Taiwan Cooperative Financial Holding Co., Ltd. Handbook for the 2020 Annual General Shareholders’ Meeting (Summary Translation)
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Stock Code:5880 Taiwan Cooperative Financial Holding Co., Ltd. Handbook for the 2020 Annual General Shareholders’ Meeting (Summary Translation) Time: 09:00 A.M., Wednesday, June 24th , 2020 Location: 1st Floor of Building B, No.225, Section 2, Chang’an East Road, Songshan District, Taipei City, Taiwan, R.O.C . (The Grand Auditorium of Taiwan Cooperative Bank Headquarters) This English version handbook is a summary translation of the Chinese version and is for reference only. If there is any discrepancy between the English version and Chinese version, the Chinese version shall prevail. - Table of Contents Matters for Reporting 1. TCFHC 2019 Business Performance………………………………………….. 2 2. TCFHC Audit Committee’s Review Opinions on 2019 Financial 3 Statements ……………………………………………………………………... 3. TCFHC 2019 Remuneration Distribution of Board of Directors and Employees 4 Report……………………………………………………………… Matters for Recognitions 1. Adoption of TCFHC 2019 Annual Business Report and Financial Statements.. 5 2. Adoption of TCFHC 2019 Earnings Appropriation…………………………… 40 Matters for Discussions 1. Proposal for New Shares Issued through Capitalization of 2019 Retained Earnings…………………………………………………………………………. 42 2. Amendment to TCFHC's Articles of Incorporation…………………………… 43 3. Amendment to the Rules for Director Elections………………………………. 58 4. Amendment to the Rules of Procedure for Shareholders’ Meeting……………. 64 Election Matters The 4th Election of Directors………………………………………………….. 81 Other Matters Proposal of Releasing the Prohibition on the 4th Directors from Participating 83 in Competitive Business……………………………………………………….. Appendices Appendix A Audit Committee Report……………………………………………. 6 Appendix B TCFHC 2019 Business Report……………………………………… 7 Appendix C Independent Auditors’ Report and TCFHC 2019 Financial 22 Statements…………………………………………………………… Appendix D TCFHC 2019 Earnings Appropriation Table……………………….. 41 Appendix E Amended TCFHC’s Articles of Incorporation and Comparison 44 Table…………………………………………………………………. Appendix F Amended TCFHC’s Rules for Director Elections and Comparison 59 Table……....…………………………………………………………. Appendix G Amended TCFHC’s Rules of Procedure for Shareholders’ Meeting 65 and Comparison Table.……………………………………………… Appendix H The 4th Independent Director Nominees…………………………… 82 Annexes Annex A TCFHC’s Articles of Incorporation…………………………………. 85 Annex B TCFHC’s Rules for Director Elections………….…………………… 97 Annex C TCFHC’s Rules of Procedure for Shareholders’ Meeting………….... 100 rd Annex D TCFHC’s 3 Directors’ Shareholdings Statistics…………………… 110 - Taiwan Cooperative Financial Holding Co., Ltd. Agenda of 2020 Annual General Shareholders’ Meeting Time: 09:00 A.M., Wednesday, June 24th, 2020 Place: 1st Floor of Building B, No.225, Section 2, Chang’an East Road, Songshan District, Taipei City, Taiwan R.O.C. (The Grand Auditorium of Taiwan Cooperative Bank Headquarters) Attendants : All shareholders and shareholders’ representatives Presided over by: Chairman Paul C. D. Lei I. To announce the quorum in present and to call the meeting to order II. Chairman’s Remarks III. Matters for Reporting 1. TCFHC 2019 Business Performance 2. TCFHC Audit Committee’s Review Opinions on 2019 Financial Statements 3. TCFHC 2019 Remuneration Distribution of Board of Directors and Employees Report IV. Matters for Recognitions 1. Adoption of TCFHC 2019 Annual Business Report and Financial Statements 2. Adoption of TCFHC 2019 Earnings Appropriation V. Matters for Discussions 1. Proposal for New Shares Issued through Capitalization of 2019 Retained Earnings 2. Amendment to TCFHC's Articles of Incorporation 3. Amendment to the Rules for Director Elections 4. Amendment to the Rules of Procedure for Shareholders’ Meeting VI. Election Matters The 4th Election of Directors VII. Other Matters Proposal of Releasing the Prohibition on the 4th Directors from Participating in Competitive Business. VI. Extemporary Motions VII. Adjournment 1 Matters for Reporting 1 Proposed by TCFHC’s Board of Directors Subject: TCFHC 2019 Business Performance Content: With regard to Business Report, please refer to Page 7-21 in this Handbook. Resolutions: 2 Matters for Reporting 2 Proposed by TCFHC’s Board of Directors Subject: TCFHC Audit Committee’s Review Opinions on 2019 Financial Statements Content: TCFHC’s Audit Committee submits review reports on 2019 Consolidated Financial Statements, 2019 Proposal of Earnings Distribution and 2019 Business Report. For details of these documents, please refer to Page 6 in this Handbook. Resolutions: 3 Matters for Reporting 3 Proposed by TCFHC’s Board of Directors Subject: TCFHC 2019 Remuneration Distribution of Board of Directors and Employees Report Content: In accordance with TCFHC’s Articles of Incorporation, a total remuneration of NT$94,908,588 (calculation basis: 0.55% of earnings) will be distributed to the board of directors, whereas the sum of NT$2,968,050 (calculation basis: 0.0172% of earnings) will be distributed to employees. Both amounts are distributed completely in cash. Resolutions: 4 Matters for Recognitions 1 Proposed by TCFHC’s Board of Directors Subject: To submit the 2019 Annual Business Report and the Financial Statements for approval and adoption. Contents: The 2019 annual business report and financial statements have both been reviewed and approved in the 34th meeting of the 3rd term Board of Directors, followed by further examination of the Audit Committee. The financial statements had also been audited and certified by Deloitte Taiwan. Therefore, the Board of Directors hereby, in accordance with article 35 of the TCFHC's Articles of Incorporation, submits the 2019 annual business report and the 2019 financial statements for recognition. Resolutions: 5 Appendix A 6 Appendix B Taiwan Cooperative Financial Holding Co., Ltd. 2019 Business Report The pace of global economic growth has slowed down in 2019 mainly due to a few unfavorable factors including US-China trade disputes, Brexit turmoil, geopolitical conflicts, and dwindling economic performance of emerging markets. Such a slowdown has prompted private sectors adopting conservative approaches towards investments and operations, and cooled down the manufacturing momentum and trade activities. According to International Monetary Fund (IMF) in February 2020, the estimated global economic growth rate for 2019 would attain 2.9%, a decrease of 0.7% from the previous year. IMF has further concerned with China’s economic growth being adversely impacted by the outbreak of COVID-19 pandemic and various risky variables in the market including the US Presidential election, US-China trade talks of the next phase, and weak economic momentum as well as geopolitical uncertainties in the Euro zone. Nevertheless, the duration of the COVID-19 pandemic will add more uncertainties to the global economic climate, increasing the chance of downward adjustment of the global economic growth rate. Despite of the fact that Taiwan’s economy in 2019 declined moderately due to weakened overseas demand, its performance actually was better-than-expected, exhibiting a quarter-by-quarter growing trend, which was mainly contributed by the increase in transferred orders resulted from shifts in global supply chain, as well as the increasing inbound investments by repatriating Taiwanese enterprises and the expansion of semiconductor production that both stimulated the growth in domestic demands. According to the statistics published by Taiwan’s Directorate-General of Budget, Accounting, and Statistics, Executive Yuan (DGBAS) in February 2020, Taiwan’s annual economic growth rate for 2019 stood at 2.71%, a figure that was only a 0.04% decrease from 2.75% in 2018. With the impact of the COVID-19 pandemic on an array of economic activities including manufacturing, consumption, and other transactions, DGBAS forecasts that Taiwan’s economic growth rate for 2020 would attain 2.37%, posting a sign of slowing growth. Thanks to the trusts and supports from our shareholders over the past years. With the grand customer base and inter-subsidiary synergy, TCFHC has continued to present remarkable performance on overall operations and has again hit record high on profits against the backdrop of fierce market competitions. For 2019, TCFHC’s consolidated net income after tax amounted to NT$17.612 billion, an increase of NT$1.596 billion from 2018, representing a growth rate of 9.97%, or an EPS after tax of NT$1.33, all of which have hit the highest record since TCFHC was established. Also, the return on equity (ROE) and return on assets (ROA) reached 8.02% and 0.49% respectively. In the future, TCFHC will continue to pursue growth and excellence by capitalizing on core business and technological innovation. A summary of TCFHC business performance in 2019 and business plan for 2020 are outlined as follows: For 2020, the developmental strategy of TCFHC will focus on creating advanced digital environment, developing multiple profit engines, expanding global service network, and raising the margins on capital utilization. At the same time, TCFHC will continue to implement discreet internal audit and control, reinforce legal compliance and information security, develop talent resource and perfect corporate governance, so as to maximize the corporate’s values, bring in profits to shareholders, and carry out corporate social responsibility. The summaries of TCFHC Operational Review for 2019 and the Business Plan for 2020 are outlined as follows: 7 A. Operational Review for 2019 a. Review of the Implementation for 2019 Business Plan 1.