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The objection opinion of independent director Mr. Jung-Chun Pan on discussion 13 in 17th meeting of the 24th term of the board of directors.
- 1.Meeting date of the board of directors or the compensation committee:2016/03/17
- 2.Contents of the resolution made by the board of directors or compensation committee (please enter〝board〞or〝 compensation committee 〞): board of directors
- 3.Cause of occurrence:WHEREAS, to meet with the requirement of business development and the amendment of relevant laws and regulations, the bank intends to modify articles of incorporation. NOW, THEREFOR, submit to the board of directors.
- 4.Name and resume of the independent director or the member that expressed objection or reservation: Mr. Jung-Chun Pan (the independent director of CHB)
- 5.Contents of the objection or reservation:
- 【The objection opinion of raising authorized capital from ninety billion to one hundred and ten billion】
- (1)Due to the ongoing litigation between the Taishin Financial Holding Co., Ltd and Ministry of Finance, it is inappropriate to raise the authorized capital of the articles of incorporation. The revision might alter the ownership structure or affect the outcome of the said litigation. Further, it might impair the trust and arouse much more controversy between the Taishin Financial Holding Co., Ltd and Ministry of Finance. So far the competent authority, namely, the Ministry of Finance shall remain as a caretaker status. I hope the Bank shall not raise any major alteration decision during this handover period and hurt each other even more.
- (2)Considering the bank’s After tax EPS in 2015 is about 1.38 NT, it is estimated that the affordable dividends of the bank is about 0.95 NT per share. Therefore, according to the latest authorized capital, the bank should be sustainable to pay the Stock dividend, which is 0.6 NT per share at most. Moreover, according to the discussion 4 in 17th meeting of the 24th term of the board of directors, it is mentioned that all index, which is related to capital adequacy ratio of the bank shall be in conformity with the requirement of regulation and law this year (2016). As a result, it is obviously that there is no urgent need to revise the bank’s articles of incorporation.
- (3)If the purpose of raising authorized capital is to keep up with the business in China, based on the uncertain future of China’s economy, it is appropriate to take fully enough time to plan and evaluate carefully. The bank should wait the result of the litigation, the bank can revise the articles of incorporation to raise authorized capital at that time once the bank has new demand of capital.
- (4)Please note the objection above of this motion in the meeting minutes and publish pursuant to laws and regulations.
- 6.Countermeasures:N/A
- 7.Any other matters that need to be specified:
- THE RESPONSE OF CHB (the bank) AS FOLLOWS：
- (1)As required by the competent authority, from 2019, tier 1 capital adequacy ratio shall be up to 8.55%, and in the event of setting up overseas presences, tier 1 capital adequacy ratio shall be increased 2% by year. At present, as required by laws and regulations, tier 1 capital adequacy ratio shall be up to 6.625%, it would become 8.625% by plus 2%. In order to develop overseas business (For example the motion of setting up subsidiaries in Chinawhich has been adopted by board of directors), tier 1 capital of the bank might be lower than the requirement by law.
- (2) At present, the difference between paid-in capital and authorized capital is merely over five billion, there might be no remainder for the bank, upon capitalization of retained earnings adding capital in this year (2016). In the event of changing in market condition in the future, the bank should hold the interim meeting of shareholders to modify and alter the articles of incorporation, it would be too late to meet the market and also against business development.
- (3)This motion is really presented basing on the development of the bank’s business. In deed it has nothing to do with the litigation between Taishin Financial Holding Co., Ltd and ministry of finance. Besides, if the bank plans to raise its authority capital in the future, the bank must follow the specific lawful procedures, and moreover it will not affect the structure or the benefits of shareholder.
- (4)The board of directors, entrusted by shareholders, shall not only act in accordance with the resolutions approved by the meeting of shareholders, but also act in accordance with Company Act, the articles of incorporation, Minutes, and so on. The board of directors should make decision based on the best benefits of the bank and all shareholders. And this motion follows above principles truly.
- (5)Nowadays financial supervisory institutions worldwide all have specific laws and regulations of capital adequacy ratio strictly. As a result, to limit the raise of capital will surely directly or indirectly limit the development of the bank’s business and affect shareholder’s benefit. It is the bank’s duty to try the best to develop business and make more profit for shareholders. Meanwhile, the bank needs to commit the requirement of capital adequacy ratio of competent authority as well. Comparing with the bank’s capital adequacy ratio, it is relatively lower than otherbanks. As a result, this motion is approved by due process.
- On this discussion, the resolution of 17th meeting of the 24th term of board of directors as follows: ”All directors adopt the motion except for managing director Mr. Julius Chen, independent director Mr. Jung-Chun Pan, director Mr. Cheng Ching Wu.”
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