Fubon Financial Holding Co., Ltd.
2011 Annual General Shareholders’ Meeting
Agenda Handbook
Date: June 24, 2011, at 9:00 a.m. Address: 14F, No. 50, Sec. 2, Jhongshan N. Rd., Taipei, Taiwan, R.O.C. (the 14th floor grand auditorium located at the Taipei Fubon Bank Jhongshan Building)
Table of Contents
Meeting Procedures…………………………………….…………………………...
Meeting Agenda………………………………………………….………………….
Matters to be Reported……………………………………………….…... ………..
(1) 2010 Business Report………………….………..…..…………......
(2) 2010 Statement and Records of Account Examined by the Audit Committee…
(3) Issuance of Unsecured Corporate Bonds in 2010………………………………..
(4) Repurchase of Treasury Stock and Amendments to the “Rules Governing Repurchase of Shares and Transfer to Employees” ………………………………………………………….
(5) Establishment of “Ethical Corporate Management Best Practices Principles”…
Matters to be Acknowledged………….…………………...……………………….
(1) Acknowledgement of the 2010 Business Report and the Financial Statements..
(2) Acknowledgement of the 2010 Earnings Distribution…………………………
Matters for Discussion and Election………………………………………………..
(1) Issuance of New Shares via Capitalization of Retained Earnings……………...
(2) Company’s Long-Term Fund Raising Plan…………………………………..
(3) Election of the Fifth Term Directors…………………………………………..
(4) Release of Fifth Term Directors from the Non-Competition Restrictions ……
Provisional Motion(s)………………………………………………………………
Attachments…………………………………………………………………….…..
Appendix…………………………………………………………………………….
Fubon Financial Holding Co., Ltd.
2011 Annual Shareholders’ Meeting Meeting Agenda
1. Announcement of the Commencement of the Meeting
2. Chairman’s Remarks
3. Matters to be Reported
4. Matters to be Acknowledged
5. Matters for Discussion and Election
6. Provisional Motion(s)
7. Meeting Adjourned
Fubon Financial Holding Co., Ltd. 2011 Annual Shareholders’ Meeting Meeting Agenda
Date: June 24, 2011 at 9:00 a.m. (Friday) Location of the Meeting: 14F, No. 50, Sec. 2, Jhongshan N. Rd., Taipei, Taiwan, R.O.C. (the14th floor grand auditorium at the Taipei Fubon Bank Jhongshan Building)
1. Announcement of the Commencement of the Meeting (report the number of shares represented by shareholders present at the meeting)
2. Chairman’s Remarks
3. Matters to be Reported (1) 2010 Business Report. (2) 2010 Statement and Records of Account examined by the Audit Committee. (3) Issuance of Unsecured Corporate Bonds in 2010. (4) Repurchase of Treasury Stock and Amendments of “Rules Governing Repurchase of Shares and Transfer to Employees” (5) Establishment of “Ethical Corporate Management Best Practices Principles”.
4. Matters to be Acknowledged (1) Acknowledgement of the 2010 Business Report and the Financial Statements. (2) Acknowledgement of 2010 Earnings Distribution.
5. Matters for Discussion and Election (1) Issuance of New Shares via Capital Increase from Retained Earnings. (2) Company’s Long-Term Fund Raising Plan. (3) Election of Company’s Fifth Term Directors. (4) Release of the Fifth Term Directors from the Non-Competition Restrictions.
6. Provisional Motion(s)
7. Meeting Adjourned
Matters to be reported:
Agenda One: 2010 Business Report (Reported by the Board of Directors) Explanation: Please refer to Attachment I for the 2010 Business Report (detailed in page [*] of this Handbook)
Agenda Two: 2010 Statement and Records of Account examined by the Audit Committee (Reported by the Audit Committee).
Explanation: Please refer to Attachment II for the Audit Report from the Audit Committee on “The 2010 Business Report, Financial Statements and Earnings Distribution” (detailed in page [*] of this Handbook).
Agenda Three: Issuance of Unsecured Corporate Bonds in 2010 (Reported by the Board of Directors) Explanation: 1. With respect to the eighth Board of Directors’ resolution of the fourth term on April 28, 2010 regarding the issuance of unsecured corporate bonds in 2010, such issuance has been approved by the Financial Supervisory Commission letter No. 0990039279 dated August 3, 2010, and the unsecured corporate bonds has been issued on August 23, 2010. 2. The total issued amount of NT$5,000,000,000 was used to replenish the Company’s working capital, with the issuance terms and conditions as stated below:
Issuance Amount Issue Term Issuance Date Maturity (Hundred Coupon Rate Millions of NT$) 5 99-1 2010/8/23 2015/8/23 50 1.56% years
3. Please refer to Attachment III for the status of the bond issuer’s handling and relevant rules (detailed in page [*] of this Handbook).
Agenda Four: Repurchase of Treasury Stock and Amendments to the “Rules Governing Repurchase of Shares and Transfer to Employees” (Reported by the Board of Directors) Explanation: 1. This proposal is conducted in accordance with Paragraph 7 of Article 28-2 of the Securities and Exchange Act and Article 10 of the Company’s “Rules Governing Repurchase of Shares and Transfer to Employees” 2. This seventh repurchase of treasury stock was approved in the tenth Board of Directors’ meeting of the fourth term held on August 27, 2010. The repurchase resolution is as follows: (i) Purpose of Repurchase: to transfer shares to employees (ii) Anticipated Repurchase Period: August 30, 2010 to October 29, 2010 (iii) Anticipated Number of Shares to Repurchase: 5,000,000 shares (iv) Anticipated Repurchase Price: NT$ 34 to 42 per share (continue to repurchase if the price is lower than NT$ 34 minimum) 3. Results of the Repurchase: (i) Actual Number of Shares Repurchased: 5,000,000 shares (ii) Actual Repurchase Period: August 31, 2010 to October 13, 2010 (iii) Total Repurchase Amount: NT$192,327,552 (iv) Average Repurchase Price: NT$38.47 (v) Result: The Company completed the repurchase of shares prior to the anticipated repurchase deadline; the shares have not yet been transferred to employees. 4. For the purpose of encouraging employees and boosting employees’ morale, the Company’s tenth Board of Directors’ meeting of the fourth term approved the “Rules Governing Repurchase of Shares and Transfer to Employees” on August 27, 2010, and amendment to Article 8 of such Rules was also approved in the eleventh Board of Directors’ meeting of the fourth term on October 29, 2010 in accordance with the opinions from the Securities and Futures Bureau. Please refer to Attachment IV for the comparison chart and revised provisions (detailed in page [*] of this Handbook).
Agenda Five: Establishment of the “Ethical Corporate Management Best Practices Principles” (Reported by the Board of Directors) Explanation: 1. In coordination with the polices of the Financial Supervisory Commission, the “Ethical Corporate Management Best Practices Principles” promulgated by the Taiwan Stock Exchange, and be in accordance with international trends and strengthen the Company’s governance, the Board of Directors hereby proposes to establish the “Ethical Corporate Management Best Practices Principles”. 2. The key points to the “Ethical Corporate Management Best Practices Principles” are as follows: (i) This “Ethical Corporate Management Best Practices Principles” shall be applicable to the Company, Company’s subsidiaries, corporations which the Company has direct or indirect contributions exceeding 50% of the capital of such corporations and other institutions or legal persons to which the Company has actual control (Article 1). (ii) Unethical act(s) and benefits explicitly prohibited (Articles 2 and 3). (iii) Bribery, illegal campaign contributions, improper charitable donations or sponsorship and provision of unreasonable gifts, hospitality or other illegitimate profits are explicitly prohibited (Articles 7 to 10). (iv) Compliance to business integrity is explicitly subject to investigation by the Company’s audit department in addition to regular reporting to the Board of Directors for suggestions and improvements (Article 11). (v) To ensure implementation of the business integrity practices, the Company shall establish sufficient accounting system and internal control system; the internal auditors shall also be regularly investigated for compliance (Article 14). (vi) In order to fully implement business integrity practices, it is explicitly provided that the Company shall provide regular educational training and promotion and establish appropriate reporting and discipline system (Articles 15 and 16). 3. Please refer to Attachment V for the Company’s “Ethical Corporate Management Best Practices Principles” (detailed in page [*] of this Handbook).
Matters to be Acknowledged:
Agenda One: Acknowledgement of the 2010 Business Report and the Financial Statements (Proposed by the Board of Directors) Explanation: 1. This proposal is handled in accordance with Articles 228 and 230 of the Company Act and Article 47 of the Financial Holding Company Act. 2. Please refer to Attachment I and VI for the 2010 Business Report and the 2009-2010 Financial Statements and the Consolidated Financial Statements respectively (detailed in page [*] of this Handbook). 3. Acknowledgment is respectfully requested. RESOLVED:
Agenda Two: 2010 Earnings Distribution (Proposed by the Board of Directors) Explanation: 1. Pursuant to the Securities and Exchange Act, Company Act, Company’s Articles of Incorporation and other related rules, the Company’s earnings for 2010 is intended to be distributed as follows: (i) The Company's 2010 after tax earnings is NT$19,905,129,313. (ii) The accumulated undistributed earnings from last year is NT$10,153,176,525. (iii) 10% of the earnings equal to NT$1,990,512,931 is reserved as legal reserve. (iv) The provision of undistributed earnings is decreased by NT$1,161,645. The Company intends to distribute to each shareholder dividends of NT$1.5 per share; among which NT$1 will be distributed as cash dividend, for a total of NT$8,571,682,601 and NT$0.5 will be distributed as stock dividend for a total amount of NT$4,285,841,300 which will be used to increase capital by issuing 428,584,130 new shares. Please refer to Attachment VII for 2010 Earnings Distribution Statement (detailed in page [*] of this Handbook). 2. NT$4,000,000 is intended to be distributed as employees’ bonuses and NT$36,000,000 is intended to be distributed as directors remuneration; both of the foregoing have been recognized and recorded as costs for 2010 in accordance with relevant rules.
3. It is proposed that the Shareholders’ Meeting authorizes the Board of Directors to set the record date for cash dividend and stock dividend. 4. In the event the number of outstanding shares in circulation has either increased or decreased as a result of the repurchase of the Company’s shares or the transfer, conversion, cancellation of shares or other circumstances, the Board of Directors or a person designated by the Board of Directors shall adjust the percentage for distribution accordingly based on the actual number of outstanding shares in circulation on the record dates for cash dividend and stock dividend by in consideration of both the total amounts of cash dividends and stock dividends resolved for distribution in this general shareholders’ meeting, in addition to making necessary adjustments and relevant changes. 5. Acknowledgment is respectfully requested. RESOLVED:
Matters for Discussion and Election Agenda One: Capitalization of Retained Earnings and Issuance of New Shares Explanation: 1. To enhance and strengthen the Company’s capital scale and financial structure, the Company intends to appropriate NT$4,285,841,300 from the Company's undistributed earnings as capital for the issuance of new shares, with a par value of NT$10 per share. The aggregate number of common shares to be issued will be 428,584,130. 2. The record date for stock dividend for this capital increase and issuance of new shares will be decided after the application for capital increase has been approved by the competent authority upon approval of this general shareholders’ meeting. For every one thousand shares based on the shareholding percentage recorded in the shareholders register on the record date, 50 shares shall be distributed to shareholders without compensation. For distribution of fractional shares, shareholders may go to the Company’s designated agent and exchange the fractional shares for cash to be calculated as a fraction of their par value (with fractions of one NT$ discarded) within 5 days from the book close date. The fractional shares will be combined and the Chairman is authorized to arrange designated persons to subscribe the fractional shares. 3. It is proposed that the Shareholders’ Meeting authorizes the Board of Directors to set the record date for stock dividend. 4. In the event that the repurchase of the Company’s shares, or transfer, conversion, cancellation of shares or other circumstances that changed the total number of outstanding shares of the Company in circulation, the Board of Directors or a person designated by the Board of Directors shall adjust the percentage for distribution accordingly based on the actual number of outstanding shares in circulation on the record date in addition to making necessary adjustments and relevant changes 5. Approval is respectfully requested. RESOLVED:
Agenda Two: The Company intends to engage in long-term fund raising (Proposed by the Board of Directors)
Explanation: 1. To meet the demand of the Company’s operation and growth and the capital requirement for long-term strategic development, and to achieve diversification and flexibility of fund raising channels, it is proposed that the shareholders’ meeting authorizes the Board of Directors to raise long-term capital at suitable timing based on market conditions and future capital requirements of the Company in accordance with the Company's Articles of Incorporations, relevant laws and regulations and the principles set forth below (by one or more of these methods), such as domestic cash capital injection, issuance of domestic or overseas convertible bonds, , and issuance of global depositary receipts. 2. The aggregate amount of long-term capital authorized to be raised in this instance shall be no more than NT$40 billion. If the capital is raised through issuance of common shares, the total number of common shares to be issued shall be no more than 1,000,000,000 shares. 3. It is proposed that the shareholders’ meeting authorizes the Board of Directors to set forth, amend and implement the fund-raising plan, including, without limitation, the actual issue price, offering terms, proposed items, issuance amount, expected progress and projected effects and all matters relevant to the issuance plan based on market conditions. In the future, if amendment is required due to competent authority's instruction to make adjustments or due to changes in business operation assessment or the objective environment, the Board of Directors shall be fully authorized to handle such amendments. 4. Please refer to Attachment VIII for issuance method and detailed descriptions (page [*] of the Agenda Handbook). 5. Approval is respectfully requested. RESOLVED:
Agenda Three: Election of the Fifth Term Directors (Proposed by the Board of Directors) Explanation: 1. The term of office for the fourth term of the Company’s directors expires on June 12, 2011, and according to Paragraph 2 of Article 195 of the Company Act, such term of office shall be extended and such directors shall not be discharged until the new directors have been elected and assumed office. 2. According to the Company’s Articles of Incorporation, the Company shall have 9
to 15 directors and among such directors, at least three independent directors with at least 1/5 seat in the Board of Directors. The election of independent directors shall follow the candidate nomination system. 3. The Board of Directors’ meeting resolved that the number of directors to be elected for the next term (i.e. the fifth term) shall be 13 directors (including four independent directors) for a term of office of three years commencing from June 24, 2011 to June 23, 2014. The nomination period for independent directors and number of independent directors to be elected have been announced publicly. 4. There were no nominations for independent directors by the shareholders during the nomination period. The nominations of the independent director have been recommended and resolved by the Board of Directors’ meeting held on March 11, 2011 to nominate Hong-Chang Chang, Louis Chi-Yan Cheung , Timothy Ting-Yu Ting, Kok-Choo Chen as the candidates for the independent directors; the nomination procedure and schedule for the above independent directors have been completed in accordance with the relevant laws and approved after verification. Please refer to Attachment IX for the qualifications of each independent director nominee (page [*] of the Agenda Handbook). 5. It is proposed to proceed for election. ELECTION RESULTS:
Agenda Four: Release of the Fifth Term Directors from the Non-Competition Restrictions (Proposed by the Board of Directors) Explanation: 1. Pursuant to Article 209 of the Company Act, a director engaging, either for himself or on behalf of another person, activities that are within the scope of the Company's business, shall explain at the shareholders’ meeting the essential details of such activities and obtain the shareholders’ approval for engaging in such activities. 2. Directors who participate in the operations of another company that engages in the same or similar business scope as the Company, and who have not obtained the approval from the shareholders, hereby requests the shareholders’ approval to release these directors and their proxies from the non-competition restrictions in accordance with Article 209 of the Company Act. 3. Pursuant to Article 178 of the Company Act, a shareholder who has a personal interest in a matter under discussion at the shareholders’ meeting, which may
impair the Company’s interests, shall neither vote nor exercise the right to vote on behalf of other shareholders as a proxy. It is proposed that the above restriction also applies to the newly elected directors of the Company and such directors’ proxies. 4. Please refer to information disclosed at the shareholders’ meeting for the status on the competition of the fifth term directors. 5. Approval is respectfully requested.
RESOLVED:
Provisional Motion(s)
Meeting Adjourned
06 2010 Annual Report
Message to Shareholders
Dear Shareholders, Buoyed by the global economic recovery and 0.61% and 9.35% respectively. revitalized financial markets, Fubon Financial posted Fubon Financial also saw a robust increase in total robust profits in 2010, and the performances of group assets in 2010, as the holdings of major Group subsid- subsidiaries rebounded to pre-financial crisis levels. iaries grew at a far faster pace than the average in their After-tax income was NT$19.905 billion, the highest sectors. Assets grew at 12.8% clip, nearly double the among domestic financial holding companies for the 7.5% asset growth in the industry, to NT$3.45 trillion second consecutive year. at the end of December, ranking Fubon Financial as Taiwan and China opened a new chapter in the second biggest publicly listed financial holding cross-Taiwan Strait financial relations in June 2010 by company by assets in Taiwan. signing an Economic Cooperation Framework Agree- The economic recovery and improved consumer ment (ECFA), which took effect in September. A confidence strengthened investor sentiment in 2010, Cross-strait Economic Cooperation Committee was helping the Wealth Management Group see a rebound established a few months later, in January 2011, further in fee income to levels attained before the global credit lifting the curtain on the new ECFA era. Fubon Financial tsunami. Bolstered by strong sales of overseas mutual is poised to capitalize on these advances by seeking out funds, the Wealth Management Group’s fee income cooperative opportunities in various fields and maintain- rose 44% from a year earlier and accounted for 69.1% ing a balanced approach to developing a presence in the of Taipei Fubon Bank’s total fee income in 2010. Taipei Greater China market, hoping eventually to build the Fubon Bank’s after-tax income totaled NT$7.28 billion, most complete financial services platform in the region. or 37% of Fubon Financial’s overall after-tax earnings. Celebrating the Fubon Group’s 50th anniversary In June 2010, Fubon Life celebrated the one-year this year, Fubon Financial is determined to set a strong anniversary of its merger with ING Life, and the positive foundation for another exciting and prosperous half impact from the merger’s synergies contributed to a century. Remaining loyal to our core values of integrity, robust bottom line. Fubon Life’s after-tax income of sincerity, professionalism and innovation, we will NT$8.62 billion accounted for 43% of Fubon Financial’s continue to attentively serve customers and expand the total after-tax earnings, the most of any of the holding Group’s reach in Greater China. company’s subsidiaries, and clearly established the life insurer along with Taipei Fubon Bank as the Fubon Record-high Income Leads Industry Group’s main profit engines. Fueled by booming exports and a large increase in Fubon Bank (Hong Kong) saw profits stabilize on private investment, Taiwan’s economy grew 10.82% in the strength of increased fee income and reduced 2010. To maintain price and financial stability, Taiwan’s pressure to set aside provisions. After-tax income was central bank raised the discount rate by 12.5 basis HK$266 million, up 1,080% from 2009, a clear sign points in each of the year’s final three quarters, to that the Bank had recovered from losses on Lehman 1.625% at the end of the year. Mini-bonds and heavy provision pressure. Although Fubon subsidiaries continued to build Fubon Insurance had after-tax income of NT$2.67 reserves in anticipation of Statement of Financial billion in 2010, and its market share of 21.1% contin- Accounting Standards (SFAS) 34, that did not deter ued to lead the industry. Its net combined ratio rose to them from cashing in on the return to prosperity in 89.1% because of the Jiasian earthquake and fires 2010. Fubon Financial had after-tax net income of suffered by large policy holders, but still remained NT$19.905 billion, or EPS of NT$2.33 a share. Return relatively strong. Direct written premium grew 4% on assets (ROA) and return on equity (ROE) were year-on-year to NT$22.17 billion. Daniel M. Tsai Chairman, Fubon Financial
Benefiting from a bullish market in 2010, Fubon sustain growth momentum through continued Securities posted after-tax income of NT$2.055 billion, increases in traditional policy sales and the balanced and it remained in the top three in brokerage business development of bancassurance and life insurance market share. In recent years, Fubon Securities has agent channels. aggressively developed an e-trading platform that has Fubon Life has also been keen to expand its won the acclaim of customers. In 2010 the platform regional reach. Its subsidiary in Vietnam, Fubon Life handled NT$1.34 trillion in trades, up 29% from Insurance (Vietnam) Co., received its business license 2009, the highest growth rate of any e-trading system on Dec. 23, 2010 and formally began operations in among Taiwan’s major brokerage houses. March 2011. The move represented the company’s ascension into the ranks of regional life insurers in Fubon Life: Emerging as Regional Life Insurer Asia. Robust growth in traditional policy sales and As of September 2010, the life insurance cover- momentum generated by insurance agents helped age rate in Vietnam was only 5%, far lower than Fubon Life’s first year premium climb 50.8% in 2010 to Taiwan’s more than 200%, indicating the market’s NT$310.2 billion and total premium rise 34.7% to massive potential. With the support of Fubon NT$438.2 billion. First year premium and total premium Financial’s deep resources, the Vietnam subsidiary will market shares remained the second highest in the try to embrace its parent company’s successful experi- industry at 26.7% and 19.0%, respectively. ence in building local brand recognition and develop Follow initiatives to adjust its product structure the insurance market through a strong specialized and lower the cost of liability, Fubon Life saw its overall agent channel. cost of liability fall to 4.16% in 2010 from 4.56% in In the China market, Fubon Life and Nanjing Zijin 2009, helping narrow the company’s negative interest Investment Co. signed a letter of intent in 2010 to set spread. Moving forward, the company intends to up a joint venture called “Fubon Zijin Life.” 08 2010 Annual Report
Fubon Insurance: Pioneering China’s Market for the first time in 2010 when it set up a branch in Fubon Insurance’s China subsidiary Fubon Property Fuzhou. It formally opened a second branch in Quan- & Casualty Insurance Co. formally opened on Nov. 10, zhou on March 14, 2011 and plans in the future to 2010, becoming the first Taiwan-invested P&C insurer expand beyond Fujian province. Approval for a to operate in China after the signing of the ECFA and Chongqing branch has already been received and representing another major step in Fubon Financial’s Zhangzhou, Tianjin and Nanchang are also being deployment there. targeted as possible branch locations. This expansion Fubon Property & Casualty, in which Fubon Life strategy is intended to position Xiamen Bank as the and Fubon Insurance each have 50% stakes, has “Haixi Zone’s Financial Gateway,” serving Taiwan- paid-in capital of 400 million Renminbi(RMB). invested businesses there and deepening its foothold Headquartered in Xiamen, it will focus initially on in the local market. cultivating the Xiamen and Fujian province P&C Benefiting from the Fubon Group’s rich corporate insurance markets. The company’s strategy will be banking experience, Xiamen Bank became the first patterned after Taiwan’s diversified sales model and financial services institution in China to set up a successful experience, emphasizing for example the “Taiwan Business Department,” highlighting the Bank’s development of strategic alliances with major banks pride in serving Taiwan-invested businesses in the and new marketing techniques such as telemarketing, region. In 2009, it also inaugurated a “Small Business to develop a foothold in the local market. Department,” dramatically enhancing the efficiency Fubon Property & Casualty has already forged a of its financing services for small and medium-sized strategic alliance that includes Xiamen Bank, the enterprises. Xiamen branches of China Construction Bank and Bank of China, leading insurers such as PICC Property and Building the Ideal Financial Services Platform Casualty Company and China Life Insurance (Group) in Greater China Company, and China Telecom to jointly promote Aside from gaining footholds in the Haixi diversified marketing and insurance services. One of Economic Zone with bank and P&C insurance Xiamen’s 10 biggest state-run companies, Xiamen Port branches, Fubon Financial is also actively seeking Holding Group Co., also has become an important cooperative opportunities in other sectors that will strategic alliance partner, contracting Fubon Property & contribute to building Greater China’s most complete Casualty to provide a full range of insurance services financial services platform. to its subsidiaries. In October 2010, Fubon Life and Nanjing Zijin Investment Co. signed a letter of intent to set up a joint Xiamen Bank: venture called “Fubon Zijin Life” to be headquartered in Creating a ‘Haixi’ Financial Gateway Nanjing. It was the first life insurance joint venture deal Xiamen Bank is Fubon Financial’s first beachhead to be signed by any Taiwanese and Chinese companies in the Western Taiwan Straits Economic Zone (also after the ECFA took effect in September. known as the Haixi Economic Zone), which comprises Inroads were also made in the fund management parts of Fujian, Guangdong and Jiangxi provinces sector. Fubon Asset Management announced in August across the Taiwan Strait from Taiwan. After 2010 that it had agreed to set up a joint venture with strengthening its asset quality in 2009, Xiamen Bank China Founder Securities called “Founder Fubon Fund had a banner year last year. Unhindered by general Management Co.” The new company will have 200 credit tightening measures, its outstanding loan million in registered capital and be headquartered in balance grew 23% in 2010 and after-tax income grew Beijing. At the end of 2010, Taiwan’s main financial 123% to 143 million RMB. The nonperforming loan regulator, the Financial Supervisory Commission rate fell to 1.47% in 2010, down from 3.98% in 2008, approved the deal, and once Chinese financial regula- and the NPL coverage ratio rose to 213.5%, from 80% tors also give the deal the green light, it will become two years earlier. the first fund management joint venture between Xiamen Bank extended its reach beyond the city Taiwanese and Chinese interests and represent a major Richard M. Tsai Vice Chairman, Fubon Financial
milestone in the cross-strait securities sector. 34 taking effect at the beginning of 2011, Taipei Fubon Bank set aside NT$1 billion in reserves in 2009 Controlling Risk to Sustain Strong Capital and continued strengthening reserves in 2010, Structure pushing its coverage ratio to 198.40% by the end of In the process of expanding Group operations, the year. That was far better than the 158.07% Fubon Financial has remained extremely attentive to risk averaged by the industry. management, maintaining a strong capital structure The strength of our operating performance and and a level of asset quality that exceeds the market asset quality were reflected in positive ratings by credit average. In 2010, our capital adequacy ratio was rating agencies. Taiwan Ratings Corp. announced on 146.73%, far above the legally mandated 100%. Nov. 18, 2010 that Fubon Financial's long-term rating Taipei Fubon Bank's BIS ratio was 12.99% as of remained at “twAA” and its short-term rating the end of 2010, an indication of the bank’s strong remained at “twA-1+,” with the company's outlook capital position. Its nonperforming loan ratio fell to stable. The ratings clearly reflected Fubon's superior 0.32%, from 0.53% a year earlier, well below the profit-generating capability and asset quality industry average of 0.61%. Also, in anticipation of SFAS compared with others in the industry.
The ratings of various rating agencies in 2010 were as follows: Credit Rating Rating Agency Type Rating Agency Outlook Effective Date Long-term Short-term Standard & Poor's BBB＋ A-2 stable 2010/11/18 International Moody's Baa1 stable 2011/02/09 Domestic Taiwan Ratings Corp. twAA twA-1＋ stable 2010/11/18 10 2010 Annual Report
Setting the Standard for Corporate Governance dominated the financial services sector in Common- Fubon Financial firmly believes that sound corpo- Wealth Magazine’s 2010 “Most Admired Company rate governance is the pillar of sustainable develop- Survey.” Fubon Financial repeated as the most admired ment. Of the 12 members on Fubon Financial’s board, among financial holding companies on the strength of four are independent directors, and the 33% ratio of its outstanding vision, innovation capability and interna- independent directors to total board members is the tional reach. Fubon Life was again rated the most highest of any domestic financial holding company. In admired insurer, and Taipei Fubon Bank repeated as the recent years, Fubon Financial has also established Audit- most admired domestic bank. ing and Corporate Governance committees. These “Following the signing of the ECFA, Fubon stringent practices have helped Fubon Financial stand Financial adopted an aggressive dual-axis strategy out as a benchmark for corporate governance in Taiwan emphasizing corporate banking and consumer finance and in the region and earned the recognition of a to gain a foothold in China’s banking market. Drawing number of specialized international publications. on its experience, it will introduce its best services into Fubon Financial, which was previously honored by the new market,” CommonWealth Magazine said in Euromoney for “Best Corporate Governance” in describing Fubon Financial. Taiwan’s banking and financial sector for six consecutive “In this year’s most admired ratings, Fubon years and as one of the “Best Managed Companies” in Financial led all financial holding companies in five Asia’s banking and financial sector for three straight major categories: operational performance, the ability years, won a recognition award from Corporate Gover- to look ahead, innovation capability, international reach nance Asia for the second straight year in 2010 as one and talent cultivation.” of the “Best of Asia” for corporate governance. The robust performance of Fubon Financial’s Fubon Financial also emerged as the only repeat subsidiaries in 2010 also earned the recognition of winner among local financial holding companies in prominent domestic and foreign financial publications. FinanceAsia’s annual awards, being honored for “Best Taipei Fubon Bank was named “Best Bank in Taiwan” Managed Company,” “Best Corporate Governance,” and “Best Debt House in Taiwan” by Euromoney and “Best Corporate Social Responsibility” and “Best “Best Domestic Provider of Cash Management Investor Relations” among banks and financial institu- Services” as voted by small corporates in Taiwan and tions in Taiwan for a second year in a row. “Best Domestic Provider of FX Services” as voted by We have long made investor relations a major corporates in Taiwan polls conducted by Asiamoney. priority, and part of that commitment has involved Taipei Fubon Bank was also honored by Global building an investor relations web page to provide the Finance as Taiwan’s “Best Trade Finance Provider” and most complete financial data in real time to institutional “Best Investment Bank” in 2010 and by The Asset as investors and analysts. Our online portal was recog- “Best Transaction Bank” in Taiwan. nized in 2010 by IR Global Rankings, which ranked Fubon’s Private Banking division, which offers Fubon Financial’s IR Website as one of the best in clients customized financial services, also earned Greater China. widespread recognition in 2010. Taipei Fubon Bank was Fubon Financial’s strong corporate governance named Taiwan’s “Best Domestic Private Bank” by performance helped Fubon Financial Chairman Daniel Asiamoney for the second consecutive year and “Best M. Tsai earn individual recognition in the field. He won Private Bank in Taiwan” by The Asset. an “Asian Corporate Director Recognition Award” for Fubon Securities was named “Best Brokerage Taiwan from Corporate Governance Asia in 2010 and House in Taiwan” in 2010 and 2011 for its outstanding soon after was cited for “Best Investor Relations by a underwriting performance, making it Taiwan’s first and CEO (Taiwan)” by IR Magazine. only general brokerage house to ever win the prestigious honor. Repeating as the Most Admired Company in At the 2010 Faith, Hope and Love Awards of the Industry Insurance, Fubon Insurance won four awards, including Fubon Financial and Group subsidiaries also the “Distinguished Profession Award for a Non-life Message to Shareholders 11
Management Team
Victor Kung President, Fubon Financial Tsan-Ming Shih Chairman, Fubon Insurance
Benny Chen Chairman, Fubon Securities Peng-Yuan Cheng President, Fubon Life
Jerry Harn President, Taipei Fubon Bank Thomas Liang Managing Director, Fubon Bank (Hong Kong) 12 2010 Annual Report
Fubon Financial
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Insurance Company,” and Fubon Life captured 10 help meet those goals. In 2010, an initiative was honors, including the “Distinguished Award for Social launched with the Syin-Lu Social Welfare Foundation to Contribution.” mobilize resources to help children living in remote areas who have development delays and make sure that CSR: Providing a Bridge to Hope they receive early intervention services. In August 2009, Typhoon Morakot destroyed a The Fubon Art Foundation is devoted to fostering bridge at the entrance to the mountainous village of cultural citizens and infusing art into people’s daily lives Koushe in Sandimen Township in southern Taiwan, through efforts to strengthen cultural roots, promote isolating the village from the outside world. To restore humanism, and bring art to life. The Taipei Fubon Bank traffic links as quickly as possible, the Fubon Charity Charity Foundation is dedicated to caring for the Foundation donated funds to rebuild the bridge and physical and mental well-being of the elderly, encourag- commissioned the private Chiayi City Chiayi Charity ing people with disabilities to grow artistically and Organization, known for its bridge building capabilities, athletically, and helping the economically disadvan- to help with the job. On Dec. 11, 2010, the “Fubon taged escape poverty. Bridge” was formally opened, giving Koushe elementary school students a safe road on which to get to school, The Ideal Financial Services Platform in Greater and it manifested the Fubon Group’s unwavering China commitment to corporate social responsibility. Many signs point to the continuing recovery of the For many years, Fubon Financial has used its social global economy in 2011. The U.S. economic rebound welfare platform comprised of four major foundations continues to pick up strength and growth momentum to get involved in charitable works in many fields and remains strong in emerging economies, especially live the spirit of “giving back to society what one gains China and India. Taiwan’s economy has also been from society.” This dedication to social welfare has rejuvenated, and the Directorate General of Budget, become a key catalyst of Fubon Financial’s sustainable Accounting and Statistics has projected 4.92% growth operations. for the country in 2011. But volatility in financial The Fubon Charity Foundation, now in its 22nd markets remains a concern. year, has long provided emergency relief and assistance The key development strategies and goals for and also helped economically disadvantaged children 2011 for each of our six business groups are as follows: realize their dream of getting an education through its 1.Corporate & Investment Banking Group – The “Making Friends with Love” campaign. In 2010, the Group will focus on improving domestic coverage program distributed NT$122 million to help 16,953 rate, deepening relationships with clients, and students stay in school. expanding client bases overseas. In China, customers The Fubon Cultural & Educational Foundation, in the southern and eastern part of the country will be now in its 20th year, has long been devoted to helping targeted, and the Xiamen Bank platform will be used teenagers improve their potential, promoting parent- to better grasp local banking operations and capital- child interaction and connecting Taiwan with the rest of ize on cross-strait banking opportunities. The Group’s the world, and it recently instituted an innovative underwriting strategy will be to pursue larger bench- “Young Voice, Young Life, Young Career” campaign to mark projects or the public listings or TDR issuances Message to Shareholders 13
planned by overseas Taiwanese businesses returning increasing fixed-income assets but also by adding home to raise funds, with the goal of becoming the holdings of property and blue-chip stocks with stable underwriter of choice for all such companies in the revenue streams. Approval has been given to increase Asia-Pacific region. the weight of offshore holdings to 40%, allowing an 2.Financial Markets Group – The Group will look to increase in the allocation of offshore fixed-income expand cooperation with the Corporate & Investment assets and long-term debt. In terms of direct and Banking Group to improve efficiency and strengthen venture capital investments, the main targets will be the interest-rate derivative business by continuing to businesses in the environmental and green energy, launch new structured products, reach into new media channel, biotechnology and emerging technol- markets and diversify profit sources. In the FX ogy sectors. business, the priority will be to build a Greater China 6.Insurance Group: Fubon Insurance expects to ride franchise base to improve profitability, while in the growth momentum from Fubon Life and external warrants market, the goal will be to build the Fubon distribution channels to expand its personal insurance brand image by developing new offerings and more business, while also making every effort to promote actively marketing our services. corporate insurance programs, develop new products 3.Consumer Finance Group – The Group will concen- and capitalize on public infrastructure or post-disaster trate on creating innovative mortgages and cultivat- reconstruction opportunities. Intensifying its presence ing quality prospects and referrals from top corporate in overseas markets, such as China and Vietnam, will clients in second-tier cities. Aside from retaining the also be a priority. Fubon Life will try to sustain the existing network of developer and real estate broker balanced development of its three major distribution channels, the Group will also build an online channel channels and draw on Fubon Financial resources to and launch a land agent classification system that improve cross-selling results. The strategy to grow rewards top performing agents. Finally, the Group’s overseas will initially rely on Vietnam subsidiaries in credit card strategy will target young customers to Hanoi and Ho Chi Minh City and on joint ventures develop a new customer base and elite consumers to with Chinese partners to make inroads into China’s help improve penetration rates at the top of the life insurance market. consumer pyramid. 2011 is a special year for the Fubon Group 4.Wealth Management Group – Among the Group’s because it marks the company’s 50th anniversary. As we main priorities will be to optimize the currency alloca- contemplate our next 50 years, we hope to ensure tion of customers’ asset portfolios to diversify risk and sustainable operations by strengthening corporate enhance investment performance; cultivate private governance and moving toward “institutionalization.” banking and online investing customers; and develop Fubon Financial will continue to stand firmly in Taiwan mobile banking by collaborating with Taiwan Mobile and pursue steady growth, while expanding our to offer customers value-added services. Other key presence in the Greater China market as we move strategies will involve strengthening institutional client steadily closer to our aspiration of becoming one of services and promoting sub-brokerage services. After Asia’s first-class financial institutions. having obtained QFII status from China, Fubon Asset Management expects to introduce offshore ETF products and establish a joint venture asset manage- Daniel M. Tsai Chairman, Fubon Financial ment company on the mainland. The next step, once legal restrictions are eased, will be to issue purely China funds, helping the firm emerge as the asset manager of choice in Greater China 5.Investment Management Group – With Fubon Life Richard M. Tsai Vice Chairman, Fubon Financial assets expected to climb to NT$1.66 trillion in 2011, the Group’s investment strategy will focus on generat- ing stable long-term investment returns, primarily by Fubon Financial Holding Co., Ltd.
Examination Report by the the Audit Committee
The Board of Directors of the Company has delivered the business report, the financial statements and the earnings distribution statement ended December 31, 2010. Wherein, the financial statements were audited by CPAs of KPMG, and the audit reports have been prepared accordingly. The Audit Committee has examined the above statements and found nothing out of order and thus prepared this report in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act for your ratification.
To: 2011 General Shareholders’ Meeting, Fubon Financial Holding Co., Ltd.
Audit Committee Independent Director: Chang, Hong-Chang
Independent Director: Ting, Timothy Ting-Yu
Independent Director: Chang, An-Ping
Independent Director: Chen, Kok-Choo
Date: April 29, 2011
Attachment 3 Status of the Outstanding Bonds 2010 the First Tranche Unsecured Corporate Type of the Bond Bonds Issue (Offer) Date August 23, 2010 to August 23, 2015 Denomination NTD 1 million Issuing and Transaction Place Republic of China Issue Price 100% par value Total Issue Amount NTD 5 billion Rate 1.56% (fixed) Term 5 years from August 23, 2010 to August 23, 2015 Guarantor N/A Trustee Trust Division, Cathay United Bank Underwriter N/A Legal Counsel N/A CPA KPMG (Taiwan) The Bonds can be redeemed upon the expiration Redemption of the 5-year period in a lump sum from the issue date Unpaid Principal NTD 5 billion Redemption on or prior to the Maturity Date N/A
Restrictions N/A Name of Credit Rating Agency, Rating Date and Taiwan Rating Corp., August 16, 2010, twAA Rating Result Amount of converted (exchanged or subscribed) ordinary shares, overseas depository receipts or other securities N/A Other until the date of printing of annual Rights report Regulations Governing Issuance and Offering Plan for the Bonds (Attached Conversion (Exchange or Subscription) hereafter) Impacts of Regulations Governing Issuance, Conversion, Exchange or Subscription, and N/A issuance conditions to possible dilutions of shares and rights and interests of existing shareholders Name of Custodian N/A Offering Plan for 2010 the First Tranche Unsecured Corporate Bonds
WHEREAS Fubon Financial Holding Co., Ltd. (the “Company”) was notified by the Financial Supervisory Commission on August 3, 2010 to issue the Corporate Bonds. The Offering Plan is as follows:
I. Name of the Bond: Fubon Financial Holding Co., Ltd. 2010 the First Tranche Unsecured Corporate Bonds (the “Bonds”)
II. Issue Amount: the total issue amount of the Bonds is NTD 5 billion
III. Denomination: NTD 1 million
IV. Issue Price: the Bonds will be fully issued at par price on the Issue Date
V. Term: 5 years from August 23, 2010 to August 23, 2015
VI. Coupon Rate: the coupon rate of the Bonds will be 1.56% per annum
VII. Payback method: redeemed upon the expiration of 5-year period in a lump sum from the issue date
VIII. Interest Calculation: Interest shall be calculated from the issue date and paid once a year based on annual single rate. The interest is paid by dollar per million, the amount less than dollar will be rounded up. If the payment date is not a business day of the paying bank, the principal and interest should be paid on the next business day, and no extra interest will be paid. If the principal and interest are received later than the payment date, no detention interest will be paid.
IX. Guaranty: The Bonds is unsecured corporate bonds
X. Forms of Bonds: No physical form of the certificates; registered at the Taiwan Depository & Clearing Corp.
XI. Trustee: Trust Division, Cathay United Bank
XII. Paying Agent: Trust Division, Cathay United Bank. The payment of the principal and interest will be conducted in accordance with the share registration information provided by the Taiwan Depository & Clearing Corp. XIII. Notice: Unless otherwise regulated by laws and regulations, the notice to the creditors will be handled in accordance with the Taiwan Depository & Clearing Corp.’s regulations.
XIV. Others:
1. Priority: The priority of the creditors of the Bonds is the same as the other unsecured creditors of the Company.
2. For the transaction of the Bonds in the secondary market, the Company will file to the GreTai Securities Market (OTC) for listing the Bonds. Attachment 4 Fubon Financial Holding Co., Ltd. (“Company”) Rules Governing Repurchase of Shares and Transfer to Employees (“Rules”)
Established by the Board of Directors on August 27, 2010 Amended by the Board of Directors on October 29, 2010
Article 1. Purpose
To encourage and motivate employees, the Company hereby establishes the Rules in accordance with Article 28-2, Paragraph 1(1) of the Securities Exchange Act and the “Regulations Governing Share Repurchase by Exchange-Listed and OTC-Listed Companies” issued by the Financial Supervisory Commission of the Executive Yuan. Unless otherwise regulated by relevant laws and regulations, repurchase of shares and transfer to employees by the Company shall be in accordance with the Rules.
Article 2. Scope
The Rules apply to the Company and the following subsidiaries:
(a) Fubon Insurance Co., Ltd.;
(b) Fubon Life Insurance Co., Ltd.;
(c) Fubon Securities Co., Ltd.;
(d) Fubon Securities Investment Co., Ltd.;
(e) Fubon Financial Holding Venture Co., Ltd.;
(f) Fubon Venture Capital Consulting Co., Ltd.;
(g) Taipei Fubon Bank Co., Ltd.;
(h) Fubon Bank (Hong Kong) Ltd.;
(i) Fubon Asset Management Co., Ltd.;
(j) Fubon Marketing Co., Ltd.; and
(k) Taiwan Sport Lottery Corporation.
The scope of the Rules may be extended to other local or foreign subsidiaries of any of the aforesaid subsidiaries.
Article 3. Applicability
The Company’s employees or employees of local or foreign subsidiaries in which the Company directly or indirectly holds more than 50% of the voting rights may purchase shares of the Company in accordance with Article 6 of the Rules, provided that such employee reported to duty before the record date, and such purchase rights was reported to, and the Chairman of Board of Directors (the “Chairman”) has been authorized to, approve such purchases.
Article 4. Types of Shares and the Rights and Restrictions
The shares transfer to employees will be the Company’s common shares. Unless otherwise regulated by relevant laws, regulations and the Rules, the rights and obligations of such shares shall be the same as other outstanding common shares.
Article 5. Transfer Term
The shares repurchased at this time may be transferred to employees at any time within 3 years after the repurchase of shares, and such transfer may be conducted all at once or at different times.
Article 6. Transfer Procedure
The Company shall consider an employee’s position, length of service, job performance and disciplinary record, and factors such as the number of shares repurchased by the Company on the record date and the permitted maximum number of shares purchased by a single employee in authorizing the Chairman to determine the number of shares that may be transferred to such employee.
Article 7. Repurchase and Transfer Procedure
1. Announcement, filing, and execution of the repurchase of shares shall be within the execution period in accordance with the resolution of the Board of Directors.
2. The Chairman shall announce the record date, establish the repurchase standards and number of shares, payment terms, and rights and restrictions in accordance with the Rules.
3. Calculate the actual number of shares repurchased, then register the transfer of such shares.
Article 8. Transfer Price
The price of the shares repurchased and transferred herein shall be the average price of the actual repurchase prices, provided that if the Company increases its outstanding common shares before the transfer, the transfer price will be adjusted proportionately with the increased issuance of the shares.
Article 9. Rights and Obligations After Transfer
Unless otherwise regulated, the rights and obligations of the shares after the registration and transfer to employees shall remain the same as the original shares.
Article 10. Implementation and Amendment
1. The Rules and any amendments hereto shall be implemented upon approval by the Company’s Board of Directors.
2. The Rules and any amendments hereto shall be reported at the shareholders’ meeting.
Attachment 5 Fubon Financial Holding Co., Ltd. (“Company”) Ethical Corporate Management Best Practices Principles (“Principles”)
Resolved by the Board of Directors on March 11, 2011.
Article 1. Purpose and Scope
The Company shall abide by the operational philosophies of honesty, transparency and responsibility, base policies on the principle of good faith and establish good corporate governance and risk control and management mechanism so as to create an operational environment for sustainable development.
The Principles is applicable to the Company’s subsidiaries, any foundation to which the Company’s direct or indirect contribution of funds exceeds 50% of the total funds received, and other institutions or juridical persons which are substantially controlled by such company ("Business Group").
Article 2. Unethical Conduct Prohibited.
When engaging in commercial activities, the Company’s directors, managers, employees or persons having substantial control over the Company ("Substantial Controllers") shall not directly or indirectly offer, promise to offer, request or accept any improper Benefits (as defined below), nor commit unethical acts including breach of ethics, illegal acts, or breach of fiduciary duty ("Unethical Conduct") for purposes of acquiring or maintaining Benefits.
The counterparties of the commercial activities stated in the preceding paragraph includes civil servants, political candidates, political parties or members of political parties, state-run or private-owned businesses or institutions, and their directors, supervisors, managers, employees or Substantial Controllers or other interested parties.
Article 3. Benefits.
"Benefits" in the Principles means any thing of value, including money, endowments, commissions, positions, services, preferential treatment or rebates of any type or in any name. Benefits received or given occasionally in accordance with accepted social customs and that do not adversely affect specific rights and obligations shall be excluded.
Article 4. Compliance.
The Company shall comply with the Company Act, Securities and Exchange Act, Business Entity Accounting Act, Political Donations Act, Anti-Corruption Statute, Government Procurement Act, Act on Recusal of Public Servants Due to Conflicts of Interest, relevant rules of Taiwan Stock Exchange and GreTai Securities Market (“TWSE/GTSM) or other laws or regulations regarding commercial activities, as the underlying basic premise to facilitate ethical corporate management.
Article 5. Warranty and Execution.
The Company’s board of directors and the managers shall undertake to rigorously and thoroughly enforce such policies for internal management and external commercial activities.
Article 6. Warranty and Execution. The Company shall engage in commercial activities in a fair and transparent manner.
Prior to any commercial transactions, the Company shall take into consideration the legality of their agents, suppliers, clients or other trading counterparties, and their records of Unethical Conduct, if any. It is advisable not to have any dealings with persons who have any records of Unethical Conduct.
When entering into contracts with other parties, the Company shall include in such contracts provisions demanding ethical corporate management policy compliance and that in the event the trading counterparties are suspected of engaging in Unethical Conduct, the Company may at any time terminate or cancel the contracts.
Article 7. Certain Benefits Prohibited.
When conducting business, the Company and its directors, managers, employees and Substantial Controllers, shall not directly or indirectly offer, promise to offer, request or accept any improper Benefits, including rebates, commissions, grease payments, or offer or accept improper Benefits in other ways to or from clients, agents, contractors, suppliers, public servants, or other interested parties, unless permitted by the laws of the territories where the Company operates.
Article 8. Certain Benefits Prohibited.
When directly or indirectly offering a donation to political parties or organizations or individuals participating in political activities, the Company and its directors, managers, employees and Substantial Controllers, shall comply with the Political Donations Act and the Company’s own relevant internal operational procedures, and shall not make such donations in exchange for commercial gains or business advantages.
Article 9. Unlawful Charitable Donations or Sponsorships Prohibited.
When making or offering donations and sponsorship, the Company and its directors, managers, employees and Substantial Controllers shall comply with relevant laws and regulations and internal operational procedures, and shall not surreptitiously engage in bribery.
Article 10. Improper Presents, Hospitality or Interests Prohibited.
The Company and its directors, managers, employees and Substantial Controllers shall not directly or indirectly offer or accept any unreasonable presents, hospitality or other improper Benefits to establish business relationship or influence commercial transactions.
Article 11. Organization and Responsibility.
The Company’s board of directors shall, in accordance with its standard of care, urge the Company to prevent Unethical Conduct, always review the results of the preventive measures and continually make adjustments so as to ensure thorough implementation the Principles. To achieve sound ethical corporate management, the audit department shall incorporate compliance with the Principles into its audits and report areas requiring improvement to the board of directors on a regular basis.
Article 12. Compliance in the Course of Business.
The Company’s directors, managers, employees and Substantial Controllers shall comply with laws and regulations and the Company’s internal controls when conducting business.
Article 13. Avoidance of Conflicts of Interest by the Directors and Managers. The Company shall promulgate policies for preventing conflicts of interests and offer appropriate means for directors and managers to voluntarily explain whether their interests would potentially conflict with those of the Company.
The Company’s directors shall exercise a high degree of self-discipline and may present his opinion and answer relevant questions when the director or the juristic person that the director represents is an interested party and such participation is likely to prejudice the interests of the Company. Such interested director is prohibited from participating in discussion of or voting on any proposal, and shall not vote as a director vote or as a proxy of another director on such proposal in such circumstances. The directors shall practice self-discipline and must not support one another in improper dealings.
The Company’s directors and managers shall not take advantage of their positions in the Company to obtain improper Benefits for themselves, their spouses, parents, children or any other person.
Article 14. Accounting and Internal Controls.
The Company shall establish effective accounting systems and internal control systems for business activities which may be at a higher risk of being involved in Unethical Conduct, not have under-the-table accounts or keep secret accounts, and conduct reviews regularly so as to ensure that the design and enforcement of the systems are showing results. The Company’s internal auditors shall periodically examine the Company’s compliance with the foregoing and prepare audit reports and submit the same to the board of directors.
Article 15. Training and Assessment Programs.
The Company shall periodically organize training and awareness programs for directors, managers, employees, and Substantial Controllers and invite the Company’s commercial transaction counterparties so they understand the Company’s resolve to implement ethical corporate management, the related policies, and the consequences of committing Unethical Conduct.
The Company shall apply the policies of ethical corporate management when creating its employee performance appraisal system and human resource policies to establish a clear and effective reward and discipline system.
Article 16. Reporting and Punishment.
The Company’s managers, employees, and Substantial Controllers shall report Unethical Conduct to the audit committee, managers, internal audit manager, or other appropriate internal officers. The Company shall keep the reporter's identity and content of the report confidential.
The Company shall establish a well-defined disciplinary and complaint system to handle violations of the Principles, and immediately disclose on the company's internal website the offender's job title, name, date the violation was committed, violating act and how the matter was handled.
Article 17. Information Disclosure.
The Company shall disclose the status of the enforcement of the Principles on its websites, annual reports and prospectuses.
Article 18. Amendments or Supplements to the Principles.
The Company shall at all times monitor the development of relevant local and international regulations concerning ethical corporate management, and encourage directors, managers and employees to make suggestions so as to review and improve the Principles and achieve better results from implementing the Principles.
Article 19. Implementation and Amendments. The Company’s Principles shall be implemented after consideration by the governance committee, approval by the board of directors, and reported at a shareholders' meeting. The same procedure shall be followed for any amendments to the Principles hereto. .
Attachment 7 Fubon Financial Holding Co., Ltd. Earnings Distribution Plan Year 2010
Unit: NTD Items Amount After-tax net profit of this year 19,905,129,313 Add: Undistributed Retained Earnings for Last 10,153,176,525 Year Less: 10% legal reserve (1,990,512,931) Less: provision for un-distributed earnings (1,161,645) adjustment amount (Note 1) Earnings for distribution 28,066,631,262 Distribution Items (Note 2):
(8,571,682,601) Cash Dividend (1 dollar per share)
(4,285,841,300) Stock Dividend (0.5 dollar per share) Un-distributed earnings balance 15,209,107,361
Note 1: Undistributed earnings items adjusted and reduced in accordance with Financial Accounting Standards No. 5. Note 2: The amount of dividend is calculated by the number of outstanding shares. The actual rates of cash and stock dividends distribution rate will be adjusted according to the number of outstanding shares of the Company on the record date for distribution of dividends, and the profit from the most recent fiscal year should be distributed with priority. Note 3: According to the Articles of Incorporations of the Company, after legal reserve has been reserved from the profit, between 0.01% and 0.05% of the remaining profit shall be reserved as employee bonus. NT$4,000,000 is proposed to be allocated as employee bonus, which have been recognized as expenses for year 2010 pursuant to relevant rules. Note 4: NT$36,000,000 is proposed to be allocated as remunerations to directors, which have been recognized as expenses for year 2010. Chairman: Manager: Chief Accounting Officer: Attachment 8 Explanations Regarding Issuance Methods and Terms of the Long-term Fund Raising Plan
I. Domestic Capital Injection in Cash:
(1) This round of capital increase in cash via issuing common shares will be conducted by way of either book building or public offering.
(2) Conducted by way of book-building
1. If the underwriting is conducted by way of book building, except that 10% to 15% of the newly issued shares shall be reserved for subscription by employees of this Company in accordance with Article 267 of the Company Act, the remaining 85% to 90% of the newly issued shares shall be allocated to the public with the approval of the shareholders’ meeting where the existing shareholders waive their preemptive right to subscribe to the new shares pursuant to Article 28-1 of the Securities and Exchange Act. In case employees waive their rights or any shares remain unsubscribed, the Chairman is authorized to contact specific persons to subscribe to the remaining shares.
2. The issue price may not be less than 90% of the arithmetic average of the closing prices of the common shares either 1, 3 or 5 business days prior to the pricing date, after deducting bonus shares from dividends (or capital reduction). Therefore, it is proposed that the Board should be authorized to negotiate with the lead manager and determine the actual issue price based on the above-described price range and the overall situation of book-building.
3. In terms of rights and interests of the existing shareholders, if the maximum number of common shares to be issued for capital increase in cash is 1,000,000,000, it will represent approximately 11.70% of the current outstanding shares of the Company. Although rights and interests of the existing shareholders will be partially diluted, it is still subject to the restrictions set forth in Articles 27, 36 and Paragraph 2 of Article 43-1 of the Securities Association Regulations Governing Underwriting and Re-Distribution of Securities by Securities Firms (the “Re-distribution Regulations”). After effect of capital increase demonstrates, it will enhance the competitiveness of the Company and benefit the shareholders and therefore, it will not likely cause major impact on rights and interests of the existing shareholders.
1 (3) Conducted by way of public offering:
1. If public offering method is adopted, 10% to 15% of the newly issued shares shall be reserved for subscription by employees of this Company, another 10% will be allocated to the public and the remaining 75% to 80% of the shares shall be subscribed by the existing shareholders based on their shareholding percentage on the record day for subscription. In case existing shareholders or employees waive their rights or any shares remain unsubscribed, the Chairman is authorized to contact specific persons to subscribe to the remaining shares.
2. The issue price may not be less than 70% of the arithmetic average of the closing prices of the common shares either 1, 3 or 5 business days prior to the pricing date, after deducting bonus shares from dividends (or capital reduction). The Board shall be authorized to establish the ex-rights date as the measurement date.
(4) The expected purpose of the fund raising is to enhance operating fund and company's capital, pay-off bank loans or meet one or multiple purposes by long-term development of the Company. Implementation of this plan is expected to strengthen the competitiveness of the Company, enhance operating efficiency, it will have positive impact on the rights and interests of the existing shareholders.
(5) It is proposed that the shareholders’ meeting approves and authorizes the Board of Directors to decide, adjust and implement the fund-raising plan, including actual issue price, number of shares to be issued, offering terms, proposed items, offering size, progress and projected effects, as well as all matters related to the issuance plan based on market conditions. In case of any amendment or alternation of the plan according to the instruction of the competent authorities or based on the business operation assessment or any need due to the objective situation, the Board of Directors should be fully authorized to handle such amendment or alternation.
II. Principles for the Authorization of the Board of Directors to Handle Capital Increase by way of Issuance of Common Shares to Participate in Issuance of Overseas Depository Receipts:
(1) Regarding issuance of overseas depository receipts for cash injection purpose with common shares as underlying securities, except that 10% to 15% of the newly issued shares shall be reserved for subscription by employees of this Company pursuant to Article 267 of the Company Act, the remaining 85% to 95% of the newly issued shares shall be allocated to the public pursuant to Article 28-1 of the Securities and Exchange Act, to serve as the original securities to participate in issuance of overseas depository
2 receipts. In case employees waive their rights or any shares remain unsubscribed, the Chairman is authorized to contact specific persons to subscribe to the shares or include them in the issuance of the original securities of overseas depository receipts.
(2) Basis and Rationality of the Price: Issue price may not be less than 90% of the simple arithmetic average of the closing prices of common shares for either 1, 3 or 5 business days prior to the pricing date, after deducting bonus shares from dividends (or capital deduction). The method for determination of price in this capital increase for the cash injection was handled pursuant to the laws and regulations of the competent authorities, therefore, the basis of the price should be reasonable. In view of the fact that the domestic stock prices tend to fluctuate violently in a very short period of time, therefore, the Chairman is authorized to contact securities manager and determine the actual issue price, within the above scope, based on international customary practice and with reference to international capital market, domestic market value and consolidated book building conditions, to increase acceptability of overseas investors. The issue price for overseas depository receipts shall be determined based on fair market value of the common shares formed in domestic collective trading market; the existing shareholders may acquire common shares with a price close to the issue price of the overseas depository receipts without bearing any currency exchange risk and liquidity risk. If the maximum number of common shares to be issued for capital increase by cash is 1,000,000,000, it will represent around 11.70% of the current outstanding shares of the Company. Although rights and interests of the existing shareholders will be partially diluted, if the existing shareholders comply with Article 27, 36 and 43-1 of the Re-distribution Regulations, overseas market customary practice, laws and regulations of local country, they may participate in book building and existing shareholders shall have the preemptive right to subscribe to new shares. After effect of the capital increase demonstrates, it is expected to enhance competitiveness of the Company and benefit the shareholders. Overall speaking, it will create positive benefit to the rights and interests of the existing shareholders.
(3) The expected purpose of the fund raised in this plan is to enhance operating fund and company's capital, pay-off bank loans or meet one or multiple purposes by long-term development of the Company. Implementation of this plan is expected to strengthen the competitiveness of the Company, enhance operating efficiency, it will have a positive impact on and rights and interests of the existing shareholders.
(4) It is proposed that the shareholders’ meeting approves and authorizes the Board of Directors to decide, adjust and implement the fund-raising plan,
3 including actual issue price, number of shares to be issued, offering terms, proposed items, offering size, progress and projected effects, as well as all matters related to the issuance plan based on market conditions. In case of any amendment or alternation of the plan according to the instruction of the competent authorities or based on the business operation assessment or any need due to the objective situation, the Board of Directors should be fully authorized to handle such amendment or alternation.
(5) In order to coordinate with the capital increase by way of issuance of common shares to participate in issuance of overseas depository receipts, it is proposed that the shareholders’ meeting authorizes the Chairman or his designated person to approve and sign all documents related to the overseas depository receipts and handle all relevant matters on behalf of the Company.
(6) Chairman is authorized to handle any matters not fully provided for above.
4 Attachment 9 Hong-Chang Chang - CV
Birthday：Oct. 9, 1939 Educational Background: - Bachelor of Commerce (International Trade), National Taiwan University - Master, London School of Economics and Political Science - Ph.D., The Wharton School of the University of Pennsylvania Professional Experience: - Research Fellow of Institute of Economics, Academia Sinica (1963-1990) - Professor of Business National Taiwan University, Studies of School of Law (1980-1985) - Professor/ Chairman/ Director of National Taiwan University , Accounting, College of Management (1985-1999) - Dean of National Taiwan University, College of Management (1996-1999) - President of De Lin Institute of Technology (1999-2001) - Acting Principal of Jinwen University (2001-2002) - Supervisor of Fubon Financial Holding Co., Ltd. (2002-2008) - Professor Emeritus/ Adjunct of National Taiwan University , Accounting, College of Management (present) - Independent Director of Fubon Financial Holding Co., Ltd (present) - Managing Independent Director of Taipei Fubon Bank (present) - Independent Director of Fubon Securities Co., Ltd. (present) - Independent Director of TECO Electric & Machinery Co., Ltd. (present) Louis Chi-Yan Cheung – CV
Birthday: Sept. 11, 1963 Educational Background: - Bachelor of Engineer, University of Cambridge - Ph.D. of Business Information Systems, University of Cambridge Professional Experience: - Consultant/Global Partner of McKinsey & Company (1993-2000) - Senior Advisor to the Chairman/Chief Information Officer/ Vice President/ Chief Financial Officer of Ping An Insurance (Group) Company of China, Ltd. (2000-2003) - President of Ping An Insurance (Group) Company of China, Ltd. (2003-2011) - Executive Director of Ping An Insurance (Group) Company of China, Ltd. (2006-2011) - Non-executive Director of Ping An Insurance (Group) Company of China, Ltd. (present) - Chief Executive Officer of Boyu Capital Advisory Co., Ltd. (present) Timothy Ting-Yu Ting - CV
Birthday: Sep. 4, 1954 Educational Background: - Bachelor of Social Studies, National Taiwan University - Master of Social Studies, University of Michigan - Ph.D. of Social Studies, University of Michigan Professional Experience: - Associate Professor of National Chengchi University, Social Studies (1983-1985) - Assistant Professor of Kansas State University, Social Studies (1986-1988) - Chairman of Public Opinion Research Foundation (1987-1991) - Associate Professor of National Taiwan University, Social Studies (1985-1997) - Chief Adviser of Gallup Market Research Corp., Taiwan (present) - Independent director of Fubon Financial Holding Co., Ltd. (present) - Independent director of Fubon Life Insurance Co., Ltd. (present) - Independent director of Fubon Insurance Co., Ltd. (present) - Director of Gallup Market Research Corp., Taiwan (present) - Independent director of KG Hospitality Management Co., Ltd.(present)
Kok-Choo Chen - CV
Birthday: Oct. 24, 1947 Professional background: - Inns of Court School of Law, U.K. (Barrister) - Admitted in California State Bar - Admitted in Singapore Professional experience: - - Common Law Lawyer of Ding & Ding Law Offices (1976 -1987) - Common Law Lawyer of Kuo Cheng Law Firm (1988 – 1990) CEO of National Culture and Arts Foundation (1995-1997) - Senior Vice President and General Counsel of Taiwan Semiconductor Manufacturing Company (1997-2001) - Chairman of TSMC Education and Culture Foundation (1998-2001) - Visiting Professor of National Tsing Hua University (1999 -2002) - Visiting Professor of Soochow University, School of Law (2000-2009) - Founder and Director-General of Taipei Story House (present) - Independent director of Fubon Financial Holding Co., Ltd. (present) - Independent director of Taipei Fubon Bank (present) - Independent director of Fubon Insurance Co., Ltd. (present) - Supervisor of Common Wealth Life Publishing Co., Ltd. (present) - Director of Yuan Harbor Investment Limited (present)
ARTICLES OF INCORPORATION OF FUBON FINANCIAL HOLDING CO., LTD. [ENGLISH TRANSLATION]
Chapter I - General provisions
Article 1 - The Company is organized in accordance with the Company Law, the Financial Holding Company Law and other applicable laws to expand the economic scale of its operations and create overall operating benefits, and is named 富邦金融 控股股份有限公司. (Fubon Financial Holding Co., Ltd.)
Article 2 - The head office of the Company is established at Taipei and may, subject to business requirement, set up branch office(s) at other appropriate locations.
Article 3 - Public notices to be given by the Company shall be handled in accordance with manners provided by applicable laws, regulations or placed in a daily circulating newspaper at the place of business of the head office.
Chapter II - Shares
Article 4 - The total authorized capital of the Company shall be NT$120 billion, divided into 12 billion shares with a par value of NT$10 each. Subject to practical need, the Board is authorized to issue such shares by installments. Within the 12 billion shares stated above, 600 million shares shall be reserved for issuance of warrants.
Article 5 - The share certificates of the Company shall all be in non-bearer form and shall be issued only after they have been signed and sealed by at least three directors, serially numbered, and duly certified by the issuing and certifying agency approved by the competent authority. The Company can be exempted from printing any share certificate for the newly issued shares. For new shares to be issued by the Company, the Company may print a consolidated share certificate representing the total number of the new shares to be issued, provided that the share certificates to be issued shall be recorded or placed under the custody of a centralized securities depository enterprise.
Article 6 - For the co-owned shares of the Company, the co-owners shall designate a person to exercise such shareholder rights.
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Article 7 - The Company shall handle share matters in accordance with the Guidelines Governing Stock Matters of Public Offering Companies.
Chapter III – Business
Article 8 - The Company engages in financial holding business.
Article 9- The Company's scope of business is as follows:
1. The Company may invest in the following businesses:
(1) Financial Holding Company (2) banking business (3) bills finance (4) credit card business (5) trust (6) insurance (7) securities (8) futures (9) venture capital (10) foreign banking institutions approved by the competent authority (11) other banking related business which is approved by the competent authority (12) other banking related businesses in which the Company may invest by law
2. Management of the above invested business entities
3. The Company may apply for approval of its investment in businesses other than as described in subparagraph (1) above.
4. Other relevant businesses approved by the competent authority.
Article 10 - The Company engages in investment business professionally. The total amount of investment in other businesses is not subject to the limitation of 40% of the Company's paid-in capital under Article 13 of the Company Law.
Article 11 ［Deleted］
Chapter IV - Shareholders' Meeting
Article 12 - Shareholders' meetings shall be of two types: regular shareholders' meeting and special shareholders' meeting, the former to be convened within six months of
2 the close of each business year by the Board, and the latter to be convened in accordance with the Company Law at such time as necessary. Shareholders' meetings are convened by the Board unless otherwise regulated by Company Law or other regulations. For regular shareholders' meeting, the notice of meeting shall be served to each shareholder at least thirty (30) days prior to the meeting; for special shareholders' meeting, a notice of meeting shall be served to each shareholder at least fifteen (15) days prior to the meeting. For the shareholders holding less than one thousand (1000) registered shares, the notice of meeting may be served through public announcement. The notice and announcement for the meetings shall specify the reasons for the meeting and upon consent by the recipient; the notice may be served electronically.
Article 13 - If a shareholder appoints a proxy to attend a shareholders' meeting in his place, the shareholder shall issue a power of attorney in the form printed by the Company setting forth the scope of vested powers. Such power of attorney shall be received by the Company five days prior to the meeting. In the event of duplicate powers of attorney, the one first received shall govern. The above shall not apply to the cancellation of a power of attorney.
After the service of a proxy to the Company, in case the shareholder granting the said proxy intends to attend the shareholders’ meeting in person, a proxy rescission notice shall be given in writing to the Company at least one day prior to the date of the shareholders’ meeting, otherwise, the voting right exercised by the authorized proxy at the meeting shall prevail.
Save in trust business or the agent for stock affairs approved by competent authorities, if one person is appointed as proxy of two or more shareholders, the voting rights of the proxy shall not exceed 3% of the total number of votes attached to all the issued shares; any vote in excess of that amount shall not count.
Article 14 - Unless otherwise provided by the law, a shareholders' meeting shall be chaired by the chairman of the Board. Where the chairman of the Board is absent, the shareholders’ meeting shall be proceeded in accordance with relevant provisions prescribed by the Company Law.
Article 15 - Except as otherwise provided by the legislation, resolutions of a shareholders' meeting shall be adopted at a meeting attended by shareholders representing a majority of the total number of issued shares and at which meeting a majority of the shareholders vote in favor of such resolutions.
3 Where the number of attending shareholders falls short of the above quorum but the meeting is attended by shareholders representing at least one-third of the total number of issued shares, such resolution are quasi-resolutions. The abovementioned quasi-resolutions, if still adopted by a majority vote of the attending shareholders, shall be deemed resolutions under the first paragraph. Quasi-resolutions may be deemed as the resolution as the resolution made by paragraph one of this Article, provided that:
(a) the quasi-resolutions are sent to all shareholders
(b) A shareholders' meeting shall be re-convened within a month, in which meeting, if attended by shareholders representing at least one-third of the total number of issued shares, and the quasi-resolutions are adopted by a majority vote of the attending shareholders and shall be notified to each shareholder.
More than one person is allowed to represent a corporate shareholder, provided the voting rights of such representatives shall be exercised based on their combined shareholding. Where there are more than two representatives, such representatives shall jointly exercise their voting rights.
Article 16 - Except as otherwise provided by the legislation, matters subject to resolution and execution at a shareholders' meeting are as follows:
1. review/determine and amend these Articles of Incorporation
2. elect directors
3. inspect and accept statements and reports compiled by the Board and the Audit Committee.
4. resolve on adjustment to capital
5. resolve on the distribution of profit, dividend and bonus, and measures to cover losses
6. other matters subject by law to resolution at a shareholders' meeting
Article 17 - Minutes shall be prepared for all resolutions adopted at a shareholders' meeting specifying the time, date and place of the meeting, number of shares held and represented by attending shareholders, name of the chairman of the meeting, how the resolutions were adopted, and matters for resolution, and shall be signed and sealed by the chairman of the meeting. Such minutes shall be kept at the Company together with the shareholder attendance book and powers of attorney
4 of proxies appointed and distributed to all shareholders. Preparation and distribution of the above minutes may be made electronically. For the shareholders holding less than one thousand (1000) shares, the distribution of minutes aforementioned can be substituted by public announcement.
Chapter V - Directors and the Board of Directors
Article 18 - The Company shall have nine to fifteen directors. The Board meeting is authorized to approve the number of directors. The number of independent directors shall be no less than three, and shall be no less than one fifth of the total number of directors, all to be elected from persons having legal capacity at a shareholders' meeting.
Election of independent directors shall adopt the candidate nomination measure and independent directors shall be elected from among the list of candidates for independent directors by the shareholders’ meeting. Matters regarding professional qualification, restrictions on shareholdings, concurrent positions held, determination of independency, method of nomination and election and other matters for compliance with respect to independent directors shall be subject to the rules prescribed by the securities governing authorities.
The total amount of shares of the non-bearer share certificates held by all directors shall conform to the Regulations Governing the Percentage Holdings, Inspection and Enforcement of the Directors and Supervisors of Public Offering Companies.
The election of directors and supervisors shall be made public, pursuant to the principle of equity, fairness. The shareholders’ meeting should also approve the Procedures for Election of Directors.
Article 19 - Directors shall each hold office for a term of three years, and are eligible for re- election. However, when the term of directors shall be prolonged till the directors for next term take up such positions when the term is complete and those of next term cannot be elected in time.
Article 20 - Where the number of directors short covers up to one-third of all directors, a special shareholders' meeting shall be called immediately in sixty (60) days to have new directors elected to fill the vacancies until the incumbent term expires; provided that with respect to a director appointed by a corporate shareholder or its representative [but incapacitated ex officio], a new director may be appointed to replace the previous director to serve out the incumbent term.
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Article 21 - The Board shall be formed by the directors. Three to five executive directors may be elected from among the directors by a majority vote of the shareholders present at a meeting attended by at least two-thirds of all directors. The chairman of the Board shall also be elected from among the executive directors in the same fashion as above. Where necessary, vice chairman of the Board may also be elected from among the executive directors. If the Board does not have an executive director, a chairman shall be elected from among the present directors at a meeting attended by over two-thirds of the directors, and by a majority vote of the attending directors. A vice chairman shall also be elected from among the present directors in the same fashion as above. The chairman of the Board shall chair all shareholders', directors' and executive directors' meetings internally and represent the Company externally. Where the chairman of the Board is on leave or unable to perform his duties, he shall designate the vice chairman of the Board to act on his behalf. If there is no vice chairman or vice chairman is also on leave or unable to perform his duties, the chairman shall designate an executive director to act on his behalf. If there is no executive director, the chairman shall designate one director to act on his behalf. In the absence of such designation, the executive directors or directors shall elect a person from among themselves to act on behalf of the chairman of the Board.
Article 22 - The Board shall perform the following functions:
(1) determine business policies or operation plan; (2) review annual budgets; (3) prepare or review financial report; (4) decide on the distribution of profit; (5) decide on the adjustment to capital; (6) determine on major investment projects; (7) decide on offering, issuance, or private placement of any equity-type securities; (8) review and examine material assets transactions; (9) approve or amend internal control policy; (10) directors’ remuneration structure and policy;
(11) appoint and dismiss financial, accounting, risk management, legal compliance or internal auditing officers and managers; managerial officer’s performance assessment standards and salary standards; (12) appoint and dismiss Certified Public Accountants, and decide their remuneration; (13) appoint directors and supervisors of subsidiaries; (14) approve the rules regulating the audit committee and other types of the functional committees ; and
6 (15) other matters requiring resolution of the board of directors meeting pursuant to law or the Articles of Incorporation; major issues prescribed by the competent authorities or matters authorized by the shareholders’ meeting .
Article 23 - The notice for the directors’ meeting shall specify the reasons for the meeting and shall be served to each director at least seven (7) days prior to the meeting. A directors' meeting may be held at any time in case of an emergency. A directors' meeting of the Company shall be convened by the chairman unless otherwise stipulated by the legislation. Unless otherwise provided by laws and regulations, resolutions of a directors' meeting shall be adopted by a majority vote of the shareholders present at a meeting attended by a majority of all directors. In case a director cannot, for cause, attend a meeting, he may appoint another director in writing as his proxy to attend in his place. A director may act as the proxy of only one other director. The minutes book shall be prepared for all resolutions adopted at a directors' meeting, and kept after being duly signed and sealed by the chairman and recording secretary of the meeting. If the Board meeting is held in the form of video conference, those participated by video conference are deemed as participation in person. Preparation and distribution of notice of the directors’ meeting and meeting minutes may be made electronically.
Article 24 - If the Company has an executive board of directors, during the Board recess period, the executive directors shall, by assembly, perform the functions of the Board on a regular basis, and the chairman of the Board shall convene meetings from time and time. Unless otherwise provided by legislation, resolutions of such meetings shall be adopted by a majority vote of the executive directors present at a meeting attended by a majority of all executive directors. For matters substantially relating to the interest of the Company, during recess of the Board, the chairman of the Board and the executive directors shall perform their duties by the resolutions of the Board.
Article 25 - The Board of the Company shall set up the Audit Committee, which shall consist of the entire independent directors. It shall be no less than three in number, one of whom shall serve as the convener, and at least one of whom shall have accounting or finance expertise. Exercise of powers and other compliance mattes of the Audit Committee shall be handled in accordance with relevant laws and regulations or provisions of the Articles of Incorporations of the Company. Since the Company has the Audit Committee, the Company is not required to have supervisor pursuant to the applicable laws and regulations.
7 The Board of the Company may separately set up a Corporate Governance Committee and other functional committees. Rules regulating such committees shall be promulgated by the Board.
Article 26 - The remuneration of the directors of the Company (including independent directors) shall be determined by the Board, considering degrees of participation and value of contribution of said directors in business operation of the Company, as well as based on levels of remuneration generally adopted by the same industry. In addition, appropriate traveling fee and other compensation can be paid to the directors. The Company may purchase liability insurance to cover indemnification obligations of directors and important officers arisen from performing their duties during tenure of their offices. The Chairman of the Board is authorized to handle the above mentioned insurance and the continuation of such insurance.
Article 27 - The directors of the Company may act concurrently as directors and supervisors of subsidiaries.
Chapter VI - Managerial Officers
Article 28 - The Company shall have several managerial officers, who shall adhere to the policies of the Board of Directors, and have the authority to manage Company’s affairs and sign documents on behalf of the Company in accordance with the Articles of Incorporations of the Company or within the scope of power stipulated under contract.
Article 29 - The appointment and dismissal of the managerial staff of the Company including the president shall be governed by the Company Law, Financial Holding Company Law and applicable laws and regulations.
Chapter VII - Accounting
Article 30 - Annual closing of books of the Company shall be made once a year on December 31 as the closing date.
Article 31 - After the closing of books of the Company each year, the following financial statements and documents shall be prepared which shall be reviewed by the Board and presented at a shareholders' meeting for acceptance pursuant to the legal procedures:
(1) Business Report; (2) Balance Sheet;
8 (3) Proposal for allocation of profit or action to deal with losses.
Article 32 - If after the annual closing of books there is a profit, the Company shall, after having provided for taxes and covered the losses of previous years, appropriate 10% as the legal reserve. If there is still a balance, between 0.01 % and 0.05 % shall be distributed as staff bonus of the Company and subsidiaries; with respect to the rest, the Board shall present a proposal on the allocation of profit at a shareholders' meeting for resolution.
The Company shall set aside a special surplus reserve before the distribution of its stock dividends if its books show any net reduced shareholders' equity such as cumulative conversion reconciliations, unrealized gain or loss of financial assets and net loss not recognized as pension cost, with the reserve in the amount equal to the amount reduced. As soon as the net reduced shareholders' equity has been recovered later on, the reserve set aside shall be entered under the cumulative earnings.
The Company will distribute dividend according to the principle of stability and balance taking into account both shareholders' interest, accumulation of the Company's capital and impact of the distribution on the company's operations.
Pursuant to the Company's dividend distribution plan, an amount shall be reserved for the necessary funds, and the remainder may be distributed in cash, provided cash dividend shall not be less than 50 % of the total dividend. Subject to practical need, the above principles of distribution of dividend may be adjusted by resolution at a shareholders' meeting.
The stock dividend policy set forth above is a general principle for regulation purposes only. The Company may decide upon the most appropriate policy taking into account the actual operating condition of the current year and capital budgeting for the following year.
Chapter VIII - Supplemental Provisions
Article 33 - Matters not addressed by these Articles shall be governed by the Company Law, the Financial Holding Company Law and other applicable laws.
Article 34 - These Articles of Incorporation were created on March 16, 1961. Amendments were made at shareholders' meetings as follows: first amendment on June 24, 1951, second amendment on June 16, 1964, third amendment on August 28, 1964, fourth amendment on October 3, 1964, fifth amendment on March 26, 1965, sixth amendment on April 15, 1967, seventh amendment on April 30, 1968, eighth amendment on May 10, 1969, ninth amendment on April 24, 1973, tenth amendment on May 8, 1974, 11th amendment on May 9, 1975, 12th
9 amendment on April 27, 1976, 13th amendment on November 8, 1977, 14th amendment on May 26, 1978, 15th amendment on April 30, 1979, 16th amendment on June 6, 1980, 17th amendment on April 19, 1981, 18th amendment on April 15, 1982, 19th amendment on May 23, 1986, 20th amendment on April 27, 1987, 21st amendment on May 11, 1988, 22nd amendment on June 1, 1989, 23rd amendment on November 30, 1989, 24th amendment on June 26, 1990, 25th amendment on June 18, 1991, 26th amendment on April 30, 1992, 27h amendment on May 9, 1994, 28th amendment n May 17, 1995, 19th amendment on April 28, 1997, 30th amendment on May 11, 1998, 31st amendment on May 15, 2000, 32nd amendment on September 6, 2000, 33rd amendment on May 22, 2001, 34th amendment on October 26, 2001, 35th amendment on Feb 6, 2002, 36th amendment on June 6, 2003 , 37th amendment on June 3, 2004, 38th amendment on June 9, 2006, 39th amendment on June 13, 2008 and 40th amendment on June 25, 2010.
10 Fubon Financial Holding Co., Ltd. Rules Governing the Procedures for Shareholders Meetings [English translation] 02/06/2002 renamed and amended by the first Extraordinary Shareholders’ Meeting 06/06/2003 amended by Annual Shareholders’ Meeting 06/09/2006 amended by Annual Shareholders’ Meeting 06/13/2008 amended by Annual Shareholders’ Meeting Provisions Article 1 (Basis for the Establishment of the Rules) The Rules are established in accordance with Article 182-1, Paragraph 2 of the Company Law of the ROC and by reference to the “Rules Governing the Conduct of Shareholders Meetings of Public Companies”. Article 2 Unless otherwise specified in laws and regulations or the Company’s Articles of Incorporation (the “AOI”), the shareholders’ meeting of this Company shall be proceeded with in accordance with the Rules. Article 3 (Convening of the Shareholders’ Meeting and Notice of the Meeting) Unless otherwise specified in laws and regulations, the shareholders’ meetings shall be convened by the Board. Notices of the regular shareholders’ meetings shall be in writing and served to each shareholder at least thirty (30) days before the date scheduled for the meeting. Those shareholders each holding less than 1,000 registered shares may be notified by means of an announcement on the Market Observation Post System Website thirty (30) days prior to the meeting. Notices of the special shareholders’ meetings shall be served to each shareholder at least fifteen (15) days before the date scheduled for the meeting. Those shareholders each holding less than 1,000 registered shares may be notified by means of an announcement on the Market Observation Post System Website fifteen (15) days in advance of the meeting. Notices and public announcements shall specify the reasons for the meeting, and the meeting notices may, as an alternative, be given by means of electronic transmission, upon obtaining a prior consent from the recipient(s) thereof. The election or discharge of directors, the amendment of this Company's Articles of Incorporation, the dissolution, merger, or spin-off of the Company, or the matters set forth in Article 185, Paragraph 1 of the Company Law, Article 26-1 or Article 43-6 of the Securities and Exchange Law, or Article 10-1 of Regulations Governing Share Repurchase by Listed and OTC Companies or Article 56-1 of Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be specified in the notices of the meeting, and may not be proposed as provisional motions. Article 4 (Shareholders’ Proposal Rights) Shareholder(s) holding more than one percent (1%) of the total number of issued and outstanding shares of the Company may propose to the Company a proposal for discussion at the regular shareholders’ meeting, provided that only one matter shall be allowed in each single proposal, and in case a proposal contains more than one matter, such proposal shall not be included in the agenda. Prior to the date on which share transfer registration is suspended before the convention of a regular shareholders' meeting, the Company shall give a public notice announcing the place and the period for shareholders to submit proposals to be discussed at the meeting; and the period for accepting such proposals shall not be less than ten (10) 1 days. The number of words of a proposal to be submitted by a shareholder shall be limited to not more than three hundred (300) words, and any proposal containing more than 300 words shall not be included in the agenda of the shareholders' meeting. The shareholder who has submitted a proposal shall attend, in person or by a proxy, the regular shareholders' meeting where his proposal is to be discussed and shall take part in the discussion of such proposal. Under any of the following circumstances, the Board of the Company may exclude the proposal submitted by a shareholder from the list of proposals to be discussed at a regular shareholders’ meeting: 1.Where the subject (the issue) of the said proposal cannot be settled or resolved by a resolution to be adopted at a meeting of shareholders; 2.Where the number of shares of the Company in the possession of the shareholder making the said proposal is less than one percent (1%) of the total number of outstanding shares at the time when the share transfer registration is suspended by the Company in accordance with the provisions set forth in Paragraph 2 or Paragraph 3, Article 165 of the Company Law; and 3.Where the said proposal is submitted on a day beyond the deadline fixed and announced by the Company for accepting shareholders' proposals. The Company shall, prior to preparing and delivering the shareholders' meeting notice, inform, by a notice, all the proposal submitting shareholders of the proposal screening results, and shall list in the shareholders' meeting notice the proposals conforming to the requirements set forth in this Article. With regard to the proposals submitted by shareholders but not included in the agenda of the meeting, the cause of exclusion of such proposals and explanation shall be made by the Board at the shareholders' meeting to be convened. Article5 (Attendance by Proxy and Authorization) A shareholder may appoint a proxy to attend a shareholders' meeting on his/her/its behalf by executing a power of attorney printed by the Company specifying therein the scope of power authorized to the proxy. 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 date scheduled for 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. After the service of the power of attorney of a proxy to the Company, in case the shareholder issuing the said proxy intends to attend the shareholders' meeting in person, a proxy rescission notice shall be in writing and filed with the Company at least one day prior to the date scheduled for the shareholders' meeting so as to rescind the proxy at issue, otherwise, the voting right exercised by the authorized proxy at the meeting shall prevail. Article 6 (Principles regarding Place and Time of Meeting) Shareholders’ meeting shall be held at the Company’s premises or at a place that is convenient for shareholders to attend and suitable for holding such meetings. The meeting shall not start earlier than 9:00 am or later than 3:00 pm. Article 7 (Preparation of Manual for Shareholders' Meeting and Sign-in Book) When this Company convenes a shareholders' meeting, the Company shall prepare a manual for shareholders' meeting proceedings and shall disclose such manual together
2 with other information related to the said shareholders' meeting in a public notice to be published prior to the scheduled meeting date of that shareholders' meeting. Regulations governing the time and manner for publishing the public notice as required in the preceding paragraph, the particulars to be contained in the manual for shareholders' meeting, and other governing rules shall be prescribed by the government authority in charge of securities affairs. The attending shareholders or their appointed proxies (hereinafter referred to as “shareholders”) shall submit attendance cards in lieu of signing in. The Company shall deliver manual for shareholders’ meeting, attendance passes, speech notes, ballots and other meeting materials to shareholders attending the shareholders’ meeting; ballots shall be given to attending shareholders when the election of directors is to be held. Shareholders shall be admitted to the shareholders’ meeting on the basis of attendance passes; those persons soliciting proxy forms shall be required to present identification documents for checking identities. When the government or a legal entity is a shareholder, more than one representative may attend the shareholders’ meeting; provided, however, that a legal entity serving as a proxy to attend a shareholders’ meeting may appoint only one representative to attend the meeting. Article 8 (Chairman of the Shareholders’ Meeting and Observers) If a shareholders’ meeting is convened by the Board, the chairman of the Board shall be the chairman presiding at the meeting. If the chairman of the Board is on leave or cannot perform his duties for some reason, the vice chairman shall preside at the meeting on the chairman’s behalf; if the Company does not have a vice chairman or the vice chairman is on leave or cannot perform his duties for some reason, the chairman of the Board shall designate an executive director to serve on his behalf. If there is no executive director, the chairman shall designate one director to act on his behalf. If the chairman has not appointed an agent, the executive directors or directors shall nominate among themselves to act on behalf of the chairman. If the shareholders’ meeting is convened by any person entitled to convene the meeting other than the Board, such person shall be the meeting’s chairman. If there is more than one such person entitled to convene the meeting, those persons shall nominate amongst themselves to be the meeting’s chairman. This Company may appoint designated legal counsel, certified public accountants or relevant persons to attend the shareholders’ meeting. Article 9 (Video or Audio Recording of the Proceeding of the Meeting) The Company shall record on audio or video tape the entire proceedings of a shareholders’ meeting, and safe-keeping the recordings for at least one year. However, the said tapes shall be preserved until the conclusion of the lawsuit if a shareholder initiates a lawsuit in accordance with Article 189 of the Company Law. Article 10 (Calculation of Numbers of Shares Attending the Meeting) Attendance at Shareholders’ meeting shall be determined based on the number of shares. The number of attending shares shall be calculated based on the attendance cards submitted by shareholders. The chairman shall announce the commencement of the meeting at the scheduled time of the meeting. If the number of shares represented by the attending shareholders has not yet constituted more than one-half of all issued and outstanding shares at the time scheduled for the meeting, the chairman may announce postponement of the meeting;
3 provided that, such postponement shall be limited to twice at the most and the meeting shall not be postponed for longer than one hour in aggregate. If after two such postponements the numbers of shares represented by the attending shareholders has not yet constituted more than one-third of all issued and outstanding shares, the chairman shall announce the adjournment of the meeting. If after two postponements the number of attending shares represented by the attending shareholders has not yet constituted more than one-half of all issued and outstanding shares but the attending shareholders at the meeting represent one-third of all issued and outstanding shares, provisional resolutions may be adopted in accordance with Article 175, Paragraph 1 of the Company Law, and shareholders shall be notified to attend another shareholders’ meeting to approve the said provisional resolutions within one month. If the attending shareholders have constituted more than on-half of all issued and outstanding shares by the end of the meeting, the chairman may re-submit the foregoing provisional resolutions to the meeting for approval in accordance with Article 174 of the Company Law. Article 11 (Discussion of the Proposals) The agenda of the shareholders’ meeting shall be set by the Board if the meeting is convened by the Board. The meeting shall be conducted based on the agenda, which may not be changed without resolutions adopted at shareholders’ meetings. The above provision applies mutatis mutandis to cases where the meeting is convened by any person, other than the Board, entitled to convene such meeting. Unless otherwise resolved at the meeting, the chairman may not announce adjournment of the meeting earlier unless the agenda (including provisional motions) under the preceding two paragraphs are concluded. If the chairman announces the adjournment of the meeting in violation of the Rules, other members of the Board shall promptly assist the attending shareholders to elect, by a majority of votes represented by attending shareholders in the meeting, another person to serve as chairman and continue the meeting in accordance with due procedures. The proposal raised by provisional motion must be in writing. For discussion of the proposals, if necessary, the chairman may deliver the proposal to the Board for resolution and then discuss it at the next shareholders’ meeting. When the chairman at a shareholders’ meeting is of the opinion that a matter has been sufficiently discussed to a degree of that it can be decided by voting, the chairman may announce the discussion closed and bring the matter to vote. Article 12 (Speeches of Shareholders) When a shareholder attending the meeting wishes to speak, a speech note shall be filled out with summary of the speech, the shareholder’s account number (or the number of attendance card) and the account name of the shareholder. The chairman shall determine the sequence of shareholders’ speeches. If any attending shareholder at the meeting submits a speech note but does not speak, no speech should be deemed to have been made by the shareholder. In case the content of the speech of a shareholder are inconsistent with the contents of the speech note, the contents of actual speech shall prevail. When proceed reporting of the matters set forth in the agenda, the same shareholder may not speak more than twice and each speech time may not exceed five minutes. For resolution of other proposals (including provisional motions), each shareholder shall not speak twice without the chairman’s consent, with five minutes in maximum for each speech. The chairman may stop the speech of any shareholder who violates 4 the above rules or exceeds the scope of the agenda or influence the order of the meeting or announce suspension of discussion to proceed other agendas or procedures immediately. Unless otherwise permitted by the chairman and the speaking shareholder, no shareholder shall interrupt the speech of the speaking shareholder; otherwise the chairman shall stop such interruption. When a legal-entity shareholder has appointed two or more representatives to attend the meeting, only one representative can speak for each proposal. The chairman may respond himself/herself or designate another person to respond after the speech of attending shareholder. Article 13 (Calculation of Voting Shares and Conflict of Interest) Voting at a shareholders’ meeting shall be based on numbers of shares. If there is a concern that a shareholder’s interest may conflict with and adversely affect the Company’s interests with regard to any matters discussed at the meeting, such shareholder may not participate in voting and may not represent another shareholder to exercise his or her voting rights, except for the purposes of promoting Company’s operation system or strengthening Company’s competitiveness or other relevant matters pursuant to Business Mergers and Acquisition Law and other applicable rules and regulations.
Article 14 (No Voting Rights) The shares of shareholders with no voting rights shall not be included in the total number of issued and outstanding shares when voting on resolutions. The shares shall have no voting right under any of the following circumstances: 1. the share(s) of a Company that are held by the issuing Company itself in accordance with the laws; 2. the shares of a holding Company that are held by its subsidiaries, where the total number of voting shares or total shares equity held by the holding Company in such a subsidiary represents more than one half of the total number of voting shares or the total shares equity of such a subsidiary; or 3. the shares of a holding Company and its subsidiaries that are held by another Company, where the total number of the shares or total shares equity of that Company held by the holding Company and its subsidiaries directly or indirectly represents more than one half of the total number of voting shares or the total share equity of such a Company. Article 15 (Restrictions on Voting Right) Except in the case of a trust enterprise or securities proxy organization approved by the securities competent authority, the proxy right of a person serving as a proxy for two or more shareholders may not exceed 3% of total issued and outstanding shares voting rights; if it does exceed 3%, the excess portion shall not be counted. The voting right exercised by mutual investment companies who know the fact of mutual investment may not exceed 3% of total issued voting shares or the total share equity of the invested Company. However, shares obtained as a result of distribution of surplus earnings or capitalization of legal reserves may be subject to exercise of voting rights. When Company advises other companies pursuant to Article 369-8 of the Company Law, the exercise of rights in shares shall not be restricted by the preceding paragraph in the event no similar notice is obtained from the other Company or being aware of the
5 facts of mutual investment. Unless otherwise specified in the Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies, the number of proxy shares of a solicitor shall not exceed 3% of total issued shares of the Company. Article 16 (Voting of Proposal, Methods for Checking and Counting Ballots) Each shareholder is entitled to one vote for each share held. The above provision shall not apply to those persons whose voting rights are restricted or who have no voting rights. Unless otherwise specified in the Company Law or the Company’s Articles of Incorporation, a resolution shall be adopted by a majority of the votes represented by the attending shareholders. When proceed voting, the chairman or its designated person shall be responsible for announcement of total voting rights of the attending shareholders for each item. An agenda item shall be approved and shall have the same effect as if it was voted by casting ballots if no objection is voiced by all attending shareholders after solicitation by the chairman. If there is any objection, the agenda item shall be put to a vote by casting ballots in accordance with the foregoing paragraph. Apart from proposals listed in the agenda, other proposals raised by the shareholders or the amendment or substitute for the original agenda shall be discussed by other shareholders. If the same agenda has an amended or substitute agenda, the chairman shall decide the sequence of voting for such agenda; provided that if any one of them has been approved, the others shall be deemed vetoed and no further voting will be required. The chairman shall appoint voting inspector and vote counting personnel during votes on proposals; provided, however, that an inspector must also be a shareholder. The ballots shall be publicly counted at the meeting venue and the result of voting shall be announced at the meeting and placed on record. Article 17 ( Exercise of Voting Right in Writing or by Electronic Transmission (1)) The voting right at a shareholders' meeting may be exercised in writing or by way of electronic transmission, provided, however, that the method for exercising the voting right shall be described in the shareholders' meeting notice to be given to the shareholders if the voting right will be exercised in writing or by way of electronic transmission. A shareholder who exercises his/her/its voting right at a shareholders meeting in writing or by way of electronic transmission as set forth in the preceding Paragraph shall be deemed to have attended the said shareholders' meeting in person, but shall be deemed to have waived his/her/its voting right in respective of any provisional motion(s) and/or the amendment(s) to the contents of the original proposal(s) at the said shareholders' meeting. Article 18 ( Exercise of Voting Right in Writing or by Electronic Transmission (2)) In case a shareholder elects to exercise his/her/its voting right in writing or by way of electronic transmission, his/her/its declaration of intention shall be served to the Company no later than the fifth day prior to the scheduled meeting date of the shareholders' meeting, whereas if two or more declarations of the same intention are served to the Company, the first declaration of such intention received shall prevail; unless an explicit statement to revoke the previous declaration is made in the declaration which comes later. In case a shareholder who has exercised his/her/its voting right in writing or by way of 6 electronic transmission intends to attend the shareholders' meeting in person, he/she/it shall, at least one day prior to the meeting date of the scheduled shareholders' meeting and in the same manner previously used in exercising his/her/its voting right, serve a separate declaration of intention to rescind his/her/its previous declaration of intention made in exercising the voting right under the preceding Paragraph. In the absence of a timely rescission of the previous declaration of intention, the voting right exercised in writing or by way of electronic transmission shall prevail. In case a shareholder has exercised his/her/its voting right in writing or by way of electronic transmission, and has also authorized a proxy to attend the shareholders' meeting in his/her/its behalf, then the voting right exercised by the authorized proxy for the said shareholder shall prevail. Article 19 (Election) If the election of directors is conducted at a shareholders' meeting, such an election shall be performed in accordance with the Procedures for the Election of Directors , and the results must be announced at the meeting. The ballots cast in the election in the foregoing paragraph must be sealed up with signature by the voting inspector, given proper safekeeping and kept for at least one year. If a shareholder initiates a lawsuit in accordance with Article 189 of the Company Law, ballots shall be kept until the end of the lawsuit. Article 20 (Minutes of the Meeting and Signature) Resolutions made at a shareholders' meeting shall be stated in the meeting minutes. The chairman shall affix his signature or seal to the minutes, which shall be issued to shareholders within 20 days after the end of the meeting. The compilation and issuance of the minutes of meeting in the preceding paragraph may be made electrically. With regard to the issue of minutes in the foregoing paragraph, the minutes may be distributed to those shareholders who each hold less than 1,000 registered and outstanding shares in the form of an announcement on the Market Observation Post System Website. The minutes must faithfully record the meeting's date (year, month, day), place, chairman's name, resolution method, summary of proceedings, and results of resolutions. The minutes of shareholders' meeting shall be preserved properly. "There is no objection from any shareholders after inquiry by the chairman and the resolution is passed" shall be recorded in the minutes if no objection is voiced after inquiry by the chairman before the agenda is put to a vote. If there are any objections, however, and the agenda is put to a vote, the number of approval votes cast and the percentage of the approval votes as to total votes shall be recorded in the minutes. Article 21 (Public Announcement) The Company shall, on the day of the meeting, compile the number of shares obtained by solicitors and the number of shares represented by proxies in statistical tables in the specified format, and shall post such tables in prominent locations within the meeting place. If any resolutions made by a shareholders' meeting are material information pursuant to applicable laws and regulations or the Taiwan Stock Exchange Corporation's
7 regulations, the Company shall transmit the content of such resolutions to the Market Observation Post System Website within the specified period of time. Article 22 (Maintenance of the Order of the Meeting Place) Persons handling affairs of the meeting shall wear identification cards or arm badges. The chairman may order disciplinary officers or security guards to assist in keeping order in the meeting place. Such disciplinary officers or security guards shall wear arm badges or identification cards marked "Disciplinary Personnel" when assisting in maintaining order in the meeting place. If the meeting place is equipped with loudspeaker equipment, the chairman shall stop any shareholders using equipment not installed by the Company from speaking. The chairman shall order disciplinary officers or security guard to escort any shareholders who violate these Rules and Procedures and fail to heed the chairman's correction, or disrupt the proceeding of the meeting and fail to desist, to leave the meeting place. Article 23 (Recess and Resumption of the Meeting) During the meeting, the chairman may, at his discretion, set time for recess. In case of incident of force majeure, the chairman may decide to temporarily suspend the meeting and announce, depending on the situation, when the meeting will resume. Before the agenda（including provisional motions）set forth in the shareholders’ meeting are concluded, if the meeting place cannot continue to be used for the meeting, then, by resolution of the shareholders, another place may be sought to resume the meeting. The shareholders may resolve to postpone or resume the meeting within five days in accordance with Article 182 of the Company Law. Article 24 These Rules and Procedure shall be effective from the date they are approved by the shareholders' meeting. The same applies in case of amendments.
8 Fubon Financial Holding Co., Ltd. The Procedures for the Election of Directors [English translation]
02/06/2002 Implemented by Extraordinary Shareholders’ Meeting 06/06/2003 First Amendment by Annual Shareholders’ Meeting 06/09/2006 Second Amendment by Annual Shareholders’ Meeting 06/13/2008 Third Amendment by Annual Shareholders’ Meeting
Articles Article 1 The Procedures is established in accordance with “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” the Articles of Incorporation of the Company. Article 2 The election procedure for the Company’s directors shall be proceeded in accordance with the Procedures, and for those which are not provided herein shall be proceeded in accordance with the Company Act and relevant laws and regulations and the provisions under the Articles of Incorporation. Article 3 The election of the Company’s directors shall consider the entire composition of the Board. The members of the Board shall all be provided with knowledge, capability and quality required for fulfilling its/his/her duties. The Board members shall be equipped with the following capabilities: 1. business judgment 2. accounting and financial analysis 3. management 4. crisis management 5. industry knowledge 6. international vision 7. leadership 8. decision making
Article 4 The independent directors of the Company shall meet one of the following professional qualification requirements, together with working experiences of at least five years: 1. a instructor or higher in a department of commerce, law, finance, accounting, or other academic department related to the business needs of the company in a public or private junior college, college, or university;. 2. judges, prosecutors, lawyers, accountants or other professionals and technical personnel qualified by national examinations with certificates, which are relevant to the Company’s businesses. 3. working experiences in business, legal, finance, accounting or other business relevant to the Company’s businesses. Given any of the following circumstances, a person may not act as an independent director, or if already acting in such capacity as independent director, shall be dismissed: 1. Any of the circumstances set out in a subparagraph of Article 30 of the Company Act. 2. Elected in the capacity of the government, a juristic person, or a representative thereof, as provided in Article 27 of the Company Act... 3. Any violation of the independent director qualification requirements set out in “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies”. Article 5 During the two years before being elected or during the term of office, an independent director of the Company shall not have been or be any of the following: 1. An employee of the Company or its affiliated companies. 2. A director or supervisor of the Company or its affiliates. The same does not apply, however, in cases where the person is an independent director of the company, its parent company, or any subsidiary in which the company holds, directly or indirectly, more than 50 percent of the voting shares. 3. A shareholder who holds shares, together with those held by his/her spouse, minor children, or held by the person under others' names, in an aggregate amount of one percent or more of the total number of issued shares of the Company, or ranking in the top 10 in holdings as individual shareholder. 4. A spouse, relatives within the second-degree of kinship, or t lineal relatives within fifth-degree of kinship of any of the persons in the preceding three subparagraphs 5. A director, supervisor or employee of the corporate shareholders who directly hold 5% or more of the total issued shares of the Company or that holds shares ranking in the top five in holdings. 6. A director, supervisor, manager or a shareholder holding 5% or more shares, of a specific company or institution that has financial or business relationship with the Company. 7. A professional individual who, or an owner, partner, director, supervisor, or officer of a sole proprietorship, partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation to the Company or to any affiliate of the company, or a spouse thereof.
The requirement of the preceding paragraph in relation to "during the two years before being elected" does not apply where an independent director of the Company has served as an independent director of the Ccompany or any of its affiliates, or of a specified company or institution that has a financial or business relationship with the Company, as stated in subparagraph 2 or 6 of the preceding paragraph, but is currently no longer in that position. No independent director of the Company may concurrently serves as an independent director of more than three other public companies. An independent director of the Company who concurrently serves as an independent director of the Company’s 100% owned subsidiary in form of public company can be deemed as serving for the same company. Such concurrent post shall not be counted if the concurrent post as independent director is held pursuant to the preceding paragraph; provided, however, that such concurrent post shall be held for one company only. In the event that such concurrent post exceeds one company, the exceeding number shall be included in the number of such other companies for which concurrent post is held. Article 6 The election of an independent director of the Company shall adopt candidate nomination system in accordance with Article 192-1 of the Company’s Act, and shall be expressly stipulated in the Articles of Incorporation; and the shareholders shall elect independent directors from among the nominees listed in the slate of independent director candidates.
The Company shall, prior to book closure date before convening a shareholders' meeting, announce in a public notice, the period for receiving the nomination of independent director candidates, the quota of independent directors to be elected, the place designated for receiving such nomination, and other necessary matters. The length of the period for receiving the nomination of independent director candidates shall not be less than ten (10) days.
The Company may present the slate of the candidates for independent directors by the methods set out below, and, upon evaluation by the Board of directors that all candidates so nominated are qualified as independent director candidates, submit it to the shareholders' meeting for elections,: 1. any shareholder holding 1% or more of the total number of shares issued by the company may present to the company in writing a slate of independent director candidates. 2. the Board may present a slate of independent director candidates . 3. other methods permitted by the government authorities.
The recommended slate of the independent directors provided by a shareholders or the Board shall be annexed with the name, education background and work experience of the independent director candidates, a written undertaking indicating the candidate's consent to serve as an independent director if elected as such, a written statement issued by each independent director candidate assuring that there is no circumstances set forth in Article 30 of this Act, and other evidential documents executed and provided by each independent director candidate.
The Board or other authorized conveners of shareholders' meetings shall review the qualifications of each independent director candidate nominated, and shall, unless under any of the following circumstances, include all qualified nominees in the final slate of independent director candidates accordingly: 1. the roster of director candidates is presented by the nominating shareholder at a time not within the announced period for receiving nominations.; 2. the number of shares of the company being held by the nominating shareholder is less than 1% of the total number of issued shares of the company at book closure time by the company in accordance with Paragraph II or Paragraph III, Article 165 of Company Act; 3. the number of director candidates nominated exceeds the quota of the directors to be elected; or 4. relevant evidential documents required by the preceding paragraph hereof are not attached.
The processes of reviewing qualifications of independent director candidates nominated pursuant to preceding paragraph shall be recorded in writing and such records shall be retained in the file for a period of at least one year; provided, however, that if any shareholder has instituted a lawsuit against the result of independent directors election, the foregoing records shall be retained in the file until the legal proceedings of such lawsuit have been concluded.
The company shall, no later than 40 days prior to the scheduled meeting date of a regular shareholders' meeting or no later than 25 days prior to the scheduled meeting date of a special shareholders' meeting, publish a notice specifying the roster of independent director candidates and their education background and work experience and the number of shares of the Company held by them ; the Company shall inform the nominating shareholders of the results of reviewing qualification and state the reason if any independent director candidate is not included in the slate of qualified independent director candidates,. Article 7 The election of the directors and supervisors adopts cumulative vote system, unless otherwise provided for in the Articles of Incorporation of the Company, the number of votes exercisable in respect of one share shall be the same as the number of directors to be elected, and the total number of votes per share may be consolidated for election of one candidate or may be split for election of two or more candidates. Article 8 The Board shall prepare for ballots, clearly listing attendance card numbers and number of the weighted votes, and distribute to the shareholders who attend the shareholders’ meeting. The registration of ballots may be replaced by the attendance card number printed on the ballots. Article 9 The directors in such number as designated by the Articles of Incorporation and the Board’s resolution shall be elected and served in accordance with the priority in obtaining the most number of votes. In the event two or more persons obtain the same number of votes and the number of such persons together with all other persons ranking prior to them exceeds the number as designated by the Articles of Incorporation and the Board’s resolution, lots shall be drawn to decide which of such persons obtaining the same number of votes shall be elected; if any of such persons is not present, the chairman shall draw the lots on half of him/her. The election of independent directors and non-independent directors shall take place together, and the number of votes of each shall be calculated separately; persons obtaining the most number of votes shall be elected and served as independent directors and non-independent directors accordingly. Article 10 Prior to the election, the Chairman shall appoint several vote counters, and ballot examiners in the capacity as the shareholders to execute each relevant tasks of the election. The ballot box shall be prepared by the Board, and be openly examined by the ballot examiners prior to the election. Article 11 In the event the candidate is a shareholder, the voter shall specifically fill in the account name and shareholder’s account number of the candidate in the candidate’s column on the ballot; in the event the candidate is a non-shareholder (limited only to natural person), the voter shall specifically fill in the name and ID number of such candidate. Provided that, the government or a corporate shareholder is the candidate, such names of the government or corporate shareholders shall be filled in the candidate’s column on the ballot. In the event such government or corporate shareholders has its representative, the name of such government or legal person and its representatives shall be filled. In the event the representatives are two or more, , the names of the representatives shall be additionally filled separately. Article 12 The votes shall be regarded as invalid and null if any of the following circumstances occurs: 1. a voter does not use the ballot prepared by the Company. 2. a voter puts a blank ballot into the ballot box. 3. the writing on the ballot is blurred and difficult to identify or is altered. 4. failure to fill in the candidate’s account name (name) or shareholders’ account number (ID number /Government Publication Number (GPN)and so on) 5. the name of the candidate filled in is the same as that of other shareholder, but the shareholder’s account number or ID number or GPN) has not been filled in to distinguish from the two. 6. two or more candidates are filled on the same ballot. 7. in addition to the candidate’s account name (title or name) or shareholders account number (ID number/ GPN) and the number of votes allocated, there are other wording attached. 8. in the event the candidate is a shareholder, which its account name and shareholder’s account number do not conform with the shareholders’ name book; and if the candidate is a non-shareholder, which its name and ID number/GPN are inconsistent after verification. 9. a voter violates laws and regulation, articles of incorporation or relevant rules. Article 13 The ballot will be counted and announced immediately after the voting process, and the Chairman shall immediately announce the ballot result together with the names of the elected directors and the names of the appointed independent directors. Article 14 The Board of the Company will issue to elected directors a notice stating his/her being elected as directors. Article 15 The Procedures will be enforceable after the shareholders’ resolution, and the same procedures shall apply to the amendments.
Appendix 4
Fubon Financial Holding Co., Ltd.
Shareholding of the Members of the Board for the Fourth Term The term of the Board is from June 13, 2008 to June 12, 2011.
The number of the shares held by the Directors recorded on the register of members on the record date as of the book closed date of the shareholders’ meeting Title Name Number of Shareholding Shares Percentage
Chairman Representative of Ming-Dong Co., Ltd. 779,765,105 9.09％ Daniel Tsai
Vice-Chairman Representative of Ming-Dong Co., Ltd. 779,765,105 9.09％ Richard Tsai Independent Hong-Chang, Chang 0 - Director Independent Nelson Chang 0 - Director Independent Timothy Ting-Yu, Ting 0 - Director Independent Kok-Choo, Chen 0 - Director Director Representative of Taipei City Government 1,216,897,660 14.19％ Dah-Jan, Chion
Director Representative of Taipei City Government 1,216,897,660 14.19％ Yeh-Shin, Chen
Director Representative of Mind-Dong Co., Ltd. 779,765,105 9.09％ Victor Kung
Director Representative of Mind-Dong Co., Ltd. 779,765,105 9.09％ Jerry Harn
Director Representative of Mind-Dong Co., Ltd. 779,765,105 9.09％ Tsan-Ming, Shih
Director Representative of Mind-Dong Co., Ltd. 779,765,105 9.09％ Peng-Yuan, Cheng Number of the shares of all Directors: 1,996,662,765 shares (23.28%) Minimum number of the shares of all Directors: 171,533,653 shares (2%) Note: I. The total number of issued and outstanding shares by record date (April 26, 2011) is 8,576,682,601. The number of shares held by all Directors is 1,996,662,765, 23.28% of the Company’s outstanding shares, which is in compliance with the 2% minimum shareholding requirement. II. The Company adopts the Audit Committee, therefore the supervisor’s minimum shareholding requirement is not applicable.