Hon Hai Precision Industry Co., Ltd
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Stock 2317 HON HAI PRECISION INDUSTRY CO., LTD. 2019 Annual Shareholders’ Meeting Meeting Handbook June 21, 2019 THIS IS A TRANSLATION OF THE HANDBOOK FOR THE 2017 ANNUAL SHAREHOLDERS’ MEETING (THE “HANDBOOK”) OF HON HAI PRECISION INDUSTRY CO., LTD. (THE “COMPANY”). THIS TRANSLATION IS INTENDED FOR REFERENCE ONLY AND NOTHING ELSE, THE COMPANY HEREBY DISCLAIMS ANY AND ALL LIABILITIES WHATSOEVER FOR THE TRANSLATION. THE CHINESE TEXT OF THE HANDBOOK SHALL GOVERN ANY AND ALL MATTERS RELATED TO THE INTERPRETATION OF THE SUBJECT MATTER STATED HEREIN. TABLE OF CONTENTS 1. Meeting Procedure ........................................................................................................ 1 2. Meeting Agenda ............................................................................................................. 2 a. Report Items ................................................................................................................. 3 b. Ratification, Discussion and Election Items .................................................................. 9 c. Extraordinary Motions ................................................................................................ 19 3. Attachments • Attachment 1: Business Report .................................................................................. 20 • Attachment 2: Audit Committee’s Review Report...................................................... 23 • Attachment 3: Independent Auditors’ Report and 2018 Financial Statements ............. 24 • Attachment 4: Articles of Incorporation Amendment Comparison Table .................... 53 • Attachment 5: Amendments to the Company’s “Procedures for Asset Acquisition & Disposal” Comparison Table ................................................................ 61 • Attachment 6: Amendments to the Company’s “Operational Procedures for Lending Funds to Others” Comparison Table .............................................................. 80 • Attachment 7: Amendments to the Company’s “Procedures for Endorsement & Guarantees” Comparison Table ............................................................................... 85 • Attachment 8: Amendments to the Company’s “Policies and Procedures for Financial Derivatives Transactions” Comparison Table ............................................... 89 • Attachment 9: Directors and Independent Directors Candidates List .......................... 91 4. Appendices • Appendix 1: Rules and Procedures of Shareholders’ Meeting ..................................... 94 • Appendix 2: Articles of Incorporation ........................................................................ 97 • Appendix 3: Regulations Governing the Election of Directors and Independent Directors ............................................................................................... 105 • Appendix 4: Shareholdings of Directors and Independent Directors ......................... 107 Hon Hai Precision Industry Co., Ltd. 2019 Annual General Shareholders’ Meeting MEETING PROCEDURE Time of Meeting: June 21, 2019 (Friday) at 9:00 am Location of Meeting: No.2 Zihyou Street, Tucheng Industrial Park, Tucheng Dist., New Taipei City, Taiwan I. Report the total number of shares represented at this AGM II. Meeting Commencement Announcement III. Chairperson’s Address IV. Report Items V. Ratification and Discussion Items VI. Extraordinary Motions VII. Meeting Adjournment - 1 - Hon Hai Precision Industry Co., Ltd. 2019 Annual General Shareholders’ Meeting MEETING AGENDA I. Chairman to announce the commencement of meeting II. Report Items (1) Report the business of 2018. (2) Statutory Auditor’s review of 2018 audited financial statements. (3) Report on the 2018 Employee Compensation Distributions. (4) Status report of Company’s indirect investment in Mainland China. (5) Status report of domestic corporate bond issuance. III. Ratification, Discussion and Election Items (1) To approve 2018 Business Report and Financial Statements. (2) To approve the proposal for distribution of 2018 earnings. (3) Discussion of amendments to the Company’s “Articles of Incorporation.” (4) Discussion of amendments to the Company’s “Procedures for Asset Acquisition & Disposal”. (5) Discussion of the amendments to the Company’s “Procedures for Lending Funds to Others.” (6) Discussion of the amendments to the Company’s “Procedures for Endorsements & Guarantees.” (7) Discussion of amendments to the Company’s “Policies and Procedures for Financial Derivates Transactions” (8) Director Elections. (9) Discussion to approve the lifting of director of non-competition restrictions. IV. Extraordinary Motions V. Meeting Adjournment - 2 - REPORT ITEMS Item 1: 2018 Business Report Description: 1. Please refer to Attachment 1 (pages 20-22) for the Business Report. 2. Please refer to Attachment 3 (pages 24-52) for the Financial Statements. - 3 - Item 2: Audit Committee’s Review Report of 2018 audited financial statements Description: Please refer to Attachment 2 (page 23) and Attachment 3 (pages 24-52) for the Audit Committee’s Review Report and the Accountant’s Audit Report, respectively. - 4 - Item 3: Report on the 2018 Employee Compensation Distributions Description: 1. According to the Articles of Incorporation adopted by the Board, 5-7% of the company profit (if any) is to be set aside for employee remuneration. 2. The employee remuneration totaled NT$7,662,780,879 in 2018, distributed in cash, taking up 5% of the profit of the year. There is no difference between the above resolution and the ratified cost for 2018. 3. The Chairman is authorized to handle any pending issues related to this item, or any changes needed due to fact changes or as required by the competent authorities. - 5 - Item 4: Status report of the Company’s new indirect investment in Mainland China Description: The 2018 new indirect investments in the Chinese mainland with the company’s own capital via the Company itself or its overseas subsidiaries are as follows: Amount Approved Approval Code Company Name (US$) 10730003620 Polight Technology (Shenzhen) Co., Ltd. 50,000,000 10730003630 Fu Sheng Optoelectronics Technology (Kunshan) Co. Ltd. 11,538,000 10700015290 Fih Electronics Technology (Nanjing) Co., Ltd. 156,950,000 10700015300 Fih (Nanjing) Intelligent Technology Co., Ltd. 75,336,000 10730027260 Jin Ji Full Precision Machinery(Qin Huang Dao)Co., Ltd. 1,593,143 10730027250 Ji Zhi Precision Technology(Shen Zhen)Co., Ltd. 15,000,000 10730026480 Shunsin Technology (Zhong Shan) Limited 27,297,000 10730050820 Nanning Foxfortune Technology Fund Ltd. 154,530 10730050830 Sharp Fit Automotive Technology (Wuxi) Co. Ltd. 6,105,870 10730063670 Hongfutai Precision Electrons (Yantai) Co., Ltd. 30,000,000 10730055180 Interface Technology (Chengdu) Co., Ltd. 19,159,000 10730058960 Huai An Jia Wei Industrial Development Co., Ltd. 4,745,000 10730061660 Gds Software (Shenzhen) Co., Ltd. 2,983,632 10730070500 Yuan Kang Agricultural Biotechnology Co., Ltd. 856,750 10730062220 Guizhou Funayuanchuang Technology Co., Ltd. 3,891,745 10700222010 Fuding Electronic Technology (Jiashan) Co., Ltd. 100,000,000 10700222000 Fuzhun Precision Tooling (Jiashan) Co., Ltd. 35,000,000 - 6 - Item 5: Status report of domestic corporate bond issuance Description: In order to pay the short-term debt, the Company issued domestic unsecured ordinary corporate bonds. Details as follows: Unit: NT$’000 Tranche/Category The 1st Tranche of Unsecured Ordinary Corporate Bonds, 2018 Date of Approval April 27th 2018 Date of Issuance May 9th 2018 Total Issuance Amount 9,000,000 Face Value 1,000 Issue Price NT$100 (at Par) Type of Bonds Coupon A Coupon B Coupon C Coupon D Coupon E Issuance Amount 1,000,000 3,100,000 200,000 3,200,000 1,500,000 2018.5.9 2018.5.9 2018.5.9 2018.5.9 2018.5.9 Term | | | | | 2021.5.9 2023.5.9 2024.5.9 2025.5.9 2028.5.9 Coupon Rate 0.76% 0.89% 0.96% 1.05% 1.35% (Fixed Rate) From the date of the issuance, a simple interest is calculated and distributed once a year Interest Payment per coupon rate Principal Payment 100% principal repayment upon maturity Trustee Bank SinoPac Debt Service Agency The Chengchung Branch of Bank SinoPac Exercise of the Issuance Exercised in Q2 2018 - 7 - Unit: NT$’000 Tranche/Category The 2nd Tranche of Unsecured Ordinary Corporate Bonds, 2018 Date of Approval July 18th 2018 Date of Issuance July 27th 2018 Total Issuance Amount 9,000,000 Face Value 1,000 Issue Price NT$100 (at Par) Type of Bonds Coupon A Coupon B Coupon C Coupon D Coupon E Coupon F Issuance Amount 700,000 200,000 3,900,000 500,000 2,300,000 1,400,000 2018.7.27 2018.7.27 2018.7.27 2018.7.27 2018.7.27 2018.7.27 Term | | | | | | 2021.7.27 2022.7.27 2023.7.27 2024.7.27 2025.7.27 2028.7.27 Coupon Rate 0.73% 0.80% 0.87% 0.92% 1.00% 1.30% (Fixed Rate) Interest Payment From the date of the issuance, a simple interest is calculated and distributed once a year per coupon rate Principal Payment 100% principal repayment upon maturity Trustee Bank SinoPac Debt Service Agency The Chengchung Branch of Bank SinoPac Exercise of the Issuance Exercised in Q3 2018 - 8 - RATIFICATION, DISCUSSION AND ELECTION ITEMS Proposal 1: To approve 2018 Business Report and Financial Statements (Proposed by the Board of Directors) Description: 1. The 2018 Business Report and the Financial Statements have been approved by the Board of Directors, and have been reviewed by the Audit Committee. 2. Please refer to Attachment 1 through Attachment 3 (pages 20-52) for the documents mentioned above. Resolution: - 9 - Proposal 2: To approve the proposal for