filing within 15 days, respectively.

  • The business report.

  • The financial statements.

  • The surplus earning distribution or loss off-setting proposals.

  • Article 35 The bank’s annual earnings, if any, in addition to paying income tax in accordance with law, shall be applied to offset the prior year losses, appropriate 30% of the remaining amount as legal reserve and with the special reserve appropriated and reversed accordingly. Then, appropriate an amount equivalent to 0.01% of the remaining balance as employee bonus and an amount equivalent to 50% of the employee bonus as compensation for directors and supervisors. The remaining balance, if any, plus the prior year’s unappropriated retained earnings are for the distribution of earnings as proposed.

The board of directors shall retain the required fund subject to the change of operating environment, operation and investment needs before proposing the proportion between cash and stock dividends for the approval of the shareholders’ meeting:

  1. The cash dividends shall be no less than 10% of the dividends and bonus allocated to shareholders.

  2. If the dividends are allocated at less than or equal to NTD 0.3 per share, the earnings may be allocated in the form of stock Dividends in full.

If the capital adequacy ratio fails to reach the legal ratio, the earnings shall be allocated in accordance with the Banking Act and the competent authority’s requirements.

Chapter 9 Supplementary Provisions

Article 36 Organizational rules of the Bank shall be stipulated separately. Article 37 For matters not cover herein, govern in accordance with the provisions

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of the Company Act, the Banking Act and related laws and regulations.

Article 38 The Articles of Incorporation became effective after being adopted at the shareholders’ meeting, the same applies to any subsequent amendments. The Articles of Incorporation were enacted on October 22, 1977 and became effective from January 1, 1978. The 1[st] amendment was made on March 4, 1979. The 2[nd] amendment was made on March 9, 1980. The 3[rd] amendment was made on March 1, 1981. The 4[th] amendment was made on March 7, 1982. The 5[th] amendment was made on March 5, 1983. The 6[th] amendment was made on March 7, 1985. The 7[th] amendment was made on March 22, 1986. The 8[th] amendment was made on March 19, 1987. The 9[th] amendment was made on March 23, 1988. The 10[th] amendment was made on March 23, 1989. The 11[th] amendment was made on October 5, 1989. The 12[th] amendment was made on March 23, 1990. The 13[th] amendment was made on June 28, 1991. The 14[th] amendment was made on October 13, 1992. The 15[th] amendment was made on June 5, 1993. The 16[th] amendment was made on April 23, 1994. The 17[th] amendment was made on June 10, 1995. The 18[th] amendment was made on October 18, 1995. The 19[th] amendment was made on March 28, 1996. The 20[th] amendment was made on May 8, 1997. The 21[st] amendment was made on June 20, 1998. The 22[nd] amendment was made on October 12, 1998. The 23[rd] amendment was made on May 18, 1999. The 24[th] amendment was made on June 15, 2000. The 25[th] amendment was made on May 17, 2002. The 26[th] amendment was made on June 25, 2003. The 27[th] amendment was made on June 9, 2006. The 28[th] amendment was made on December 7, 2006. The 29[th] amendment was made on June 15, 2007. The 30[th] amendment was made on June 13, 2008.

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The 31[st] amendment was made on June 19, 2009. The 32[nd] amendment was made on June 15, 2010. The 33[rd] amendment was made on June 22, 2011 The 34[th] amendment was made on June 13, 2013.

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Appendix 4

Taichung Commercial Bank Co., Ltd. Rules for Director Elections

  • Article 1 The election of the directors of Taichung Commercial Bank Co., Ltd. (hereinafter referred to as the Bank) is held at the meeting of shareholders in accordance with the Rules for Director Elections.

  • Article 2 The Bank’s directors are elected with a straight cumulative voting method.

  • Each share is with the vote equivalent to the number of directors to be elected. The vote can be cast for one candidate or several candidates. Voters can be identified with the attendance pass number instead of name.

  • Article 3 The Chairman at the commencement of the election appoints the scrutineers and counting officers to handle the ballot scrutinizing and counting matters.

  • Article 4 The number of directors stated in the Articles of Incorporation is to be elected in accordance with Article 198 of the Company Act and other relevant provisions; also, the candidates receiving the higher electoral votes are elected. If there are two or more persons receiving the same number of electoral votes causing the number of directors elected to exceed the number of directors to be elected, the candidates who received the same electoral votes is to be decided by balloting. The Chairman is to vote on behalf of the absent candidates who received the same electoral votes.

  • Non-independent directors and independent directors should be elected together for the respective number of seats.

  • Article 5 The ballots are prepared by the Bank and numbered in accordance with the attendance pass number, including the number of votes detailed.

  • Article 6 Voters shall fill out the name in the candidate column on the ballot with the shareholder account number or I.D. Card number detailed before casting it in the ballot box. However, when the government or juridical person shareholders are the candidates, the name of the government or juridical person shareholders should be filled in the candidate column on the ballot in accordance with Article 27 Paragraph 1 of the Company Act; also, may have the name of the government, juridical person shareholders, and the representatives filled in the candidate column on the ballot in accordance with Article 27 Paragraph 2 of the Company Act.

  • Article 7 The ballots with any of the following circumstances are invalid:

  • The ballots used are not in compliance with the Rules for Director Elections.

  • Blank ballots are cast in the ballot box.

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  1. Illegible, unidentifiable or obliterated writing.

  2. The name of the elected candidate filled in the ballot differs from the Register of Shareholders or I.D. Card number.

  3. The ballot is filled in with the names of two candidates.

  4. In addition to the name of the elected candidates and shareholder account number (or I.D. Card number) and assigned votes, the ballot contains other information.

  5. Failure to comply with Article 6.

  6. Article 8 The ballots are counted immediately at the end of voting and the Chairman is to announce the voting results.

  7. Article 9 The Board is to issue an elected notice to the elected directors.

  8. Article 10 The matters that are not addressed in the Rules for Director Elections should be handled in accordance with the Company Act, the Bank’s Articles of Incorporation, and the relevant regulations.

  9. Article 11 The Rules for Director Elections is drafted by the Board for resolution in the meeting of shareholders before implementation, so is the amendment.

The Procedure was established in the 6[th] Special Meeting of Shareholders on October 20, 1968.

The Procedure was amended for the first time in the 11[th] Special Meeting of Shareholders on October 26, 1980.

The Procedure was amended for the second time in the 13[th] Special Meeting of Shareholders on October 4, 1986.

The Procedure was amended for the third time in the 14[th] Special Meeting of Shareholders on October 4, 1989.

The Procedure was amended for the fourth time in the 15[th] Special Meeting of Shareholders on October 13, 1992.

The Procedure was amended for the fifth time in the 41[st] Annual Meeting of Shareholders on June 5, 1993.

The Procedure was amended for the sixth time in the 17[th] Special Meeting of Shareholders on October 12, 1998.

The Procedure was amended for the seventh time in the Annual Meeting of Shareholders on May 17, 2002.

The Procedure was amended for the eighth time in the Annual Meeting of Shareholders on June 15, 2007.

The Procedure was amended for the ninth time in the Annual Meeting of Shareholders on June 13, 2013.

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Appendix 5

Shareholding of Directors and Supervisors

  1. All directors and supervisors minimum shareholding and the shareholdings listed in the registry of shareholders
Position Shareholding Shareholding registered in the
registryof shareholders		 Remarks
Director 61,626,829 Shares 184,754,239 Shares
Supervisor 6,162,682 Shares 9,316,398 Shares

Note: The book closure date is on April 21, 2014.

  1. Directors and supervisors shareholding list
Position Name Register of
shareholders
Registered
shareholding		 Remarks
Chairman Representative of Pan Asia Chemical Corporation:
Jin-Fong Soo		 157,823,593
Vice Chairman Representative of Pan Asia Chemical Corporation:
Kuei-Fong Wang		 157,823,593
Managing Director Representative of Pan Asia Chemical Corporation:
Jer-ShyongTsai		 157,823,593
Managing Director Representative of I Joung Investment Co., Ltd.:
Yi-Der Chen		 15,995,167
Independent
ManagingDirector		 Hsi-Rong Huang 0
Independent
Director		 Jin-Yi Lee 0
Independent
Director		 Chen-Le Liu 0
Director Representative of Pan Asia Chemical Corporation:
Chun-Sheng Lee		 157,823,593
Director Representative of Pan Asia Chemical Corporation:
Hsin-Ching Chang		 157,823,593
Director Representative of Pan Asia Chemical Corporation:
Su-Yuan Lin		 157,823,593
Director Representative of Pan Asia Chemical Corporation:
Ming-ShanChuang		 157,823,593
Director Representative of Pan Asia Chemical Corporation:
Meng-Liang Chang		 157,823,593
Director Representative
of
Ho
Yang
Management
Consultant Co.,Ltd.: Chia-HungLin		 1,501,317
Director Representative
of
Chou
Chang
Co.,
Ltd.:
Wei-Lian Lin		 9,434,162
Director Representative of I Joung Investment Co., Ltd.:
Ching-HsinChang		 15,995,167
Resident Supervisor Representative of Xin Rui Investment Co., Ltd.:
Jiann-Ell Huang		 8,470,802
Supervisor Representative of Xin Rui Investment Co., Ltd.:
Shu-Li Huang		 8,470,802
Supervisor Representative of Xin Rui Investment Co., Ltd.:
Chien-Hwa Lee Fu		 8,470,802
Supervisor Representative of Xin Rui Investment Co., Ltd.:
Ching-HuangTsai		 8,470,802
Supervisor Representative of Tai Jiunn Enterprise Co., Ltd.:
Chao-Nan Hsieh		 845,596

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Appendix 6

The Board endorsed the proposed distribution of cash dividends to employees and remunerations for directors and supervisors: Explanation:

  • I. It is processed in accordance with the Jin-Guan-Chen-Shen Zi No. 1010059296 Letter dated December 28, 2012 of the Financial Supervisory Commission.

  • II. Employee bonus of NTD209,280 and compensation for directors and supervisors of NTD104,640 are distributed in cash in accordance with the Articles of Incorporation.

  • III. Difference between the employee bonuses and compensation for directors and supervisors distributed and the estimated amount of the current year and its handling:

  • Amount of difference: The current estimated employee bonus of NTD197,221 and the compensation for directors and supervisors of NTD98,611 are different from the actual amount of distributions by NTD12,059 and NTD6,029, respectively.

  • Reason for the difference: It is due to the estimated earnings available for distribution that is different from the actual settlement amount.

  • Process: The amount of the difference is processed as changes in accounting estimates in 2014.

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