entie commercial bank 2017 annual general meeting of … agm agenda... · 2017. 5. 10. · agenda...

(This translated document is prepared in accordance with the Chinese version and is for

reference only. In the event of any inconsistency between the English version and the Chinese

version, the Chinese version shall prevail.)

EnTie Commercial Bank

2017 Annual General Meeting of Shareholders

Agenda Handbook

Date: 9:00 a.m., June 16 (Friday), 2017 Venue: 4F, Meeting Hall of Farmers’ Association, No.80, Zhongzheng Rd.,

Xinzhuang Dist., New Taipei City, Taiwan

Stock Code:2849

Agenda of 2017 Annual General Meeting of Shareholders EnTie Commercial Bank

Ⅰ. Announcement of the commencement of the meeting and Chairman’s remarks． 1. Announcement of the commencement of the meeting (report number of shares

represented by attending shareholders)

2. Chairman’s remarksⅡ. Agenda for the meeting

1. Reporting Items:

(1)To note for record the 2016 Business Report．．．．．．．．．．．．．． (2)To note for record the Audit Committee’s Review Report on the 2016

Financial Statements．．．．．．．．．．．．．．．．．．．．．．．．(3)To note for record the Distribution of Employees’ Compensation and

Directors’ and Supervisors’ remuneration for 2016．．．．．．．．．．．．

(4)To note for record the Revise Report for the “Criteria Governing Codes of

Ethical Conduct” of the Bank．．．．．．．．．．．．．．．．．．．．．． (5)To note for record the Revise Report for the “Criteria for Ethical Corporate

Management” of the Bank．．．．．．．．．．．．．．．．．．．．．．

(6)To note for record the Revise Report for the “Criteria for Corporate SocialResponsibility Best Practice” of the Bank．．．．．．．．．．．．．．．．

(7)To note for record the short-form merger report between An Yin Insurance

Broker Co., Ltd. and the Bank．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．． 2. Acknowledgment Items:

(1)Adoption of the 2016 Business Report and Financial Statements．．．．．(2)Adoption of the Proposal for Distribution of 2016 Profits ．．．．．．．．．．．

3. Discussion Items:

(1)To approve the amendments to the Articles of Incorporation of the Bank．．． (2)To approve the amendments to the “Criteria Governing Assets Acquisition

and Disposal” of the Bank．．．．．．．．．．．．．．．．．．． (3)To approve the proposal of having the Bank redeem the CPPS upon the 10th

anniversary by issuing new similar capital instruments at current market rates．． 4. Extemporaneous Motions．．．．．．．．．．．．．．．．．．．．．．．．．

5. Adjournment．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．

Ⅲ. Appendix 1. The Shareholding Status of all Directors．．．．．．．．．．．．．．．．．．

1

2

9

11

12

20

30

34

36 46

50

58

72 73 73

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http://eng.selaw.com.tw/FLAWDAT01.asp?lsid=FL055768


2. The Rules and Procedures of Shareholders’ Meeting of EnTie Commercial Bank．3. Articles of Incorporation of EnTie Commercial Bank．．．．．．．．．．．．4. The Criteria Governing Codes of Ethical Conduct of EnTie Commercial Bank．．．

5. The Criteria for Ethical Corporate Management of EnTie Commercial Bank．．6. The Criteria for Corporate Social Responsibility Best Practice of EnTie Commercial

Bank．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．．

7. The Criteria Governing Assets Acquisition and Disposal of EnTie Commercial Bank．．．

75 85 99 102

111 119


Ⅰ. Announcement of the commencement of the meeting and

Chairman’s remarks

1. Announcement of the commencement of the meeting (report numberof shares represented by attending shareholders)

2. Chairman’s remarks

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Ⅱ. Agenda for the meeting

1. Reporting Items:(1) Proposed by the Board of Directors

Proposal: To note for record the 2016 Business Report Explanation: Please see details from pages 3 to 8 of this Agenda

Handbook for the 2016 Business Report.

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2016 Business Report

Global economic recovery lost steam in 2016 and the economic growth rate hit a new low since the Global Financial Crisis in 2008. Growth Momentum in developed markets

including the US, Japan, and Europe was lower than expected, and the Chinese economy

slowed as the country underwent structural reform. In addition, the Brexit referendum and the US presidential election brought political uncertainties and volatilities, impacting global

investment, consumption, trade, and financial market confidence.

In Taiwan, the economy continued to suffer from a slowing global economy. The first

quarter growth rate fell into negative territory, and the government business monitoring

system flashed “blue”, indicating a recession of ten consecutive months. This ten-month streak was Taiwan’s most protracted recession since the crisis, so for a while the country

struggled to keep its annual GDP growth rate above 1%. Fortunately, the global economy

started to turn for the better in the second half of 2016, and external demand spurred Taiwan’s export growth, pushing the annual GDP growth rate to 1.5%. However, the

economic growth rate was still the second lowest since the crisis, and private consumption

and investment were both slow. Against such a challenging economic backdrop, domestic banks recorded lower net operating incomes and pre-tax net profits compared with 2015,

and the Bank was no exception. Like our peers, our financial performance was lackluster,

and profits were considerably lower than in previous years. Nevertheless, the Bank’s non-financial performance continued to improve, laying a solid foundation for our return to

growth.

Business Performance in 2016

The Bank’s net income after tax in 2016 reached NT$1,055 million, a YOY decrease

of NT$2,240 million. Earnings per share (EPS) was NT$0.63 after tax, a YOY fall of NT$1.33. In the main, both these figures reflect the impact of several factors: a decline in

borrowing demand caused by a sluggish economy and slowing corporate investment,

consumption, and real estate trading; a further squeeze on interest spreads as a result of rate cutting by the central bank, and an increase in bad debt provision following the

target redemption forwards (TRF) trading scandal.

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The Bank’s net operating profits were NT$6,300 million, while its operating expenses

were NT$3,025 million, giving an operating expense ratio of 48%. Operating profits before bad debt provision came to NT$3,275 million and the budget achievement rate

was approximately 63%. With the deduction of NT$1,565 million in bad debt provision,

pre-tax profits were NT$1,710 million, net income was NT$1,055 million (tax: NT$655 million) and the EPS was NT$0.63. ROAA and ROAE were 0.34% and 3.46%,

respectively.

In terms of asset quality and capital structure, non-performing loans (NPLs),

including collections, amounted to NT$1,658 million, with an NPL ratio of 0.9%. Bad debt

reserves totaled NT$2,604 million, indicating a coverage ratio of 157.08% and a total loan coverage ratio of 1.41%. By the end of 2016, the Bank had a capital adequacy ratio and

Tier 1 Capital of 13.32%, of which 12.75% was common equity. Our robust capital

structure is a strong foundation on which to continue to seek business growth.

It was the Bank’s ample capital levels, moderate asset risks, and well-managed

provision risks that led to our recognition by Fitch, which on September 21, 2016, maintained our long-term national credit rating of A(twn) with a stable outlook.

In the 2016 Services Industry Survey conducted by Taipei-based Global View Magazine, the Bank ranked second among banks that are not part of financial holding

groups and for the third time came fifth among all financial banks. In addition, the official

Bank website received the top AAA certification for accessibility from the National Communications Commission for providing the most friendly financial service

environment for the disabled. Currently, only three financial institutions have received

the top certification, indicating that the Bank’s service quality has been recognized not only by our clients but also by external parties.

As part of our efforts to achieve world-class corporate governance, the Bank has continued to enhance information disclosure, regulatory compliance, risk control,

performance culture, organization, and management systems. As a result, in the last few

years the Bank has been able to establish a brand for itself in the areas of corporate image, product depth, personnel quality, and profitability. In 2016, the Bank also set up

an audit committee to continue to improve the internal monitoring mechanism in the

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corporate governance regime. In the second corporate governance evaluation conducted by

the Taiwan Stock Exchange, the Bank was ranked among the top 6%–20% bracket among 824 listed companies, a testament to our commitment to enhancing shareholder value.

The Bank has also continued to optimize internal organization in order to enhance efficiency and be ready to tackle market changes. In May 2016, we adjusted the Bank’s

structure and created the positions of Chief Credit Officer and Chief Operating Officer in

order to centralize credit lending and operations and keep these functions separate. By introducing these changes, we have enabled business units to focus more on product

design and client servicing and thus boost business growth momentum. In August 2016,

the Bank merged with its subsidiary An Yin Insurance Brokers Co., Ltd. and set up Insurance Brokerage Department under the Retail Banking Group to take over

operations.

Review of Major Business Operations

As of the end of 2016, the Bank’s total deposits amounted to NT$248.3 billion, a

YOY decrease of approximately NT$0.3 billion owing to strategic adjustments. However, the current account deposit ratio hit a record high. Total loans came to NT$185 billion, a

YOY grow of approximately NT$2 billion, which contributed to a higher loan-to-deposit

ratio and better efficiency for asset liability management. A comprehensive overview of business operations is laid out below.

A. Retail Banking (1) Credit Lending

In 2016, the Bank’s retail loan balances amounted to NT$86.5 billion, roughly the same

level as the previous year. However, a slowing real estate market led to a slight decrease of 2% in our mortgage balances, which came to NT$75.2 billion. In addition to the existing

mortgage business, the Bank has also worked to expand its channels and tap into the

mortgage refinancing market. Personal loan balances (excluding loans under debt relief negotiations) were NT$10.1 billion, a significant YOY increase of 23% thanks to the Bank’s

precise market segmentation and pricing strategy targeting high-quality clients, including

employees of listed companies, government agencies, and medical institutions, and small- and medium-sized enterprises.

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(2) Wealth Management

Owing to volatilities in financial markets, investors turned conservative and converted most of their assets into insurance policies and fixed-income products. As of the end of 2016,

client asset under management stood at NT$66.6 billion, a YOY growth of 5%. Of these,

insurance assets under management grew by 17%, structured products under management by 32%, while specific money trust investment in domestic and foreign

securities fell by 16%. In addition to cultivating existing clients, we have reached out to a

younger generation of clients by creating a new category of Family Finance Planning Members and continuing to optimize our electronic trading platform. We have also

strengthened our capabilities to design bespoke products in order to expand our base of

professional investors.

(3) Digital Banking

By continuing to enhance our financial infrastructure, the Bank has expanded the accessibility, convenience, diversity, and stability of our financial services. The Bank has a

proven track record in creating a digital financial environment, developing mobile

payments, and pushing for friendly financial services: In 2016, we started offering credit loan and credit card application and wealth management services for our online banking

clients, and the number of applications via online banking and telephone banking grew

by almost 20% on the previous year. In June 2015, our mobile banking app went live and we actively sought to collaborate with electronic payment providers to better serve our

clients’ daily needs in a wider variety of mobile payment scenarios.

B. Corporate Banking and Markets (1) Credit Lending

Our corporate lending balance stood at NT$98.5 billion, a YOY increase of 2%. This growth can be attributed to the Bank’s strategy to reduce real estate lending and increase

lending to general industries as a way to expand the customer base. The Bank was able

to reduce price pressure from competitors by choosing a precise market position and providing customers with professional value-added services. In our main transaction

business, accounts receivable invoice volume reached NT$31.8 billion, the ninth highest in

the market, while trade finance balances amounted to NT$17.8 billion. In addition, the Bank’s Offshore Banking Unit continued to enrich product and service offerings to

comprehensively satisfy customers’ financial needs.

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(2) Financial Operation Despite a global bond market downturn owing to rising yields in the second half of 2016,

the Bank’s investment and transaction incomes amounted to NT$886 million, thanks to

our flexible asset allocation strategy, rigorous trading discipline, precise forecast of interest rate trends, and gains on disposal of bonds. Of the investment and transaction incomes,

gains on financial assets and liabilities at fair value through profit or loss stood at

NT$708 million, a YOY decrease of 39%, and realized gains on available-for-sale financial assets came to NT$272 million, a YOY increase of 30%.

(3) Financial Marketing Following a sharp decline in the Chinese renminbi, on March 9, 2016, the Bank’s board

approved a decision to suspend high-risk derivatives trading, leading to a significant

decrease in income from our financial marketing operations. The Bank’s derivative transaction volumes amounted to NT$72.7 billion.

Aiming to Reload the Momentum

Looking ahead, the global economy is expected to gradually recover, and according

to forecasts by major international institutions, the 2017 economic growth rate will be slightly higher than that of the previous year, although momentum will be restrained and countries

will not grow in unison. Moreover, there are still a number of downside risks on the

horizon, including the direction of US economic and trade policies, the challenges faced by China as it restructures its economy, the start of the Brexit process, European election

jitters, rising geopolitical tensions, and volatilities in oil and commodity prices. All these

uncertainties may threaten the global economic outlook and financial market stability.

In Taiwan, exports are expected to grow as external demand picks up, and the

government’s projects to push for innovative industries and advanced infrastructure will have a positive impact on domestic demand. On February 15, 2017, the

Directorate-General of Budget, Accounting, and Statistics forecast that the 2017 growth

rate for Taiwan will be 1.92％, outperforming the previous year.

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As the rate-cutting cycle is nearing an end, the banking industry will get a respite

from the constant squeeze on interest spreads. However, rising labor costs in Taiwan may put a cap on corporate investment, and more stringent regulatory supervision

means more investment of resources in anti-money laundering, anti-terrorist financing,

and IT security operations. All these factors will put pressure on the banking industry; therefore, the Bank will review and analyze the implications of the regulations and

communicate with the regulator as necessary. Overall, the Bank is cautiously optimistic

towards its operational outlook this year. In this volatile politico-economic and business environment, we will continue to strengthen our operational management and business

promotion and use resources in a flexible manner to keep abreast of market trends and

business opportunities and so balance our income structure, reduce risk concentration, and put the Bank firmly on the path to growth.

Faced with these challenges, we will continue to rely on our determination and resilience to keep our team united and put into practice our core philosophy of providing

“speedy, professional, and trustworthy services”. We hope that our core philosophy will

create maximum investment value for our shareholders and help us return to glory with business performance that earns universal acclaim.

Chairman President Head of Accounting Department

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(2) Proposed by the Board of Directors Proposal: To note for record the Audit Committee’s Review

Report on the 2016 Financial Statements Explanation: The Audit Committee has checked the Bank’s 2016

Financial Statements. The Audit Committee’s Audit Report is submitted to the Annual General Meeting of Shareholders for record (please see details on page 10 of this Agenda Handbook) in accordance with Article 219 of the Company Act as prescribed in paragraph 3 of Article 14-4 of Securities and Exchange Act.

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Audit Committee’s Review Report

We have checked the business report, Earning Distribution Table, the financial

statements prepared by the Bank and audited in advance by KPMG for the year of

2016 and found no items that are inaccurate. This report is submitted in accordance

with Article 219 of the Company Act as prescribed in paragraph 3 of Article 14-4 of

Securities and Exchange Act.

To: Annual General Meeting of the Shareholders of EnTie Commercial Bank, 2017

Audit Committee of EnTie Commercial Bank, Co. Ltd.

Convener：Philippe Espinasse

April 25, 2017

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(3) Proposed by the Board of Directors Proposal: To note for record the Distribution of Employees’

Compensation and Directors’ and Supervisors’ remuneration for 2016

Explanation: 1. This proposal is prepared in accordance with Article 39 of the Articles of Incorporation of the Bank.

2. The proposal for Distribution of 2016 Employees’ Compensation and Directors’ & Supervisors’ Remuneration was approved at the 6th board meeting of the 9th term held on April 25, 2017.

3. The profit of the Bank in 2016 is NT$1,735,209,258 (i.e. the Before-Tax Income prior to the deductions of Employees’ Compensation and Directors’ & Supervisors’ Remuneration). The proposed of Employees’ Compensation and Directors’ & Supervisors’ Remuneration of 2016 are NT$19,864,847 and NT$5,182,134 respectively, and will be made at the rate of 1.14% and 0.3% of the profit of the Bank and distributed in cash.

4. The 2016 directors’ compensation declined due to the decreased net income of the Bank, the average total remuneration paid to each director (including the annual compensations, remunerations and travel expenses; exclusion of the salary paid to the director who concurrently serves as an employee) shows a YOY increase of NT$781,000 mainly resulted from the reorganization and the establishment of Audit Committee of the Bank, which requires more responsibilities and participations from the chairman and independent directors on bankwide business. The Bank therefore adjusted the compensations of chairman and independent directors by referencing the industry standard, and the said were approved at the 21st board meeting of the 8th term and the 2nd board meeting of the 9th term respectively.

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(4) Proposed by the Board of Directors Proposal: To note for record the Revise Report for the “Criteria

Governing Codes of Ethical Conduct” of the Bank (the “Criteria”)

Explanation: 1. This proposal is prepared in accordance with Article 5 of the Criteria which stipulates, “The Criteria, and any amendments to it, shall enter into force after it has been adopted by the board of directors, delivered to each independent directors, and hereby is submitted to a shareholders meeting for record”.

2. In view of the Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of directors on June 8, 2016, we hereby revise the Criteria accordingly. Please refer to pages 13 to 19 of this Agenda Handbook for the comparison table of changes made to the Criteria.

3. The revised proposal of the Criteria was approved by the president with the delegation granted at the 1st extraordinary board meeting of the 9th term held on June 8, 2016 for signing off all necessary revisions and amendments that are related only to the replacement of supervisors’ role with an audit committee to all internal regulations, and is submitted to the Annual General Meeting of Shareholders for record.

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The Comparison Table of Current and Revised Articles of Current and Revised Articles for Criteria Governing Codes of Ethical Conduct,

Entie Commercial Bank Proposed Revision Current articles Description

Article 1 (Purpose and scope of the Criteria)

The Criteria is adopted for the purpose of encouraging directors and managerial officers (including general managers or their equivalents, assistant general managers or their equivalents, deputy assistant general managers or their equivalents, chief financial and chief accounting officers, and other persons authorized to manage affairs and sign documents on behalf of the Bank) of EnTie Commercial Bank (the “Bank”) to act in line with ethical standards.

Article 1 (Purpose and scope of the Criteria) The Criteria is adopted for the purpose of encouraging directors, supervisors, and managerial officers (including general managers or their equivalents, assistant general managers or their equivalents, deputy assistant general managers or their equivalents, chief financial and chief accounting officers, and other persons authorized to manage affairs and sign documents on behalf of the Bank) of EnTie Commercial Bank (the “Bank”) to act in line with ethical standards.

The Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of directors on June 8, 2016. Thus, the term “supervisors” is deleted.

Article 2 (Content of the Criteria)

Matters to be followed by directors and managerial officers are as follows: 1. Prevention of conflicts of interests

A director and managerial officer of the Bank, and a person authorized to manage affairs and sign documents on behalf of the Bank shall perform their duties in an objective and efficient manner, and shall not take

Article 2 (Content of the Criteria) Matters to be followed by directors, supervisors and managerial officers are as follows: 1. Prevention of conflicts of interests

A director, supervisor, and managerial officer of the Bank, and a person authorized to manage affairs and sign documents on behalf of the Bank shall perform their duties in an objective and

The Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of directors on June 8, 2016. Thus, the term “supervisors” is deleted; also, the phrase

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advantage of their positions to benefit for either themselves or their spouses, parents, children, or relatives within the second degree of kinship. Should the Bank provide loans of funds or guarantees to, or have major asset transactions or the purchase (or sale) of goods with the affiliated enterprise at which a director and managerial officer works, such persons shall voluntarily explain whether there is any potential conflict between them and the Bank.

2. Minimizing incentives to pursue personal gain

Directors and managerial officers shall not engage in any of the following activities:

(items (1) & (2) omitted) (3) Competing with the Bank.

When the Bank has an opportunity for profit, it is the responsibility of the directors and managerial officers to maximize the reasonable and proper benefits that can be obtained by the Bank.

3. Prevention of unethical behavior

Directors and managerial

efficient manner, and shall not take advantage of their positions to benefit for either themselves or their spouses, parents, children, or relatives within the second degree of kinship. Should the Bank provide loans of funds or guarantees to, or have major asset transactions or the purchase (or sale) of goods with the affiliated enterprise at which a director, supervisor and managerial officer works, such persons shall voluntarily explain whether there is any potential conflict between them and the Bank.

2. Minimizing incentives to pursue personal gain

Directors, supervisors, and managerial officers shall not engage in any of the following activities:

(items (1) & (2) omitted) (3) Competing with the Bank.

When the Bank has an opportunity for profit, it is the responsibility of the directors, supervisors, and managerial officers to maximize the reasonable and proper benefits that can be obtained by the Bank.

“report to a supervisor” is replaced by “report to an independent director”.

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officers shall perform their duties in an impartial, ethical and fair manner, and shall not directly or indirectly offer, promise, request or receive improper benefits, or have unethical activities in violation of ethical principles, a law or regulation, or breach of fiduciary duty for the purpose of obtaining or maintaining personal gain.

4. Confidentiality

Directors and managerial officers shall be bound by the obligation to maintain the confidentiality of any information regarding the Bank itself or its clients, except when authorized or required by law to disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Bank or its clients.

5. Fair trade

Directors and managerial officers shall treat all clients, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure,

3. Prevention of unethical behavior

Directors, supervisors, and managerial officers shall perform their duties in an impartial, ethical and fair manner, and shall not directly or indirectly offer, promise, request or receive improper benefits, or have unethical activities in violation of ethical principles, a law or regulation, or breach of fiduciary duty for the purpose of obtaining or maintaining personal gain.

4. Confidentiality

Directors, supervisors, and managerial officers shall be bound by the obligation to maintain the confidentiality of any information regarding the Bank itself or its clients, except when authorized or required by law to disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Bank or its clients.

5. Fair trade

Directors, supervisors, and

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or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.

6. Safeguarding and proper use of Bank assets

All directors and managerial officers have the responsibility to safeguard Bank assets and to ensure that they can be effectively and lawfully used for official business purposes.

7. Legal compliance

Directors and managerial officers shall comply with the Securities and Exchange Act and other applicable laws, regulations, and bylaws.

8. Encouraging reporting on illegal or unethical activities

The Bank shall encourage employees to report to an independent director, managerial officer, chief auditor, or other appropriate individual upon suspicion or discovery of any activity in violation of a law or regulation or the Criteria. To encourage employees to report illegal conduct, the Bank shall establish a concrete

managerial officers shall treat all clients, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.


All directors, supervisors, and managerial officers have the responsibility to safeguard Bank assets and to ensure that they can be effectively and lawfully used for official business purposes.

7. Legal compliance

Directors, supervisors, and managerial officers shall comply with the Securities and Exchange Act and other applicable laws, regulations, and bylaws

8. Encouraging reporting on illegal or unethical activities

The Bank shall encourage employees to report to a supervisor, managerial officer, chief auditor, or other

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whistle-blowing system and make employees aware that the Bank will use its best efforts to ensure the safety of informants and protect them from reprisals.

9. Disciplinary measures

When a director or a managerial officer violates the Criteria, the Bank shall handle the matter in accordance with the Company Act, Articles of Incorporation of the Bank, and relevant internal regulations, and shall without delay disclose on the Market Observation Post System (MOPS) the date of the violation, reasons for the violation, the provisions of the code violated, and the disciplinary actions taken. A violator penalized for violation of the Criteria could appeal for remedies in accordance with relevant regulations if he/she feels needed.

appropriate individual upon suspicion or discovery of any activity in violation of a law or regulation or the Criteria. To encourage employees to report illegal conduct, the Bank shall establish a concrete whistle-blowing system and make employees aware that the Bank will use its best efforts to ensure the safety of informants and protect them from reprisals.


When a director, supervisor, or a managerial officer violates the Criteria, the Bank shall handle the matter in accordance with the Company Act, Articles of Incorporation of the Bank, and relevant internal regulations, and shall without delay disclose on the Market Observation Post System (MOPS) the date of the violation, reasons for the violation, the provisions of the code violated, and the disciplinary actions taken. A violator penalized for violation of the Criteria could appeal for remedies in accordance with relevant regulations if he/she feels needed.

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Article 3 (Procedures for exemption) Any exemption for directors and managerial officers from compliance with the Criteria shall be adopted by a resolution of the board of directors, and information on the date on which the board of directors adopted the resolution for exemption, objections or reservations of independent directors, and the period of, reasons for, and principles behind the application of the exemption shall be disclosed without delay on the MOPS, in order that the shareholders may evaluate the appropriateness of the board resolution to forestall any arbitrary or dubious exemption from the Criteria, and to safeguard the interests of the Bank by ensuring appropriate mechanisms for controlling any circumstance under which such an exemption occurs.

Article 3 (Procedures for exemption) Any exemption for directors, supervisors, and managerial officers from compliance with the Criteria shall be adopted by a resolution of the board of directors, and information on the date on which the board of directors adopted the resolution for exemption, objections or reservations of independent directors, and the period of, reasons for, and principles behind the application of the exemption shall be disclosed without delay on the MOPS, in order that the shareholders may evaluate the appropriateness of the board resolution to forestall any arbitrary or dubious exemption from the Criteria, and to safeguard the interests of the Bank by ensuring appropriate mechanisms for controlling any circumstance under which such an exemption occurs.

The Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of directors on June 8, 2016. Thus, the term “supervisors” is deleted.

Article 5 (Enforcement) The Criteria, and any

amendments to it, shall enter into force after it has been adopted by the board of directors, delivered to each independent director, and submitted to a shareholders meeting for record.

Article 5 (Enforcement) The Criteria, and any

amendments to it, shall enter into force after it has been adopted by the board of directors, delivered to each supervisor, and submitted to a shareholders meeting for record.

The Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of

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directors on June 8, 2016. Thus, the term “supervisors” is replaced by “independent director”.

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for Ethical Corporate Management” of the Bank (the “Criteria”)

Explanation: 1. This proposal is prepared in accordance with Article 27 of the Criteria which stipulates, “The Criteria of the Bank shall be implemented after the board of directors grants the approval, and shall be sent to the independent directors and reported at a shareholders’ meeting. The same procedure shall be followed when the Criteria have been amended”.

2. In view of the Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of directors on June 8, 2016, we hereby revise the Criteria accordingly. Please refer to pages 21 to 29 of this Agenda Handbook for the comparison table of changes made to the Criteria.

3. The revised proposal of the Criteria was approved by the president with the delegation granted at the 1st extraordinary board meeting of the 9th term held on June 8, 2016 for signing off all necessary revisions and amendments that are related only to the replacement of supervisors’ role with an audit committee to all internal regulations, and is submitted to the Annual General Meeting of Shareholders for record.

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The Comparison Table of Current and Revised Articles for the Criteria for Ethical Corporate Management,

Entie Commercial Bank Proposed revision Current articles Description Article 2 (Preventing Unethical Conduct) When engaging in commercial activities, directors, managers, employees, mandataries of the Bank or persons having substantial control over the bank (short as “Substantial Controllers” hereafter) shall not directly or indirectly offer, promise to offer, request or accept any improper Benefits, nor commit unethical acts including breach of ethics, illegal acts, or breach of fiduciary duty (short as “Unethical Conduct” hereafter) for purposes of acquiring or maintaining Benefits. (Paragraph 2 omitted)

Article 2 (Preventing Unethical Conduct) When engaging in commercial activities, directors, supervisors, managers, employees, mandataries of the Bank or persons having substantial control over the bank (short as “Substantial Controllers” hereafter) shall not directly or indirectly offer, promise to offer, request or accept any improper Benefits, nor commit unethical acts including breach of ethics, illegal acts, or breach of fiduciary duty (short as “Unethical Conduct” hereafter) for purposes of acquiring or maintaining Benefits. (Paragraph 2 omitted)

The Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of directors on June 8, 2016. Thus, the term of “supervisors” is deleted.

Article 10 (Forbidding Bribery and Receiving Brides) When conducting business, the Bank and its directors, managers, employees, mandataries and Substantial Controllers, shall not directly or indirectly offer, promise to offer, request, or accept any improper Benefits in other ways from clients, trading counterparties, public servants, or other interested parties.

Article 10 (Forbidding Bribery and Receiving Brides) When conducting business, the Bank and its directors, supervisors, managers, employees, mandataries and Substantial Controllers, shall not directly or indirectly offer, promise to offer, request, or accept any improper Benefits in other ways from clients, trading counterparties, public servants, or other interested parties.

Same as above

21

Article 11 (Forbidding Illegal Political Donations) When directly or indirectly offering a donation to political parties or organizations or individuals participating in political activities, the Bank and its directors, managers, employees, mandataries and Substantial Controllers, shall comply with the Political Donations Act and their own relevant internal operational procedures, and shall not make such donations in exchange for commercial gains or business advantages.

Article 11 (Forbidding Illegal Political Donations) When directly or indirectly offering a donation to political parties or organizations or individuals participating in political activities, the Bank and its directors, supervisors, managers, employees, mandataries and Substantial Controllers, shall comply with the Political Donations Act and their own relevant internal operational procedures, and shall not make such donations in exchange for commercial gains or business advantages.

Same as above

Article 12 (Forbidding Improper Donations and Sponsorship) When making or offering donations and sponsorship, the Bank and its directors, managers, employees, mandataries and Substantial Controllers shall comply with relevant laws and regulations and internal operational procedures, and shall not surreptitiously engage in bribery.

Article 12 (Forbidding Improper Donations and Sponsorship) When making or offering donations and sponsorship, the Bank and its directors, supervisors, managers, employees, mandataries and Substantial Controllers shall comply with relevant laws and regulations and internal operational procedures, and shall not surreptitiously engage in bribery.

Same as above

Article 13 (Forbidding Giving out/Receiving Unreasonable Presents, Hospitality or Other Improper Benefits) The Bank and its directors, managers, employees,

Article 13 (Forbidding Giving out/Receiving Unreasonable Presents, Hospitality or Other Improper Benefits) The Bank and its directors, supervisors, managers,

Same as above

22

mandataries 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.

employees, mandataries 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 14 (Forbidding Infringing Intellectual Property Rights) The Bank and its directors, managers, employees, mandataries and Substantial Controllers shall observe applicable laws and regulations, internal operational procedures, and contractual provisions concerning intellectual property, and may not use, disclose, dispose, or damage intellectual property or otherwise infringe intellectual property rights without the prior consent of the intellectual property rights holder.

Article 14 (Forbidding Infringing Intellectual Property Rights) The Bank and its directors, supervisors, managers, employees, mandataries and Substantial Controllers shall observe applicable laws and regulations, internal operational procedures, and contractual provisions concerning intellectual property, and may not use, disclose, dispose, or damage intellectual property or otherwise infringe intellectual property rights without the prior consent of the intellectual property rights holder.

Same as above

Article 16 (Preventing Products and Services Damaging Stakeholders) In the course of research and development, procurement, provision, or sale of products and services, the Bank and its directors, managers, employees, mandatories and Substantial Controllers shall observe applicable laws and regulations

Article 16 (Preventing Products and Services Damaging Stakeholders) In the course of research and development, procurement, provision, or sale of products and services, the Bank and its directors, supervisors, managers, employees, mandatories and Substantial Controllers shall observe applicable laws and

Same as above

23

and international standards to ensure the transparency of information about, and safety of their financial products and services. They shall also adopt and publish a policy on the protection of the rights and interests of consumers or other stakeholders, and carry out the policy in their operations, with a view to preventing their products and services from directly or indirectly damaging the rights and interests, health, and safety of consumers or other stakeholders. Where there are sufficient facts to determine that the Bank’s services are likely to pose any hazard to the safety and health of consumers or other stakeholders, the Bank shall in principle, suspend the services immediately.

regulations and international standards to ensure the transparency of information about, and safety of their financial products and services. They shall also adopt and publish a policy on the protection of the rights and interests of consumers or other stakeholders, and carry out the policy in their operations, with a view to preventing their products and services from directly or indirectly damaging the rights and interests, health, and safety of consumers or other stakeholders. Where there are sufficient facts to determine that the Bank’s services are likely to pose any hazard to the safety and health of consumers or other stakeholders, the Bank shall in principle, suspend the services immediately.

Article 17 (Organization and Responsibility)

The directors, managers, employees, mandataries and Substantial Controllers of the Bank shall exercise the due care of good administrators to 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 of its

Article 17 (Organization and Responsibility) The directors, supervisors, managers, employees, mandataries and Substantial Controllers of the Bank shall exercise the due care of good administrators to urge the company to prevent Unethical Conduct, always review the results of the preventive measures and continually make adjustments so as to ensure thorough

Same as above

24

ethical corporate management policies. (Paragraph 2 omitted)

implementation of its ethical corporate management policies. (Paragraph 2 omitted)

Article 18 (Legal Compliance of Conducting Business) The Bank and its directors, managers, employees, mandataries and Substantial Controllers shall comply with laws and regulations and the Prevention Program when conducting business. (Paragraph 2 omitted)

Article 18 (Legal Compliance of Conducting Business) The Bank and its directors, supervisors, managers, employees, mandataries and Substantial Controllers shall comply with laws and regulations and the Prevention Program when conducting business. (Paragraph 2 omitted)

Same as above

Article 19 (Preventing Conflicts of Interest) The Bank shall promulgate policies for preventing conflicts of interest to identify, monitor, and manage risks possibly resulting from Unethical Conduct, and shall also offer appropriate means for directors, managers, and other stakeholders attending or present at board meetings to voluntarily explain whether their interests would potentially conflict with those of the Bank.

When a proposal at a given board of directors meeting concerns the personal interest of, or the interest of the juristic person represented by, any of the directors, managers, and other stakeholders attending or present at board meetings, the concerned person shall state the

Article 19 (Preventing Conflicts of Interest) The Bank shall promulgate policies for preventing conflicts of interest to identify, monitor, and manage risks possibly resulting from Unethical Conduct, and shall also offer appropriate means for directors, supervisors, managers, and other stakeholders attending or present at board meetings to voluntarily explain whether their interests would potentially conflict with those of the Bank. When a proposal at a given board of directors meeting concerns the personal interest of, or the interest of the juristic person represented by, any of the directors, supervisors, managers, and other stakeholders attending or present at board meetings, the

Same as above

25

important aspects of the relationship of interest at the given board meeting. If his or her participation is likely to prejudice the interest of the Bank, the concerned person may not participate in discussion of or voting on the proposal and shall recuse himself or herself from the discussion or the voting, and may not exercise voting rights as proxy for another director. The directors shall practice self-discipline and must not support one another in improper dealings.

The Bank’s directors, managers, employees, mandataries and Substantial Controllers shall not take advantage of their positions or influence in the Bank to obtain improper Benefits for themselves, their spouses, parents, children or any other person.

concerned person shall state the important aspects of the relationship of interest at the given board meeting. If his or her participation is likely to prejudice the interest of the Bank, the concerned person may not participate in discussion of or voting on the proposal and shall recuse himself or herself from the discussion or the voting, and may not exercise voting rights as proxy for another director. The directors shall practice self-discipline and must not support one another in improper dealings. The Bank’s directors¸ supervisors, managers, employees, mandataries and Substantial Controllers shall not take advantage of their positions or influence in the Bank to obtain improper Benefits for themselves, their spouses, parents, children or any other person.

Article 21 (Operational Procedures and Code of Conduct) The Bank shall establish operational procedures and code of conduct in accordance with Article 6 hereof to guide directors, managers, employees, and Substantial Controllers on how to conduct business. The

Article 21 (Operational Procedures and Code of Conduct) The Bank shall establish operational procedures and code of conduct in accordance with Article 6 hereof to guide directors, supervisors, managers, employees, and Substantial Controllers on how to conduct

Same as above

26

procedures and guidelines should at least contain the following matters: (Subparagraphs 1 to 8 omitted)

business. The procedures and guidelines should at least contain the following matters: (Subparagraphs 1 to 8 omitted)

Article 22 (Educational Training and Performance Appraisal) The Chairman, the President or the upper level of management of the Bank shall communicate the importance of corporate ethics to its directors, employees, and mandataries on a regular basis. The Bank shall periodically organize training and awareness programs for directors, managers, employees, mandataries and Substantial Controllers, so they understand the Bank’s resolve to implement ethical corporate management, the related policies, Prevention Program and the consequences of committing Unethical Conduct. (Paragraph 3 omitted)

Article 22 (Educational Training and Performance Appraisal) The Chairman, the President or the upper level of management of the Bank shall communicate the importance of corporate ethics to its directors, employees, and mandataries on a regular basis. The Bank shall periodically organize training and awareness programs for directors, supervisors, managers, employees, mandataries and Substantial Controllers, so they understand the Bank’s resolve to implement ethical corporate management, the related policies, Prevention Program and the consequences of committing Unethical Conduct. (Paragraph 3 omitted)

Same as above

Article 23 (Reporting and Disciplinary Actions) (Paragraph 1 omitted) When material misconduct or likelihood of material impairment to the Bank comes to its awareness upon investigation, the dedicated personnel or unit handling the whistle-blowing system shall immediately prepare

Article 23 (Reporting and Disciplinary Actions) (Paragraph 1 omitted) When material misconduct or likelihood of material impairment to the Bank comes to its awareness upon investigation, the dedicated personnel or unit handling the whistle-blowing system shall immediately prepare

Same as above

27

a report and notify the independent directors in written form.

a report and notify the independent directors or supervisors in written form.

Article 26 (Review of the Policies and Measures of Ethical Management) The Bank 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 based on which the adopted ethical corporate management policies and measures taken will be reviewed and improved with a view to achieving better implementation of ethical management.

Article 26 (Review of the Policies and Measures of Ethical Management) The Bank shall at all times monitor the development of relevant local and international regulations concerning ethical corporate management, and encourage directors, supervisors, managers and employees to make suggestions based on which the adopted ethical corporate management policies and measures taken will be reviewed and improved with a view to achieving better implementation of ethical management.

Same as above

Article 27 (Implementation) The Criteria of the Bank shall

be implemented after the board of directors grants the approval, and shall be sent to the independent directors and reported at a shareholders’ meeting. The same procedure shall be followed when the Criteria have been amended.

When the Criteria is submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full

Article 27 (Implementation) The Criteria of the Bank shall

be implemented after the board of directors grants the approval, and shall be sent to the supervisors and reported at a shareholders’ meeting. The same procedure shall be followed when the Criteria have been amended.

When the Criteria is submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent

The Bank had established the Audit Committee to replace supervisors after the election of the 9th term board of directors on June 8, 2016. Thus, the term of “supervisors” is deleted and replaced by “independent

28

consideration each independent director’s opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. An independent director intending to express objection or reservations but unable to attend the meeting in person shall, unless there is some legitimate reason to do otherwise, issue a written opinion in advance, which shall be recorded in the meeting minutes.

director’s opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. An independent director intending to express objection or reservations but unable to attend the meeting in person shall, unless there is some legitimate reason to do otherwise, issue a written opinion in advance, which shall be recorded in the meeting minutes.

After the Bank establishes the audit committee, the Criteria shall apply mutatis mutandis to the audit committee.

directors” to be in line with the intent of notification; meanwhile, the Sunrise Clause is be deleted since the Audit Committee has been established.

29

http://terms.naer.edu.tw/detail/1625081/


for Corporate Social Responsibility Best Practice” of the Bank

Explanation: 1. In accordance with the revised “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”, which was announced by the Taiwan Stock Exchange Corporation (TWSE) per letter No. 1050014103 dated July 28, 2016, we hereby revise the “Criteria for Corporate Social Responsibility Best Practice” (“the Criteria”) of the Bank. Please see details from pages 31 to 33 of this Agenda Handbook for the comparison table of changes made to the Criteria.

2. This proposal was approved at the 3rd board meeting of the 9th term held on Oct. 22, 2016, and is submitted to the Annual General Meeting of Shareholders for record.

30

The Comparison Table of Current and Revised Articles for Corporate Social Responsibility Best Practice, EnTie Commercial Bank

Proposed revision Current articles Description

Article 7 The Board of Directors shall exercise

the due care of good administrators

to urge the Bank to perform its corporate social responsibility

initiatives, examine the results of the

implementation thereof from time to time and continually make

adjustments so as to ensure the

thorough implementation of its corporate social responsibility

policies.

The Board of Directors is advised to consider the interests of interested

parties and uphold corporate social

responsibility by performing the following:

1. Identifying the company's

corporate social responsibility mission or vision, and declaring its

corporate social responsibility

policies, systems or relevant management principles.

2. Making corporate social

responsibility the guiding principle of the company's operations and

development, and approving

concrete plan of corporate social responsibility.

3. Enhancing the disclosure of

corporate social responsibility

Article 7 The Board of Directors shall exercise

the due care of good administrators

to urge the Bank to perform its corporate social responsibility

initiatives, examine the results of the

implementation thereof from time to time and continually make

adjustments so as to ensure the

thorough implementation of its corporate social responsibility

policies.

The Board of Directors is advised to uphold corporate social responsibility

by performing the following:

1. Identifying the company's corporate social responsibility mission

or vision, and declaring its corporate

social responsibility policies, systems or relevant management principles.

2. Making corporate social

responsibility the guiding principle of the company's operations and

development, and approving

concrete plan of corporate social responsibility.

3. Enhancing the disclosure of

corporate social responsibility information timely and correctly.

As for the economy, environment and

social issues resulting from the

1. Article is amended

2. The wording is

amended pursuant to

Article 7 of the

“Corporate Social

Responsibility

Best Practice Principles for

TWSE/GTSM

Listed Companies”

31


information timely and correctly.

As for the economy, environment and

social issues resulting from the Bank’s operation, the Board of

Directors shall authorize the upper

level of management to deal with the issues and report their processing

situation. The processing

procedure and related accountable persons should be defined concretely

and unequivocally.

Bank’s operation, the Board of

Directors shall authorize the upper

level of management to deal with the issues and report their processing

situation. The processing procedure

and related accountable persons should be defined concretely and

unequivocally.

Article 22-1 The Bank is advised to treat its

customers or consumers fairly by

implementing the following principles: fairness and good faith, due care and

fiduciary duty, truthfulness of

advertising, suitability of products or services, duty of disclosure, duty

regarding sale of complex, high-risk

products, equitable performance-based compensation

plans, protection of complainants,

professionalism of sales personnel etc., and revise related executed

strategy and concrete measures.

1. New article 2. Nine principles

of the

“Principles for Financial

Services

Enterprises to Treat

Customers

Fairly” are included as

part of the

Criteria pursuant to

Article 22-1 of

the “Corporate Social

Responsibility

Best Practice Principles for

TWSE/GTSM

Listed

32


Companies”

Article 26 The Bank shall consider the impact of

their business operations on the

community and use qualified personnel to enhance community

acceptance.

The Bank may, through equity investment, commercial activities,

donations of goods and materials,

volunteering services or other pro bono services, etc., invest in

organizations that solve social or

environmental issues through business operations, or participate in

events held by citizen groups,

charities, and government agencies for community development and

education to accelerate the

development of community.

Article 26 The Bank shall consider the impact of

their business operations on the

community and use qualified personnel to enhance community

acceptance.

The Bank may, through commercial activities, donations of goods and

materials, volunteering services or

other pro bono services, participate in events held by citizen groups,

charities, and local government

agencies for community development and education to accelerate the

development of community.

1. Article is amended

2. Pursuant to

Article 27 of the “Corporate

Social

Responsibility Best Practice

Principles for

TWSE/GTSM Listed

Companies”,

the article is amended to

stipulate that

the Bank is advised to

participate or

invest in organizations

that solve social

or environmental

issues through

business operations.

33

(7) Proposed by the Board of Directors Proposal: To note for record the short-form merger report

between An Yin Insurance Brokers Co., Ltd. and the Bank

Explanation: 1.Pursuant to paragraph 1 of Article 19 of the Business Mergers and Acquisitions Act (Article 19(1)), in case a parent company merges with its subsidiary company whose ninety percent or more of the total number of the issued shares is held by the parent company, the merger agreement may be concluded upon a resolution to be adopted separately at the Board meeting of each company by a majority vote of the directors present at the meeting attended by directors representing two-thirds or more of the directors of the respective companies. Also, as regulated in paragraph 2 of Article 7 of the same Act, the Board of Directors shall submit reports for matters of the merger/consolidation and acquisition adopted under Article 19(1) at the next closest general meeting. The Bank merged with its 100% held subsidiary company, An Yin Insurance Brokers Co., Ltd. (hereinafter referred to as “An Yin Insurance Brokers”), on August 1, 2016 pursuant to the aforementioned regulations. Keynotes of the merger are explained below: (1) To effectively integrate resources and reduce

the management costs, the resolution that the Bank merged with An Yin Insurance Brokers pursuant to Article 19 of the Business Mergers and Acquisitions Act was adopted by the Boards of both companies on June 21, 2016, which resolved that the Bank would be the surviving

34

company and An Yin Insurance Brokers would be the dissolved company. The merger has been completed, and the reference date of the merger was August 1, 2016. As permission for the Bank to engage in insurance brokerage business has been granted, the Insurance Brokerage Department undertook the business formerly conducted by An Yin Insurance Brokers.

(2) The aforementioned merger has been approved and filed pursuant to Letter No. 10501204290 from the Ministry of Economic Affairs.

(3) As An Yin Insurance Brokers was 100% owned by the Bank, the merger was carried out as a short-form merger in accordance with Article 19 of the Business Mergers and Acquisitions Act. Shareholders’ equity was not affected as the Bank neither issued new shares nor distributed cash or other assets for the said merger.

2.The proposal was approved at the 5th board

meeting of the 9th term held on Mar. 2, 2017, and is submitted to the Annual General Meeting of Shareholders for record.

35

2. Acknowledgment Items: (1) Proposed by the Board of Directors Proposal: Adoption of the 2016 Business Report and Financial

Statements Explanation:

1. The Bank’s Business Report and Financial Statements of year 2016 which were approved for submission by Audit Committee at the 5th and 6th audit committee meetings of the 1st term held on March 2, 2017 and April 25, 2017 respectively. The same were approved by the Board at the 5th and 6th board meetings of the 9th term held on March 2, 2017 and April 25, 2017 respectively.

2. The financial documents stated in the proposal include the Business Report, also listed in Reporting Item 1 (please see details from pages 3 to 8 of this Agenda Handbook), the financial statements, inclusive of the auditors’ report, balance sheets, statements of comprehensive income, statements of changes in equity, and statements of cash flows (please see details from pages 37 to 45 of this Agenda Handbook).

Resolution:

36

(2) Proposed by the Board of Directors Proposal: Adoption of the Proposal for Distribution of 2016

Profits (please see details on page 49 of this Agenda Handbook)

Explanation: 1. The Proposal for Distribution of 2016 Profits was approved at the 6th board meeting of the 9th term on April 25, 2017.

2. According to IFRS 7, the Bank had set aside NT$398,786,964 for preferred stock dividend expense. The Bank’s pre-tax net profit for the year of 2016 is NT$1,710,162,277. The net profit after tax is NT$1,054,678,898 after the deduction of tax expenses NT$655,483,379.

3. According to the letters bearing ref. No. 86217699 issued by the Ministry of Economic Affairs dated September 23, 1997, “Before making distribution of earnings after paying tax, the companies should set aside legal reserve”, and ref. No. 0950000507 issued by the Financial Supervisory Commission dated January 27, 2006 “Listed and over-the-counter companies shall recognize or reverse special reserve for deductions of stockholders’ equity, which includes unrealized gains/losses of financial instruments, cumulative translation adjustment, net losses not recognized as pension cost; Unrealized gains can be combined with losses if available.” After the appropriation of a legal reserve of NT$316,403,669, a special reserve of NT$7,298,506 as deduction of stockholders’ equity, and a special reserve of NT$5,273,394 for career transfer education and training in respond to FinTech impact in 2016, the remaining earnings for distribution of the Bank is

46

NT$725,703,329. With the addition to the beginning balance of undistributed retained earnings of NT$5,928,654,241, and actuarial gains/losses on defined benefit plans of NT$595,355 for change in actuarial income/loss in 2016, the total retained earnings of 2016 available for common stock dividend distribution is NT$6,654,952,925.

4. As of December 31, 2016, the total issued and outstanding common shares of the Bank were 1,679,677,506 shares. The total amount of cash dividends which the Bank plans to distribute is NT$1,007,806,504, which in average is approximately NT$0.6 per share.

5. The amount of common share cash dividends and preferred share dividends would be rounded down to the whole NT dollar amount. The combined total of a fraction of NT$1 calculated under the aforementioned method should be included in the Bank’s miscellaneous income account. The dividends would be distributed upon approval from shareholders at the Annual General Meeting of shareholders along with an additional authorization to the board of directors to set the ex-dividend date and dividend distribution methods later on.

6. Please also authorize the board of directors to adjust the payout ratio based on the actual numbers of outstanding shares on the ex-dividend date, and make related adjustments in accordance with the regulations if there is any increment/deduction to the common shares outstanding due to stock repurchasing, transferring, cancellation, or other conditions, which may result in changes in the

47

number of outstanding shares on the ex-dividend date after the earnings distribution plan is approved.

Resolution:

48

Entie Commercial Bank, Ltd.

Earning Distribution Table

For the Year of 2016

Unit: NTD

2016 Current Term Pre-Tax Net Profit

1,710,162,277

Subtract: Tax Expense

(655,483,379) 2016 Current Term After-Tax Net Profit

1,054,678,898

Subtract: 30% of Tax Net Profit as Legal Reserve (316,403,669) Subtract: Special Reserve for Deduction of Stockholders' Equity (7,298,506) Subtract: Special Reserve for Career Transfer Education and

Training in Respond to FinTech Impact (5,273,394)

Total Distributable Amount

725,703,329 Plus: Beginning Undistributed Earning 5,928,654,241 Plus: Change in Actuarial Gains (Losses) on Defined Benefit Plans in

2016 595,355

2016 Distributable Common Stock Dividend Balance 6,654,952,925 Earning Distribution:

Common Stock Cash Dividend-

1,679,677,506 Number of Shares, NT $0.6 per Share (1,007,806,504)

2016 Accumulated Undistributed Earnings 5,647,146,421

Note:

1. The Bank had set aside preferred stock dividends NT $398,786,964 in 2016 in accordance with IFRS 7.

2. For the cash dividends on common stocks and preferred stock dividends distributions, the Bank plans to acquire the authorization from shareholders at the Annual General Shareholders’ Meeting, to delegate to the Board of Directors for setting up the record date and methods of distribution.

49

3. Discussion Items: (1) Proposed by the Board of Directors Proposal: To approve the amendments to the Articles of

Incorporation of the Bank Explanation: 1. Key revisions of AOI are as follows:

(1)Based on the long-term strategic development needs to maintain a sound capital structure, we propose to revise subparagraph 9 of paragraph 1 of Article 5-1 of the AOI to extend the call date of CPPS and delete the step-up clause (i.e. CPPS dividend rate up to 7.75%).

(2)In accordance with Article 3 of “Regulations Governing Procedure for Board of Directors Meetings of Public Companies”, the meeting frequency of the board of directors in Article 27 of AOI is revised.

(3)The Bank has completed the election of the 9th term Board of Directors and established an audit committee in lieu of supervisors. We hereby propose to amend Articles 39 and 44 to delete the sunset provisions concerning the remuneration of supervisors and other transitional clauses.

2. Please refer to pages 51 and 57 of Agenda Book for a comparison table of the changes.

3. This proposal was approved for submission at the 6th board meeting of the 9th term held on April 25, 2017. Your approval is appreciated.

Resolution:

50

The Comparison Table of Current and Revised Articles of 5-1, 27, 39 and

44 of Articles of Incorporation, EnTie Commercial Bank (“AOI”) Proposed revision Current articles Description

Article 5-1This Bank may issue 621,890,000

shares of Series 1 Convertible

Perpetual Preferred Shares, eachwith a par value of NT$10 (the

“Series 1 CPPS”) in one issuance or

in tranches. The major terms andconditions are as follows:

1. If the Bank has any profit after

every year, losses of the previousyears shall first be covered after

the payment of taxes and

adjustment due to accountingrule changes. If there is any

remaining amount, the Bank shall

set aside or add reversal of legaland special reserves in

accordance with Article 40 of the

AOI, and then distribute dividendto the holders of Series 1 CPPS

as described herein.

2. Holders of Series 1 CPPS shallbe entitled to receive annual

cash dividend of a fixed rate of

6.75% (“Annual Dividends”),payable in cash. After the annual

financial statements have been

ratified in the annual generalmeeting of shareholders, the

Board of Director shall set a

record date for distribute AnnualDividends for the preceding fiscal

Article 5-1This Bank may issue 621,890,000

shares of Series 1 Convertible

Perpetual Preferred Shares, each with apar value of NT$10 (the “Series 1

CPPS”) in one issuance or in tranches.

The major terms and conditions are asfollows:

1. If the Bank has any profit after

every year, losses of the previousyears shall first be covered after the

payment of taxes and adjustment

due to accounting rule changes. Ifthere is any remaining amount, the

Bank shall set aside or add reversal

of legal and special reserves inaccordance with Article 40 of the

AOI, and then distribute dividend to

the holders of Series 1 CPPS asdescribed herein.

2. Holders of Series 1 CPPS shall be

entitled to receive annual cashdividend of a fixed rate of 6.75%

(“Annual Dividends”), payable in

cash. After the annual financialstatements have been ratified in the

annual general meeting of

shareholders, the Board of Directorshall set a record date for distribute

Annual Dividends for the preceding

fiscal year. Pro-rata dividend toSeries 1 CPPS will be paid in the

1. Article isamended

2. Based on the

long-termstrategic

development

needs, CPPScall date is

extended

from 10 yearsto 15 years. In

addition, the

annual fix rateof dividend

payments per

share isadjusted from

7.75% to

6.75%.Provisions

related to the

said annualfix portion of

the dividend

payments pershare are

revised

accordingly.

51

http://eng.selaw.com.tw/FLAWDOC01.asp?lsid=FL055768&lno=3


Proposed revision Current articles Descriptionyear. Pro-rata dividend to Series

1 CPPS will be paid in the year of

issuance of the Series 1 CPPSbased on actual holding period of

that year from the date of

issuance which shall be therecord date for the capital

increase. Pro-rata dividend will

also be paid to Series 1 CPPS inthe year of redemption of the

Series 1 CPPS based on actual

holding period of that year.3. If there are no earnings or the

earnings are not sufficient for the

full payment of the AnnualDividends of Series 1 CPPS in

any fiscal year, the insufficient

amount will not be accumulatedto the years thereafter.

4. Holders of Series 1 CPPS shall

be entitled, in addition to theAnnual Dividends distributable

under Item 2 of this Article, if so

resolved by the Board ofDirectors, to participate in the

dividends declared on Common

Share at a ratio of every 2 sharesof Series 1 CPPS for each

Common Share dividend;

provided that such participationright shall be available only if,

after the distributions of cash

dividends for Common Share atan amount equal to the cash

year of issuance of the Series 1

CPPS based on actual holding

period of that year from the date ofissuance which shall be the record

date for the capital increase.

Pro-rata dividend will also be paid toSeries 1 CPPS in the year of

redemption of the Series 1 CPPS

based on actual holding period ofthat year.

3. If there are no earnings or the

earnings are not sufficient for the fullpayment of the Annual Dividends of

Series 1 CPPS in any fiscal year, the

insufficient amount will not beaccumulated to the years thereafter.

4. Holders of Series 1 CPPS shall be

entitled, in addition to the AnnualDividends distributable under Item 2

of this Article, if so resolved by the

Board of Directors, to participate inthe dividends declared on Common

Share at a ratio of every 2 shares of

Series 1 CPPS for each CommonShare dividend; provided that such

participation right shall be available

only if, after the distributions of cashdividends for Common Share at an

amount equal to the cash dividends

distributed for Series 1 CPPS pershare, there is any remaining

balance.

5. The Series 1 CPPS will have aliquidation preference per share

52

Proposed revision Current articles Descriptiondividends distributed for Series 1

CPPS per share, there is any

remaining balance.5. The Series 1 CPPS will have a

liquidation preference per share

over the Common Share up tothe Purchase Price of Series 1

CPPS.

6. Voting Rights: Holder of Series 1CPPS shall be entitled to vote

and the right to elect and being

elected together with theCommon Shares on an

as-converted basis. Holder of

Series 1 CPPS shall be entitledto vote in preferred shareholders

meeting.

7. Holder of Series 1 CPPS willhave same preemptive rights as

Common Shares holders with

respect to subscription of newshare issuance.

8. Except for the closed period in

which the share registrar isclosed or the conversion of any

convertible securities is

suspended according to lawsand regulations, at the option of

the holders, the Series 1 CPPS

are convertible into CommonShares on a one-to-one basis, at

any time after one month of the

date of the issuance and theCommon Shares issued upon

over the Common Share up to the

Purchase Price of Series 1 CPPS.

6. Voting Rights: Holder of Series 1CPPS shall be entitled to vote and

the right to elect and being elected

together with the Common Shareson an as-converted basis. Holder of

Series 1 CPPS shall be entitled to

vote in preferred shareholdersmeeting.

7. Holder of Series 1 CPPS will have

same preemptive rights as CommonShares holders with respect to

subscription of new share issuance

8. Except for the closed period inwhich the share registrar is closed

or the conversion of any convertible

securities is suspended according tolaws and regulations, at the option

of the holders, the Series 1 CPPS

are convertible into CommonShares on a one-to-one basis, at

any time after one month of the date

of the issuance and the CommonShares issued upon such

conversion shall have the same

rights and obligations as otheroutstanding Common Shares.

Pro-rata preferred dividend will also

be paid in the year when conversionright is exercised based on holding

period of that year; provided,

however, holders of Series 1 CPPSwho convert their Series 1 CPPS

53

Proposed revision Current articles Descriptionsuch conversion shall have the

same rights and obligations as

other outstanding CommonShares. Pro-rata preferred

dividend will also be paid in the

year when conversion right isexercised based on holding

period of that year; provided,

however, holders of Series 1CPPS who convert their Series 1

CPPS into Common Shares

before the record date fordividends distribution of that year

shall have no rights to participate

in the Annual Dividends forSeries 1 CPPS in the year of

conversion and any year thereafter.

9. Subject to the applicable laws andapproval from the competent

authority, this Company shall have

the right to redeem any part or alloutstanding Series 1 CPPS after

the 15th anniversary of the

Closing, at a redemption price pershare equal to the Issuance Price.

into Common Shares before the

record date for dividends distribution

of that year shall have no rights toparticipate in the Annual Dividends

for Series 1 CPPS in the year of

conversion and any year thereafter.9. Subject to the applicable laws and

approval from the competent

authority, this Company shall havethe right to redeem any part or all

outstanding Series 1 CPPS after the

10th anniversary of the Closing, at aredemption price per share equal to

the Issuance Price. If any of the

Series 1 CPPS are not redeemedafter the 10th anniversary of the Date

of Issuance, the annual fix portion of

the dividend payments per share willbe increased to 7.75%.

Article 27

The Board of Directors calls one

meeting at least quarterly throughthe convening of the chairman. The

chairman can call the meeting at any

time upon contingency or therequest from more than 50% of

directors.

Article 27

The Board of Directors calls one

meeting every three months through theconvening of the chairman. The

chairman can call the meeting at any

time upon contingency or the requestfrom more than 50% of directors.

In addition to the written notification, the

1. Article is

amended

2. Pursuant toArticle 3 of

“Regulations

GoverningProcedure for

Board of

54



Proposed revision Current articles DescriptionIn addition to the written notification,

the Bank’s Board meeting could be

convened by the Chairman via mail,fax notices or notices in electronic

transmission.

If the chairman fails to convene themeeting of directors or the meeting

of managing directors, the vice

chairman shall act on his behalf. Butif the vice chairman fails to convene

or exercise his power and authority

for any cause within 7 days started atthe required day, then the chairman

should appoint one managing

director (director) as the proxy toconvene in advance. Should no

proxy be appointed, the convener

can be chosen among managingdirectors (directors).

When the board meetings are

adjourned, the Managing Directorswill exercise their rights on behalf of

the board, and meetings can be

convened by the Chairman.However any items that concern

greater interests of the Company, the

board has the final decision.

Bank’s Board meeting could be

convened by the Chairman via mail, fax

notices or notices in electronictransmission.

If the chairman fails to convene the

meeting of directors or the meeting ofmanaging directors, the vice chairman

shall act on his behalf. But if the vice

chairman fails to convene or exercisehis power and authority for any cause

within 7 days started at the required

day, then the chairman should appointone managing director (director) as the

proxy to convene in advance. Should no

proxy be appointed, the convener canbe chosen among managing directors

(directors).

When the board meetings areadjourned, the Managing Directors will

exercise their rights on behalf of the

board, and meetings can be convenedby the Chairman. However any items

that concern greater interests of the

Company, the board has the finaldecision.

Directors

Meetings of

PublicCompanies”,

wording of

boardmeeting

frequency is

revised.

Article 39When there is any profit (i.e. the

Before-Tax Income prior to the

deductions of employees’ and board members remunerations) at the end

of each year, the Bank shall allocate

Article 39When there is any profit (i.e. the

Before-Tax Income prior to the

deductions of employees’ and board members remunerations) at the end of

each year, the Bank shall allocate not


2. As the Bank

hasestablished

the audit

55



Proposed revision Current articles Descriptionnot less than one percent of the said

profit as employees’ remuneration,

and no more than one percent asremunerations of directors. However,

the Bank’s accumulated losses

should have been coveredbeforehand.

less than one percent of the said profit

as employees’ remuneration, and no

more than one percent asremunerations of directors and

supervisors. However, the Bank’s

accumulated losses should have beencovered beforehand.

The preceding paragraph regarding

supervisors’ remuneration shall no longer be applicable when the Bank

establishes the audit committee in lieu

of supervisors.

committee to

replace the

supervisors,provisions of

remuneration

of supervisorsare deleted.

Article 44The Articles of Incorporations was

developed after approval by the

entire founders on September 26,1991.

.

.

.

The 23rd amendment was made at

the General Shareholders’ Meetingon June 12, 2015.

The 24th amendment was made at

the General Meeting of Shareholderson June 8, 2016.

The 25th amendment was made at

the General Meeting of Shareholderson June 16, 2017.

Article 44The Articles of Incorporations was

developed after approval by the entire

founders on September 26, 1991..

.

.

The 23rd amendment was made at the

General Shareholders’ Meeting on June

12, 2015. All amended and deletedarticles shall be implemented after the

approval of the General Meeting of

Shareholders except for the revisedArticle 15, Subparagraph 2 and 3 of

Paragraph 1 of Article 19, Article 23,

Article 26-1, Article 39, Subparagraph 2of Paragraph 1 of Article 40, and the

deleted Article 31 to Article 34 of

Chapter VI, which will take effect afterthe re-election of the 9th term Board of

Directors.


2. The 9th term

Board ofDirectors has

been elected.

We herebydelete the

sunset

provisions.3. To add a

latest revision

date.

56



Proposed revision Current articles DescriptionThe 24th amendment was made at the

General Meeting of Shareholders on

June 8, 2016.

57

(2) Proposed by the Board of Directors

Proposal: To approve the amendments to the “Criteria Governing Assets Acquisition and Disposal” of the Bank (the “Criteria”)

Explanation: 1. The Criteria is amended in accordance with the revised “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” announced by the Financial Supervisory Commission (FSC) per letter No. 1060001296 dated February 9, 2017, and in response to the establishment of the Audit Committee of the Bank. We hereby propose to amend the Criteria accordingly. Please refer to pages 59 and 71 of this Agenda Handbook for the comparison table of amendments made to the Criteria.

2. This proposal was approved for submission at the6th board meeting of the 9th term held on April25, 2017, and is submitted to the Annual GeneralMeeting of Shareholders for approval.

Resolution:

58

The Comparison Table of Current and Revised Articles for the Criteria Governing Assets Acquisition and Disposal, EnTie Commercial Bank (the

“Criteria”)


Article 6 (Restrictions on Acquisition

and Disposal of Assets)

For acquisition or disposal of assets mentioned in Article 3, the Criteria shall

govern unless otherwise specified in

the Bank’s internal rules such as “Criteria for Long-term Investments”,

“Criteria on Funding Operations”,

“Criteria Governing the Operations of Financial Derivatives”, “Criteria for

collateral Management and Disposal”,

“Criteria of NPL Disposal”, “Rules Governing Acquisition and Disposal of

Loan Assets of Corporate Banking

and Markets Group”, “Rules Governing Properties and

Expenditures”, the statements of

stratified responsibilities, and other rules stipulated by the Bank.

Total amounts of real property or

securities acquired by the Bank and limits on individual securities, unless

otherwise specified in the Bank’s

internal rules, shall be handled in compliance with the Banking Act and

the regulations required by the

Competent Authority. The calculation of the transaction

amounts referred to in this Chapter

shall be done in accordance with Item

Article 6 (Restrictions on Acquisition

and Disposal of Assets)

For acquisition or disposal of assets mentioned in Article 3, the Criteria shall

govern unless otherwise specified in the

Bank’s internal rules such as “Criteria for Long-term Investments”, “Criteria

on Funding Operations”, “Criteria

Governing the Operations of Financial Derivatives”, “Criteria for collateral

Management and Disposal”, “Criteria

of NPL Disposal”, “Rules Governing Acquisition and Disposal of Loan

Assets of Corporate Banking Group”,

“Rules Governing Properties and Expenditures”, the statements of

stratified responsibilities, and other

rules stipulated by the Bank. Total amounts of real property or

securities acquired by the Bank and

limits on individual securities, unless otherwise specified in the Bank’s

internal rules, shall be handled in

compliance with the Banking Act and the regulations required by the

Competent Authority.

The calculation of the transaction amounts referred to in this Chapter

shall be done in accordance with Item

5 of Subparagraph 1, Paragraph 1,

1. Names of certain

internal

regulations are revised in

response to the

reorganization of the Bank.

2. Article is revised

in response to the amendments

to Article 15 of

the Criteria. 3. In response to

the

establishment of the Audit

Committee, the

term “supervisor” is

deleted, and the

Audit Committee is included to

take part of the

approval process.

59


7 of Subparagraph 1, Paragraph 1,

Article 15, and “within the preceding

year” as used herein refers to the year preceding the date of occurrence of

the current transaction. The

transaction amounts stated in Articles 8 to 10 for which an appraisal report

from a professional appraiser or a

CPA’s opinion has been obtained pursuant to the requirements

stipulated in the Criteria need not be

counted toward the transaction amount; the transaction amount

stated in Subparagraph 1, Paragraph

1 of Article 11 for which an approval has been obtained from by the Audit

Committee and the Board of Directors

pursuant to the requirements stipulated in the Criteria need not be

counted toward the transaction

amount.

Article 15, and “within the preceding

year” as used herein refers to the year

preceding the date of occurrence of the current transaction. The

transaction amounts stated in Articles

8 to 10 for which an appraisal report from a professional appraiser or a

CPA’s opinion has been obtained

pursuant to the requirements stipulated in the Criteria need not be

counted toward the transaction

amount; the transaction amount stated in Subparagraph 1, Paragraph 1 of

Article 11 for which an approval have

been obtained from the board of directors and recognized by the

supervisors pursuant to the

requirements stipulated in the Criteria need not be counted toward the

transaction amount.

Article 7 (Approval Procedure for

Major Transactions)

The Bank’s acquisition or disposal of assets for which the approval of the

board of directors is required under

the Criteria or other internal or external regulations is defined as

major transaction; such transactions

shall be approved by more than half of all audit committee members, and

then be submitted to the board for a

resolution.

Article 7（Handling Disagreements

from Board Directors）

The Bank’s acquisition or disposal of assets for which the approval of the

board of directors is required under the

Criteria or other laws or regulations, if a director expresses dissent and it is

contained in the minutes or a written

statement, the Bank shall submit the director’s dissenting opinion to each

supervisor.

1. Article is

amended

2. Define “major transaction”. The

internal

regulations stated in

paragraph 1

shall include but are not limited to

the regulations

listed in Article 6

60


If approval of more than half of all

audit committee members as required

in the preceding paragraph is not obtained, the procedures may be

implemented if approved by more

than two-thirds of all directors, and the resolution of the audit committee shall

be recorded in the board meeting

minutes. When a major transaction is

submitted for discussion by the board

of directors pursuant to the preceding paragraph, the board of directors shall

take into full consideration each

independent director’s opinions. If an independent director objects to or

expresses reservations on any matter,

it shall be recorded in the board meeting minutes.

The term “all audit committee

members” in paragraph 1 and “all directors” in paragraph 2 shall be

counted as the actual number of

persons holding those positions.

When a transaction involving the acquisition or disposal of assets is

submitted for discussion by the board

of directors pursuant to the preceding paragraph, the board of directors shall

take into full consideration each

independent director’s opinions. If an independent director objects to or

expresses reservations on any matter,

it shall be recorded in the board meeting minutes.

of the Criteria.

3. In response to

audit committee has been

established, any

transaction involving major

assets or

derivatives shall be approved by

more than half of

all audit committee

members and

submitted to the board of

directors for a

resolution.” The procedures for

approving major

asset transactions are

amended

accordingly, adjust the

approval

procedure for major

transactions in

accordance with the Article 8 of

“Regulations

Governing the

61


Acquisition and

Disposal of

Assets by Public

Companies.”

Article 9 (Procedures for Acquisition and Disposal of Real Property or

Equipment)

(omitted) 1. (omitted)

2. (omitted)

3. Real Property and Equipment Appraisal Reports

In acquiring or disposing real

property or equipment where the transaction amount reaches 20

percent of the Bank’s paid-in capital

or NT$300 million or more, the Bank, unless transacting with a

government institution, engaging

others to build on its own land, engaging others to build on rented

land, or acquiring or disposing of

equipment for business use, shall obtain an appraisal report prior to

the date of occurrence of the event

from a professional appraiser. The appraisal report shall include items

as specified by the regulations of

the Competent Authority and… (omitted)

Article 9 (Procedures for Acquisition and Disposal of Real Property or

Equipment)

(omitted) 1. (omitted)

2. (omitted)

3. Real Property and Equipment Appraisal Reports

In acquiring or disposing real

property or equipment where the transaction amount reaches 20

percent of the Bank’s paid-in capital

or NT$300 million or more, the Bank, unless transacting with a

government agency, engaging

others to build on its own land, engaging others to build on rented

land, or acquiring or disposing of

equipment for business use, shall obtain an appraisal report prior to

the date of occurrence of the event

from a professional appraiser. The appraisal report shall include items

as specified by the regulations of the

Competent Authority and… (omitted)

Amend the wording in response to

revised Article 9 of

“Regulations

Governing the

Acquisition and

Disposal of Assets

by Public

Companies’’.

62


Article 10 (Procedures for Acquisition

and Disposal of Memberships or

Intangible Assets) Unless the Bank’s Rules Governing

Properties and Expenditures and

other internal rules provide otherwise, the Bank shall acquire or dispose

memberships or intangible assets

pursuant to the Criteria. Where the Bank acquires or disposes

of memberships or intangible assets

and the transaction amount reaches or exceeds 20% of the Bank’s paid-in

capital or NT$300 million, except in

transactions with a government institution, the Bank shall engage a

certified public accountant prior to the

date of occurrence of the event to render an opinion on the

reasonableness of the transaction

price; the CPA shall comply with the provisions of the Statement of

Auditing Standards No. 20 published

by the ARDF.


and Disposal of Memberships or

Intangible Assets) Unless the Bank’s Rules Governing

Properties and Expenditures and other

internal rules provide otherwise, the Bank shall acquire or dispose

memberships or intangible assets

pursuant to the Criteria. Where the Bank acquires or disposes

of memberships or intangible assets

and the transaction amount reaches or exceeds 20% of the Bank’s paid-in

capital or NT$300 million, except in

transactions with a government agency, the Bank shall engage a

certified public accountant prior to the

date of occurrence of the event to render an opinion on the

reasonableness of the transaction

price; the CPA shall comply with the provisions of the Statement of Auditing

Standards No. 20 published by the

ARDF.

Amend the wording

in response to

revised Article 10 of “Regulations

Governing the

Acquisition and

Disposal of Assets

by Public

Companies’’.

Article 11 (Procedures for Related

Party Transaction)

(omitted) 1. Appraisal and Operating Procedures

When the Bank engages in any

acquisition or disposal of real property from or to a related party, or engages

in any acquisition or disposal of

assets other than real property from

Article 11 (Procedures for Related

Party Transaction)

(omitted) 1. Appraisal and Operating Procedures

When the Bank engages in any

acquisition or disposal of real property from or to a related party, or engages

in any acquisition or disposal of assets

other than real property from or to a

1. Wording of

Subparagraph 1

of Paragraph 1 is amended in

response to

revised Article 14 of the

“Regulations

Governing the

63


or to a related party and the

transaction amount reaches 20

percent or more of paid-in capital, 10 percent or more of the Bank's total

assets, or NT$300 million or more,

except in trading of government bonds or bonds under repurchase

and resale agreements, or

subscription or repurchase of domestic money market funds issued

by domestic securities investment

trust enterprises, the Bank may not proceed to enter into a transaction

contract or make a payment until the

following matters have been approved by the audit committee and

the board of directors :

(omitted) 2.Evaluation of the reasonableness of

the real property transaction costs

(1) (omitted) (2) (omitted)

(3) (omitted)


A. (omitted)

B. The Audit Committee shall supervise the execution of the said

operations of the Bank in compliance

with Article 218 of the Company Act. (omitted)

related party and the transaction

amount reaches 20 percent or more of

paid-in capital, 10 percent or more of the Bank's total assets, or NT$300

million or more, except in trading of

government bonds or bonds under repurchase and resale agreements, or

subscription or redemption of domestic

money market funds, the Bank may not proceed to enter into a transaction

contract or make a payment until the

following matters have been approved by the board of directors and

recognized by the supervisors:

(omitted) 2. Evaluation of the reasonableness of

the real property transaction costs


(3) (omitted)


A. (omitted)

B. The Supervisors shall supervise the execution of the said operations of the

Bank in compliance with Article 218 of

the Company Act. (omitted)

Acquisition and

Disposal of

Assets by Public

Companies”.

2. In response to

the establishment of

the Audit

Committee in lieu of the

supervisors, the

term “supervisor” is

deleted, and the

Audit Committee is included to

take part of the

approval process.

3. In response to

the establishment of

the Audit

Committee, the term

“supervisor” is

revised and changed to the

“Audit

Committee”.

64


Article 12 (Procedures for

Acquisition and Disposal of Claims of

Financial Institutions) When acquiring or disposing debt

rights of financial institutions, unless

the “Criteria of NPL Disposal Procedures”, the “Rules Governing

Acquisition and Disposal of Loan

Assets of Corporate Banking and Markets Group”, and other internal

rules provide otherwise, the Criteria

shall govern.


and Disposal of Claims of Financial

Institutions) When acquiring or disposing debt

rights of financial institutions, unless

the “Criteria of NPL Disposal Procedures”, the “Rules Governing

Acquisition and Disposal of Loan

Assets of Corporate Banking Group”, and other internal rules provide

otherwise, the Criteria shall govern.

Names of certain

internal regulations

are revised in response to the

reorganization of

the Bank.

Article 13 (Procedures of Acquisition

and Disposal of Derivatives Products)

1. (omitted) 2. (omitted)

3. Internal Audit System

(1)The internal auditor shall review periodically the suitability of internal

control on derivatives transactions.

If any major violation is found, the Audit Committee shall be notified in

writing and a report shall be

submitted to the Board of directors. (omitted)

Article 13 (Procedures of Acquisition

and Disposal of Derivatives Products)

1. (omitted) 2. (omitted)

3.Internal Audit System

(1)The internal auditor shall review periodically the suitability of internal

control on derivatives transactions. If

any major violation is found, a written report shall be submitted to

notify the Board of directors and the

Supervisors. (omitted)

Article is amended

in response to the

establishment of the Audit Committee

and in accordance

with the practical operation procedure

of the internal audit

system.

Article 14 (Procedures for Mergers,

Demerger, Acquisitions and Transfer

of Shares) 1.Appraisal and Operating

Procedures

(1)When conducting a merger, demerger, acquisition, or transfer of

shares, prior to convening a board

Article 14 (Procedures for Mergers,

Demergers, Acquisitions and Transfer

of Shares) 1.Appraisal and Operating procedures

(1)When conducting a merger,

demerger, acquisition, or transfer of shares, prior to convening a board

meeting to resolve on the matter, the

Article is amended

in response to

revised Article 22 of the “Regulations

Governing the

Acquisition and

Disposal of Assets

by Public

65


meeting to resolve on the matter,

the Bank shall engage a CPA,

attorney, or securities underwriter to give an opinion on the

reasonableness of the share

exchange ratio, acquisition price, or distribution of cash or other

property to shareholders, and

submit it to the board of directors for deliberation and passage. The

abovementioned opinion can be

exempted if the Bank conducts a merger with its subsidiary whose

entire issued shares or capital are

directly or indirectly held by the Bank, or if the Bank’s subsidiary

conducts a merger with one

another whose entire issued shares or capital are directly or indirectly

held by the Bank respectively.

(omitted)

Bank shall engage a CPA, attorney,

or securities underwriter to give an

opinion on the reasonableness of the share exchange ratio,

acquisition price, or distribution of

cash or other property to shareholders, and submit it to the

board of directors for deliberation

and passage.

(omitted)

Companies”, which

recognizes a

merger between a parent company

and its 100% owned

subsidiary or a merger between

subsidiaries 100%

owned by a parent company

respectively to be

as an reorganization of a Group, and

assumes that such

merger will not involve share

exchange and

computation of share exchange

ratio, distribution of

cash or assets to the shareholders,

etc. Therefore, the

requirement of obtaining an

experts’ opinion is

lifted.

Article 15 (Procedures for Public

Disclosure of Information)

Procedures for Public Disclosure of Information of the Bank are described

below:

1. (omitted)

Article 15 (Procedures for Public

Disclosure of Information)

Procedures for Public Disclosure of Information of the Bank are described

below:

1. (omitted)

1. Item 1 of

Subparagraph

1 of Paragraph 1 is amended in

response to

revised Article

66


(1)Acquisition or disposal of real

property from or to a related party,

or acquisition or disposal of assets other than real property from or to a

related party where the transaction

amount reaches 20 percent or more of paid-in capital, 10 percent

or more of the company’s total

assets, or NT$300 million or more; provided, this shall not apply to

trading of government bonds or

bonds under repurchase and resale agreements, or subscription or

repurchase of domestic money

market funds issued by domestic securities investment trust

enterprises.


(4) Where the type of asset

acquired or disposed is equipment for business use, the trading

counterparty is not a related party,

and the transaction amount is NT$1 billion or more.

(5)Where land is acquired under an

arrangement on engaging others to build on the Bank’s own land,

engaging others to build on rented

land, joint construction and allocation of housing units, joint

construction and allocation of

ownership percentages, or joint

(1)Acquisition or disposal of real

property from or to a related party, or

acquisition or disposal of assets other than real property from or to a

related party where the transaction

amount reaches 20 percent or more of paid-in capital, 10 percent or

more of the company’s total assets,

or NT$300 million or more; provided, this shall not apply to

trading of government bonds, or

bonds under repurchase and resale agreements, or subscription or

redemption of domestic money

market funds.

(2) (omitted)

(3) (omitted)

(4)Where an asset transaction other

14 of

“Regulations

Governing the

Acquisition and

Disposal of

Assets by

Public

Companies”.

2. The following amendments

are made in

response to revised Article

30 of

“Regulations

Governing the

Acquisition and

Disposal of

Assets by

Public

Companies”: (1) For a public

company

whose paid-in capital is over

NT$10 billion,

the amount for non-related-par

ty transactions

to be announced or

reported has

been raised to

67


construction and separate sale, and

the amount the Bank expects to

invest in the transaction is NT$500 million or more.

(6) Where an asset transaction

other than any of those referred to in the preceding five

subparagraphs, a disposal of

receivables by a financial institution, or an investment in the

mainland China area reaches 20

percent or more of paid-in capital or NT$300 million or more. However,

this requirement does not apply to

the following circumstances: A.Trading of government bonds.

B.Trading of securities by

investment professionals on foreign or domestic securities

exchanges or over-the-counter

markets, subscription/offering/issuance

of ordinary corporate bonds and

general bank debentures that do not involve shareholding

rights in the domestic primary

market, or subscription of securities by a security firm

required for providing

underwriting services or acting as recommending securities

firms for emerging-stock

companies in accordance with

than any of those referred to in the

preceding three items, a disposal of

receivables by a financial institution, or an investment in the mainland

China area reaches 20 percent or

more of paid-in capital or NT$300 million; provided, this shall not apply

to the following circumstances:

A.Trading of government bonds. B.Securities trading by

investment professionals on

foreign or domestic securities exchanges or over-the-counter

markets, or subscription of

securities by a securities firm, either in the primary market or in

accordance with relevant

regulations. C.Trading of bonds under

repurchase/resale agreements,

or subscription or redemption of domestic money market funds.

D.Where the type of asset

acquired or disposed is equipment for business use, the

trading counterparty is not a

related party, and the transaction amount is less than NT$500

million.

E.Where land is acquired under an arrangement on engaging

others to build on the Bank’s own

land, engaging others to build on

NT$1 billion.

Thus the

current Item 4(D) of

Subparagraph

1 of Paragraph 1 is revised and

moved to Item

4 under the same

subparagraph.

(2) The current Item 4(E) of

Subparagraph

1 of Item 1 is amended and

moved to Item

5 under the same

subparagraph.

(3) The current Items 4(A),

4(B), and 4(C)

of Subparagraph

1 of Paragraph

1 are amended and moved to

Items 6(A), 6(B)

and 6(C) under the same

subparagraph.

(4) Item 6(B) of

68


the regulations of Taipei

Exchange.

C.Trading of bonds under repurchase/resale agreements,

or subscription or repurchase of

domestic money market funds issued by domestic securities

investment trust enterprises.

(7)The amount of transactions stated in the preceding

subparagraphs 1 to 6 shall be

calculated as follows… (omitted) 2. (omitted)

3. (omitted)


(3)When the Bank makes an error

or omission in an item required to be publicly announced and so is

required to correct it, all the items

shall be again publicly announced and reported in their entirety within

two days commencing immediately

from the date of acknowledgement of the event.

(omitted)

rented land, joint construction

and allocation of housing units,

joint construction and allocation of ownership percentages, or

joint construction and separate

sale, and the amount the Bank expects to invest in the

transaction is less than NT$500

million. (5)The amount of transactions as

used in Items 1-4 shall be calculated

as follows, (omitted) 2. (omitted)

3. (omitted)


(3)When the Bank makes an error or

omission in a required public announcement, such public

announcement shall be corrected,

be again publicly announced and reported in their entirety.

(omitted)

Subparagraph

1 of Paragraph

1 is amended to adopt the

circumstances

exempted from the

requirements of

public disclosure of

information.

(5) Wording for Item 6(C) of

Subparagraph

1 of Paragraph 1 is amended in

response to

revised Article 14 of

“Regulations

Governing the

Acquisition and

Disposal of

Assets by

Public

Companies”.

(6) Item 3 of Subparagraph

3 of Paragraph

1 is amended to adopt the

correction

requirement.

69

Proposed revision Current articles Description Article 19 (Calculation of Total Assets) The 10 percent of total assets referred to in the Criteria shall be calculated based on the total assets stated in the most recent parent company only financial report or individual financial report prepared under the “Regulations Governing the Preparation of Financial Reports by Public Banks”.

Article 19 The 10 percent of total assets referred to in the Criteria shall be calculated based on the total assets stated in the most recent parent company only financial report or individual financial report prepared under the “Regulations Governing the Preparation of Financial Reports by Public Banks”.

Add the intent and purpose of the article.

Article 20 (Implementation and Revision) The Criteria and any amendments thereto shall be discussed by the Audit Committee and the board of directors, and submitted to the shareholders’ meeting for approval. Regarding the approval procedures conducted by the Audit Committee and the Board, Article 7 shall apply.

Article 20 (Implementation and Revision) Once the Criteria are approved by the board of directors, they shall be submitted to each Supervisor and to the shareholders’ meeting for approval; same procedures should be applied for amendments to the Criteria. Regarding the handling of dissent expressed by the board and independent director(s), Article 7 shall apply.

1. Amend the Chinese wording of the intent and purpose of the article.

2. In response to audit committee has been established, and Article 6 of “Regulations Governing the Acquisition and Disposal of Assets by Public Companies’’, which regulates acquisition and disposal of assets shall be approved by more than half of all audit committee members and submitted to the board of directors for a resolution, revising the implementation

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Proposed revision Current articles Description and revision procedure of the criteria.

Article 21 (Conformity of Matters Not Mentioned) Matters not set forth in the Criteria shall be dealt with in accordance with the applicable laws, rules, regulations or internal rules of the Bank.

Article 21 Matters not set forth in the Criteria shall be dealt with in accordance with the applicable laws, rules, regulations or internal rules of the Bank.

Add the intent and purpose of the article.

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(3) Proposed by the Shareholder Proposal: To approve the proposal of having the Bank redeem

the CPPS upon the 10th anniversary by issuing new similar capital instruments at current market rates

Explanation: 1. According to Articles 8 & 11 of “Regulations Governing the Capital Adequacy and Capital Category of Banks”, the Bank’ s CPPS included in the regulatory capital (Tier-1 capital) has been reduced by 10% yearly since 2013, and shall not be included in Tier-1 capital after the 10th anniversary of issuance. In short, having CPPS to serve as the Bank’s capital is limited but at very high costs.

2. Also, Article 5-1 of AOI of the Bank stipulates, if any of the CPPS are not redeemed after the 10th anniversary, the annual fix portion of the dividend payments per share will be increased to 7.75%. It’s believed that it would entail heavier burden to the Bank and an adverse effect on business performance of the Bank.

3. In view of the coupon rates of latest preferred shares issued by the peers are set around 3.8%-4.75%, indicating the costs paid to the Bank’s CPPS is way higher than the current market rates, we believe that by issuing the new capital instruments to redeem the expiring CPPs would improve the business performance of the Bank.

Resolution:

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5. Extemporaneous Motions 6. Adjournment

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Ⅲ . Appendix:

Appendix 1 The Shareholding Status of all Directors of the 9th term

Title Name Shareholding Shareholding

percentage(％)

Director

Longreach Edith Investment Cooperatief, 3, U.A. Representative: Jesse Ding Representative: Mark Z. Chiba Representative: Claudie Yu

263,709,343 13.47

Director Reng Hsiang Co., Ltd. Representative: Wen-Hsien Tsai Representative: Chien-Hung Liao

17,474,796 0.89

Director Hung Wei Construction Co., Ltd. Representative: Chien-San Yen Representative: Yu-Li Huang

686,575 0.04

Director OLHE Cayman Limited Partnership Representative: Harukazu Yamaguchi

146,565,937 7.49

Independent Director

Henry Lee 0 0


Philippe Espinasse 0 0


Steven P. Thomas 0 0

1. The shareholding is recorded on the Roster of Shareholders up to the book closure date for 2017 AGM (i.e. April 18, 2017). The current number of issued shares of the Bank is 1,957,910,050 shares, including common shares 1,679,677,506 shares, and preferred shares 278,232,544 shares. The shareholding of Longreach Edith Investment Cooperatief, 3, U.A. includes shares under Mega Bank’s custodian.

2. According to Article 26 of “Securities and Exchange Law and Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”, the total shareholdings owned by all directors of the Bank shall not be less than 2.4 percent of the total issued shares (i.e. 46,989,841 shares). The shareholding of all directors of the Bank has met the requirement.

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Appendix 2 The Rules and Procedures of Shareholders’ Meeting of


Article 1(Purpose of Establishment) To establish an excellent governance system of shareholders’ meeting, and to enhance

the supervision and management of EnTie Commercial Bank (“the Bank”), we hereby

establish the “Rules and Procedures of Shareholders’ Meeting, EnTie Commercial Bank”

(the “Rules and Procedures”), in accordance with Article 5 of Corporate Governance Best-Practice Principles for TWSE/GTSM Listed Companies, and Article 11 of Corporate

Governance Best-Practice Principles for Banks.

Article 2 (Legal Basis)

Unless relevant laws and regulations or the Bank’s Articles of Incorporation provide

otherwise, Shareholders’ Meeting of the Bank shall be conducted in accordance with the Rules and Procedures.

Article 3 (Calling and Meeting Notice of Shareholders’ Meeting) The Bank’s shareholders’ meeting shall, unless otherwise provided in the regulations or

laws, be convened by the board of directors.

Thirty days before the Bank convenes an annual shareholders’ meeting or fifteen days before a special shareholders’ meeting, the Bank shall prepare electronic files of the meeting

notice, proxy form, explanatory materials relating to proposals for ratification, matters for

deliberation, election or dismissal of directors, and other matters on the shareholders’ meeting agenda, and upload them to the Market Observation Post System (“MOPS”). Twenty-one

days before the Bank is to convene an annual shareholders’ meeting, or fifteen days before it

convenes a special shareholders’ meeting, it shall prepare an electronic file of the shareholders’ meeting agenda handbook and the supplemental materials referred to in the preceding

paragraph, and upload it to the MOPS. Fifteen days before the Bank is to convene a

shareholders’ meeting, it shall prepare the shareholders’ meeting agenda handbook and supplemental materials and make them available for the shareholders to obtain and review

at any time. In addition, the handbook shall be displayed at the Bank and its professional

shareholder services agent, and distributed on-site at the meeting.

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The subject of a meeting of shareholders to be convened shall be stated in the individual

notice and the public announcement. With the consent of the addressee, the meeting notice may be given in electronic form. For those shareholders whose shareholdings are less than

one thousand shares, the prescribed notice may be substituted with a public announcement.

Matters pertaining to election or dismissal of directors, amendment to the Articles of Incorporation, and dissolution, merger, spin-off, or any matters as set forth in paragraph 1,

Article 185 of Company Act, Article 26-1 and Article 43-6 of Securities and Exchange Act,

Article 56-1 and Article 60-2 of Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be itemized in the subjects of meeting notice, and not

be brought up as extemporary motions.

A shareholder holding one percent or more of the total number of issued shares may submit to the Bank a written proposal for discussion at a regular shareholders meeting.

Such proposals, however, are limited to one item only, and no proposal containing more

than one item will be included in the meeting agenda. In addition, when the circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act apply to a proposal

put forward by a shareholder, the board of directors may exclude it from the agenda.

Prior to the book closure date before a regular shareholders meeting is held, the Bank shall publicly announce that it will receive shareholder proposals, and the location and time

period for their submission; the period for submission of shareholder proposals may not be

less than 10 days. Proposals submitted by shareholders are limited to 300 words, and no proposal containing

more than 300 words will be included in the meeting agenda. The shareholder making the

proposal shall be present in person or by proxy at the regular shareholders’ meeting and take part in discussion of the proposal.

Prior to the date for issuance of notice of a shareholders’ meeting, the Bank shall inform

the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the

shareholders’ meeting the board of directors shall explain the reasons for exclusion of any

shareholder proposals not included in the agenda.

Article 4 (Proxy appointment and Authorization) A shareholder may appoint a proxy to attend a shareholders’ meeting in his/her/its behalf

by executing a power of attorney printed by the Bank stating therein the scope of power

authorized to the proxy.

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One shareholder may present one proxy letter and appoint only one proxy. A proxy must

be delivered to the Bank at least five days before the shareholders’ meeting. The first proxy shall have precedence if proxies are repeated and delivered. This restriction shall not apply,

however, to those shareholders who declare to retract their prior appointment of a proxy.

If a shareholder wishes to attend the Shareholders’ meeting in person after delivering a proxy to the Bank, the shareholder must, two business days prior to the shareholders’

meeting at the latest, notify the Bank in writing to retract his or her proxy. In the case a

shareholder fails to make a retraction before the deadline, the voting right exercised by the proxy shall be counted instead.

Article 5 (Principles for Determining Venues and Time of Shareholders’ Meeting) The place for convening a shareholders’ meeting shall be held inside the premises of the

Bank, or any other place convenient for attendance by shareholders, and suitable for holding

of such a meeting. The time for commencing the said meeting shall not be earlier than 9am or later than 3pm. The independent directors’ opinion as to the place and time of such a

meeting shall be taken into consideration.

Article 6 (Preparation of Documents, such as Attendance Book)

The Bank shall specify in its shareholders’ meeting notices the time during which shareholder

attendance registrations will be accepted, the place to register for attendance, and other matters for attention.

The time during which shareholder attendance registrations will be accepted, as stated in

the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly

marked and a sufficient number of suitable personnel assigned to handle the registrations.

Shareholders and their proxies (collectively, “shareholders”) shall attend shareholders’ meetings based on attendance cards, sign-in cards, or other certificates of attendance. The

Bank may not arbitrarily add requirements for documents of other qualifications beyond the

eligibility showing by shareholders to attend the shareholders’ meetings. Solicitors soliciting proxy forms shall also bring identification documents for verification.

The Bank shall furnish the attending shareholders with an attendance book to sign, or

attending shareholders may hand in a sign-in card in lieu of signing in. The Bank shall provide the agenda handbook of shareholders’ meeting, annual report,

attendance badge, speech request note, voting paper and other materials, to shareholders

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who are present at the meeting; as for elections of directors, the Bank shall provide ballots

to shareholders separately. When the government or a juristic person is a shareholder of the Bank, its proxy shall not

be limited to one person; an institutional shareholder being entrusted to attend in the

shareholders’ meeting may designate only one representative to attend the meeting.

Article 7(Chairman of Shareholders’ Meeting and Attendees) If the shareholders’ meeting is called by the board of directors, the chairman of the Board

shall preside at the said shareholders’ meeting. In case the chairman is on leave of absence,

or cannot exercise his powers and authority, the vice chairman shall act in lieu of him. If

there is no vice chairman, or the vice chairman is also on leave of absence, or cannot exercise his powers and authority, the chairman shall designate a board director to act in

lieu of him; if the chairman does not designate a board director, directors shall elect one

among themselves to act in lieu of the chairman. It is advisable that shareholders’ meetings convened by the board of directors be

attended by a majority of the directors, and at least one representative from each standing

committee. Such attendance status shall be recorded in the meeting minutes of the shareholders’ meeting.

If the shareholders’ meeting is called by any other person than the board of directors,

who has the right to call the meeting, said person shall preside at that meeting; when there are more than two persons who have the right to call the meeting, the chairman shall be

elected among the said persons.

The Bank may designate its lawyer, certified public accountant or other relevant persons to attend the shareholders’ meeting.

Article 8 (Documentations for Shareholders’ Meeting by Audio or Video) The Bank, beginning from the time it accepts shareholder attendance registrations, shall

make an uninterrupted audio and video recording of the registration procedure, the proceedings

of the shareholders’ meeting, and the voting and vote counting procedures. The recorded materials of the preceding paragraph shall be preserved for at least one

year. If any of shareholders filed a law suit against the Bank based on Article 189 of Company

Act, such tapes shall be preserved till the end of such litigation.

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Article 9 (Shares Calculation of Quorum and Attendance of Shareholders’ Meeting) The presence of shareholders in the shareholders’ meeting shall be calculated in accordance

with the number of shares and the Article 177 of Company Act.

Chairman shall call the shareholders’ meeting to order at the time scheduled for 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 postpone the time for the meeting. The postponements

shall be limited to two times at the most and the meeting shall not be postponed for longer than one hour in the aggregate. If the quorum is not met after two postponements and the

attending shareholders still represent less than one third of the total number of issued

shares, the chairman shall declare the meeting adjourned. If after two postponements the number of attending shares represented by the attending

shareholders has not yet constituted more than one-third of all issued and outstanding

shares, provisional resolutions may be made in accordance with Paragraph 1 of Article 175 of the Company Act, all shareholders shall be notified of the tentative resolution and another

shareholders’ meeting shall be convened within 1 month.

If the attending shareholders have constituted more than one-half of all issued and outstanding shares by the end of the meeting, the chairman may submit the foregoing

provisional resolutions to the shareholders’ meeting for approval in accordance with Article

174 of the Company Act.

Article 10 (Proposal Discussions) The agenda of the shareholders’ meeting shall be set by the board of directors if the

shareholders’ meeting is called by the board of directors. Unless otherwise resolved at the

shareholders’ meeting, the shareholders’ meeting shall proceed in accordance with the

agenda. The above provision applies mutatis mutandis to cases where the shareholders’ meeting

is convened by any person, other than the board of directors, which is entitled to convene

such shareholders’ meeting. Unless otherwise resolved at the shareholders’ meeting, the chairman cannot announce

adjournment of the shareholders’ meeting before all the discussion items (including extempore motions) set forth in the agenda are resolved. In the event that the chairman adjourns the shareholders’ meeting in violation of these Rules and Procedures, the other members of the board of directors shall promptly assist the attending shareholders in electing a new

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chair in accordance with statutory procedures, may designate, by agreement of a majority of votes represented by the attending shareholders, one person as chairman to continue the meeting.

When the chairman considers that the discussion for a motion in the agenda and an amendment or extemporaneous item is raised by the shareholder, he/she shall explain and offer the opportunity sufficiently for discussion, and once it has reached the level for making a resolution, he/she shall announce discontinuance of the discussion and submit the motion for resolution. Article 11 (Speaking at Shareholders’ Meeting)

A present shareholder shall, before taking the floor to speak, submit a Speech Request Note filled out the key points of speech, the shareholder’s code (or code of presence certificate) and name. The sequence of shareholder’s speaking is decided by the chairman.

A present shareholder who only submits a Speech Request Note but without actually speaking shall be deemed as not having spoken. In case of a discrepancy between what is stated on the Speech Request Note and what is actually spoken, the contents actually spoken shall prevail.

Unless otherwise permitted by the chairman, each shareholder shall not, for each discussion item, speak more than two times in excess of 5 minutes each time. In case the speech of any shareholder violates the above provision or exceeds the scope of the discussion item, the chairman may stop the speech of such shareholder.

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 a violation.

If a corporate shareholder designates two or more representatives to attend the shareholders’ meeting, only one representative can speak for each item.

After the speech of a shareholder, the chairman may respond himself/herself or appoint an appropriate person to respond. Article 12 (Calculation of Voting Shares and Recusal System)

The voting of shareholders in the shareholders’ meeting shall be calculated in accordance with the number of shares.

The shareholder who owns a share of the Bank is entitled to one voting power, except when the shares are restricted or are deemed non-voting shares under paragraph 2, Article 179 of the Company Act.

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The shares held by shareholders having no voting right shall not be counted in the total

number of issued shares while adopting a resolution at a meeting of shareholders. A shareholder who has a personal interest in the matter under discussion at a meeting,

which may have a conflict of interest with the Bank shall not vote nor exercise the voting

right on behalf of another shareholder. In passing a resolution at a shareholders’ meeting, shares for which voting right cannot

be exercised as provided in the prescribed Paragraph shall not be counted in the number of

votes of shareholders present at the meeting. Except for trust enterprises or stock agencies approved by the competent authority, when

a person who acts as the proxy for two or more shareholders, the number of voting power

represented by him/her shall not exceed 3% of the total number of voting shares of the Bank, if so, the portion of excessive voting power shall not be counted.

Article 13 (Ways of Voting, Ballot Counting and Ballot Scrutinizing) When convening the shareholders’ meeting, the Bank shall accept written notice or electronic

votes as means of exercising voting power, the ways of exercising and declaration shall be

done in accordance with Articles 177-1 and 177-2 of Company Act. Except as otherwise provided in the Company Act and in the Bank’s Articles of Incorporation,

the passage of a proposal shall require an affirmative vote of a majority of the voting rights

represented by the attending shareholders. At the time of a vote, for each proposal, the chairman or a person designated by the chairman shall first announce the total number of

voting rights represented by the attending shareholders, followed by a poll of the shareholders.

After the conclusion of the shareholders’ meeting, the voting results for each proposal, including the number of positive votes, negative votes and abstentions, shall be uploaded on

the MOPS.

When there is an amendment or an alternative to a proposal, the chairman shall present the amended or alternative proposal together with the original proposal and decide the

order in which they will be put to a vote. When any one among them is passed, the other

proposals will then be deemed rejected, and no further voting shall be required. The persons for supervising the casting of votes and the counting thereof for resolutions

shall be designated by the chairman, provided, however, that the person supervising the

casting of votes shall be a shareholder. Vote counting for shareholders meeting proposals or elections shall be conducted in

public at the place of the shareholders meeting. Immediately after vote counting has been

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completed, the results of the voting, including the statistical tallies of the numbers of votes,

shall be announced on the spot, and be placed on record.

Article 14 (Election of Directors) The election of directors at a shareholders meeting shall be held in accordance with the

applicable election and appointment rules adopted by the Bank, and the voting results shall

be announced on-site immediately, including the names of those elected as directors and

the numbers of votes with which they were elected. The ballots for the election referred to in the preceding paragraph shall be sealed with the

signatures of the monitoring personnel and kept in proper custody for at least 1 year. If,

however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

Article 15 (Meeting minutes and Signature affixing) Resolutions adopted at the shareholders’ meeting shall be recorded in the minutes of the

meeting, which shall be affixed with the signature or seal of the chairman of the meeting

and shall be distributed to all shareholders of the Bank within twenty days after the close of the meeting. The preparation and distribution of the minutes of shareholders’ meeting may

be conducted by means of electronic transmission.

The prescribed distribution of meeting minutes, it may be conducted by posting the public announcement on Market Observation Post System (“MOPS”) designated by the authorities.

The meeting minutes shall accurately record the year, month, day, and place of the

meeting, the chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their results, and shall be retained for the duration of the

existence of the Bank.

Article 16 (Public Announcement)

The shares solicited by the solicitor and shares represented by the proxy agents, and

shares voted in writing or via electronic voting system, shall be publicly disclosed by the Bank in the required format at the place of meeting.

Any resolution of the Shareholders’ meeting, which fits in the required reporting item by the law or the important information stipulated by the TWSE, the Bank shall upload such resolution to the MOPS within required deadline.

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Article 17 (Maintenance of Meeting Order) Staff handling administrative affairs of a shareholders meeting shall wear identification

cards or arm bands. The chairman may conduct the disciplinary officers or the security guard to assist in

keeping order of the Meeting place. Such disciplinary officers or security guards shall wear badges marked “Disciplinary Officers” for identification.

At the place of a shareholders’ meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by the Bank, the chairman may prevent the shareholder from so doing.

Shareholders who fail to obey the Rules and Procedures, and the correction either from the chairman or disciplinary officers, the chairman may ask the disciplinary officers or security guard to correct such disobedience by escorting them to leave the meeting place. Article 18(Intermission and Resume)

During the meeting, the chairman may, at his discretion, set time for intermission, and 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 be resumed.

If the scheduled agenda (including the extemporaneous item) is not discussed fully yet, and the venue is not able to be used at that time, the meeting, by resolution of the shareholders present at the meeting, may be resumed at another venue.

A resolution may be adopted at a shareholders’ meeting to postpone or resume the meeting within 5 days in accordance with Article 182 of Company Act.

Article 19

Any matter not provided in these Rules and Procedures shall be handled in accordance with Company Act, Bank’s Articles of Incorporation, Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies and other relevant laws and regulations. Article 20

These Rules and Procedure shall be effective after being approved by the shareholders’ meeting. The same applies in case of revision.

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The Rules and Procedures was developed after the inaugural meeting on December 28th

1992. The 1st amendment was made at the Annual General Shareholders’ Meeting on April 16th,

1998.

The 2nd amendment was made at the Annual General Shareholders’ Meeting on June 17th, 2002.

The 3rd amendment was made at the Annual General Shareholders’ Meeting on June 9th,

2006. The 4th amendment was made at the Annual General Shareholders’ Meeting on June 10th,

2011.

The 5th amendment was made at the Annual General Shareholders’ Meeting on June 22nd, 2012.

The 6th amendment was made at the Annual General Shareholders’ Meeting on June 6th,

2014. The 7th amendment was made at the Annual General Shareholders’ Meeting on June 8th,

2016.

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Appendix 3 Articles of Incorporation of EnTie Commercial Bank

Chapter I. General Provisions

Article 1 The Bank shall be incorporated under the Company Act and the Banking Act of the Republic of China, and shall be named as EnTie Commercial Bank Co., Ltd., (short for “EnTie Bank”.) Article 2 The Bank shall have its head office in Taipei, the Republic of China, and may set up local and overseas branches at suitable locations depending on business needs upon approval of the Board of Directors and the competent authority. Article 3 Public announcement of the Bank shall be made in accordance with Article 28 of the Company Act.

Chapter II. Scope of Businesses Article 4 The Bank’s scope of business includes: H101021 Commercial Banking Business (limited to business items approved by the competent authority), H602011 Personal Insurance Broker, and H602021 Property and Liability Insurance Broker. The Bank is also authorized to conduct other banking related businesses that are approved by the Competent Authority.

Chapter III. Shares Article 5 This Company’s authorized capital shall be NT$ 47.6 billion, dividing to 4.76 billion shares, each with a par value of NT$10, which can be issued in tranches. “Preferred stocks” can be issued. The shares held by “same person” or “same connected person” shall comply with Article 25 of the Banking Act.

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Article 5-1 This Company may issue 621,890,000 shares of Series 1 Convertible Perpetual Preferred

Shares, each with a par value of NT$10 (the “Series 1 CPPS”) in one issuance or in

tranches. The major terms and conditions are as follows: 1. If the Bank has any profit after every year, losses of the previous years shall first be

covered after the payment of taxes and adjustment due to accounting rule changes. If

there is any remaining amount, the Bank shall set aside or add reversal of legal and special reserves in accordance with Article 40 of the AOI, and then distribute dividend to

the holders of Series 1 CPPS as described herein.

2. Holders of Series 1 CPPS shall be entitled to receive annual cash dividend of a fixed rate of 6.75% (“Annual Dividends”), payable in cash. After the annual financial statements

have been ratified in the annual shareholders meeting, the Board of Director shall set a

record date for distribute Annual Dividends for the preceding fiscal year. Pro-rata dividend to Series 1 CPPS will be paid in the year of issuance of the Series 1 CPPS

based on actual holding period of that year from the date of issuance which shall be the

record date for the capital increase. Pro-rata dividend will also be paid to Series 1 CPPS in the year of redemption of the Series 1 CPPS based on actual holding period of that

year.

3. If there are no earnings or the earnings are not sufficient for the full payment of the Annual Dividends of Series 1 CPPS in any fiscal year, the insufficient amount will not

be accumulated to the years thereafter.

4. Holders of Series 1 CPPS shall be entitled, in addition to the Annual Dividends distributable under Item 2 of this Article, if so resolved by the Board of Directors, to

participate in the dividends declared on Common Share at a ratio of every 2 shares of

Series 1 CPPS for each Common Share dividend; provided that such participation right shall be available only if, after the distributions of cash dividends for Common Share at an

amount equal to the cash dividends distributed for Series 1 CPPS per share, there is

any remaining balance.

5. The Series 1 CPPS will have a liquidation preference per share over the Common Share

up to the Purchase Price. Series 1 CPPS.

6. Voting Rights: Holder of Series 1 CPPS shall be entitled to vote and the right to elect and being elected together with the Common Shares on an as-converted basis. Holder

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of Series 1 CPPS shall be entitled to vote in preferred shareholders meeting.

7. Holder of Series 1 CPPS will have same preemptive rights as Common Shares holders with respect to subscription of new share issuance

8. Except for the closed period in which the share registrar is closed or the conversion of any

convertible securities is suspended according to laws and regulations, at the option of the holders, the Series 1 CPPS are convertible into Common Shares on a one-to-one

basis, at any time after one month of the date of the issuance and the Common Shares

issued upon such conversion shall have the same rights and obligations as other outstanding Common Shares. Pro-rata preferred dividend will also be paid in the year

when conversion right is exercised based on holding period of that year; provided,

however, holders of Series 1 CPPS who convert their Series 1 CPPS into Common Shares before the record date for dividends distribution of that year shall have no rights

to participate in the Annual Dividends for Series 1 CPPS in the year of conversion and

any year thereafter.

9. Subject to the applicable laws and approval from the competent authority, this

Company shall have the right to redeem any part or all outstanding Series 1 CPPS after

the 10th anniversary of the Closing, at a redemption price per share equal to the Issuance Price. If any of the Series 1 CPPS are not redeemed after the 10th anniversary

of the Date of Issuance, the annual fix portion of the dividend payments per share will be

increased to 7.75%.

Article 5-2 Deleted Article 6

All the share certificates of the Bank shall bear the name of the shareholder who owns such shares and shall be issued after they are signed or sealed by the Chairman of the Board and

at least two Managing Directors (Directors), affixed with the seal of the Bank, and duly

certified per the “Regulations Governing Certification of Corporate Stock and Bond Issued by Public Companies”.

After public issue of the shares, the Bank may be exempted from printing share certificates.

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Article 7

Shareholders of the Bank shall handle stock-related matters with the Bank or Bank’s stock agent in accordance with the “Guidelines Governing the Processing of Stock Affairs by

Public Company” and related laws and regulations.

Article 8

Deleted

Article 9

Deleted

Article 10

Deleted

Article 11

Deleted

Article 12

Registration for transfer of shares shall be suspended 60 days immediately before the date

of each General Shareholders Meeting, or 30 days immediately before each Special Shareholders Meeting, or within 5 days before the record date for distributing dividends,

bonuses or other benefits.

Article 13

Deleted

Chapter IV. Shareholders Meeting

Article 14 Shareholders Meetings of the Bank are of two types: 1. General Shareholders Meetings: shall be convened by the Board of Directors within six

months after the end of each fiscal year. 2. Special Shareholders Meetings: may be convened in accordance with law when

necessary.

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Article 15 The Board of Directors shall prepare the following documents and submit the same to the

Audit Committee for audit 15 days prior to the date for the General Shareholders Meeting:

1. Business report;

2. Financial Statements;

3. Proposal for distribution of profits or covering of losses

Article 16

For any shareholder who is unable to attend a Shareholders Meeting in person, it may be handled in accordance with Article 177 of the Company Act.

The attendance of shareholders in a Shareholders Meeting and the relevant Shareholders

Meeting affairs shall be processed pursuant to the “Regulations Governing Use of Proxies by Public Companies for Attending Shareholders Meetings” promulgated by the competent

authority and related laws and regulations such as the Company Act.

Article 17

Where the Shareholders Meeting is convened by the Board of Directors, the chairman shall

be elected per Paragraph 3 of Article 208 of the Company Act. Where the Shareholders Meeting is convened by a person other than the Board of Directors who has such

convening power, the convening person shall act as the chairman; where there are two or

more convening persons, the convening persons shall elect a chairman from among themselves.

Article 18 Resolutions of the shareholders meetings shall be processed in accordance with the

Company Act and related laws and regulations.

Article 19

The functions and powers of the Shareholders Meetings are as follows:

1. to amend the Articles of Incorporation; 2. to elect Directors

3. to audit documents prepared by the Board of Directors and the Audit Committee

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4. to resolve on distribution of profits or covering of losses

5. to resolve on increase or decrease of capital 6. other important matters and resolutions on matters prescribed under the Company Act

Article 20

Deleted

Article 21

Except otherwise provided in the laws and AOI, the shareholders of the Bank shall be

entitled to one vote for each share, and any fractional vote shall not be counted.

Article 22

Minutes shall be prepared for all resolutions adopted at a Shareholders Meeting, including the date, place, name of chairman, method for resolution, summary of the resolution

process and the result thereof, and shall be duly signed or sealed by the chairman and

forwarded to each shareholder within twenty (20) days after the meeting. The making and distribution of the minutes for Shareholders Meetings as required in the preceding

Paragraph may be executed in electronic format or by a public notice.

The minutes of the preceding paragraph shall be kept together with attendance book (or

attendance cards) signed by the shareholders present at the meeting and the proxies at the

Bank in accordance with laws and regulations.

Chapter V. Board of Directors Article 23

The Bank shall have 9 to 15 Directors to constitute the Board of Directors. The Directors shall

serve for a term of three years and may continue to serve if re-elected. Election of Directors shall adopt the candidate nomination system and Directors shall be elected from among the

list of candidates for Directors at the shareholders’ meeting.

The Bank shall have at least three Independent Directors, which is not less than one-fifth of

the total number of Directors. The professional qualifications, restrictions on shareholdings

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and concurrent positions, method of nomination and election, and other matters for

compliance with respect to Independent Directors shall follow related regulations prescribed by the competent authority.

The Bank shall establish the Audit Committee composing of the entire number of independent directors and not fewer than three persons in number, one of whom shall be

the convener and at least one of whom shall have accounting or financial expertise.

Exercise of powers or conducts of the audit committee shall follow related regulations prescribed by the competent authority.

Article 23-1

Deleted

Article 24

The Board of Directors could have three to five managing directors, who will be elected among

directors. One chairman and vice chairman should be elected among managing directors (directors). The chairman will represent the Company externally and the chairman’s

authority is limited the provisions of laws and regulations and the Articles of Incorporations

of the company, and the resolutions adopted by the shareholders' meetings and the meetings of the board of directors.

The managing directors shall include no less than one independent director member, and no less than one-fifth of the managing director seats shall be held by independent directors.

Article 25 The remuneration of the chairman, the vice chairman, managing directors and directors should

accord with their respective participation and contribution to the corporate operation, in

addition to be compared with the industrial standard, and then be approved by the meeting of Board of Directors after the Board acquires authorization.

Different but reasonable remuneration from that of other directors may be set forth for the independent directors.

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Article 26

The functions and powers of the Board of Directors are as follows: 1. to prescribe important rules and organizational bylaws;

2. to approve business plans;

3. to propose increase or decrease of capital; 4. to make decision on establishment, close or change local and overseas branches;

5. to review important contracts;

6. to approve budget and closing of books; 7. to make decision on purchase and disposal of material real properties; provided that

resolution of the Shareholders Meeting is required in case of assignment of all or the

major portion of business or assets to another party or assumption of all or the major portion of business or assets from another party which has material impact on the Bank;

8. to propose distribution of profits or covering of losses;

9. to approve important business decisions; 10. to appoint and discharge the General Manager, Vice General Manager, chief auditor,

Assistant General Manager, chiefs and deputy chiefs of departments, and branch (regional

center) managers; 11. to establish special committees with different kinds of functions and to approve the rules

for committees’ exercise of authority;

12. other functions and powers in accordance with laws and regulations or as authorized by the shareholders meeting.

Article 26-1

The Board of Directors could purchase the liability insurance for directors and key staff with

respect to their liabilities resulting from exercising their duties during their terms of

occupancy.

Article 27

The Board of Directors calls one meeting every three months through the convening of the chairman. The chairman can call the meeting at any time upon contingency or the request

from more than 50% of directors. In addition to the print notification, the Bank’s Board

meeting could be convened by the Chairman via mail, fax notices or notices in electronic transmission. If the chairman fails to convene the meeting of directors or the meeting of

managing directors, the vice chairman shall act on his behalf. But if the vice chairman fails

to convene or exercise his power and authority for any cause within 7 days started at the

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required day, then the chairman should appoint one managing director (director) as the proxy to convene in advance. Should no proxy be appointed, the convener can be chosen among managing directors (directors). When the board meetings are adjourned, the Managing Directors will exercise their rights on behalf of the board, and meetings can be convened by the Chairman. However any items that concern greater interests of the Company, the board has the final decision. Article 28 At both the meeting of directors and the meeting of managing directors, the chairman of the Company shall act as the chairman of the meeting. In the event that the chairman is on leave or fails to exercise his power and authority for any cause whatsoever, the vice chairman shall act on his behalf. But if the vice chairman is also on leave or fails to exercise his power and authority for any cause, one of managing directors (directors) should be appointed to act on behalf of the chairman. If there is no appointment, a director should be elected among all the directors and act on behalf of the chairman. Article 29 Unless otherwise provided for in the Company Act, the Board meeting shall be attended by a majority of Directors, and resolutions of the Board of Directors shall be adopted by a majority vote of the present Directors. The meeting of Managing Directors shall be attended by a majority of Managing Directors, and resolutions of the meeting of Managing Directors shall be adopted by a majority vote of the present Managing Directors. Minutes shall be prepared for the Board Meeting or meeting of Managing Directors, duly signed or sealed by the chairman, and shall be forwarded to each Director or Executive Director within twenty (20) days after the meeting. Where a Board Meeting is held by videoconference, a Director attending the

videoconference shall be deemed as present in person. The Minutes shall include the date, place, name of chairman, method for resolution, summary of the resolution process and the result thereof, and shall be kept together with attendance book (or attendance cards) signed by the present Directors or Managing Directors and the proxies at the Bank. The making and distribution of the Minutes may be executed in electronic format.

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Article 30 A Director may designate another Director to act as his proxy at that meeting by a proxy form. A Director may act as proxy for only one absent Director.

Chapter VI. (Deleted)

Article 31

Deleted

Article 32

Deleted

Article 33

Deleted

Article 34

Deleted

Chapter VII. Managers Article 35

The Bank shall have one President to take full charge of business matters of the Bank in

accordance with resolutions of the Board of Directors. Furthermore, the Bank should have several Senior Vice Presidents and Vice Presidents to assist processing business matters of

the Bank. Appointment and discharge of the President is proposed by the Chairman to the

Board of Directors to be approved by a majority of the Directors. Appointment and discharge of the Senior Vice Presidents, Vice Presidents, chiefs of departments, and

branch (regional banking center) managers shall be proposed by the Chairman to the

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Board of Directors to be approved by a majority of the Directors. Appointment of managers

shall comply with the qualification requirements set by the competent authority.

The Board of Directors is authorized to determine the number of the aforesaid Senior Vice

Presidents and Vice Presidents depending on actual need.

Article 36

Where the President is for a reason not able to execute business, the Chairman of the Board of Directors shall appoint a Senior Vice President to act as the deputy.

Article 37 The Bank due to business necessity may engage consultants, whose appointment and

discharge shall be proposed by the Chairman to the Board of Directors for approval.

Chapter VIII. Accounting

Article 38 The fiscal year of the Bank begins January 1st and ends on December 31st. Upon close of each fiscal year, the board of directors shall prepare the following books and statements and submit the same to the Shareholders’ Meeting for recognition in accordance with the legal procedure: 1. Business report; 2. Financial Statements; 3. Plan for distribution of profits or covering of losses. The aforesaid closing books and statements shall be filed with the competent authority per the Company Act, the Securities and Exchange Law, the Banking Act of the Republic of China and other related laws and regulations and be publicly announced as required.

Article 39 When there is any profit (i.e. the Before-Tax Income prior to the deductions of

employees’ and board members remunerations) at the end of each year, the Bank shall

allocate not less than one percent of the said profit as employees’ remuneration, and no more than one percent as remunerations of directors and supervisors. However, the Bank’s

accumulated losses should have been covered beforehand.

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The preceding paragraph regarding supervisors’ remuneration shall no longer be applicable when the Bank establishes the audit committee in lieu of supervisors.

Article 40 If the Bank has any profit after every year, after the payment of taxes and adjustment due to

accounting rule changes, losses of the previous years shall be covered first. If there is any

remaining amount, the Bank shall set aside legal reserve based on the Banking Act, and then set aside special reserve or add reversal of special reserve based on relevant

regulations or requests by the competent authority or business needs before the

distribution of the annual cash dividend of the fixed rate to the holders of Series 1 specified in Article 5-1 of the AOI. If there is any remaining amount, the Board may add it up with the

undistributed accumulated profit in the beginning of a fiscal year, and take into

consideration the business environmental changes, appropriate capital adequacy ratio, and capital needs for long-term financial planning, and then come up with a profit-allocation plan,

which shall be sent to the Shareholders’ Meeting for approval.

As to the allocation of shareholders’ bonus, pure stock, pure cash or a mix of stock and

cash may be adopted, and decided by the Shareholders’ Meeting. However if Tier 1 capital

of the Bank doesn’t meet regulatory requirement, stock dividend takes priority. For constraints related to cash dividend, Article 50 of the Banking Act of the Republic of China

shall be followed.

Chapter IX. Supplemental Provisions

Article 41

Deleted

Article 42

If the financial institution and the Bank’s responsible person have been harmed by gossip

or ruin its credit, the Bank’s responsible person should immediately propose to Adjustment Unit in relation to Article 313 and 314 of the Criminal Law, to make the problem replied and

solved earlier.

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Article 43 Matters not provided for in these Articles of Incorporation shall be dealt with in accordance

with the Banking Act, Company Act, Securities and Exchange Act and other pertinent laws.

Article 44

The Articles of Incorporations was developed after approval by the entire founders on

September 26, 1991.

The 1st amendment was made at the inaugural meeting on December 28, 1992.

The 2nd amendment was made at the 2nd General Shareholders’ Meeting on May 16, 1994.

The 3rd amendment was made at the 3rd General Shareholders’ Meeting on April 20, 1995.

The 4th amendment was made at the 4th General Shareholders’ Meeting on April 12, 1996.

The 5th amendment was made at the 5th General Shareholders’ Meeting on May 7, 1997.

The 6th amendment was made at the 6th General Shareholders’ Meeting on April 16, 1998.




The 10th amendment was made at the 10th General Shareholders’ Meeting on June 17, 2002.

The 11th amendment was made at the Extraordinary Shareholders’ Meeting on November

21, 2003.

The 12th amendment was made at the 12th General Shareholders’ Meeting on June 9,

2006.

The 13th amendment was made at the Extraordinary Shareholders’ Meeting on March 9, 2007.

The 14th amendment was made at the General Shareholders’ Meeting on June 5, 2007.

The 15th amendment was made at the Extraordinary Shareholders’ Meeting on August 6, 2007.

The 16th amendment was made at the Extraordinary Shareholders’ Meeting on December

27, 2007.

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The 17th amendment was made at the Extraordinary Shareholders’ Meeting on February 20,

2008.


The 19th amendment was made at the General Shareholders’ Meeting on May 27, 2010.


The 21st amendment was made at the General Shareholders’ Meeting on June 22, 2012.

The 22nd amendment was made at the General Shareholders’ Meeting on March 29, 2013.

The 23rd amendment was made at the General Shareholders’ Meeting on June 12, 2015. All amended and deleted articles shall be implemented after the approval of the General

Meeting of Shareholders except for the revised Article 15, Subparagraph 2 and 3 of

Paragraph 1 of Article 19, Article 23, Article 26-1, Article 39, Subparagraph 2 of Paragraph 1 of Article 40, and the deleted Article 31 to Article 34 of Chapter VI, which will take effect

after the re-election of the 9th term Board of Directors.

The 24th amendment was made at the General Meeting of Shareholders on June 8, 2016.

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Appendix 4 The Criteria Governing Codes of Ehtical Conduct of


Article 1 (Purpose and scope of the Criteria) The Criteria is adopted for the purpose of encouraging directors and managerial

officers (including general managers or their equivalents, assistant general managers

or their equivalents, deputy assistant general managers or their equivalents, chief financial and chief accounting officers, and other persons authorized to manage affairs

and sign documents on behalf of the Bank) of EnTie Commercial Bank (the “Bank”) to

act in line with ethical standards.

Article 2 (Content of the Criteria) Matters to be followed by directors and managerial officers are as follows:

1. Prevention of conflicts of interests

A director and managerial officer of the Bank, and a person authorized to

manage affairs and sign documents on behalf of the Bank shall perform their

duties in an objective and efficient manner, and shall not take advantage of their positions to benefit for either themselves or their spouses, parents, children, or

relatives within the second degree of kinship.

Should the Bank provide loans of funds or guarantees to, or have major asset transactions or the purchase (or sale) of goods with the affiliated enterprise at

which a director and managerial officer works, such persons shall voluntarily explain

whether there is any potential conflict between them and the Bank. 2. Minimizing incentives to pursue personal gain

Directors and managerial officers shall not engage in any of the following activities:

(1) Seeking an opportunity to pursue personal gain by using property or information of the Bank or taking advantage of their positions;

(2) Obtaining personal gain by using property or information of the Bank or taking

advantage of their positions; (3) Competing with the Bank. When the Bank has an opportunity for profit, it is the

responsibility of the directors and managerial officers to maximize the reasonable

and proper benefits that can be obtained by the Bank. 3. Prevention of unethical behavior

Directors and managerial officers shall perform their duties in an impartial, ethical

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and fair manner, and shall not directly or indirectly offer, promise, request or receive

improper benefits, or have unethical activities in violation of ethical principles, a law or regulation, or breach of fiduciary duty for the purpose of obtaining or maintaining

personal gain.

4. Confidentiality Directors and managerial officers shall be bound by the obligation to maintain

the confidentiality of any information regarding the Bank itself or its clients, except

when authorized or required by law to disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor

or disclosed, could result in damage to the Bank or its clients.

5. Fair trade Directors and managerial officers shall treat all clients, competitors, and employees

fairly, and may not obtain improper benefits through manipulation, nondisclosure,

or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.


All directors and managerial officers have the responsibility to safeguard Bank assets and to ensure that they can be effectively and lawfully used for official

business purposes.

7. Legal compliance Directors and managerial officers shall comply with the Securities and Exchange

Act and other applicable laws, regulations, and bylaws.

8. Encouraging reporting on illegal or unethical activities The Bank shall encourage employees to report to an independent director,

managerial officer, chief auditor, or other appropriate individual upon suspicion

or discovery of any activity in violation of a law or regulation or the Criteria. To encourage employees to report illegal conduct, the Bank shall establish a

concrete whistle-blowing system and make employees aware that the Bank will

use its best efforts to ensure the safety of informants and protect them from reprisals.


When a director or a managerial officer violates the Criteria, the Bank shall handle the matter in accordance with the Company Act, Articles of Incorporation

of the Bank, and relevant internal regulations, and shall without delay disclose

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on the Market Observation Post System (MOPS) the date of the violation, reasons

for the violation, the provisions of the code violated, and the disciplinary actions taken. A violator penalized for violation of the Criteria could appeal for remedies

in accordance with relevant regulations if he/she feels needed.

Article 3 (Procedures for exemption) Any exemption for directors and managerial officers from compliance with the Criteria

shall be adopted by a resolution of the board of directors, and information on the date on which the board of directors adopted the resolution for exemption, objections or

reservations of independent directors, and the period of, reasons for, and principles

behind the application of the exemption shall be disclosed without delay on the MOPS, in order that the shareholders may evaluate the appropriateness of the board resolution

to forestall any arbitrary or dubious exemption from the Criteria, and to safeguard the

interests of the Bank by ensuring appropriate mechanisms for controlling any circumstance under which such an exemption occurs.

Article 4 (Method of disclosure) The Bank shall disclose the Criteria it has adopted, and any amendments to it, on

its company website, in its annual reports and prospectuses and on the MOPS.

Article 5 (Enforcement) The Criteria, and any amendments to it, shall enter into force after it has been

adopted by the board of directors, delivered to each independent director, and submitted

to a shareholders meeting for record.

The Rules and Procedures was established at the 18th meeting of the 8th board of directors on

December 18, 2015.

The 1st amendment was made and approved by the president on June 29, 2016 with the authorization

granted at the 1st extraordinary board meeting of the 9th board of directors

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Appendix 5 The Criteria for Ethical Corporate Management,


Article 1 (Purpose) In order to establish a corporate culture of ethical management and strengthen

the Bank’s management, and pursuant to TWSE/GTSM the “Ethical Corporate Management

Best Practice Principles for TWSE/GTSM-Listed Companies,” EnTie Commercial Bank

(short as “the Bank” hereafter) hereby establishes the Criteria accordingly. Article 2 (Preventing Unethical Conduct)

When engaging in commercial activities, directors, managers, employees, mandataries of the Bank or persons having substantial control over the Bank (short as “Substantial

Controllers” hereafter) shall not directly or indirectly offer, promise to offer, request or

accept any improper Benefits, nor commit unethical acts including breach of ethics, illegal acts, or breach of fiduciary duty (short as “Unethical Conduct” hereafter) for

purposes of acquiring or maintaining Benefits.

Parties referred to in the preceding paragraph include 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 (Types of Benefits)

“Benefits” in the Criteria means any valuable things, 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 (Legal Compliance) The Bank 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, TWSE/GTSM-listing rules, or other laws or regulations regarding commercial activities, as the underlying basic premise to facilitate ethical corporate management.

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Article 5 (Policy) The Bank shall abide by the operational philosophies of honesty, transparency

and responsibility, base policies on the Criteria of good faith and establish good

corporate governance and risk control and management mechanism so as to create

an operational environment for sustainable development.

Article 6 (Prevention Program) The Bank shall in their own ethical management policy clearly and thoroughly

prescribe the specific ethical management practices and establish in their own ethical

corporate management best practice criteria comprehensive programs to forestall

Unethical Conduct (“Prevention Program”), including operational procedures, code of conduct, and training.

When establishing the Prevention Program, the Bank shall comply with relevant

laws and regulations of the territory where the Bank is operating. In the course of developing the prevention program, the Bank is advised to negotiate

with staff, labor unions members, important trading counterparties, or other stakeholders.

Article 7 (Scope of Prevention Program)

When establishing the Prevention Program, the Bank shall analyze which business

activities within its business scope which are possibly at a higher risk of being involved in an Unethical Conduct, and strengthen the preventive measures.

The Prevention Program established by the Bank shall at least include preventive

measures against the following: 1. Offering and acceptance of bribes

2. Illegal political donations

3. Improper charitable donations or sponsorship 4. Offering or acceptance of unreasonable presents or hospitality, or other improper

Benefits

5. Misappropriation of trade secrets and infringement of trademark rights, patent rights, copyrights, and other intellectual property rights

6. Engaging in unfair competitive practices

7. Damage directly or indirectly caused to the rights or interests, health, or safety of consumers or other stakeholders in the course of research and development,

procurement, provision, or sale of products and services

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Article 8 (Promise and Enforcement) The Bank shall clearly specify in their rules and external documents the ethical

corporate management policies and the commitment by the board of directors and the

management on rigorous and thorough implementation of such policies, and shall carry out the policies in internal management and in commercial activities.

Article 9 ( Ethical Management in Commercial Activities) The Bank shall engage in commercial activities in a fair and transparent manner

on the principle of ethical management.

Prior to any commercial transactions, The Bank shall take into consideration the legality of its agents, suppliers, clients, or other trading counterparties and whether any

of them are involved in Unethical Conduct, and shall avoid any dealings with persons

so involved. When entering into contracts with agents, suppliers, clients, or other trading

counterparties, The Bank shall include in such contracts provisions demanding ethical

corporate management policy compliance and which in the event the trading counterparties are suspected of engaging in Unethical Conduct, The Bank may at any time terminate

or cancel the contracts.

Article 10 (Forbidding Bribery and Receiving Brides)

When conducting business, the Bank and its directors, managers, employees,

mandataries and Substantial Controllers, shall not directly or indirectly offer, promise to offer, request, or accept any improper benefits in other ways from clients, trading

counterparties, public servants, or other interested parties.

Article 11 (Forbidding Illegal Political Donations)

When directly or indirectly offering a donation to political parties or organizations

or individuals participating in political activities, the Bank and its directors, managers, employees, mandataries and Substantial Controllers, shall comply with the Political

Donations Act and their own relevant internal operational procedures, and shall not

make such donations in exchange for commercial gains or business advantages.

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Article 12 (Forbidding Improper Donations and Sponsorship) When making or offering donations and sponsorship, the Bank and its directors,

managers, employees, mandataries and Substantial Controllers shall comply with

relevant laws and regulations and internal operational procedures, and shall not

surreptitiously engage in bribery.

Article 13 (Forbidding Giving out/Receiving Unreasonable Presents, Hospitality or Other Improper Benefits)

The Bank and its directors, managers, employees, mandataries 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 14 (Forbidding Infringing Intellectual Property Rights)

The Bank and its directors, managers, employees, mandataries and Substantial

Controllers shall observe applicable laws and regulations, internal operational procedures,

and contractual provisions concerning intellectual property, and may not use, disclose, dispose, or damage intellectual property or otherwise infringe intellectual property

rights without the prior consent of the intellectual property rights holder. Article 15 (Forbidding Engaging in Unfair Competitive Practices)

The Bank shall engage in business activities in accordance with applicable

competition laws and regulations, compliance with the Fair Trade Commission’s regulations to finance enterprises.

Article 16 (Preventing Products and Services Damaging Stakeholders) In the course of research and development, procurement, provision, or sale of

products and services, the Bank and its directors, managers, employees, mandatories

and Substantial Controllers shall observe applicable laws and regulations and international standards to ensure the transparency of information about, and safety of their financial

products and services. They shall also adopt and publish a policy on the protection of

the rights and interests of consumers or other stakeholders, and carry out the policy in their operations, with a view to preventing their products and services from directly or

indirectly damaging the rights and interests, health, and safety of consumers or other

105



stakeholders. Where there are sufficient facts to determine that the Bank’s services are

likely to pose any hazard to the safety and health of consumers or other stakeholders, the Bank shall in principle, suspend the services immediately.

Article 17 (Organization and Responsibility)

The directors, managers, employees, mandataries and Substantial Controllers

of the Bank shall exercise the due care of good administrators to 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 of its ethical

corporate management policies.

To achieve sound ethical corporate management, the Bank shall establish a dedicated unit that is under the board of directors and responsible for establishing and

enforcing the ethical corporate management policies and Prevention Program. The

dedicated unit shall be in charge of the following matters, and shall report to the board of directors on a regular basis:

1. Assisting in incorporating ethics and moral values into the company's business

strategy and adopting appropriate prevention measures against corruption and malfeasance to ensure ethical management in compliance with the requirements of

laws and regulations.

2. Adopting programs to prevent Unethical Conduct and setting out in each program the standard operating procedures and conduct guidelines with respect to the

company's operations and business.

3. Planning the internal organization, structure, and allocation of responsibilities and setting up check-and-balance mechanisms for mutual supervision of the business

activities within the business scope which are possibly at a higher risk for Unethical

Conduct. 4. Promoting and coordinating awareness and educational activities with respect to

ethics policy.

5. Developing a whistle-blowing system and ensuring its operating effectiveness. 6. Assisting the board of directors and management in auditing and assessing

whether the prevention measures taken for the purpose of implementing ethical

management are effectively operating, and preparing reports on the regular assessment of compliance with ethical management in operating procedures.

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Article 18 (Legal Compliance of Conducting Business) The Bank and its directors, managers, employees, mandataries and Substantial

Controllers shall comply with laws and regulations and the Prevention Program when

conducting business.

If the Bank is fined by the competent authorities due to the violation of provision stipulated in paragraph 1, Article 133 of Banking Act, it shall propose a compensation

claim to the person in charge of the corresponding matters at the Personnel Evaluation

Committee meeting for discussion.

Article 19 (Preventing Conflicts of Interest) The Bank shall promulgate policies for preventing conflicts of interest to identify,

monitor, and manage risks possibly resulting from Unethical Conduct, and shall also

offer appropriate means for directors, managers, and other stakeholders attending or

present at board meetings to voluntarily explain whether their interests would potentially conflict with those of the Bank.

When a proposal at a given board of directors meeting concerns the personal

interest of, or the interest of the juristic person represented by, any of the directors, managers, and other stakeholders attending or present at board meetings, the concerned

person shall state the important aspects of the relationship of interest at the given

board meeting. If his or her participation is likely to prejudice the interest of the Bank, the concerned person may not participate in discussion of or voting on the proposal

and shall recuse himself or herself from the discussion or the voting, and may not

exercise voting rights as proxy for another director. The directors shall practice self-discipline and must not support one another in improper dealings.

The Bank’s directors, managers, employees, mandataries and Substantial Controllers

shall not take advantage of their positions or influence in the Bank to obtain improper Benefits for themselves, their spouses, parents, children or any other person.

Article 20 (Accounting and Internal Control) The Bank shall establish effective accounting systems and internal control systems

for business activities which may at a higher risk of being involved in an 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.

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Auditing Dep. shall periodically examine the Bank’s compliance with the foregoing

and prepare audit reports and submit the same to the board of directors. Auditing Dep. may engage a certified public accountant to carry out the audit, and may engage

professionals to assist if necessary.

Article 21 (Operational Procedures and Code of Conduct)

The Bank shall establish operational procedures and code of conduct in

accordance with Article 6 hereof to guide directors, managers, employees, and Substantial Controllers on how to conduct business. The procedures and guidelines

should at least contain the following matters:

1. Standards for determining whether improper Benefits have been offered or accepted

2. Procedures for offering legitimate political donations

3. Procedures and the standard rates for offering charitable donations or sponsorship 4. Rules for avoiding work-related conflicts of interests and how they should be

reported and handled

5. Rules for keeping confidential trade secrets and sensitive business information obtained in the ordinary course of business

6. Regulations and procedures for dealing with clients and business transaction

counterparties suspected of Unethical Conduct 7. Handling procedures for violations of the Criteria for Ethical Management

8. Disciplinary measures on offenders

Article 22 (Educational Training and Performance Appraisal)

The Chairman, the President or the upper level of management of the Bank shall

communicate the importance of corporate ethics to its directors, employees, and mandataries on a regular basis.

The Bank shall periodically organize training and awareness programs for directors,

managers, employees, mandataries and Substantial Controllers, so they understand the Bank’ resolve to implement ethical corporate management, the related policies,

Prevention Program and the consequences of committing Unethical Conduct.

The Bank 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.

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Article 23 (Reporting and Disciplinary Actions) The Bank shall adopt a concrete whistle-blowing system and scrupulously operate

the system. The whistle-blowing system shall include at least the following:

1. An independent mailbox or hotline, either internally established and publicly announced or provided by an independent external institution, to allow internal and external

personnel of the Bank to submit reports

2. Dedicated personnel or unit appointed to handle whistle-blowing system. Any tip involving a director or senior manager shall be reported to the independent directors.

Categories of reported misconduct shall be delineated and standard operating

procedures for the investigation of each shall be adopted 3. Documentation of case acceptance, investigation processes, investigation results,

and relevant documents

4. Confidentiality of the identity of whistle-blowers and the content of reported cases 5. Measures for protecting whistle-blowers from inappropriate disciplinary actions due

to their whistle-blowing

6. Whistle-blowing incentive measures When material misconduct or likelihood of material impairment to the Bank comes

to its awareness upon investigation, the dedicated personnel or unit handling the

whistle-blowing system shall immediately prepare a report and notify the independent directors in written form

Article 24 (Disciplinary and Complaint System)

The Bank shall establish a well-defined disciplinary and complaint system to

handle violation of the ethical corporate management rules, and immediately disclose

on the Bank’s internal website the offender’s job title, name, date the violation was committed, violating act and how the matter was handled.

Article 25 (Information Disclosure)

The Bank shall collect quantitative data about the promotion of ethical management and continuously analyze and assess the effectiveness of the promotion of ethical management policy. It shall also disclose the measures taken for implementing ethical corporate management, the status of implementation, the foregoing quantitative data, and the effectiveness of promotion on its websites, annual reports, and prospectuses, and shall disclose the Criteria on the Market Observation Post System.

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Article 26 (Review of the Policies and Measures of Ethical Management)

The Bank 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 based on which the adopted ethical corporate management policies and measures taken will be reviewed and

improved with a view to achieving better implementation of ethical management.

Article 27 (Implementation)

The Criteria of the Bank shall be implemented after the board of directors grants

the approval, and shall be sent to the independent directors and reported at a shareholders’ meeting. The same procedure shall be followed when the Criteria have

been amended.

When the Criteria is submitted for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each

independent director’s opinions. If an independent director objects to or expresses

reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. An independent director intending to express objection or reservations

but unable to attend the meeting in person shall, unless there is some legitimate

reason to do otherwise, issue a written opinion in advance, which shall be recorded in the meeting minutes.

The Criteria was established and approved at the 17th board meeting of the 7th term on Nov. 22, 2011

The 1st amendment was made and approved at the 13th board meeting of the 8th term on Feb. 8, 2015

The 2nd amendment was made and approved by the president on June 29, 2016 with the authorization granted at the 1st

extraordinary board meeting of the 9th term board of directors

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Appendix 6 The Criteria for Corporate Social Responsibility Best Practice of


Chapter 1 General Provisions Article 1 In order to fulfill corporate social responsibility initiatives, to promote economic,

environmental and social advancement, to achieve sustainable development, and to manage the economic, environmental and social impacts, EnTie Commercial Bank ("the Bank" hereafter) hereby establishes the Criteria pursuant to "Corporate Social Responsibility Best Practice Principles for TWSE/GTSM-Listed Companies”.

Article 2 The Criteria applies to the entire business, including the Bank and subsidiary

companies. The Bank shall actively fulfill its corporate social responsibility in the course of business operations. Therefore, the Bank shall follow the development of international norms, foster corporate citizenship, and enhance its competitive edges built on corporate social responsibility in order to contribute the economic development to the country, and improve the quality of lives of employees, communities and the whole society.

Article 3 To fulfill corporate social responsibility initiatives, the Bank shall, in its corporate

management policies and operation, give due consideration the rights and interests of the stakeholders and while pursuing sustainable operations and profits, also give due consideration to the environment, society and corporate governance.

Article 4 To implement corporate social responsibility initiatives, the Bank shall follow

the principles below: 1. Implement corporate governance. 2. Foster a sustainable environment. 3. Protect employee’s legal rights and interests. 4. Preserve public welfare. 5. Enhance disclosure of corporate social responsibility information.

Article 5 The Bank shall pay close attention to the development of domestic and

international corporate social responsibility principles and to its connection

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to the core of the Bank’s business, and to the influence of the operation of EnTie and its subsidiary companies on the stakeholders. The Bank shall establish policies, systems or relevant management principles and concrete plans for corporate social responsibility programs. They shall be approved by the Board of Directors and reported at a shareholders' meeting. When the shareholders put forth a related proposal involving the corporate social responsibility, the Board of Directors are advised to put it on the agenda of the shareholder's meeting.

Chapter 2 Implementing Corporate Governance Article 6 The Bank shall follow “Corporate Governance Best Practice Principles for Banks”,

“Ethical Corporate Management Best Practice Principles for TWSE/GTSM-Listed Companies” and “Code of Ethical Conduct for TWSE/GTSM-Listed Companies” to establish effective corporate governance framework and relevant ethical standards so as to enhance corporate governance.

Article 7 The Board of Directors shall exercise the due care of good administrators to

urge the Bank to perform its corporate social responsibility initiatives, examine the results of the implementation thereof from time to time and continually make adjustments so as to ensure the thorough implementation of its corporate social responsibility policies. The Board of Directors is advised to consider the interests of interested parties and uphold corporate social responsibility by performing the following: 1. Identifying the company's corporate social responsibility mission or vision,

and declaring its corporate social responsibility policies, systems or relevant management principles.

2. Making corporate social responsibility the guiding principle of the company's operations and development, and approving concrete plan of corporate social responsibility.

3. Enhancing the disclosure of corporate social responsibility information timely and correctly.

As for the economy, environment and social issues resulting from the Bank’s operation, the Board of Directors shall authorize the upper level of management to deal with the issues and report their processing situation. The processing procedure and related accountable persons should be defined concretely and unequivocally.

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Article 8 The Bank is advised to, on a regular basis, organize training on implementation

of corporate social responsibility, including promotion of matters prescribed in the paragraph 2 of the preceding Article.

Article 9 For the purpose of managing corporate social responsibility initiatives, the

Bank is advised to establish an exclusively (or concurrently) dedicated unit to be in charge of proposing and enforcing the corporate social responsibility policies, systems or relevant management principle and concrete plan and to report those to the board of directors on a periodic basis. The Bank is advised to establish reasonable remuneration policy to ensure that the remuneration program could match the organization’s target and stakeholders' benefit. Performance review and compensation system of employees are advised to incorporate corporate social responsibility policy, and should establish a clear and effective reward/discipline system.

Article 10 The Bank shall respect the rights and interests of any stakeholders, set up

a stakeholders’ page in the official website, identify and understand the reasonable expectations and demands of such parties through proper communication and allowing their participation, and shall adequately respond to the important corporate social responsibility issues which they are concerned about.

Chapter 3 Fostering a Sustainable Environment Article 11 The Bank shall follow relevant environmental laws and regulations and

international criteria properly protect the environment and shall endeavor to promote a sustainable environment when engaging in business operation and internal management.

Article 12 The Bank shall endeavor to utilize all resources more efficiently and try to

use renewable and low-impact materials to improve sustainability of natural resources.

Article 13 The Bank shall assign a dedicated unit, ask personnel to maintain the

environment management, hold environment education for its managerial officers and other employees on a periodic basis, establish proper environment

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management goals based on the characteristics of financial industries, and examine whether such goals should be maintained and whether they are still relevant on a regular basis.

Article 14 The Bank shall take into account the effect of operation on ecological

efficiency, promote and promote the concept of sustainable consumption, and to operate in accordance with the following principles to reduce the impact on the natural environment from their business operations: 1. Reduce resource and energy consumption, emission of pollutants,

toxins and waste, and dispose of waste properly. 2. Maximize the sustainability of renewable resources under the condition

that the Bank should not violate customers’ data protection. 3. Provide “e-finance” service to improve efficiency of financial products and

service. 4. Encourage the Bank’s suppliers and clients to implement environmental

protection and carbon-reducing measures. Article 15 To improve water use efficiency, the Bank shall properly and sustainably

use water resources and use their best efforts to lessen any adverse impacts on human health and the environment.

Article 16 The Bank shall monitor the impact of climate change on their operations

and should promote energy conservation and carbon or greenhouse gas reduction according to the result of regular checks of greenhouse gas volume, so the impact of their business operations on the climate change can be reduced.

Chapter 4 Protecting employee’s legal rights and interests Article 17 The Bank shall comply with laws and “International Bill of Human Rights”

to protect the rights to gender equality, work and prohibition of discrimination, etc. In order to fulfill the responsibility of protecting human rights, the Bank shall establish related management policies and procedure, including 1. To propose human rights policy of the enterprise and pronouncement 2. To evaluate the influence of operation activities and inner management

upon human rights, and establish related handling procedure

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3. To regularly review the results of the human rights policy or pronouncement.4. If any violation of human rights occurs, the Bank shall disclose the handling

procedure involving its stakeholders.The Bank shall comply with internationally recognized labor force's human rights, just as the freedom of association, the right to collective bargaining, caring vulnerable groups, forbidding child labors, eliminating all forms of forced labor, eliminating recruitment and employment discrimination, etc., and shall assure that the human resource policies do not contain differential treatments based on gender, race, social and economic status, age, marital and family status, and shall achieve equality in terms of employment, employment requirement, remuneration, welfare, training, evaluation and promotion opportunities. As for violation of the labors’ rights, the Bank shall provide an effective and proper mechanism for complaints to ensure the equality and transparency in the process. The procedure for complaints shall be clear, convenient and unimpeded. Furthermore the Bank shall respond to the employee's complaints properly.

Article 18 The Bank shall provide information for their employees so that the employees have knowledge of their rights and the labor laws of the countries where the companies have business operations.

Article 19 The Bank shall provide a safe and healthy work environment for their employees, including necessary health and first-aid facilities and shall endeavor to protect employees’ safety and health from dangers and occupational accidents. The Bank shall organize training on safety and health for their employees on a regular basis.

Article 20 The Bank shall create an environment conducive to the development of their employees' careers and establish effective training programs to foster professional skills. To ensure the effectiveness of recruitment, retaining the talents and motivating employees, the Bank shall reflect its profits or achievement appropriately in the employee's remuneration policy.

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Article 21 The Bank shall establish a platform to facilitate regular two-way communication between the management and the employees for the employees to obtain relevant information and express their opinions on the company's operations, management and decisions. The Bank shall respect the employee representatives' rights to bargain for the working conditions, and shall provide the employees with necessary information and hardware equipment, in order to improve the negotiation and cooperation among employers, employees and employee representatives. The Bank shall, by reasonable means, inform employees of operation changes that might have serious impacts.

Chapter 5 Preserving Public Welfare Responsibility Article 22 To embrace product and service responsibility, and uphold marketing ethics,

the operating procedures should ensure the transparency of information and safety of products and services, the Bank shall establish and disclose its consumer protection policy and enforce the procedures to prevent product or service from harming consumer's rights, health and security.

Article 22-1 The Bank is advised to treat its customers or consumers fairly by implementing the following principles: fairness and good faith, due care and fiduciary duty, truthfulness of advertising, suitability of products or services, duty of disclosure, duty regarding sale of complex, high-risk products, equitable performance-based compensation plans, protection of complainants, professionalism of sales personnel etc., and revise related executed strategy and concrete measures.

Article 23 The Bank shall ensure the quality of their products and services by following the laws and regulations of the government and relevant standards of their industries. The Bank shall follow the laws, regulations and relevant international guidelines when marketing or advertising its financial products or services and shall not deceive, mislead, commit fraud or engage in any other acts which would lose customers’ trust or damage customers’ rights or interests.

Article 24 The Bank is advised to evaluate and manage the risks caused by business interruption to reduce the impacts on consumers and the society. The Bank shall provide a clear and effective procedure for responding to

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customers’ complaints in order to fairly and timely deal with their complaints, and shall comply with Personal Information Protection Act etc. relevant laws and regulations for respecting consumers’ rights to privacy and securing their personal data.

Article 25 The Bank shall cooperate with their suppliers to foster a stronger sense of corporate social responsibility. The Bank is advised to evaluate whether the suppliers have a record of causing harms to the environment and society and should avoid dealing with those suppliers who violate the Bank’s social responsibility policy. When the Bank signs a contract with the main supplier, its content is advised to include compliance with both parties' corporate social responsibility policies, and if the supplier violates the policies and has major influence on the environment or society, the Bank can terminate or annul the contract at any time.

Article 26 The Bank shall consider the impact of their business operations on the community and use qualified personnel to enhance community acceptance. The Bank may, through equity investment, commercial activities, donations of goods and materials, volunteering services or other pro bono services, etc., invest in organizations that solve social or environmental issues through business operations, or participate in events held by citizen groups, charities, and government agencies for community development and education to accelerate the development of community.

Chapter 6 Enhancing Disclosure of Corporate Social Responsibility Information Article 27 The Bank shall disclose information according to relevant laws and

regulations such as “the Corporate Governance Best Practice Principles for TWSE/GTSM-Listed Companies” and shall properly disclose relevant and reliable information relating to their corporate social responsibility initiatives to improve information transparency. The disclosed information relating to corporate social responsibility includes:

1. The policies, systems or relevant management principles and concreteplans for corporate social responsibility initiatives resolved by theboard of directors

2. The risks and the impact on the corporate operations and financial

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condition arising from exercising corporate governance, fostering a sustainable environment and preserving social public welfare

3. Goals and measures for realizing the corporate social responsibility initiatives established by the companies, and the results of them.

4. The main stakeholders and their concerns. 5. The information on environmental and social issues disclosed by the

main supplier and their management on those issues 6. Other information relating to corporate social responsibility initiatives.

Article 28 The Bank shall adopt internationally-recognized criteria or guideline to

produce corporate social responsibility reports to disclose the status of the implementation of the policies. Furthermore, the Bank is advised to obtain the third party’s confirmation or guarantee to enhance information’s reliability. The reports are advised to include: 1. The policies, systems or relevant management principles and concrete

plans of implementing corporate social responsibility initiatives 2. Major interested parties and their concerns 3. Results and a review of the implementation of corporate governance,

fostering of a sustainable environment, preservation of public welfare and promotion of economic development

4. Future improvement and goals. Chapter 7 Supplementary Provisions Article 29 The Bank shall at all times monitor the development of domestic and

international corporate social responsibility criteria and the change of business environment so as to examine and improve their own framework and to obtain better results from the implementation of the policies.

Article 30 The Criteria and any amendments hereto, shall be implemented after

approval from the board of directors.

The Criteria was established and approved at the 11th board meeting of the 8th term on Oct. 23, 2014.

The 1st amendment was made and approved at the 12th board meeting of the 8th term on Dec. 22, 2014.

The 2nd amendment was made and approved at the 3rd board meeting of the 9th term on Oct. 20, 2016.

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Appendix 7

The Criteria Governing Asset Acquisition and Disposal, EnTie Commercial Bank

Chapter 1 General Principles Article 1 (Purpose)

To protect assets and to increase the information transparency of the Bank,

we hereby establish the “Criteria Governing Asset Acquisition and Disposal,

EnTie Commercial Bank” (the “Criteria”). Article 2 (Legal Basis)

The Criteria is set up in accordance with “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” promulgated by the Financial

Supervisory Commission (the “FSC”).

Article 3 (Assets Scope)

The term “assets” as used in the Criteria includes the following:

1. Securities, including investments in stocks, government bonds, corporate bonds, financial debentures, securities representing interest in a fund,

depositary receipts, call (put) warrants, beneficial interest securities, and

asset-backed securities. 2. Real property (including land, houses and buildings, investment property,

and rights to use land) and equipment.

3. Memberships. 4. Intangible assets, including patents, copyrights, trademarks, franchise rights,

and other intangible assets.

5. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables).

6. Derivatives.

7. Assets acquired or disposed of in connection with mergers, spin-offs, acquisitions, or transfer of shares in accordance with the law.

8. The above assets acquired or disposed due to exercising rights to collaterals.

9. Other major assets.

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Article 4 (Definition of Terms) Terms used in the Criteria are defined as follows: 1. Derivatives: Forward contracts, options contracts, futures contracts, leverage

contracts, and swap contracts, and compound contracts combining the

above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term “forward contracts”

does not include insurance contracts, performance contracts, after-sales

service contracts, long-term leasing contracts, or long-term purchase (sales) agreements.

2. Assets acquired or disposed through mergers, spin-offs, acquisitions, or

transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, spin-offs, or acquisitions conducted under the

Business Mergers and Acquisitions Act, Financial Holding Company Act,

Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the

consideration therefor (hereinafter called “transfer of shares”) under Paragraph

8 of Article 156 of the Company Act. 3. Related party or subsidiary: As defined in the “Regulations Governing the

Preparation of Financial Reports by Public Banks”.

4. Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or

equipment.

5. Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors

resolutions, or other date that can confirm the counterpart and monetary

amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the

above date or the date of receipt of approval by the competent authority

shall apply. 6. Investments in Mainland China: Refers to engaging in Mainland investments

as defined by the “Regulations Governing Approval for Investments and

Technical Cooperation in Mainland Area” as promulgated by the Investment Committee under the Ministry of Economic Affairs Investment Commission.

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Article 5 (Related Party Prohibition) Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Bank with appraisal reports,

certified public accountant’s opinions, attorney’s opinions, or underwriter’s

opinions shall not be a related party of any party to the transaction.

Chapter 2 Disposition Procedures

Article 6 (Restrictions on Acquisition and Disposal of Assets) For acquisition or disposal of assets mentioned in Article 3, the Criteria shall govern unless otherwise specified in the Bank’s internal rules such as “Criteria

for Long-term Investments”, “Criteria on Funding Operations”, “Criteria Governing

the Operations of Financial Derivatives”, “Criteria for collateral Management and Disposal”, “Criteria of NPL Disposal”, “Rules Governing Acquisition and

Disposal of Loan Assets of Corporate Banking Group”, “Rules Governing

Properties and Expenditures”, the statements of stratified responsibilities, and other rules stipulated by the Bank.

Total amounts of real property or securities acquired by the Bank and limits on

individual securities, unless otherwise specified in the Bank’s internal rules, shall be handled in compliance with the Banking Act and the regulations

required by the Competent Authority.

The calculation of the transaction amounts referred to in this Chapter shall be done in accordance with Item 5 of Subparagraph 1, Paragraph 1, Article 15,

and “within the preceding year” as used herein refers to the year preceding

the date of occurrence of the current transaction. The transaction amounts stated in Articles 8 to 10 for which an appraisal report from a professional

appraiser or a CPA’s opinion has been obtained pursuant to the requirements

stipulated in the Criteria need not be counted toward the transaction amount; the transaction amount stated in Subparagraph 1, Paragraph 1 of Article 11

for which an approval have been obtained from the board of directors and

recognized by the supervisors pursuant to the requirements stipulated in the Criteria need not be counted toward the transaction amount.

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Article 7 (Handling Disagreements from Board Directors) The Bank’s acquisition or disposal of assets for which the approval of the board of directors is required under the Criteria or other laws or regulations, if

a director expresses dissent and it is contained in the minutes or a written

statement, the Bank shall submit the director’s dissenting opinion to each supervisor.

When a transaction involving the acquisition or disposal of assets is submitted

for discussion by the board of directors pursuant to the preceding paragraph, the board of directors shall take into full consideration each independent director’s

opinions. If an independent director objects to or expresses reservations on

any matter, it shall be recorded in the board meeting minutes.

Article 8 (Procedures for acquisition or disposal of securities) Unless “Criteria for Long-term Investment”, “Criteria for Funding Operation”, “Criteria Governing the Operation of Financial Derivatives”, “Criteria of Collateral

Management and Disposal”, and other relevant internal rules provide otherwise,

the Bank shall acquire or dispose securities based on the following procedures: 1. Procedures for setting transaction terms and authorized amount

(1) Acquiring and disposing of investments as mentioned in the Article

74-1 of the Banking Act, the Bank’s responsible department shall decide based on market conditions, and the transaction amount shall be decided

based on the Bank’s “Criteria for Funding Operation” and its relevant

rules. (2) The Bank’s responsible department shall come up with an assessment

report and get approval from the Board before it acquires and disposes

of the Bank’s investments as defined in Article 74 of Banking Act. 2. Professional opinion

(1) The Bank acquiring or disposing of securities shall, prior to the date of

occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified

public accountant, for reference in appraising the transaction price,

and if the dollar amount of the transaction is 20 percent of the company’s paid-in capital or NT$300 million or more, the company shall additionally

engage a certified public accountant prior to the date of occurrence of

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the event to provide an opinion regarding the reasonableness of the

transaction price. If the CPA needs to adopt an expert report as evidence, the CPA shall do so in accordance with the provisions of

Statement of Auditing Standards No. 20 published by the Accounting

Research and Development Foundation (ARDF) of the ROC. This requirement does not apply, however, to publicly quoted prices of

securities that have an active market, or where otherwise provided by

regulations of the FSC. (2) Where the Bank acquires or disposes of assets through court auction

procedures, the evidentiary documentation issued by the court may

be substituted for the appraisal report or CPA opinion.

Article 9 (Procedures for Acquisition and Disposal of Real Property or Equipment)

Unless the “Criteria of Collateral Management and Disposal”, “Rules Governing

Properties and Expenditures”, and other relevant internal rules provide otherwise,

the Bank shall acquire or dispose real property or equipment based on the procedures as follows:

1. Decision process for transaction terms and authorized amount

(1) In the event of acquisition or disposal of real property, the Bank shall refer to the publicly announced land value, appraised value, actual

transaction prices of neighboring properties, and propose transaction

terms and price. An analysis report is presented to the Board for approval before execution.

(2) When the Bank acquires or disposes of equipment, all procedures

shall be conducted in accordance with the “Rules Governing Properties and Expenditures” of the Bank.

2. Unit for Execution

In acquiring or disposing real property or equipment, the responsible department will execute after the approval level approves as mentioned

above.

3. Real Property and Equipment Appraisal Reports In acquiring or disposing real property or equipment where the transaction

amount reaches 20 percent of the Bank’s paid-in capital or NT$300 million

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or more, the Bank, unless transacting with a government agency, engaging

others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an

appraisal report prior to the date of occurrence of the event from a

professional appraiser. The appraisal report shall include items as specified by the regulations of the Competent Authority and shall also comply with

the following provisions:

(1) Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the

transaction price, the transaction shall be submitted for approval in

advance by the board of directors, and the same procedure shall be followed for any future changes to the terms and conditions of the

transaction.

(2) When the transaction amount is NT$1 billion or more, appraisals shall be obtained from two or more professional appraisers.

(3) Where any one of the following circumstances applies with respect to

the professional appraiser’s appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction

amount, or all the appraisal results for the assets to be disposed of

are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the

provisions of Statement of Auditing Standards No. 20 published by

the Accounting Research and Development Foundation (ARDF) of the ROC and render a specific opinion regarding the reason for the

discrepancy and the appropriateness of the transaction price:

A. The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.

B. The discrepancy between the appraisal results of two or more

professional appraisers is 10 percent or more of the transaction amount.

(4) No more than 3 months may elapse between the date of the appraisal

report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the

same period is used and not more than 6 months have elapsed, an

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opinion may still be issued by the original professional appraiser.

(5) Where the Bank acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may

be substituted for the appraisal report or CPA opinion.

Article 10 (Procedures for Acquisition and Disposal of Memberships or Intangible Assets)

Unless the Bank’s Rules Governing Properties and Expenditures and other internal rules provide otherwise, the Bank shall acquire or dispose memberships

or intangible assets pursuant to the Criteria.

Where the Bank acquires or disposes of memberships or intangible assets and the transaction amount reaches or exceeds 20% of the Bank’s paid-in

capital or NT$300 million, except in transactions with a government agency,

the Bank shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the

transaction price; the CPA shall comply with the provisions of the Statement

of Auditing Standards No. 20 published by the ARDF.

Article 11 (Procedures for Related Party Transaction) The Bank that acquires or disposes of assets from a related party shall ensure that the necessary resolutions are adopted the reasonableness of

the transaction terms is appraised, and other relevant matters are carried

out, in compliance with the provisions of the preceding three Articles and this article. If the transaction amount reaches 10 percent or more of the

Bank’s total assets, the Bank shall also obtain an appraisal report from a

professional appraiser or a CPA’s opinion in compliance with the provisions of the preceding three Articles. When judging whether a trading counterparty

is a related party, in addition to legal formalities, the substance of the

relationship shall also be considered: 1. Appraisal and Operating procedures

When the Bank engages in any acquisition or disposal of real property

from or to a related party, or engages in any acquisition or disposal of assets other than real property from or to a related party and the transaction

amount reaches 20 percent or more of paid-in capital, 10 percent or

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more of the Bank's total assets, or NT$300 million or more, except in

trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market

funds, the Bank may not proceed to enter into a transaction contract or

make a payment until the following matters have been approved by the board of directors and recognized by the supervisors:

(1) The purpose, necessity and anticipated benefit of the acquisition or

disposal of assets. (2) The reason for choosing the related party as a trading counterparty.

(3) With respect to the acquisition of real property from a related party,

information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with the provisions of Subparagraph

2 Items 1-4 and Item 6.

(4) The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading

counterparty’s relationship to the Bank and the related party.

(5) Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the

necessity of the transaction, and reasonableness of the funds utilization.

(6) An appraisal report from a professional appraiser or a CPA’s opinion obtained in compliance with this article.

(7) Restrictive covenants and other important stipulations associated

with the transaction. 2. Evaluation of the reasonableness of the real property transaction costs

(1) The Bank acquires real property from a related party shall evaluate

the reasonableness of the transaction costs by the following means: A. Based upon the related party’s transaction price plus necessary

interest on funding and the costs to be duly borne by the buyer;

Necessary interest on funding is imputed as the weighted average interest rate on borrowing in the year the Bank purchases the

property; provided, it may not be higher than the maximum non-financial

industry lending rate announced by the Ministry of Finance. B. Total loan value appraisal from a financial institution where the

related party has previously created a mortgage on the property

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as security for a loan; provided, the actual cumulative amount

loaned by the financial institution shall have been 70 percent or more of the financial institution’s appraised loan value of the property

and the period of the loan shall have been 1 year or more. However,

this shall not apply where the financial institution is a related party of one of the trading counterparties.

(2) Where land and structures thereupon are combined as a single

property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance

with either of the means listed in the preceding item.

(3) A public company that acquires real property from a related party and appraises the cost of the real property in accordance with the provisions

of Item 1 and Item 2 shall also engage a CPA to check the appraisal

and render a specific opinion. (4) When the results of the Bank’s appraisal conducted in accordance

with the provisions of Item 1 and Item 2 are uniformly lower than the

transaction price, the matter shall be handled in compliance with the provisions of Item 5. However, where the following circumstances

exist, objective evidence has been submitted and specific opinions

on reasonableness have been obtained from a professional real property appraiser and a CPA have been obtained, this restriction

shall not apply:

A. Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one

of the following conditions:

(A) Where undeveloped land is appraised in accordance with the means regulated in Items 1-3 and 6, and structures according

to the related party’s construction cost plus reasonable

construction profit are valued in excess of the actual transaction price. The reasonable construction profit shall be deemed

the average gross operating profit margin of the related party’s

construction division over the most recent 3 years or the gross profit margin for the construction industry for the most

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recent period as announced by the Ministry of Finance,

whichever is lower. (B) Completed transactions by unrelated parties within the preceding

year involving other floors of the same property or neighboring

or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable

price discrepancies in floor or area land prices in accordance

with standard property market practices. (C) Completed leasing transactions by unrelated parties for

other floors of the same property from within the preceding

year, where the transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance

with standard property leasing market practices.

B. Where the Bank acquiring real property from a related party provides evidence that the terms of the transaction are similar to

the terms of transactions completed for the acquisition of

neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year.

Completed transactions for neighboring or closely valued parcels

of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no

more than 500 meters or parcels close in publicly announced current

value; transaction for similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a

land area of no less than 50 percent of the property in the planned

transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property.

(5) Where the Bank acquires real property from a related party and the

results of appraisals conducted in accordance with the provisions of Items 1-4 and Item 6 are uniformly lower than the transaction price,

the following steps shall be taken:

A. A special reserve shall be set aside in accordance with the provisions of Paragraph 1 of Article 41 of the Act against the

difference between the real property transaction price and the

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appraised cost, and may not be distributed or used for capital

increase or issuance of bonus shares. B. The Supervisors shall supervise the execution of the said operations

of the Bank in compliance with Article 218 of the Company Act.

C. Actions taken pursuant to the previous points shall be reported to the Shareholders’ Meeting, and the details shall be disclosed in

the annual report and the prospectus.

The Bank that has set aside a special reserve under this item may not utilize the special reserve until it has recognized a loss on

decline in market value of the assets it purchased at a premium, or

they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other

evidence confirming that there was nothing unreasonable about the

transaction, and the competent authority has given its consent. (6) Where the Bank acquires real property from a related party and one

of the following circumstances exists, the acquisition shall be conducted

in accordance with the provisions of the preceding Subparagraph, and the provisions of Items 1-3 do not apply:

A. The related party acquired the real property through inheritance

or as a gift. B. More than 5 years have elapsed from the time the related party

signed the contract to obtain the real property to the signing date

for the current transaction. C. The real property is acquired through signing of a joint development

contract with the related party, or through engaging a related party

to build real property, either on the company’s own land or on rented land.

(7) When the Bank obtains real property from a related party, it shall also

comply with the provisions of Item 5 if there is other evidence indicating that the acquisition was not a normal transaction.

Article 12 (Procedures for Acquisition and Disposal of Claims of Financial Institutions)

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When acquiring or disposing debt rights of financial institutions, unless the

“Criteria of NPL Disposal Procedures”, the “Rules Governing Acquisition and Disposal of Loan Assets of Corporate Banking Group”, and other internal

rules provide otherwise, the Criteria shall govern.

Article 13 (Procedures of Acquisition and Disposal of Derivatives Products)

Unless the “Criteria for Funding Operation”, the “Criteria Governing the

Operation of Financial Derivatives”, and other internal rules provide otherwise, the Bank shall acquire or dispose derivatives products based on the following

procedures:

1. Trading principles and guidelines: Shall include the types of derivatives that may be traded, operating or hedging strategies, segregation of

duties, essentials of performance evaluation, total amount of derivatives

contracts that may be traded, and the maximum loss limit on total trading and for individual contracts.

2. Risk Management Measures

When the Bank is engaging in derivatives trading shall adopt the following risk management measures:

(1) Risk management shall address credit, market, liquidity, cash flow,

operational, and legal risks. (2) Personnel engaged in derivatives trading may not serve concurrently

in other operations such as confirmation and settlement.

(3) Risk measurement, monitoring, and control personnel shall verify that the personnel responsible for trading, deal confirmation and settlements

are from different departments, and shall report to the board of

directors or senior management personnel with no responsibility for trading or position decision-making.

(4) Derivatives trading positions held shall be evaluated at least once

per week; however, positions for hedge trades required by business shall be evaluated at least twice per month. Evaluation reports shall

be submitted to senior management personnel authorized by the

board of directors. (5) Other important risk management measures.

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3. Internal Audit System

(1) The internal auditor shall review periodically the suitability of internal control on derivatives transactions. If any major violation is found, a

written report shall be submitted to notify the Board of directors and

the Supervisors. (2) The internal auditors shall file a report which includes the auditing

report and the annual internal auditing operation report to the local

authorities no later by end of February in the following year, and shall report to the local authorities for the improvements made by the Bank

for the unusual issues no later by end of May in the following year.

4. When the Bank is engaging in derivatives trading shall establish trading sheets or all types of evaluation reports for record to replace the log

book in which details of the types and amounts of derivatives trading

engaged in, approval dates from board of directors, and the matters required to be carefully evaluated under this article.

5. Where the Bank engaging in derivatives trading, the board of directors

shall faithfully supervise and manage such trading in accordance with the following principles:

(1) Designate senior management personnel to pay continuous attention

to monitoring and controlling derivatives trading risk. (2) Periodically evaluate whether derivatives trading performance is

consistent with established operational strategy and whether the risk

undertaken is within the Bank’s permitted scope of tolerance. 6. Senior management personnel authorized by the board of directors shall

manage derivatives trading in accordance with the following principles:

(1) Periodically evaluate the risk management measures currently employed are appropriate and are faithfully conducted in accordance with the

“Regulations Governing the Acquisition and Disposal of Assets by Public

Companies” formulated by the FSC , the said “Criteria”, the “Criteria Governing Operations of Financial Derivatives”, and other internal

rules provide otherwise.

(2) When irregular circumstances are found in the course of supervising trading and profit-loss circumstances, appropriate measures shall be

adopted and a report immediately made to the board of directors; an

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independent director shall be present at the board meeting and express

an opinion. 7. The Bank shall report to the next upcoming meeting of the board of

directors after it authorizes the relevant personnel to handle derivates

trading in accordance with its internal procedures for engaging in derivatives trading.

Article 14 (Procedures for Mergers, Demergers, Acquisitions and Transfer of Shares)

The Bank’s Procedures for Mergers, Demergers, Acquisitions and Transfer of Shares are as follows: 1. Appraisal and Operating procedures

(1) When conducting a merger, demerger, acquisition, or transfer of shares, prior to convening a board meeting to resolve on the matter, the Bank shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage.

(2) The Bank participating in a merger, demerger, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to the preceding Item when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply. Where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the companies participating in the merger, demerger or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

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(3) A company participating in a merger, demerger, or acquisition shall

convene a board of directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the merger,

demerger, or acquisition, unless another act provides otherwise or the

competent authority is notified in advance of extraordinary circumstances and grant consent. A company participating in a transfer of shares

shall call a board of directors meeting on the day of the transaction,

unless another act provides otherwise or the competent authority is notified in advance of extraordinary circumstances and grant consent.

(4) When participating in a merger, demerger, acquisition, or transfer of

another company’s shares, a company that is listed on an exchange or has its shares traded on an OTC market shall prepare a full written

record of the following information and retain it for five years for

reference: A. Basic identification data for personnel, including the occupational

titles, names, and national ID numbers (or passport numbers in

the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or transfer

of another company’s shares prior to disclosure of the information.

B. Dates of material events, including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal

advisor, the execution of a contract, and the convening of a board

of directors meeting. C. Important documents and minutes, including merger, demerger,

acquisition, and share transfer plans, any letter of intent or

memorandum of understanding, material contracts, and minutes of board of directors meetings.

(5) When participating in a merger, demerger, acquisition, or transfer of another company’s shares, the Bank shall, within 2 days commencing immediately from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out in A and B of the preceding Item to the competent authority for recordation.

(6) Where any of the companies participating in a merger, demerger,

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acquisition, or transfer of another company’s shares is neither listed on an exchange nor has its shares traded on an OTC market, the Bank shall sign an agreement with such company whereby the latter is required to abide by the provisions of Item 4 and Item 5.

2. Other attentions (1) Prior confidentiality: Every person participating in or with knowledge

of the plan for merger, demerger, acquisition, or transfer of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or transfer of shares.

(2) Principles of setting and changing share exchange ratio or merger prices: The Bank participating in a merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the circumstances below, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares: A. Cash capital injection, issuance of convertible corporate bonds, or

the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other

equity based securities.

B. An action, such as a disposal of major assets that affects the company’s financial operations.

C. An event, such as a major disaster or major change in technology

which affects shareholder equity or share price. D. An adjustment where any of the companies participating in the

merger, demerger, acquisition, or transfer of shares from another

company, buys back treasury stock. E. An increase or decrease in the number of entities or companies

participating in the merger, demerger, acquisition, or transfer of shares.

F. Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.

(3) Information to be noted in the contract: Besides the following Article

317-1 of the Company Act and Article 22 of the Business Mergers

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And Acquisitions Act, and relevant rules and regulations in Financial

Institutions Merger Law, the following information shall be noted in the contracts:

A. Handling of breach of contract.

B. Principles for handling of equity-type securities previously issued or treasury stock previously bought back by any company that is

extinguished in a merger or that is demerged.

C. The amount of treasury stock participating companies are permitted under law to buy back after the record date of calculation of the

share exchange ratio, and the principles for handling thereof.

D. The manner of handling changes in the number of participating entities or companies.

E. Progress of Project Plan and Projected Finish Date.

F. Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and

relevant procedures.

(4) Procedures when number of the companies participating in a merger, demerger, acquisition, or transfer of shares has changes:

After public disclosure of the information, if any company participating

in the merger, demerger, acquisition, or share transfer intends to carry out another merger, demerger, acquisition, or share transfer with

another company, all of the participating companies shall carry out

anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or share transfer; except

that where the number of participating companies is decreased and a

participating company’s shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such

participating company may be exempted from calling another shareholders

meeting to resolve on the matter anew. (5) Any of the companies participating in a merger, demerger, acquisition,

or transfer of shares is not a public company:

Where any of the companies participating in a merger, demerger, acquisition, or transfer of shares is not a public company, the Bank

shall sign an agreement with the non-public company, and abide by

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the provisions of Items 3-6 of the preceding Subparagraph and Items

1 and 4.

Chapter 3 Public Disclosure of Information

Article 15 (Procedures for Public Disclosure of Information) Procedures for Public Disclosure of Information of the Bank are described below:

1. Items and Standards of Public Announcement and Reporting

(1) Acquisition or disposal of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a

related party where the transaction amount reaches 20 percent or

more of paid-in capital, 10 percent or more of the company’s total assets, or NT$300 million or more; provided, this shall not apply to trading

of government bonds, or bonds under repurchase and resale agreements,

or subscription or redemption of domestic money market funds. (2) Merger, demerger, acquisition, or transfer of shares.

(3) Losses from derivatives trading reaching the limits on aggregate

losses or losses on individual contracts set out in the procedures adopted by the Bank.

(4) Where an asset transaction other than any of those referred to in the

preceding three items, a disposal of receivables by a financial institution, or an investment in the mainland China area reaches 20 percent or

more of paid-in capital or NT$300 million; provided, this shall not

apply to the following circumstances: A. Trading of government bonds.

B. Securities trading by investment professionals on foreign or

domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm, either in the primary

market or in accordance with relevant regulations.

C. Trading of bonds under repurchase/resale agreements, or subscription or redemption of domestic money market funds.

D. Where the type of asset acquired or disposed is equipment for

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business use, the trading counterparty is not a related party, and

the transaction amount is less than NT$500 million. E. Where land is acquired under an arrangement on engaging

others to build on the Bank’s own land, engaging others to build

on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or

joint construction and separate sale, and the amount the Bank

expects to invest in the transaction is less than NT$500 million. (5) The amount of transactions as used in Items 1-4 shall be calculated

as follows, and “within one year” refers to the year preceding the base

date of occurrence of the current transaction. Items duly announced in accordance with the rules need not be entered.

A. The amount of any individual transaction.

B. The cumulative transaction amount of acquisitions or disposals of the same type of underlying asset with the same trading

counterparty within the preceding year.

C. The cumulative transaction amount of real property acquisitions or disposals (cumulative acquisitions and disposals, respectively)

within the same development project within the preceding year.

D. The cumulative transaction amount of acquisitions or disposals (cumulative acquisitions and disposals, respectively) of the same

security within the preceding year.

2. Deadline for Public Announcement and Reporting The assets acquired or disposed that need to be publicly announced based

on the proceeding Subparagraph and transaction amount reaches the

standards that need to be publicly announced, public announcement/reporting shall be made within 2 days commencing immediately from the date of

occurrence.

3. Procedures for Public Announcement and Reporting (1) The Bank shall make public announcement or reporting via the website

as designated by the competent authority.

(2) The Bank shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by the Bank

and any of its subsidiaries that are not domestic public companies

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and enter the information in the prescribed format into the information

reporting website designated by the competent authority by the tenth day of each month.

(3) When the Bank makes an error or omission in a required public

announcement, such public announcement shall be corrected, be again publicly announced and reported in their entirety.

(4) The Bank acquiring or disposing of assets shall keep all relevant contracts,

meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the Bank, where they shall be

retained for 5 years except where another act provides otherwise.

(5) Where any of the following circumstances occurs with respect to a transaction that the Bank has already publicly announced and reported

based on rules, a public report of relevant information shall be made

on the information reporting website designated by the competent authority within 2 days commencing immediately from the date of

occurrence:

A. Change, termination, or rescission of a contract signed in regard to the original transaction.

B. The merger, demerger, acquisition, or transfer of shares is not

completed by the scheduled date set forth in the contract. C. Changes to the originally publicly announced and reported information.

4. Format of Public Announcement

Following the items and content of Public Announcement and Reporting as set in the Criteria, the Bank will follow the format set by the competent

authority.

Article 16 (Procedures of Public Announcement and Reporting by the Subsidiaries)

Information required to be reported in accordance with the provisions of

Article 15 on acquisitions and disposals of assets by any subsidiary of the Bank that is not itself a domestic public company shall be reported by the

Bank.

The paid-in capital or total assets of the Bank shall be the standard for determining whether or not a subsidiary under the preceding Paragraph

requires a public announcement and filing with the authority in the event

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when the type of transaction specified therein reaches 20 percent of paid-in

capital or 10 percent of the total assets. In the case of the subsidiary of the Bank whose shares have no par value

or a par value other than NT$10, for the calculation of transaction amounts

of 20 percent of paid-in capital stipulated in Articles 8 to 11, 15 and 16 under the Criteria, 10 percent of the Bank’s equity shall be substituted.

Chapter 4 Penalties

Article 17 (Penalties) For staffs who violate the provisions stipulated in the Criteria, they shall be punished in accordance with the personnel rules of the Bank; for those who

are involving in illegal conduct shall be reported to the juridical institutions

for further investigation.

Chapter 5 Additional Provisions Article 18 (Procedures for Control and Management of Subsidiaries)

The Bank shall urge its subsidiaries to adopt and implement the “Criteria

Governing the Acquisition and Disposal of Assets” based on the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies”.

The Bank shall urge its subsidiaries to self-examine whether the procedures

it uses to acquire or dispose assets comply with the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” and the “Criteria

Governing the Acquisition and Disposal of Assets”.

Internal audit shall review the audit reports or self-examination reports submitted by the subsidiaries.

Article 19 The 10 percent of total assets referred to in the Criteria shall be calculated

based on the total assets stated in the most recent parent company only

financial report or individual financial report prepared under the “Regulations Governing the Preparation of Financial Reports by Public Banks”.

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Article 20 (Implementation and Revision) Once the Criteria are approved by the board of directors, they shall be submitted to each Supervisor and to the shareholders’ meeting for approval;

same procedures should be applied for amendments to the Criteria. Regarding

the handling of dissent expressed by the board and independent director(s), Article 7 shall apply.

Article 21 Matters not set forth in the Criteria shall be dealt with in accordance with

the applicable laws, rules, regulations or internal rules of the Bank.

The Criteria was established and approved at the 7th board meeting of the 4th

term on Feb. 24, 2003

The 1st amendment was made and approved at the 24th board meeting of the

5th term on April 23, 2007

The 2nd amendment was made and approved at the Annual General Meeting of

Shareholders on May 27, 2010

The 3rd amendment was made and approved at the Annual General Meeting of

Shareholders on June 10, 2011

The 4th amendment was made and approved at the Annual General Meeting of






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