CSBC Corporation, Taiwan
Directions for Asset Acquisition or Disposal
Enacted under the Document of Chuan-Cai-Zih-Di No. 0970003187 dated Jul. 24, 2008
Amended under the Document of Chuan-Cai-Zih-Di No. 0990001285 dated Jun. 7, 2010
Chapter 1: General Principles
Article 1 These Directions are provided in accordance with Paragraph 1 , Article 6 of
the Regulations Governing the Acquisition and Disposal of Assets by
Public Companies (hereinafter referred to as the “Regulations”)
promulgated by the Financial Supervisory Commission, Executive Yuan
(hereinafter referred to as the “FSC”).
Article 2 The term "assets" as used in these Directions includes the following:
1. Investments in stocks, government bonds, corporate bonds, bank
debentures, securities representing interest in a fund, depositary receipts,
call (put) warrants, beneficial securities, asset-backed securities and
(principal-protected) structured notes
2. Real property and other fixed assets
3. Memberships
4. Patents, copyrights, trademarks, franchise rights, and other intangible
assets
5. Derivatives
6. Assets acquired or disposed of in connection with merger, demerger,
acquisition, or transfer of shares in accordance with law
7. Other major assets
Article 3 Terms used in these Directions are defined as follows:
1. "Derivatives": Forward contracts, options contracts, futures contracts,
leverage contracts, 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 merger, demerger, acquisition, or
transfer of shares in accordance with law": Refers to assets acquired or
disposed through merger, demerger, or acquisition conducted under the
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Business Mergers and Acquisitions Act, Financial Holding Company Act,
Financial Institutions Merger Act and other acts, or to transfer of shares
[from another company] through issuance of new shares of its own as
the consideration thereof (hereinafter "transfer of shares") under
Paragraph 6, Article 156 of the Company Act.
3. "Stakeholder": As defined in Statement of Financial Accounting
Standards No. 6 published by the Accounting Research and
Development Foundation of the R.O.C. (hereinafter "ARDF").
4. "Subsidiary": As defined in Statements of Financial Accounting
Standards No. 5 and 7 published by the ARDF.
5. "Professional appraiser": Refers to a real property appraiser or other
persons duly authorized by law to engage in the value appraisal of real
property or other fixed assets.
6. "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 dates that can confirm the counterpart and
monetary amount of the transaction, whichever date is earlier; for
investment for which approval of the Competent Authority is required,
the above date or the date of receipt of approval by the Competent
Authority shall apply, whichever is earlier.
7. "Mainland area investment": Refers to investments in China approved by
the Ministry of Economic Affairs Investment Commission or conducted
in accordance with the provisions of the Regulations Governing the
Approval of Investment or Technical Cooperation in Mainland China.
8. Within one year: A period of one year prior to the date on which the
acquisition or disposal of asset or the actual transaction takes place.
9. The “financial statement of the latest period” shall mean the financial
statement, audited and certified by a certified public accountant,
disclosed as required by the laws, prior to the acquisition or disposal of
asset by a company.
Article 4 The professional appraisers and their officers, certified public accounts,
attorneys, and securities underwriters that provide the CSBC with appraisal
reports, certified public accountant's opinions, attorney's opinions, or
underwriter's opinions shall not be a stakeholder of any party in the
transaction.
Article 5 Where the CSBC acquires or disposes of assets through court auction
procedures, the evidentiary documentation issued by the court may be
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substituted for the appraisal report or CPA opinion.
Article 6 The amendment of these Directions or the acquisition or disposal of a
particular asset approved by the board of directors of CSBC in accordance
with these Directions or other laws shall take the opinions of all
independent directors into consideration during the discussion in the
meeting of the directors. All objections or qualified opinion raised by an
independent director or other directors, including written statements, shall
be stated in the minutes of the directors’ meeting, and such minutes shall be
delivered to all independent directors and supervisors.
Chapter 2: Handling Procedures
Section 1: Prescription of acquisition or disposal procedures
Article 7 Appraisal procedure
1. The net value per share, profitability, future development potential,
market interest rates, coupon rates of bonds, debtor’s credit of debt, and
current price of the negotiable securities not traded at the stock exchange
market or over the counter market when acquiring or disposing the said
securities.
2. The acquisition or disposal of the negotiable securities already traded at
the stock exchange market or over the counter market shall be
determined according to the current stock equity or bond price.
3. The acquisition or disposal of other assets other than the assets
mentioned in the above two subparagraphs may be conducted through
price inquiry, price comparison, price negotiation or open tender offer,
with considerations of the respective announced present value, assessed
present value, or actual closing price of neighboring real estate. The
acquisition or disposal in compliance with the applicable laws and the
requirement of professional appraisal report as stipulated by this
Procedure shall also consider the price appraisal report provided by a
professional appraiser.
Article 8 Procedure for Acquisition or Disposal of Assets
1. The undertaking unit responsible for the acquisition or disposal of assets
shall review the reason, subject, opposite party of the transaction,
transfer price, payment terms and price reference for such an acquisition
or disposal, and submit such a matter to the competent unit for decision,
whereby the acquisition or disposal shall be executed by the unit defined
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in Paragraph 2 of this Article.
2. The executive unit of the CSBC concerning long-term and short-term
investments in negotiable securities and derivatives shall be the financial
department. The executive units concerning real estate and other fixed
assets shall be defined by the Directions for Management of Fixed
Assets of the CSBC. Asset investments other than negotiable securities,
real estate and other fixed assets shall be first reviewed by the planning
unit before it may be executed.
3. The stipulations concerning the control operation provided by the
Directions:
(1)
Investment in current and non-current financial products:
1. The re-investment and the disposal of the respective stock equity
for the purpose of business shall require approval by the board of
directors.
2. The low-risk investment subjects acquired for disposed, such as
government bond, company bond, financial bond, domestic or
foreign bond fund, domestic or foreign currency fund, negotiable
certificate of deposit, short-term commercial paper, and bank
acceptance bill, for the purpose of fund dispatching, shall be
solely handled by the managing department authorized by the
“Transaction and Handling Procedures for Financial Instruments
of CSBC”.
3. A transaction of investment in other financial products with a total
amount, per transaction or accumulated in one year, exceeding
TWD 100 million shall require approval from the board of
directors. The same with a total amount under TWD 100 million
shall be solely handled by the authorized managing department,
and a report after the transaction shall be submitted to the next
meeting of the board of director.
(2)
Real estate and other fixed assets:
Follow Article 10 and Section 2 of the Directions.
(3)
Other assets:
To be approved by the president unless otherwise stipulated by the
Company Act, Business Mergers And Acquisitions Act or other laws or the
Articles of Incorporation of the CSBC and Sections 3 and 4 of the
Directions.
Article 9 The total amount of re-investment, the total amount of negotiable security
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investment, limit of the amount of particular negotiable securities, and the
total amount of the real estate not for business use, of the CSBC or its
subsidiary, shall comply with the following regulations:
1. The total amount of re-investment by the CSBC may not exceed 40% of
the paid-up capital of the CSBC, and the total amount of investment
other than ship building and ship repair may not exceed 10% of the
paid-up capital of the CSBC. The total amount of negotiable security
investment may not exceed 10% of the paid-up capital of the CSBC. The
limit of the amount of investment in particular negotiable securities may
not exceed 2.5% of the paid-up capital of the CSBC and 10% of the
paid-up capital of the subject company invested.
2. Other than the subsidiary of which the primary business is investment, a
subsidiary may not divest with an amount that exceeds its paid-up capital,
may not invest in other negotiable securities with an amount that exceeds
40% of its paid-up capital, may not exceed the limit, which is both 10% of
paid-up capital of the respective subsidiary and 10% of paid-up capital of
the subject company invested, on the amount of investment on particular
negotiable securities.
3. The total amount of the real estate acquired by the CSBC or its subsidiary
not for business use may not exceed 10% of paid-up capital of the
respective entity.
The negotiable securities mentioned in the above Paragraph do not include
the low risk investment subjects acquired or disposed for the purpose of
financial dispatching mentioned in Item 2, Subparagraph 1, Paragraph 3 of
Article 8.
Article 10 Other than the transactions with government agencies, buildings on own
land, buildings on leasehold, or business machinery acquired or disposed,
the acquisition or disposal of the real estate of other fixed assets with a
transaction amount exceeding TWD 300 million shall require an appraisal
report issued by a professional appraiser in advance and the compliance
with the following regulations:
1. A transaction of which price reference is a limited price, specific price
or special price for an extraordinary reason shall require approval from
the board of directors in advance. The same regulation applies to the
change of terms and conditions of future transaction.
2. A transaction with an amount that exceeds TWD 1 billion shall require
professional appraisals from at least two appraisers.
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3. Any of the followings that applies to the appraisal made by the
professional appraiser shall be submitted to a certified public
accountant in accordance with the Statements on Auditing Standards
No. 20 promulgated by the Accounting Research and Development
Foundation for opinions pertaining to the reason of discrepancy and
adequacy of transaction price:
(1) More than 20% of discrepancy between the appraised price and the
transaction price; or
(2) More than 10% of discrepancy in appraisals made by at least two
professional appraisers.
4. For appraisal to be conducted before the contract date, an appraisal
report dated within three months before the contract date is required.
However, for a contract to which an applicable announcement of the
present value within six months is available, such a contract requires
only a statement of opinion issued by the original professional
appraiser.
The determination of price of the acquisition or disposal of the real estate
or other fixed assets other than the assets abovementioned shall first refer
to the announced present value, assessed value, and transaction price of
neighboring real estate or the appraisals made by more than two
professional appraisers.
Article 11 The latest financial statement issued by the subject company and audited
or certified by an accountant shall be acquired as reference for transaction
price before acquiring or disposing negotiable securities of the said
subject company, and additional opinions concerning the fairness of the
transaction price made by a certified public accountant are also required
for the said acquisition or disposal with a total amount that exceeds TWD
300 million, unless the open offer of the subject securities may excite the
market or otherwise stipulated by the FSC.
The exceptions referred in the above proviso shall mean:
1. acquisition of negotiable securities with cash for the purpose of
establishment initiation or fundraising;
2. cash capital increase by a company participating in the subscription of
the subject company through the mean of issuing negotiable securities
at face value in accordance with the applicable laws;
3. participating in a re-investment by subscribing 100% of the subject
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company being invested and issuing negotiable securities to increase
4.
5.
6.
7.
8.
cash capital;
trading listed, OTC and emerging negotiable securities at a stock
exchange market or OTC market;
government callable or puttable bond;
domestic or foreign fund;
listed or OTC corporate stock acquired or disposed in accordance with
the regulations for bidding or auction of listed or OTC securities
stipulated by the Securities Exchange or the GreTai Securities Market;
acquiring negotiable securities by subscribing shares for cash increase
offered by a listed company, and the negotiable securities acquired is
not private placement of securities;
9. subscribing fund prior to the establishment of such a fund in
accordance with Paragraph 1, Article 11 of the Securities Investment
Trust and Consulting Act and the SFC Order of
Jin-Guan-Jheng-Sih-Zih-Di No. 0930005249 dated November 1, 2004;
10. Subscribing or redeeming domestic private placement of securities,
provided that the trust agreement has stated the investment strategy its
scope of investment is the same as public offering of fund, with
exclusions of security trust transaction and the product positions that
relate to non-offset securities;
11. Other situations stipulated by the SFC.
Article 12 The CSBC’s acquisition or disposal of membership or intangible assets
with an amount that exceeds TWD 100 million shall require the opinions
from a certified public accountant on the reasonability of the transaction
price, and such a CPA shall comply with the Statements on Auditing
Standards No. 20 promulgated by the Accounting Research and
Development Foundation.
Section 2: Acquiring real estate from a stakeholder
Article 13 The real estate that the CSBC purchases from or exchanges with a
stakeholder shall comply with the previous Section and this Section and
evaluate the reasonability of the terms and conditions of the said
transaction. When judging if the opposite party of the said transaction is a
stakeholder, attention shall be paid to the legal formality and the practical
relationship.
Article 14 The CSBC may not acquire real estate from a stakeholder before
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submitting the following information to the board of directors and
supervisors for approval:
1. The purpose, necessity, and expected benefit of the acquisition of the
real estate;
2. The reason for selecting the stakeholder as a transaction party;
3. The information concerning the evaluation on the reasonability of the
terms and conditions of the transaction in accordance with Article 15
and Article 16;
4. The date, price, and transaction party with which the stakeholder
acquires its real estate, and the relationship among the said transaction
party, the stakeholder and the CSBC;
5. The cash income/expenditure estimate of every month for one year in
the future starting from the month in which the contract is to be made,
and the evaluation on the necessity of the transaction and the
reasonability of the use of capital;
6. Limitations and other important agreements for the transaction.
When proposed to the board of directors as stipulated above, full
consideration shall be given to the opinions of all independent directors.
Any objection or qualified opinion from the independent directors shall
be stated on the minutes of the meeting of the board of directors.
Article 15 The followings shall be adopted to evaluate the reasonability of the
transaction cost when the CSBC acquires real estate from a stakeholder:
1. The necessary interest of capital and the cost to be borne by the buyer
shall be added to the price of transaction with a stakeholder. The
necessary interest of capital shall mean the weighted average interest
rate incurred on the mortgage made in the year of the asset acquisition
from a stakeholder, and such interest rate may not be higher than the
maximum interest rate of loan for non-financial business announced by
the Ministry of Finance.
2. If the stakeholder has ever placed a pledge on the property in question
for a loan from a financial institute, the assessed value of the said
property for loan decision by the said financial institute shall be
considered, and the actual accumulated loan released for the said
property by the said financial institute shall exceed 70% of the total
assessed value, and the load has started for more than one year. This
Paragraph does not apply if the borrow is a stakeholder to the said
financial institute.
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If the land and building of the same property is to be purchased
concurrently, the transaction costs for the land and building shall be
assessed separately with any of the above methods.
The CSBC’s acquisition of real estate from a stakeholder shall require a
secondary review and opinion from a CPA in addition to the assessment of
cost of real estate as stipulated in Paragraph 1 and Paragraph 2.
The above three Paragraphs shall not apply if:
1. The stakeholder receives the real estate through inheritance or
donation;
2. The time when the stakeholder acquires the real estate through a
contract is more than five years from the contract date of the
transaction;
3. The real estate is acquired from the stakeholder through a joint
construction contract.
Article 16 Article 17 shall apply of the value assessed in accordance with Paragraph
1 and Paragraph 2 of the previous Article is lower than the transaction
price, unless the following reasons exist and objective evidence and
practical and reasonable opinions from professional real estate appraisers
and CPAs are presented:
1. The stakeholder acquires an undeveloped land or a leasehold, then
builds buildings on such a land, and is able to prove that any of the
following conditions is satisfied:
(1) The value of the undeveloped land is assessed in accordance with
the methods stipulated above, reasonable construction profit is
included in the construction cost to the stakeholder of the building,
and the total amount exceeds the factual transaction price. The said
reasonable construction profit shall mean the average gross profit
ratio from the construction department of the stakeholder for the
past three years or the latest gross profit ratio among the
construction industry announced by the Ministry of Finance,
whichever is lower.
(2) The transaction, closed within one year and to which the
stakeholder is not involved, regarding another floor of the same
property, or other nearby property, with similar space and terms
and conditions and the price tiers of floor and area that fall within
the common practice of real estate transaction.
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(3) The lease, made within one year and to which the stakeholder is
not involved, regarding another floor of the same property with
terms and conditions and the price tiers of floor and area that fall
within the common practice of real estate lease.
2. The CSBC is able to prove that the terms and conditions and space of
the real estate purchased from the stakeholder are similar to the nearby
property purchased within one year from other than the stakeholder.
The said closed transaction in the nearby area shall mean the same
property or the property on the adjacent block that falls within 500 meters
of radius or with an announced present value similar to that of the real
estate in question. The said similar space shall mean principally the space
of a property, closed not with the stakeholder, not less than 50% of the
space of the real estate in question. The said one-year period shall mean
the time period of one year prior to the date on which the purchase of the
real estate in question takes place.
Article 17 The followings are required for the purchase of real estate by the CSBC
from a stakeholder in accordance with Article 15 and Article 16 and the
results of the appraisal are lower than the transaction price:
1. The difference between the real estate transaction price and the
assessed cost shall be listed as special earning surplus according to
Paragraph 1, Article 41 of the Securities and Exchange Act and may
not be distributed or regarded as capital addition for share allotment.
2. The supervisors shall comply with Article 218 of the Company Act.
3. The Subparagraphs 1 and 2 shall be reported in the shareholders’
meeting and the transaction details shall be disclosed in the annual
report and the public prospectus.
The special business surplus listed in accordance with the above regulation
may be used only if the asset purchased with high price has been listed as
depreciation loss or disposal or has been adequately compensated or
recovered or other proofs are available to prove that such use is not
unreasonable and is approved by the FSC.
If there are other proofs that prove the transaction of the real estate the
CSBC acquired from a stakeholder does not conform to normal business
practices, the above two paragraphs shall apply.
Section 3: Transaction of Derivatives
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Article 18 The followings are the principles and guidelines for the CSBC’s
engagement in derivative transactions as well as the risk management
measures and audit practices required:
1.
Transaction principles and guidelines:
(1) Operation and hedging strategy: The CSBC’s engagement in
derivative transaction shall be limited to non-business and require
the adaptation of risk hedging principles. All concerned units shall
duly fulfill their respective responsibility, maintain risk management
and submit assessment reports periodically.
(2) Transaction types: The derivatives that the CSBC currently trades
are limited to forward exchange agreements, foreign exchange
options, currency exchange, interest rate exchange, and hedge
transactions that the operation may require.
(3)
Responsibilities:
1. Finance department: The finance department is the execution unit
of derivative transactions and shall control the general position
and the domestic and foreign financial developments for the
CSBC, engage in transition at the appropriate times within the
amount authorized, and control the cash flow of the position
placed into the transaction to reduce future settlement risk. The
finance department shall submit the receipts and related
information of the transactions in which it engages to the
accounting department for record keeping.
2. Accounting department: The accounting department shall
faithfully record the receipts submitted to it and adopt the
generally accepted principles of accounting.
(4) Performance appraisal: After the account closing at the end of every
month, the accounting department shall compile a statistic table that
represents the current loss/gain as the result of the actual settlements
of derivative contracts that take place within the same month and
stated on the accounting records, and submit such a statistic to the
finance department and the responsible executive vice president as
the reference of performance appraisal.
(5)
Total value of contract and limit of loss:
1. The total value of foreign exchange agreements and currency
exchange agreements shall be limited up to 50% of the net
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position of the long term or short term foreign exchange
transactions estimated by the CSBC. The total value of interest
rate exchange agreements shall be limited up to the total amount
of the long term liability of the CSBC.
2. The loss of all or individual agreements of derivative transactions
may not exceed 20% of the amount of all of individual
agreements.
2. Risk management measures:
(1) The scope of risk to be managed shall consider the followings and
take proper preventive measures:
1. Credit risk: The risk that the opposite party of a transaction fails
to perform the contract and result in loss.
2. Market risk: The risk of loss due to fluctuation of market price of
the derivatives.
3. Liquidity risk: The risk of commodity market transaction depth
and cash-out settlement at a reasonable market price, and the risk
of fund dispatching for the due settlement in the future.
4. Cash flow risk: To ensure the stability of cash turnover of the
CSBC, the CSBC’s fund used in derivative transactions shall
consider the cash flow and the need for funds according to the
future cash receipt/expenditure estimates.
5. Operational risk: Operation risks such as negligence, poor
supervision, fraud, and poor management.
6. Legal risk: Risks that may result in losses due to contract
ambiguity, poor authorization and discrepancy between laws and
their respective interpretation.
(2) The positions of transaction dealer and the administrative personnel
in charge of confirmation and settlement shall be assumed by the
finance department personnel and concurrent position is not allowed.
The transaction dealer shall submit the transaction receipts or
agreements (contract notes) to the confirmation personnel, who shall
reconcile with the correspondent bank and acknowledge with the
settlement personnel before forwarding the records to the
accounting department for entries. The accounting department shall
from time to time reconcile or confirm the records with the
correspondent bank.
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(3) The assessment, supervision and control personnel of risk must be
the personnel from the departments other than the departments
abovementioned and shall report to the board of directors or the high
rank officer not responsible for the decision of the transaction or
position.
(4)
Authorized amount and level:
1. Depending on the condition of the business and risk position of
the CSBC, the authorized amounts are as follows:
Authorization level
Amount of single deal
Daily total amount
President
USD 10 mil. or equiv.
USD 30 mil. or equiv.
Executive vice
USD 5 - 10 mil. or equiv.
USD 10 mil. or equiv.
president or senior
(exclusive)
(exclusive)
USD 0 - 5 mil. or equiv.
USD 5 mil. or equiv.
(exclusive)
(exclusive)
vice president
Finance director
2. The authorization given shall be recorded in the finance
department business report to the board of directors.
(5)
Periodical assessment and abnormality handling:
1. The finance department shall at least once per week assess the
positions on hand and at least twice per month assess the
necessary hedge transactions. The assessment reports shall be
submitted to high rank officers authorized by the board of
directors.
2. The high rank officers authorized by the board of directors shall
verify the compliance of the performance of derivative
transactions to the pre-determined strategy and the tolerance of
risk every quarter. The quarterly assessments shall be recorded in
the finance department business report to the board of directors.
3. The high rank officers authorized by the board of directors shall
periodically assess the adequacy of currently adopted risk control
procedure and verify the compliance to the said procedure.
4. The high rank officers authorized by the board of directors shall
monitor the transactions and their loss/profit, take necessary
measures in reaction to the abnormality when the assessed market
price exceeds the limit of loss, and immediately report to the
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board of directors, of which independent directors shall present
and address their opinions.
3. Internal audit:
The internal audit personnel shall periodically verify the adequacy of the
internal control and produce audit reports regarding the transaction
department’s compliance to the regulations for derivative transactions. If
major violation is found, a written notice shall be submitted to all
supervisors and independent directors.
Article 19 A journal for the CSBC’s derivative transactions shall be in place and
keep detailed records of the type, amount, date of approval of the said
derivative transactions, and the items stipulated by Item 1 and Item 2,
Subparagraph 5, Paragraph 2 of Article 18.
Section 4 Merger, spin-off, acquisition or assignation of shares
Article 20 Prior to the decision regarding a merger, spin-off, acquisition or
assignation of shares of the CSBC is made by the board of directors, a
CPA, attorney or security underwriter shall be retained to advise the board
of directors for approval concerning the reasonability of share exchange
ratios, price of acquisition, cash distributed to shareholders or other
property.
Article 21 The CSBC shall produce a letter to the shareholders, along with expert
opinions and shareholders' meeting notice abovementioned, to address
important merger, spin-off, acquisition or related issues as reference for
the shareholders to determine the approval of the said merger, spin-off or
acquisition, unless otherwise stipulated by laws that exempt a
shareholders’ meeting to determine the said merger, spin-off or
acquisition.
The CSBC shall immediately make a public statement to address the
cause, follow-up actions, and estimated date to summon a shareholders’
meeting if it fails to summon or conclude a shareholders’ meeting due to
insufficient quorum, voting shares or other legal restriction, or a proposal
in a shareholders’ meeting.
Article 22 The CSBC’s personnel involving or knowing its plan of merger, spin-off,
acquisition, or share assignation shall produce a written non-disclosure
agreement that prohibits such personnel from disclosing the plan to
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outsiders and prohibits such personnel from purchasing or purchasing
through a proxy the stock or equivalent securities of the companies
concerned in the said merger, spin-off, acquisition, or share assignation.
Article 23 Unless otherwise stipulated by laws or approved by the FSC in advance
for special reason, the CSBC shall summon a meeting of the board of
directors and a shareholders’ meeting to determine on the issues regarding
the merger, spin-off or acquisition on the same date of the said merger,
spin-off, or acquisition.
Unless otherwise stipulated by laws or approved by the FSC in advance
for special reason, the company participates in the share assignation shall
summon a meeting of the board of directors on the same date.
The CSBC shall record the following data concerning a merger, spin-off,
acquisition or share assignation in written details and keep such record for
five years for inspection:
1. Basic data of personnel: including the job title, name, and ID number
(passport number for foreigners) of the personnel who participate in or
execute the plan of the merger, spin-off, acquisition, or share
assignation prior to public disclosure.
2. Important dates: including the dates of the signing of letters of intent,
memorandums, retaining financial or legal consultants, signing of
contracts, and meetings of the board of directors.
3. Important document and meeting minutes: including the plans of
merger, spin-off, acquisition, or share assignation, letters of intent,
memorandums, important contracts and minutes of the meeting of the
board of directors.
Materials mentioned in Subparagraphs 1 and 2 of the abovementioned
Paragraph shall be submitted to the FSC in the required format through
the FSC online report system within two days from the resolution being
made by the board of directors.
Article 24 The share exchange ratio or acquisition price regarding to the CSBC’s
merger, spin-off, acquisition or share assignation may not be changed, and
the terms and conditions that allow such a change regarding the said
merger, spin-off, acquisition or share assignation shall be stated on the
respective agreement, unless:
1. Cash capital increase, issuing of convertible bond, stock dividends,
issuing of equity warrant bond, preferred shares with warrants, stock
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option certificates, and other equivalent securities.
2. Action that impacts the CSBC’s financial operation, such as disposal of
major assets.
3. Situations that impacts the CSBC’s shareholder’s equity or stock price,
such as major disasters or major changes of technology.
4. Any of the companies that participate in the merger, spin-off,
acquisition, or share assignation repurchases treasury stock in
accordance with the laws as an adjustment.
5. Changes of the main entity or number of companies participating in the
merger, spin-off, acquisition, or share assignation.
6. Terms and conditions of change have been stated on the agreement and
disclosed to the public.
Article 25 The agreement of a merger, spin-off, acquisition, or share assignation in
which the CSBS participates shall clearly state the rights and obligations
of the CSBC and the following details:
1. Handling of breach
2. The principles that deal with the equity equivalent securities issued or
the treasury stock already repurchased by the company that is to be
dissolved or spun off due to merger.
3. The principles that deal with the quantity of the treasury stock that may
be legally repurchased by the participating companies after the base
date for share exchange.
4. Methods to handle the change of the main entity or the
increase/decrease of the number of participating companies.
5. Estimated progress of execution and estimated completion date of the
plan.
6. The scheduled date of a shareholders’ meeting, as required by laws, in
response to the failure of completing the plan as scheduled.
Article 26 If any party involved in the merger, spin-off, acquisition or share
assignation in which the CSBC participates plans for a merger, spin-off,
acquisition or share assignation with another company after the public
disclosure, the procedure or legal proceeding already completed
concerning the original merger, spin-off, acquisition or share assignation
shall be redone by all participating companies, and the participating
companies are not required to summon a shareholders’ meeting for
re-determining, except when the number of participating companies
decreases and the shareholders’ meeting has reached a resolution that
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authorizes the board of directors to change the authorization.
Article 27 If a company that participates in the merger, spin-off, acquisition or share
assignation, in which the CSBC also participates, is not a public company,
the public company shall enter into an agreement with such a non-public
company and comply with Articles 22, 23, and 26.
Chapter 3 Information disclosure
Article 28 The information concerning the asset that the CSBC acquires or disposes
shall be announced and disclosed at the website designated by the FSC
according to the nature of the information as well as the format required
by the FSC within two days from the date of occurrence if the said asset
matches any of the following conditions:
1. The asset is acquired from a stakeholder;
2. The asset is an investment in Mainland China;
3. The asset concerns a merger, spin-off, acquisition or share assignation;
4. The asset concerns a derivative that results in loss exceeding the loss
limit of all or individual agreements as stipulated in Item 2,
Subparagraph 5, Paragraph 1, Article 18.
5. The transaction of the asset, other than the four types of assets
abovementioned, exceeds TWD 300 million, unless:
(1) The transaction concerns government bond;
(2) The transaction concerns bonds with repurchase or reverse
repurchase agreements;
(3) The nature of the asset acquired or disposed is commercial
machinery, the opposite party to the transaction is not a
stakeholder, and the amount of the transaction does not reach
TWD 500 million;
(4) The transaction concerns the real estate that is acquired through
contracted construction on own land, joint construction with split
ownership of the building, joint construction with proportional
ownership, or joint construction for separate sale, and the
transaction amount that the CSBC plans to invest does not reach
TWD 500 million.
The calculation of the amounts of the transaction abovementioned shall be
made according to the following conditions, but the part that has been
announced to the public in accordance with the Directions may be
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excluded from the calculation:
1. The amount of each transaction;
2. The amount accumulated within one year from the acquisition or
disposal of the property of similar nature with the same transaction
party;
3. The amount accumulated within one year from acquiring or disposing
(separately accumulated) the properties of the same real estate
development plan;
4. The amount accumulated within one year from acquiring or disposing
(separately accumulated) the same securities.
The CSBC shall upload the status of derivative transactions, conducted as
of the end of the previous month by the CSBC and the subsidiary not
domestically listed, in the format stipulated by the FSC to the information
announcement website designated by the FSC before the tenth day of the
current month.
The CSBC shall re-announce all items if correction is required for any
error or omission in the items of the mandatory announcement.
Unless otherwise stipulated by laws, the CSBC shall keep the agreements,
minutes, notes, appraisal reports, opinions of accountant, attorney or
security underwriter concerning the asset acquired or disposed by the
CSBC for at least five years.
Article 29 After the mandatory announcement as stipulated above, the CSBC shall
also upload the information relating to any of the followings to the
announcement website designated by the FSC within two days from the
occurrence:
1. Change, termination, or cancellation of the already signed agreement;
2. The merger, spin-off, acquisition, or share assignation is not completed
as scheduled by the respective agreement;
Chapter 4 Supplementary Articles
Article 30 The subsidiary that is a domestic public company shall make their
respective directions for asset acquisition or disposal in accordance with
the Regulations. The subsidiary that is not a domestic public company
shall refer to these Directions and make their respective directions for
asset acquisition or disposal.
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Article 31 The CSBC shall be responsible for the public announcement on behalf of
the subsidiary that is not a domestic public company in accordance with
the stipulations provided in Chapter 3.
Article 32 The directors and supervisors assigned to a subsidiary by the CSBC shall
monitor and verify that the subsidiary complies with its directions for
asset acquisition or disposal.
The audit report, on the adequacy of the acquisition or disposal of asset by
a subsidiary that is a domestic public company, made by the internal audit
personnel of the said subsidiary shall be submitted to the CSBC. The
CSBC may from time to time assign internal audit personnel to conduct
audit projects on the subsidiary that is not a domestic public company, or
order the said subsidiary to retain an external auditor to conduct the audit
projects.
Article 33 The CSBC managers or other employees that violate the Directions shall
be subject to punishment in accordance with the disciplinary measures
provided by the CSBC depending on the severity.
Article34 Any issue that is not covered by the Directions shall be governed and
construed by the applicable laws and the regulations.
Article 35 These Directions shall prevail if any of the other directions provided by
the CSBC conflicts with this Directions pertaining to asset acquisition or
disposal.
Article 36 These Directions, after being approved by the board of directors, shall be
submitted to the supervisors and the shareholders’ meeting for approval.
The amendment of these Directions shall follow the same procedure.
*This English version is a translation of Articles of Directions for Asset Acquisition or Disposal of
CSBC Corporation in Chinese. In case of any discrepancy, the Chinese version shall prevail.
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