CTBC Financial Holding Co., Ltd. Handbook for the 2016 Annual General Meeting of. Shareholders

Transcription

1 Stock Code: 2891 CTBC Financial Holding Co., Ltd. Handbook for the 2016 Annual General Meeting of Shareholders Meeting Time:June 24, 2016 Place:12F, The Grand Ballroom, The Grand Hotel, No.1, Chung Shan N. Rd., Sec.4, Taipei, Taiwan, R.O.C.

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3 Table of Contents A. Discussions (Voting Items) 1. The Amendments to part of The Article of Incorporation B. Item for Report (Non-Voting Items) 2. The 2015 Business Report 3. The 2015 Audit Committee's Report 4. The report on 2015 employee and director remuneration distribution 5. The status report on the Private Placement 6. The report on rationale and relevant matters on the senior unsecured corporate bonds of NT$15 billion issued in The report on regulations regarding the same person or the same affiliate who intends to possess more than the designated amount of total voting shares from the same FHC B. Item for Acceptance (Voting Items) 8. The 2015 Financial Reports 9. The Distribution of Earnings for 2015 C. Discussions (Voting Items) 10. The increase of capital by NT$14,422,090,040 and issuance of new shares of 1,442,209,004 at par value of NT$10 per share to enhance the funding and operations capability of the Company 11. The issuance of common shares to raise capital through private placement D. Questions and Motions (Voting Items) E. Attachments 1. Table of Comparisons between Amended and Original Provisions for The Article of Incorporation 2. The 2015 Business Report 3. The 2015 Audit Committee s Report Earnings Distribution Table

4 F. Appendices Appendix Ⅰ:The Independent Auditors Report and Financial Statements Appendix Ⅱ:The Rules of Procedure for Shareholder Meetings Appendix Ⅲ:The Impact to the Operations Result, Earning Per Share, and Return of Equity by the Increase of Capital and Issuance of New Shares Appendix Ⅳ:The Articles of Incorporation Appendix Ⅴ:The Shares Held by the Members of the Board of Directors

5 A. Discussions (Voting Items) Proposal 1:The Amendments to part of The Article of Incorporation, it is hereby proposed to Shareholders Meeting for joint decision. Explanation: a. In response to the changing dynamics of the financial market and to meet various investors demand, regarding the rights and obligations and issuing conditions of Class B Preferred Shares, it is hereby amending Article 5 of Articles of Incorporation and adding 5 of Article 6 thereto pursuant to relevant provisions of Company Law, with aim to diversify the funding sources for the Company and provide greater flexibility in capital allocation. The relevant key points are abstracted as follows: (a) Article 5: It is amended that the shares of capital sum to include common share and preferred share. (b) 5 of Article 6: The rights and obligations and other important issuing conditions of Class B Preferred Shares are added. I. The dividend distribution order of Class B Preferred Shares is stipulated. II. The upper limit of the annual interest rate is 8%. III. The Company has its own discretion in dividend distribution, and the undistributed dividend is not cumulative. IV. The Class B Preferred Shareholders are not normally entitled to receive any dividends on common shares accrued from allocation of profits and capital reserve. V. The Class B Preferred Shareholders are entitled to receive the remaining assets to be allocated by the Company after Class A Preferred Shareholders and before the common shareholders and the other preferred shareholders. However, the amount of allocation shall not exceed the issue value. VI. The Class B Preferred Shareholders do not have voting right and election right during the common shareholders meeting, but may be elected as directors. VII. The Class B Preferred Shareholders do not have rights to convert to common shares, nor request the issuing company to redeem their holdings. VIII. There is no maturity date, but a call date shall be stipulated. And the call

6 date shall be no earlier than 7 years and one day after the issue date. Upon the call, the Company shall payback Shareholders at the issue price. Upon actual issuance, Board of Directors is authorized to determine the issue date and specific conditions of Class B Preferred Shares according to Articles of Incorporation of the Company and relevant laws and decrees, and based on the then capital market conditions and subscription intention of investors. b. In response to the addition of 1 in Article 235 and amendment to the Article 235 and Article 240 of the Company Law, it is hereby proposed to amend relevant articles in the Articles of Incorporation of the Company as follows: (a) Article 20: Amend the wordings to be in line with Article 29. (b) Article 29: I. To be in line with the amendments in the Company Law, the earnings distribution will no longer have items such as employee share bonus and director remuneration. It is proposed to amend the wordings "employee bonus" as "employee remuneration" in Articles of Incorporation, and adjust the allocation basis of employee and director remuneration from "after-tax profit" to "pretax profit". II. The allocation ratio of director remuneration is reduced from the original "1%" to "no more than 0.7%". III. According to the interpretation of Jing-Shang-Zi No Letter issued by Ministry of Economic Affairs on June 11, 2015, it is amended that the employee remuneration may be paid in existing shares or through new share issuance. (c) 1 of Article 29: It is the added article, summarizing contents related to dividend policy in original Article 29. c. Article 32: added the amendment date hereof and the number of amendment. d. Comparison table on the amended articles and original articles of the Articles of Incorporation of the Company is attached hereto as Attachment 1. e. This proposal was approved by the 21 st, 31 st and 34 th meeting of the 5 th term of the Board of Directors.

7 B. Report (Non-Voting Items) Proposal 2:The 2015 Business Report, it is hereby proposed to Shareholders Meeting for joint decision. Explanation:The 2015 Business Report is attached hereto as Attachment 2 Proposal 3 : The 2015 Audit Committee's Report, it is hereby proposed to Shareholders Meeting for joint decision. Explanation:The Audit Committee's Report is attached hereto as Attachment 3 Proposal 4:The report on 2015 employee and director remuneration distribution, it is hereby proposed to Shareholders Meeting for joint decision. Explanation: a. The Company has amended the Articles of Incorporation pursuant to 1 of Article 235 of Company Law and the interpretation of Jing-Shang-Zi No letter issued by Ministry of Economic Affairs on June 11, 2015, the company shall allocate employee remuneration and director remuneration based on the pretax profit, and the total amount and issuing method thereof shall be discussed and agreed by the Board of Directors and reported to the Shareholders' Meeting. b. Pursuant to the provisions of Article 29 of the amended Articles of Incorporation, for the pretax profit in 2015, the Company will allocate 0.05%, namely NT$17,828,843 as employee remuneration; and otherwise allocate 0.7%, namely NT$249,603,802 as director remuneration. c. The 2015 employee and director remuneration of the Company mentioned above will be fully disbursed in cash. d. This proposal was approved by the 34 th meeting of the 5 th term of the Board of Directors.

8 Proposal 5:The status report on the Private Placement, it is hereby proposed to Shareholders Meeting for joint decision. Explanation: a. Pursuant to the provisions of "Instruction for Public Company in Handling Private Equity Securities", the Company shall report the status of capital raising plan to issue common shares through private placement that had been approved in Shareholders' Meeting and Board of Directors in the next Shareholders' Meeting. b. The Company had been approved by the general meeting on June 29 th, 2015 to carry out long-term capital raising, among them, including carrying out cash capital increase to issue common shares through private placement. Pursuant to the provisions of 6 of Article 43 of Securities Exchange Act, the stock capital or proceeds of private equity securities shall be fully collected within one year as of the date approved by Shareholders' Meeting. However, due to insufficient processing time and based on the consideration of strategic development of the Company and the continuation of resolution of general meeting in last year, it is planned to otherwise propose to the 2016 general meeting for carrying out cash capital increase through private placement. Proposal 6:The report on rationale and relevant matters on the senior unsecured corporate bonds of NT$15 billion issued in 2015 Explanation: a. Pursuant to the provisions of Paragraph 1, Article 246 of Company Law, the Company shall report the reasons for issuing corporate bonds and relevant matters thereof to the Shareholders' Meeting. b. The Company issued senior unsecured corporate bonds in the amount of NT$15 billion in 2015, which will be used to strengthen financial structure, improve medium and long term liquidity and lock in medium and long term cost of capital. The major issuing conditions and relevant matters thereof are as follows: CTBC Financial Holding Co., Ltd. Item 2015 Senior Unsecured Corporate Bonds Date of Resolution was passed by the 17 th meeting of the 5 th term of the Board of

9 Item resolution by Board of Directors Approval No. of competent authority CTBC Financial Holding Co., Ltd Senior Unsecured Corporate Bonds Directors on May 26 th, June 29 th, 2015 Jin-Guan-Zheng-Fa-Zi No Issue date August 3 rd, 2015 The total issue amount of these corporate bonds is NT$15 billion, the issue Amount/ amount, term and coupon rate are as follows: Term/ Tranche A: NT$3.2 billion, term is 3 years, and the coupon rate is 1.15%. Coupon rate Tranche B: NT$6.3 billion, term is 5 years, and the coupon rate is 1.35%. Tranche C: NT$5.5 billion, term is 7 years, and the coupon rate is 1.65%. Issue price These corporate bonds will be issued in full on issue date at the face amount of and face NT$ 1 Million. amount Interest calculation As of the issuing date, the simple interest will be calculated and paid once a year and payment according to the coupon rate. method Method for The principal repayment will be paid in lump sum upon respective maturity of repayment of each tranche. principal Method for redemption or Not available. advance repayment Entrustee Mega International Commercial Bank Co., Ltd. Agency for repayment of CTBC Bank Co. Ltd. principal and interest It is issued by adopting book entry form, and registered by Taiwan Depository & Form of bond Clearing Corporation. Security These corporate bonds are unsecured corporate bonds.

10 Item method Sales target Repayment priority Issuing and OTC listing location CTBC Financial Holding Co., Ltd Senior Unsecured Corporate Bonds Only limited to the professional investors as stipulated in ROC Taipei Exchange Foreign Currency Denominated International Bonds Management Rules. The repayment priority of creditor of these corporate bonds is the same as the repayment priority of other unsecured creditors of the Company. Listed in ROC Taipei Exchange on August 3 rd, Proposal 7:The report on regulations regarding the same person or the same affiliate who intends to possess more than the designated amount of total voting shares from the same FHC, it is hereby proposed to Shareholders Meeting for joint decision. Explanation: According to the regulation of the Financial Supervisory Committee (FSC) letter No , the related sections of the Financial Holding Company Act is as follows: a. Under the Financial Holding Company Act Article 4, the regulations on same person, same concerned person, and affiliates are listed below: (a) Same person: means the same natural or juridical person (b) Same concerned person: means persons related to the same natural or juridical person, the scope including: 1. The principal, his/her spouse and relatives by blood within the second degree of kinship. 2. An enterprise in which the persons referred to in the preceding subparagraph hold more than one third (1/3) of its outstanding voting shares or more than one third of its capital stock. 3. An enterprise or a foundation in which the persons referred to in Subparagraph (1) hereof act as its chairman, president or directors representing the majority of directors. 4. The same juridical person and its chairman and president as well as the spouse and relatives by blood within second degree of kinship of the chairman and

11 president. 5. Enterprises in which the same juridical person and natural persons referred to in the preceding subparagraph hold more than one third (1/3) of their outstanding voting shares or capital stock, or enterprises or foundations in which the same juridical person and natural persons referred to in the preceding subparagraph act as their chairman, president or directors representing the majority of directors. 6. The affiliates of the same juridical person (c) The scope of the affiliates includes companies for which Company Act Article 369 Item 1-3, 9, and 11 apply. b. The regulations of Financial Holding Company Act Article 16 are listed below: When a financial institution is converted into a financial holding company, a same person or same concerned person who singly, jointly or collectively holds more than ten percent (10%) of the financial holding company s outstanding voting shares shall report such fact to the Competent Authority. After a financial holding company has been established, a same person or same concerned person who singly, jointly or collectively holds more than five percent (5%) of the financial holding company s outstanding voting shares shall report such fact to the Competent Authority within ten (10) days from the day of holding; the preceding provision applies to each cumulative increase or decrease in the shares of the same person or same concerned person by more than one percent (1%) thereafter. After a financial holding company has been established, a same person or same concerned person who intends to singly, jointly or collectively acquire more than ten percent (10%), twenty-five percent (25%) or fifty percent (50%) of the financial holding company s outstanding voting shares shall apply for prior approval of the Competent Authority. A third party who holds shares of a financial holding company on behalf of the same person or same concerned person in trust, by mandate or through other types of contract, agreement or authorization shall fall within the purview of the same concerned person. The same person or same concerned person who applies for approval pursuant to Paragraph 3 hereof, required documentation, shares to be acquired, purpose of acquisition, sources of funding, state of pledging of shares held, existing shareholding,

12 and the reporting and announcement of changes in other important events, and other matters to be complied with shall be prescribed by the Competent Authority. The same person or same concerned person who holds more than ten percent (10%) of the outstanding voting shares of a financial holding company shall not pledge his or her shares to a subsidiary of the financial holding company. The preceding provision does not apply to shares of a financial holding company already pledged to a financial institution before the financial institution was converted into its subsidiary, provided the original pledge continues to be in effect. If a same person or same concerned person referred to in Paragraph 1 hereof does not meet the qualifications or requirements stipulated in the regulations as referred to in Paragraph 5 hereof, the same person or concerned person may continue to hold shares of such companies, but may not increase his or her shareholding. The application referred to in Paragraph 3 hereof shall be deemed approved if the Competent Authority does not object thereto within fifteen (15) business days from the next day following the receipt of such application. The same person or same concerned person who singly, jointly or collectively holds more than five percent (5%) but less than ten percent (10%) of a financial holding company s outstanding voting shares prior to the implementation of the amendment to the Act on December 30 th, 2008 shall report such fact to the Competent Authority within six (6) months from the implementation date of the said amendment. Where the same person or same concerned person who holds voting shares issued by a financial holding company without filing a report with the Competent Authority or obtaining approval from the Competent Authority in accordance with the provisions set forth in Paragraphs 2 or 3, the excess shares held by such same person or same concerned person shall not have voting rights and shall be disposed of within the given period prescribed by the Competent Authority. c. The FSC can use the regulation of Financial Holding Company Act, Article 16, Item 10 to limit the voting rights for the portion above the legally allowed shares, if violate the regulations of the aforementioned Item 3, where ownership of the issued voting rights is greater than 10% if not approved by the Competent Authority. The regulatory agency can order the disposal of the excess shares within a given period, and fine an amount between NT$ 2 Million and NT$ 10 Million according to Article 60. If chosen to serve as board director, board supervisor, or other role of

13 responsibilities, the person is considered to be dishonest, improper, and unsuitable to serve in those roles according to Article 3, Item 3, Paragraph 13 of the Regulations Governing Qualification Requirements for the Promoter or Responsible Persons of Financial Holding Companies and Concurrent Serving Restrictions and Matters for Compliance by the Responsible Persons of a Financial Holding Company, and is relieved of duty according to the Article 11, Item 2 of the same act. d. For related Regulations and Application Forms, please visit the company s website at ( -> Shareholder Information -> Shareholder Services -> Legal Disclosure) C. Items for Acceptance (Voting Items) Proposal 8: The 2015 Financial Reports, it is hereby proposed to Shareholders Meeting for joint decision. Explanation:The financial statements of the company for 2015 were approved at the 31 st and 34 th meeting of the 5 th term Board of Directors and duly reviewed by the Audit Committee. (The CPA s audit report and the financial statements as well as the business report are attached hereto as Attachment 1 and Appendix I) Resolution: Proposal 9 : The Distribution of Earnings for 2015, it is hereby proposed to Shareholders Meeting for joint decision. Explanation: a. It is hereby prepared the 2015 earnings distribution proposal of the Company as shown in the Attachment 4. b. The 2015 beginning undistributed earnings is NT$77,747,985; deduct the change of confirmed welfare program actuarial gains and losses in this period of NT$533,351,237; after adjustment, the beginning losses pending for recovery is NT$455,603,252. The 2015 net profit after-tax of the Company is NT$35,397,576,664, it is planned to cover the losses first, and then allocate statutory surplus reserve (10%)

14 of NT$3,494,197,342 pursuant to Company Law; besides, pursuant to Article 14 of Securities Exchange Act, after allocating special surplus reserve of NT$2,194,692,549 from the increased amount of "Other equity reduction" listed in this year, the total distributable earnings is NT$29,253,083,521. c. Planned distribution items are as follows: As of April 26 th, 2016 (Shareholders' Meeting book closure day) this year, the total common shares issued is 18,054,780,565 shares, after deducting 27,168,003 treasury shares, the number of shares eligible for distribution is 18,027,612,562 shares. In consideration of shareholders' capital needs and to reserve appropriate capital for business demand, it is planned to distribute cash dividend of NT$0.81 and stock dividend of NT$0.80 per common share from the distributable common share dividend balance of NT$29,253,083,521, distributing NT$1.61 per share in total. The total cash dividend amount distributed to each individual shareholder to the nearest NT$1, and fractional amounts less than NT$1 will be listed in other incomes of the Company. d. It is planned to give priority to handle all kinds of distributions with earnings in 2015, and the deficient part will be paid by the undistributed earnings in previous year, the balance after distribution is NT$228,627,306, pursuant to provisions of 1 of Article 29 of Articles of Incorporation, it is not distributed since the cash dividend distributed per share is less than NT$0.1, and it is planned to reserve for distribution after annual accounting of next year. e. Pursuant to 4 of Article 6 of the Articles of Incorporation, the Company shall issue Class A Preferred Share dividend of NT$71,050,000, which has been deducted from the net profit of 2015 according to accrual basis. The distribution of Class A Preferred Share dividend to each individual shareholder to the nearest NT$1, and fractional amounts less than NT$1 will be listed in other incomes of the Company. f. After this case has been passed per discussion in Shareholders' Meeting, Board of Directors is authorized to set the record date for distributing cash dividend and dividend and other relevant distribution matters; after the stock dividend of common share has been reported to competent authority for approval, Board of Directors is authorized to set the record date for capital increase and other relevant matters. g. If subsequently due to capital increase or decrease; buying back (selling) the shares of the Company; or assignment, transfer and cancellation, or employees exercise

15 employee stock option request for share subscription, or shareholders give up holding shares etc., the record date for cash dividend distribution and the number of shares outstanding on the record date for capital increase are affected, and the common share dividend payout ratio is changed therefor, it is planned that Shareholders' Meeting will authorize Board of Directors to handle matters regarding the change of payout ratio. h. This proposal was approved by the 34 th and 36 th meeting of the 5 th term of the Board of Directors. Resolution: D. Discussions (Voting Items) Proposal 10:The Increase of Capital by NT$14,422,090,040 and Issuance of New Shares of 1,442,209,004 at Par Value of NT$10 Per Share to Enhance the Funding and Operations Capability of the Company, it is hereby proposed to Shareholders Meeting for joint decision. Explanation: a. The sources of new shares in this capital increase are as follows:: Allocate NT$14,422,090,040 from the earnings in 2015, pursuant to the provisions of Article 240 of Company Law, issue 1,442,209,004 new shares, and the nominal amount per share is NT$10. As of April 26 th, 2016 (Shareholders' Meeting book closure day), the total common shares issued by the Company is 18,054,780,565 shares, after deducting 27,168,003 treasury shares, the number of shares eligible for distribution is 18,027,612,562 shares. If calculate according to the number of common shares eligible for dividend payout as mentioned above, 80 shares will be distributed for free per one thousand shares. The actual number of shares in free distribution per one thousand shares will be calculated according to the shareholding ratio of each shareholder as recorded in Shareholders List of the Company on the record date for capital increase. For fractional shares less than one share, shareholders may voluntarily gather them to one share. The part of shares cannot be gathered to one share will be payout in cash according to the nominal amount, for the shares thereof, Board of Directors is authorized to negotiate with specific person for subscription.

16 b. It is proposed the Board of Directors is authorized to decide the payable date of the new shares, subject to the approval of the regulators. c. The rights and obligation of the new shares to be issued will be the same as the existing common shares. d. If subsequently due to capital increase or decrease; buying back (selling) the shares of the Company; or assignment, transfer and cancellation, or employees exercise employee stock option request for share subscription, or shareholders give up holding shares etc., the number of shares outstanding on the base date for capital increase are affected, and the common share dividend payout ratio is changed therefor, it is planned that Shareholders' Meeting will authorize Board of Directors to handle matters regarding the change of payout ratio. e. This proposal was approved by the 34 th meeting of the 5 th term of the Board of Directors. Resolutions: Proposal 11 : The issuance of common shares to raise capital through private placement, it is hereby proposed to Shareholders Meeting for joint decision. Explanation: a. To meet the Company and Group's long term strategic development and capital needs for business growth, it is hereby proposed in the Shareholders' Meeting to authorize the Board of Directors to carry out cash capital increase by issuing common shares through private placement at appropriate time pursuant to provisions of Articles of Incorporation or relevant laws and decrees, so as to raise long term capital. b. Main contents of cash capital increase through private placement are as follows: (a) Purpose of capital increase: To meet the Company and Group's long term strategic development and capital needs (including but not limited to strengthening financial structure, improving capital adequacy ratio, debt repayment, or one or several applications necessary for long term strategic development etc.) for future business growth. (b) Capital source:

17 Carry out cash capital increase by issuing 602,678,478 common shares through private placement. (c) The provisions of Article 43-6 of the Securities Exchange Law and Matters for Attention by Public Companies for the Processing of Private Securities Placement will be complied with, and the matters that need to be explained for private placement are as follows: 1. Basis and rationale for setting private placement price Based on relevant laws and regulations, the price of the private placement shall not be less than 80% of the higher of the following prices: (1) The simple arithmetic average of the closing price(s) of the Company's ordinary shares one, three or five business days (one of them shall be chosen) before the price setting day, minus stock and cash dividends and plus capital reduction. (2) The simple arithmetic average of the closing prices of the Company's ordinary shares 30 business days prior to the price setting day, minus stock and cash dividends and plus capital reduction. The shareholders meeting will authorize the board of directors after the shareholders meeting to determine the actual price setting date and the actual private placement price, which shall not be less than the level in the resolution of the shareholders meeting, based on specific individuals subscription status. 2. Selection of Specific Individuals The provisions of Article 43-6 of the Securities Exchange Law and the letter from the SFC dated June 13, 2002 with reference number (91) Tai-Tsai-Cheng-1 No shall be followed for the selection of the specific individuals. Since the Company has an after-tax net profit in recent years without an accumulated loss, only strategic investors will be introduced for this private placement. The Company will increase cash capital by issuing ordinary shares through private placement and the strategic investor will be China CITIC Bank Corporation Limited ( CITIC ). The selection method, purpose and expected benefit are as follows: (1) Selection method and purpose: Leverage the strategic alliance with CITIC to further setup operations and

18 business development in China: A. CITIC is the 9th largest bank and the 4th largest joint-stock commercial bank in China with asset size totaling RMB5.1 trillion at the end of It has over 1,300 branches and sub-branches domestically and over 40 overseas outlets in Hong Kong, Macau, New York, Los Angeles, Singapore, etc. B. CITIC is reputable and well-known in China and the Company and its subsidiaries can cooperate with CITIC to raise its brand awareness in China. C. Business development of corporate banking: the Company and its subsidiaries can leverage CITIC s extensive network in China to serve Taiwanese corporates in China. In addition, CITIC s wide corporate customer base of 356,000 can help expand the Company s customer base in China. CITIC and the Company can together service the cross-strait Taiwanese corporates and Chinese-owned corporates with corporate banking services. D. Business development of retail banking: CITIC has over 57 million retail customers and an AUM of over RMB 1 trillion. The company and its subsidiaries can leverage CITIC s extensive customer base to cross-sell co-brand credit card, wealth management, private banking, etc. E. Strengthen offshore banking services: CITIC can assist the Company and its subsidiaries to develop RMB-related services in Taiwan, China, Hong Kong, US and Southeast Asia. Both can collaborate to develop additional offshore banking services which include cross-border settlement, TMU, cash management, mutual fund (RQFII), Formosa bonds, etc. to expand overseas customers. (2) Rationale of private placement: Taiwan financial sector is highly competitive. To increase the competitiveness of the Company and its bank subsidiary in areas of product development and global financial services, overseas expansion is a must. In addition, to enhance the profitability and cross border competitiveness of the Company and its bank subsidiary, bringing in strategic investor

19 which has the asset scale and profitability is a must for the Company s overall competitiveness. (3) Expected benefit: CITIC will subscribe 602,678,478 common shares of the Company issued for capital increase. The funds from private placement are expected to strengthen the Company s financial structure and further business development. Through this cooperation, the Company can accelerate and expand the Company s overseas business scope to improve overall competitiveness. (4) Relationship between the Strategic Investor and the Company: The top 10 shareholders of CITIC are not Company or its affiliates and are listed below: Name of shareholders CITIC Group Corporation Share class A share, H share Shareholding ratio (%) Hong Kong Securities Clearing (Agent) Co., Ltd. H share China Securities Finance Co., Ltd. A share 1.86 Central Huijin Assets Management Co., Ltd. A share 0.58 China Construction Bank Co. Ltd. H share 0.36 Hebei Construction & Investment Group Co., Ltd. A share 0.07 National Social Security Fund 503 Portfolio A share 0.06 China Poly Group Corporation A share 0.06 Shares of Industrial and Commercial Bank of China - SSE 50 Exchange Traded Fund Agricultural Bank of China Co., Ltd. - E Fund Rui Hui Flexible Configuration Mixed Type A share 0.05 A share 0.05

20 Name of shareholders Initiating Securities Investment Fund Share class Shareholding ratio (%) Note: Company s subsidiary, Taiwan Life Insurance currently holds about 0.22% (H share) of the shares of CITIC Corporation Limited, the biggest shareholder and parent company of CITIC. (5) After the private placement with the strategic investor, there should be no issue relating to if there is a significant change in managerial control within the 1 year period immediately preceding the day on which the board of directors resolves on the private placement or if there will be a significant change in managerial control after the introduction of strategic investor through private placement. 3. Necessity of private placement (1) Reason for not adopting public offering: considering the quick, simple and convenient characteristics of private placement, which is good for achieving the purpose of introducing strategic investor, and the provision that negotiable securities in private placement cannot be transferred freely within three years can ensure long term cooperation and relationship between the Company and the strategic investor. Furthermore, private placement processing which has been approved by the board of directors based on the Company s business demand, will effectively improve the maneuverability and flexibility of fund raising. (2) Private placement quota: issuing 602,678,478 common shares. (3) Usage of funds from private placement and expected benefits: All the funds from the capital increase will be used to strengthen the Company s financial structure, improve the capital adequacy ratio, repay loans or meet the Company s needs for long-term strategic development (for one or any combination of the purposes listed above). After the capital increase, the Company s capital adequacy ratio is expected to improve and the net debt ratio and double leverage ratio are expected to reduce to help ensure the Company s steady business growth and benefit shareholders equity.

21 4. The privately placed ordinary shares will have the same rights and obligations as the Company s ordinary shares that have already been issued. However, according to the provisions in the Securities Exchange Law, the privately placed shares cannot be sold within three years after the share distribution date, except to the objects specified in Article 43-8 of the Securities Exchange Law. After three years from the share distribution date of the privately placed shares, a proposal will be brought up in a shareholders meeting for authorization from the board of directors to obtain from the Taiwan Stock Exchange Co., Ltd. a listing approval and apply for listing of the shares with the Financial Supervisory Commission based on the situation at that time. 5. If the share price, number of private placement shares, fund usage plan, planned use of funds, timeline, expected benefit and other matters need to be revised due to a change in the laws and regulations, the authority s opinion or a change of environment, a revision proposal that excludes the pricing principle will be raised in the shareholders meeting for authorization from the board of directors to handle it according to relevant provisions. 6. The Company plans to propose at the shareholders meeting for authorization from the chairman or his proxy to sign relevant documents and handle follow-up matters concerning the follow-up processing of the private placement. 7. Matters not mentioned above will be brought up in a shareholders' meeting for full authorization from the board of directors and/or the chairman to handle them based on relevant laws and regulations. c. This proposal was approved by the 34 th meeting of the 5 th term of the Board of Directors. Resolutions: D. Questions and Motions (Voting Items)

22 Attachment 1 CTBC Financial Holding Co., Ltd. Table of Comparisons between Amended and Original Provisions for The Article of Incorporation Amended provisions Original provisions Explanation Article5 The authorized capital of the company is NT$ 230 billion in 23 billion shares with a par value of Article 5 The authorized capital of the company is NT$ 230 billion in 23 billion shares with a par value of Add preferred share as the share class of the Company. NTD10 per share. The Board is authorized to issue the unissued shares in batches according to the needs, and some of them may be preferred shares. NTD10 per share. The Board is authorized to issue the unissued shares in batches according to the needs. 5 of Article 6: Not available The rights and obligations and other important issuing conditions of Class B Preferred Shares of the Company are as follows respectively: 1. The fiscal year-end earnings of the Company shall be applied to the following uses in order: payments of taxes, adjustments per financial and accounting principle, making-up of deficit, legal reserve, special reserve by law or reversal, the remainders shall first be applied to distribute the dividend of Class A Preferred Shares shall be distributed in the current year, and the cumulative undistributed dividend or the deficient dividend distributed This article is newly added. 1. Stipulate the dividend distribution order of Class B Preferred Shares pursuant to the provisions of Paragraph 1, Article 157 of Company Law. 2. Stipulate the distribution dividend and bonus fixed rate of Class B Preferred Shares pursuant to the provisions of

23 in previous years; and secondly, be applied to distribute the dividend of Class B Preferred Shares may be distributed in current year. 2. The dividend of Class B Preferred Shares takes eight percent annual rate as upper limit, and is calculated based on the issuing price per share, the dividend will be issued in cash once a year, after the general meeting has acknowledged the financial report every year, the Board of Directors will determine the base date for paying the dividend may be distributed in previous year. The distribution of dividend of issuing year and recovery year shall be calculated based on the actual issuing date of the current year. 3. The Company has independent discretionary power for the distribution of dividend of Class B Preferred Shares, if per annual accounting there is no earnings or the earnings is not sufficient for distributing the dividend of Class B Preferred Shares, or the distribution of dividend of Class B Preferred Shares will make the capital adequacy ratio of the Company lower than the minimum requirement stipulated by law Paragraph 1, Article 157 of Company Law. 3. Stipulate other matters of the rights and obligations of Class B Preferred Shares pursuant to the provisions of Paragraph 4, Article 157 of Company Law, describing that the undistributed dividend of Class B Preferred Shares is not cumulative. 4. Stipulate other matters of the rights and obligations of Class B Preferred Shares pursuant to the provisions of Paragraph 4, Article 157 of Company Law, describing that the Class B Preferred Shares does not involve in the earnings and capital reserve bonus of common share. 5. Stipulate the remaining assets distribution order and quota of Class B Preferred Shares pursuant to the

24 or competent authority, or in case of other circumstances, the Company may not distribute or cancel the dividend of Class B Preferred Shares, and it shall not constitute an event of default. If the issued Class B Preferred Shares is of non-cumulative type, the undistributed dividend or the deficient dividend distributed thereof will not be cumulated into the subsequent years with earnings for deferred reimbursement. 4. Apart from receiving the dividend as stated in Subparagraph 2 of this paragraph, Class B Preferred Shares are not normally entitled to receive any dividends on common shares accrued from allocation of profits and capital reserve. 5. The Class B Preferred Shareholders are entitled to receive the remaining assets to be allocated by the Company after Class A Preferred Shareholders and before the common shareholders. However, the amount of allocation shall not exceed the issuing value. 6. The Class B Preferred Shareholders do not have voting right and election right provisions of Paragraph 2, Article 157 of Company Law. 6. Stipulate the order and limit of exercising voting right by shareholders of Class B Preferred Shares, or that shareholders of Class B Preferred Shares have no voting right pursuant to the provisions of Paragraph 3, Article 157 of Company Law. 7. Stipulate other matters of the rights and obligations of Class B Preferred Shares pursuant to the provisions of Paragraph 4, Article 157 of Company Law, describing that the Class B Preferred Shares do not have conversion right, nor have redemption right. 8. Commend shareholders holding special shares for more than seven years pursuant to the

25 during the common Shareholders Meeting, but may be elected as directors, and have voting right in the Class B Preferred Shares Shareholders' Meeting and the Shareholders' Meeting concerning the rights and obligations of shareholders of Class B Preferred Shares. 7. Class B Preferred Shares cannot be converted to common shares, and the shareholders of Class B Preferred Shares are not entitled to request the company to recover the Class B Preferred Shares held by them. 8. Class B Preferred Shares has no maturity date, but the Company may determine the recovery date, and the recoverable date shall not be earlier than the second day 7 years after the issuing date. When recovering the issued Class B Preferred Shares in whole or in part, it shall be recovered according to the actual issuing price, for the Class B Preferred Shares unrecovered, the rights and obligations of issuing conditions as stated in preceding paragraphs shall still continue. If the Company determines to distribute dividend through a resolution in current year, as at the recovery date, the dividend provisions of Paragraph 4, Article 2 of CTBC Financial Holding Co., Ltd. Integrated Capital Adequacy Ratio Management Measures. Pursuant to provisions of Article 158 of Company Law, describe that the special shares issued by the company may be recovered, and pursuant to Paragraph 4, Article 157 of Company Law and the interpretation of Jing-Shang-Zi No Letter issued by Ministry of Economic Affairs on July 7, 2011, describe the recovery condition and time limit of special shares, and the type and amount of consideration shall be paid by the company.

26 shall be distributed shall be calculated based on the actual issuing date in current year. Regarding the issuing date and specific conditions of Class B Preferred Shares, upon actual issuing, Board of Directors is authorized to determine according to Articles of Incorporation of the Company and relevant laws and decrees, and based on the then capital market conditions and subscription intention of investors. Article 20: The term of the directors shall be three years. They may be re-elected at expiry. The directors shall be compensated for their duty as directors disregard the result of operations of the Company. The Board of Directors shall be authorized to determine the said compensation based on their participation, contribution and industry market level. In addition, the provisions of the Article 29 of the Article of Incorporation of the Company shall govern the compensation distribution for the profitable year(s). Article 29: If the Company makes a profit in the year (namely the profit before deducting the distributed employee remuneration and Article 20: The term of the directors shall be three years. They may be re-elected at expiry. The directors shall be compensated for their duty as directors disregard the result of operations of the Company. The Board of Directors shall be authorized to determine the said compensation based on their participation, contribution and industry market level. In addition, the provisions of the Article 29 of the Article of Incorporation of the Company shall govern the compensation distribution for the year(s) with earnings. Article 29: In order to continuously expand the scale and increase the profitability and in consideration of relevant laws and regulations, the Company Amend the texts synchronously by referring to Article In respond to the addition of 1 of Article 235 and amendment of

27 director remuneration from adopts residual dividend policy. pretax profit), after deducting The fiscal year-end earnings of accumulated losses, if it still has the Company shall be applied to the balance, based on the same basis, following uses in order: payments 0.05% and no more than 0.7% of taxes, adjustments per financial shall be allocated as employee and accounting principle, remuneration and director making-up of deficit, legal reserve, remuneration respectively. But special reserve by law or reversal, when the Company still has and preferred stock dividends. The accumulated losses, it shall reminders shall be applied to the reserve the compensation amount bonus of employees (0.05% of the in advance. remainders) and directors (1% of Board of Directors is authorized to the remainders). The 30% to 100% stipulate the employee of the balance, after the remuneration distribution measure. above-mentioned applications, shall When distributing employee be combined with the beginning remuneration in old shares or retained earnings for dividends and through issuing new shares, bonuses for the shareholders subject employees of affiliated company to approval by a shareholders may also be distributed to if meeting. conforming to the provisions of The Board of Directors shall be Company Law, and Board of authorized to establish a procedure Directors is authorized to stipulate for the distribution of bonus to specific measures thereof. employees. The employees of the subsidiaries, defined by the Company Law, may entitle the bonus when the bonus is paid in 1 of Article 29: (newly added stock shares of the Company and article) the Board of Directors shall be The Company, aiming to a authorized to establish the continued growth and increase pertaining procedure. profitability as well as to be in line The earnings distribution is based with the provisions of laws, adopts on cash and stock dividend a residual dividend policy. according to the business plan. The fiscal year-end earnings of the However, the cash dividend shall Company shall be applied to the not be less than 10% of the total following uses in order: payments distributable dividends. The above Article 235 and Article 240 in Company Law, it is hereby planned to coordinate to amend the Articles of Incorporation of the Company. 2. After the amendment of Company Law, employee and director remuneration items will no longer be included in earnings distribution table, hence contents of this article are divided into Article 29 (Specification for employee and director remuneration) and 1 of Article 29 (Specification for dividend policy). 3. Amend contents of Article 29: (1) Amend the "bonus of employee" into "employee remuneration", and adjust the allocation basis of employee and director

28 of taxes, adjustments per financial and accounting principle, making-up of deficit, legal reserve, mentioned cash dividend may be adjusted, for needs of operations, investments, acquisition, and by the remuneration from "after-tax profit" into "pretax profit". special reserve by law or reversal, amendment of laws, but no less than (2) The allocation ratio and preferred stock dividends, if it 1% of the total dividends. The of director still has earnings, the 30% to 100% adjustment, if any, shall be proposed remuneration is of the balance, after the by the Board of Directors and reduced from the above-mentioned applications, shall approved by a Shareholders' original "1%" to be combined with the beginning Meeting. The Company may "0.7%" as the retained earnings for dividends and retain the earnings that are less than bonuses for the shareholders subject NT$0.1 per share of cash dividend. to approval by a shareholders meeting. The earnings distribution is based on cash and stock dividend according to the business plan. However, the cash dividend shall not be less than 10% of the total distributable dividends. The above mentioned cash dividend may be adjusted, for needs of operations, investments, acquisition, and by the amendment of laws, but no less than 1% of the total dividends. The adjustment, if any, shall be proposed by the Board of Directors and approved by a Shareholders' Meeting. The Company may retain the earnings that are less than "upper limit". (3) According to the interpretation of Jing-Shang-Zi No Letter issued by Ministry of Economic Affairs, it is amended that the employee remuneration may be paid in old shares or through issuing new shares of Article 29 is the newly added article, summarizing contents related to dividend policy in original Article 29. NT$0.1 per share of cash dividend. Article 32 The Articles of Incorporation was initially established on June 29, Article 32 The Articles of Incorporation was initially established on June 29, Add the amendment date hereof and the 2001, the 1 st amendment on June 6, 2001, the 1 st amendment on June 6, times of amendment. 2003, the 2 nd amendment on August 2003, the 2 nd amendment on August 20, 2003, the 3 rd amendment on June 11, 2004, the 4 th amendment 20, 2003, the 3 rd amendment on June 11, 2004, the 4 th amendment

29 on June 10, 2005, the 5 th on June 10, 2005, the 5 th amendment on December 8, 2005, amendment on December 8, 2005, the 6 th amendment on June 9, 2006,; the 6 th amendment on June 9, 2006,; the 7 th amendment on June 15, the 7 th amendment on June 15, 2007, the 8 th amendment on June 2007, the 8 th amendment on June 13, 2008, the 9 th amendment on 13, 2008, the 9 th amendment on June 26, 2009, the 10 th amendment June 26, 2009, the 10 th amendment on June 10, 2011, the 11 th on June 10, 2011, and the 11 th amendment on June 28, 2012, the amendment on June 28, 2012, the 12 th amendment on June 21, 2013, 12 th amendment on June 21, 2013; a the 13 th amendment on December the 13 th amendment on December 20, 2013, the 14 th amendment on 20, 2013; and the 14 th amendment June 20, 2014; and the 15 th on June 20, 2014; and the 15 th amendment on June 29, 2015, and amendment on June 29, the 16 th amendment on June 24, 2016.

30 Attachment 2 The 2015 business report The drop in commodity prices and the slowdown of Chinese economic growth in 2015 had destabilized the financial market, increasing the risks and vulnerability of the global economy. Due to the lackluster growth of the global economy, Taiwan's export trading exhibited negative growth, which caused the economy to continue to plunge downward, rendering the 2015 GDP at merely 0.75%. In addition, due to the impact of the RMB target redemption forward (TRF), the Financial Supervisory Commission (FSC) continues to increase its control over related products and regulations, posing further challenges to the business environment of domestic financial institutions. However, despite these challenges, CTBC Holding delivered outstanding performances for the year. In 2015, thanks largely to two of its subsidiaries, namely: CTBC Bank and CTBC Life, CTBC Holding delivered an after-tax profit totaling NTD35.4 billion, indicating a strong execution and achievement of its income and expenditure budget. Going forward, CTBC Holding will continue to expand its presence in China, Japan, Hong Kong, Indonesia, the Philippines, and USA and interconnect them in a global network to provide comprehensive global financial services. Internally, CTBC group has always adopted cross-selling strategy as its business orientation to maximize the benefits offered by financial holding groups. CTBC Holding will also stay committed to its brand spirit, "We are family", and our brand value by being a "caring, professional and trustworthy" partner when serving customers. We aspire to become the best, most trusted Chinese financial institution not only in Taiwan, but also in Asia and the rest of the world. Business plans and results (1) Rapid growth in life insurance with the acquisition of Taiwan Life Insurance CTBC Holding successfully acquired Taiwan Life Insurance on October 15 th, 2015, after which CTBC Life under CTBC Holding merged with Taiwan Life Insurance on January 1 st, This merger further diversified the insurance sales channel, expanded the scope of service, and increased the diversity of products offered by CTBC. In response to government policies and the growing digital trend in recent years, Taiwan Life has introduced online services and offered new offshore insurance unit (OIU) services. Post the merger, Taiwan Life, with greater economies of scale focuses on valuable products to increase company value and through cross-selling, achieve greater group synergy.