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207 26.2726.27/F 207 Tun Hwa S.Road,Sec.2,TaipeiTel:(02)2378-6868 Fax:(02)2377-9000Swift Code : FEINTWTPhttp://www.feib.com.tw

Handbook for 2014 Annual Shareholders’ Meeting

1

Contents

Reports (Non-Voting Items) ........................................................................ 5

1. 2013 Business Report .......................................................................... 5 2. 2013 Financial Statements ................................................................... 5 3. Supervisor's Review Report on the 2013 Business Operations and

Financial Statements ............................................................................ 5

4. Report of Article 25 of the Banking Act ................................................. 5

5. Report of Subordinated Financial Debentures issued in 2013 .............. 5

Items for Acceptance (Voting Items) .......................................................... 5

1. 2013 Business Report and Financial Statements ................................. 5

2. 2013 Earnings Distribution Proposal ...................................................... 6

Discussions (Voting Items) ......................................................................... 7

1. Proposal for new shares issuing based on stock dividends and capitalization of employee bonuses ...................................................... 7

2. Amendment to the Rules Governing the Conduct of Shareholders’ Meeting ................................................................................................. 8

3. Amendment to the Articles of Incorporation of Far Eastern International Bank ................................................................................ 8

4. Amendment to the Procedures of Asset Acquisition or Disposal ............ 8

5. Proposal for private placement - to issue common shares, preferred shares, convertible bonds or a combination of above securities to specific parties ....................................................................................... 9

Questions and Motions (Voting Items) ...................................................... 10

Attachments ................................................................................................. 11

I 2013 Business Report ........................................................................ 11

II Independent Auditors’ Report & 2013 Financial Statements .............. 15

III Supervisor's Review Report on the 2013 Business Operations and Financial Statements .......................................................................... 34

IV Report of Article 25 of the Banking Act ............................................... 35

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V Report of Subordinated Financial Debentures issued in 2013 ............ 37

VI Amendment to the Rules Governing the Conduct of Shareholders’ Meeting of Far Eastern International Bank ......................................... 38

VII Amendment to the Articles of Incorporation of Far Eastern International Bank ............................................................................... 41

VIII Amendment to the Procedures of Asset Acquisition or Disposal of Far Eastern International Bank ....................................................... 44

IX Current shareholding of Directors and Supervisors .............................. 57

X Impact of the Stock Dividend Distribution on Operating Results, Earnings per Share and Shareholders’ Return on Investment ............ 58

XI Information about employee bonuses and remuneration to Directors and Supervisors .................................................................................. 59

General Information ..................................................................................... 60

I Articles of Incorporation of Far Eastern International Bank ................. 60

II Rules Governing the Conduct of Shareholders’ Meeting of Far Eastern International Bank ................................................................. 70


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Far Eastern International Bank (FEIB) 2014 Annual General Shareholders’ Meeting

(Translation) Date: Tuesday, 24 June 2014

Time: 9:00 a.m. Taipei time

Place: Auditorium in the Taipei Hero House, No. 20, Changsha Street, Section 1, Taipei, Taiwan

Meeting Agenda

Call the meeting to order

Chairperson takes chair

Chairperson remarks

Reports (Non-Voting Items)

1. 2013 Business Report

2. 2013 Financial Statements

3. Supervisor's Review Report on the 2013 Business Operations and Financial Statements

4. Report of Article 25 of the Banking Act

5. Report of Subordinated Financial Debentures issued in 2013

Items for Acceptance (Voting Items)

1. 2013 Business Report and Financial Statements

2. 2013 Earnings Distribution Proposal

Discussions (Voting Items)

1. Proposal for new shares issuing based on stock dividends and capitalization of employee bonuses

2. Amendment to the Rules Governing the Conduct of Shareholders’ Meeting

3. Amendment to the Articles of Incorporation of Far Eastern International Bank

4

4. Amendment to the Procedures of Asset Acquisition or Disposal

5. Proposal for private placement - to issue common shares, preferred shares, convertible bonds or a combination of above securities to specific parties

Questions and Motions (Voting Items)

Meeting adjourned

The English version is the translation of the Chinese version and if there is any discrepancy

between this English translation and the Chinese text of this document, the Chinese text shall

prevail.


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Reports (Non-Voting Items)

1. 2013 Business Report

The 2013 business report is attached as Attachment I.

2. 2013 Financial Statements

The 2013 financial statements and independent auditors’ audit report by Deloitte & Touche

are attached as Attachment II. (The 2013 financial statements are available for access at

http://mops.twse.com.tw )

3. Supervisor's Review report on the 2013 Business Operations and Financial Statements

The Supervisors’ review report is attached as Attachment III.

4. Report of Article 25 of the Banking Act

The report of Article 25 of the Banking Act is attached as Attachment IV.

5. Report of Subordinated Financial Debentures issued in 2013

The report of Subordinated Financial Debentures issued in 2013 is attached as Attachment

V.

Items for Acceptance (Voting Items)

1. 2013 Business Report and Financial Statements

The Board of Directors recommends shareholders vote FOR acceptance of 2013 business

report and financial statements.

Explanatory Notes:

i. The supervisors of the Bank have examined the business report, audited financial

statements( by CPA J.H. Chen and C.S. Yang of Deloitte & Touche) for the year ended

2013 and found them in order with an audit report issued.

ii. The 2013 business report, independent auditors’ audit report, Supervisors’ report, and

the aforesaid financial statements are attached as Attachments I, II, and III.

iii. Please vote for acceptance.

Resolutions:

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2. 2013 Earnings Distribution Proposal

The Board of Directors recommends shareholders vote FOR acceptance of 2013 earnings

distribution.

Explanatory Notes:

i. The 2013 earnings distribution of the Bank is as follows: (Unit: NT$)

Unappropriated earnings - beginning 577,090

Adjustment for adopting IFRSs (158,755,305)

Adjustment on retained earnings for investment under equity method

680,282

Accumulated losses after adjustment (157,497,933)

Net income 3,061,270,119

Legal reserve (871,131,656)

Special reserve (124,400,329)

Distributable earnings 1,908,240,201

Earnings distribution:

Shareholder dividends 1,906,255,667

Unappropriated earnings - ending 1,984,534

The distributable employee bonuses of $124,321,022 and remuneration to directors

and supervisors of $41,440,341 have been deducted from the net income in

accordance with the Articles of Incorporation.

ii. Shareholder dividends are allocated as follows: (Unit: NT$)

Per share Total amount

Cash dividend 0.250 681,779,567

Stock dividend 0.449 1,224,476,100

Total 0.699 1,906,255,667

iii. Dividend will be distributed on the ex-dividend (ex-right) date that is to be scheduled

separately after the (2014) general shareholders meeting. Dividend per share referred

to above is calculated in accordance with the outstanding 2,727,118,264 shares on

February 10, 2014. Please authorize the Board of Directors to adjust dividend ratio in

accordance with total dividends when the actual outstanding shares differ from the

expected number of shares on the ex-dividend (ex-right) date, due to the impact of the

actual conversion of euro convertible bond and the implementation of treasury shares.

iv. Please vote for acceptance.

Resolutions:


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Discussions (Voting Items)

1. Proposal for new shares issuing based on stock dividends and capitalization of

employee bonuses

The Board of Directors recommends shareholders vote FOR capitalization of 2013 stock

dividends and employee bonuses.

Explanatory Notes:

i. Capitalization of stock dividends:

(i) Purpose of capitalization and sources of funds: For the needs of business development,

replenishment of working capital, and improvement of capital structure, it is proposed

to capitalize shareholder dividends of NT$1,224,476,100 from the 2013 earnings

distribution for issuing of new 122,447,610 shares at NT$10 per share at par.

(ii) Allotment method: 122,447,610 shares are issued for the capitalization, from

shareholders’ bonuses and are distributed in accordance with the shareholding ratio

documented in the shareholder’s register on the dividend ex-right date, that is, 44.9

shares per thousand shares held. Two or more shareholders may have fractional

shareholding with less than one share consolidated within the specified period for

dividend distribution. For a fractional share less than one share that is not consolidated

before the deadline, or that is consolidated but remains less than one share, cash

will be distributed according to the face value (rounded up to the dollar). The

accumulated fractional shares are to be subscribed at par value by the employee

shareholding trust account of the Bank.

(iii) Dividend per thousand shares referred above is calculated in accordance with the

outstanding 2,727,118,264 shares on February 10, 2014. Please authorize the Board

of Directors to adjust stock dividend ratio in accordance with the total dividends when

the actual outstanding shares differ from the expected number of shares on the ex-

right date due to the impact of actual conversion of euro convertible bond and the

implementation of treasury shares.

ii. Capitalization of employee bonuses:

New shares are issued for the capitalization of $124,321,022 employee bonuses. The

number of shares issued is based on the closing price on the day prior to the shareholders’

meeting and the effect of ex-right and ex-dividend; also, the employee bonuses for a

shareholding less than one share is paid in cash.

iii. The rights and obligations of the shares issued from the capitalization are the same as

those of ordinary shares.

iv. The ex-right date of the capitalization will be scheduled separately after the (2014)

general shareholders’ meeting.

v. Please approve.

Resolutions:

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2. Amendment to the Rules Governing the Conduct of Shareholders’ Meeting

The Board of Directors recommends shareholders vote FOR the amendments of the

Rules Governing the Conduct of Shareholders’ Meeting.

Explanatory Notes:

i In order to improve the shareholders’ meeting procedure and protect shareholders’

interests, Article 2 and Article 11 of “the Rules Governing the Conduct of a Shareholders’

Meeting of Far Eastern International Bank” will be amended in accordance with the Tai-

Jheng-Shang-Yi-Zi No. 1020003468 Order of Taiwan Stock Exchange – amendments to

the “Sample Template for XXX Co., Ltd. Rules of Procedure for a Shareholders’ Meeting.”

ii A summary table of “the Rules Governing the Conduct of Shareholders’ Meeting”

Before and After amendments is attached as Attachment VI.

iii Please approve.

Resolutions:

3. Amendment to the Articles of Incorporation of Far Eastern International Bank

The Board of Directors recommends shareholders vote FOR the amendments of the Articles

of Incorporation.

Explanatory Notes:

i In response to the “Expanding the scope of mandatory audit committee” by the Financial

Supervisory Commission with the Gin-Guan-Jheng-Fa-Zi No. 10200531121 Order,

dated December 31, 2013, the Bank upon the expiration of the term of the incumbent

directors and supervisors (June 26, 2015) shall establish an audit committee to replace

supervisors. Also, to specify the appointment authorities of the Board of Directors and to

clarify definition of the Bank’s management, Article 15, Article 20, Article 23, and Article

29 of the Bank’s Articles of Incorporation are to be amended.

ii A summary table of the “Articles of Incorporation of Far Eastern International Bank”

Before and After amendments is attached as Attachment VII.

iii Please approve.

Resolutions:

4. Amendment to the Procedures of Asset Acquisition or Disposal

The Board of Directors recommends shareholders vote FOR the amendments of the

Procedures of Asset Acquisition or Disposal.

Explanatory Notes:

i In response to the “Guidelines for Handling Acquisition and Disposal of Assets by Public

Companies” by the Financial Supervisory Commission with the Gin-Guan-Jheng-Fa-Zi

No. 1020053073 Order dated December 30, 2013, the Bank will be amended Article 3,

Article 4, Article 7 – Article 10, Article 12, and Article 14 of the Bank’s Procedures of Asset

Acquisition or Disposal.


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ii A summary table of the “Procedures of Asset Acquisition or Disposal of Far Eastern

International Bank” Before and After amendments is attached as Attachment VIII.

iii Please approve.

Resolutions:

5. Proposal for private placement - to issue common shares, preferred shares, convertible bonds or a combination of above securities to specific parties for a total amount not exceeding NT$10 billion or equivalent in foreign currencies

The Board of Directors recommends shareholders vote FOR the issuing of common shares, preferred shares, convertible bonds or a combination of above securities to specific parties for a total amount not exceeding NT$10 billion or equivalent in foreign currencies.

Explanatory Notes:

i. The Bank’s Board of Directors was authorized in the general shareholders meeting on June 19, 2013 to proceed private placement of a total amount not exceeding NT$10 billion or equivalent in foreign currencies. This proposal is the extension of last shareholders approval for another year.

ii. The purpose of private placement, to issue common shares, preferred shares, convertible bonds, or a combination of above for a total amount not exceeding NT$10 billion or equivalent in foreign currencies is to seek domestic or foreign strategic alliance opportunities, to strengthen the Bank’s financial structure and capital adequacy ratio, and to facilitate the Bank’s long-term development. The preferred shares will be issued according to Article 4.1 of the Articles of Incorporation.

iii According to Article 43.6 of the Securities and Exchange Act, the disclosure of private placement proposal shall include: (i) The basis and reasonableness of private placement pricing

1. The common stock price per share shall be no less than 80% of the reference price. The reference price is set as the higher of the following two basis prices: (1) The simple average closing price from either 1, 3 or 5 days before the pricing

date, minus dividends adjustment, plus price discount adjustment due to capital reduction.

(2) The simple average price of 30 days before the pricing date, minus dividend adjustment, plus price discount adjustment due to capital reduction.

2. The issuing price of preferred shares and convertible bonds by private placement shall be no less than 80% of the theoretical price, which is the securities price determined by a price model applicable by the issuing terms and considering all options in the issuing terms.

3. The pricing date, reference price, theoretical price, and actual issuing price, based on provisions above, will be determined after taking into consideration of market conditions, and qualification of specific parties. If the below-par issuing price results in cumulative losses to the Bank, the Bank may, subject to operation status, engage in de-capitalization or reverse retained earnings or capital surplus to make up the losses.

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4. The determination of private placement price, based on regulation of government

authorities, reference price or theoretical price, and the 3-year lock-up period set by

the Securities and Exchange Act, shall be reasonable.

(ii) The method and objectives of selecting the specific parties, necessity of selection,

and anticipated benefits:

1. The method and objectives of selecting the specific parties: The selection is

limited to strategic investors qualified for the rules in Article 43.6 of the Securities and

Exchange Act and able to assist the Bank to expand sales channels, grow market

shares, improve service quality, and reduce operating costs.

2. Necessity: The selection is necessary to improve the Bank’s capital adequacy upon

Basel III implementation, to enhance the Bank’s risk asset taking capacity, and to

support the Bank’s long-term development.

3. Anticipated benefits: The participation of the specific parties will enhance the

Bank’s competitiveness and profitability.

(iii) The necessity of private placement:

1. Reason for not taking a public offering: In consideration of the cost, and efficiency

of capital raising, the actual necessity of strategic investors, and the 3-year lock-

up period of private placement ensuring a long-term relationship with the strategic

partners, a public offering is not a considerable approach for capital raising.

2. The amount of private placement: Not exceeding NT$10 billion or equivalent in

foreign currencies, the amount will be raised by one or two tranches, subject to

conditions of markets and strategic parties, within 1 year from the shareholders

meeting resolution date.

3. Capital usage plan and anticipated benefits of private placement: The capital

raised by one or 2 tranches will be used to expand the scale of the Bank’s

business operations and to pursue strategic alliance opportunities domestically

and overseas. The anticipated benefits of private placement include strengthening

of the Bank’s competitiveness, improvement of the Bank’s profitability, capital

adequacy rate, and shareholders’ equity.

iv. It is proposed to authorize the Board of Directors to determine the issuance plan of private

placement, including issuing shares, price, terms and conditions, specific parties’ selection,

record date, capital usage plan, anticipated benefits, and other matters related to the

private placement. It is also proposed to authorize the Board of Directors to revise the

issuance plan due to changes of law and regulations, market conditions, environmental,

or if receiving instructions from government authorities.

v. Please approve.

Resolutions:

Questions and Motions (Voting Items)

Meeting adjourned


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Attachment I 2013 Business report

In retrospective of year 2013, while the world economy showed signs of slow recoveries

on resolving feud over budget, lower unemployment and stronger economic momentum incurred

in the US, Abe’s Three Arrows spurring recovery in Japan, slow growth in China as a result of

economic restructuring, as well as Eurozone gradually climbing out of recession, in Taiwan

continuous downward adjustments of GDP growth were caused by the economic slowdown in

trade and domestic consumption. Looking into 2014, more optimistic outlook of global recovery

than 2013 with moderate growth of Taiwan economy, Taiwan’s banking industry is expected to

embrace a new era with tremendous profitable opportunities after the signing of the Service

Trade Pact for the financial sector.

In 2013, thanks to joint efforts of all colleagues, Far Eastern International Bank (FEIB)

managed to deliver an outstanding performance ahead of its peers. The fiscal year net profit was

NT$ 3.061 billion with a significant year-over-year growth of 20.01% and earnings per share

(EPS) was NT$ 1.30 with an increase of 19.27%. The total return on assets (ROA) was 0.64%.

The return on equity (ROE) was 11.05%, exceeding over 10% in four consecutive years which

demonstrates steady performance. In addition, the asset quality of FEIB has surpassed industry

standards with the provision for bad debt coverage ratio at 391.62% and NPL ratio at 0.37%.

The Bank’s bi-cultural management team with best practices continued to launch innovative

and niche products. The Wealth Management Department was awarded the “Best Bank Service

Image Award” and “Best Wealth Management Confidence Award” from the Excellence Magazine.

Additionally, the newly set up branch which combined Far Eastern International Securities

Company Ltd. and FEIB at Taipei 101, aims to provide private banking services to high net worth

clients. In terms of credit card business, NFC mobile payment, inControl anti-fraud MasterCard

and i-bonus exchange app/platform were launched to offer e-banking and mobile-banking services.

In the consumer banking business, installment, and automobile & motorcycle loans continued

its lead position in market share. The international financial teams across Taiwan, Hong Kong

and China under corporate banking not only provided capital market and structural finance

products, but also completed many landmark projects that accounts for 30% of the Bank’s overall

profit attributed by overseas and cross-border businesses. Furthermore, the internet platform

of convertible bond asset swap and FX margin trading were also developed in order to strengthen

its niche position of financial market.

The Bank has long been committed to promoting various philanthropic activities and fulfilling

the corporate social responsibilities (CSR). FEIB continued to fund Eden Welfare Foundation’s

App development of “Children’s First Mile” which received “Health Promotion Cloud Value-Added

Application Excellence Award” from the Ministry of Health and Welfare, sponsored the world-

class performance of “OVO” by Cirque du Soleil, and published jointly with Department of

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Geography, National Taiwan University and the Forestry Bureau the aesthetic 2014 calendar

titled “Taiwan Classic of Rivers and Mountains” with the theme of “Taiwan natural landscape

reserve” to promote eco-friendly concept. For 11 consecutive years, we have been receiving

grants from Training Center Bureau of Employment and Vocational Training Council of Labor

Affairs in recognition of the Bank’s efforts in continuous talent cultivation.

In future, FEIB will continue its growth momentum to further develop its four pillar strategies:

“steady growth, niche market, portfolio management, and new initiatives”. Aimed to grow total

asset to its target of NT$600 billion, the Bank will also strive to maintain leadership positions of

its niche products, develop affordable products for the general public, increase capital adequacy

ratio, and improve capital cost structure. Through the application of Big Data and Data Warehouse,

FEIB is committed to explore marketing opportunities for high net worth clients. We will implement

Succession Plan to cultivate management talents, strengthen operations, and initiate niche

market with “Blue Ocean Strategy” in e-banking and mobile banking by developing mobile

payment, third-party payment, and on-line financial instruments. Furthermore, to seize

opportunities from the opening of cross-Strait financial sector, the Bank is actively developing

RMB products, seeking joint-venture and strategic partners, opening new branches in China

after the passing of Service Trade Pact to enter the Greater China market. With leading

innovative strategies, the Bank is determined to effectively push for growth, strengthen market

competitiveness, and create maximum value for our customers, shareholders, and employees.

Operating Results

1. Key Performance Results

A. Target Achievement

FEIB’s total assets stood at NT$492.1 billion, achieved 103% of target; deposits amounted

to NT$399 billion, achieved 101% of target; and loan outstanding amounted to NT$296.8

billion, achieved 99% of target.

B. Analysis of Profitability

FEIB’s net operating income in 2013 grew 12.61% (YoY) to NT$9.205 billion; net interest

income increased 18.67% (YoY) to NT$4.885 billion; net fee income stood at NT$2.461

billion, jumped 23.40% than that of 2012; other net profit was NT$1.859 billion, dropped

9.92% than 2012.

The Bank’s net income after tax was NT$3.061 billion, up 20.01% than that of 2012; and

earnings per share was NT$1.30, grew 19.27% (YoY).

2. Core Businesses

A. Individual Banking

Trust assets were NT$55.7 billion in 2013, grew 11.18% comparing to that of 2012. Trust

business revenue grew 35.36% (YoY). Wealth management income grew 18% (YoY).

B. Consumer Banking and Credit Card

Consumer Banking


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FEIB’s consumer loan outstanding in 2013 grew 9% (YoY), among which mortgage

outstanding was NT$134.8 billion with 5% (YoY); personal loan outstanding was

NT$14.8 billion with 7% (YoY); car loan outstanding was NT$27 billion with Top 1

market share surged 43% than that of 2012.

Credit Card

Credit cards in circulation stood at 1.417 million and spending volume totaled

NT$63.9 billion with an increase of 6% (YoY).

C. Corporate Banking

Credit Line Business: Outstanding was NT$127.3 billion, slightly dropped 1% (YoY).

D. Financial Markets

The revenues and valuations from stock trading and beneficiary certificate grew 18.01%

(YoY). The transaction volume of derivatives grew over 100% (YoY). The revenues and

valuations of convertible bond business, buying bonds, asset swaps grew 6.35% (YoY).

Operating Goals

1. Operating Target:

Operating Target for 2014 is summarized as follows:

(1) Total asset: NT$515.9 billion

(2) Total deposit: NT$423.6 billion

(3) Total loan: NT$339 billion

2. Operating Highlights:

(1) Individual Banking Business

The Wealth Management business continues to cultivate customers from the

acquired Chinfon Bank, as well as the newly set up Taipei 101 Branch that combined

with Far Eastern International Securities Company Ltd. to focus on high net worth

customers. FEIB has been aggressively developing FE Direct, Mobile banking, third-

party payment service, and Taiwan’s first online “Smart buy & sell” function for mutual

fund investments that offer clients the most innovative e-banking and m-banking services.

The Bank’s SME Service Department is also expanding service locations to meet SME

customers’ various needs. The Bank not only maintains its number one position in Taiwan’s

TDR market, but also proactively promotes new trust products to generate service fees.

(2) Consumer Banking and Credit Card Business

A. Consumer Banking Business

FEIB continues to expand the diversity and efficiency of its branch channels, focus

on comprehensive services, and satisfy customers’ financing and wealth management

needs; added with enhanced risk management, elevated asset scale and quality. Facing

market competition and in compliance with regulation adjustments, the Bank aims to

improve service efficiency and quality so as to develop niche products and maintain

market leadership. FEIB also dedicates to developing new products, new channels,

continuously developing e-commerce and M-commerce business models for new

opportunities.

14

B. Credit Card Business

FEIB continues to integrate the Group’s diversified enterprise resources for synergy

of cross-industry products. Taking advantage of the bonus point program through

“HAPPY GO” across various business sectors, FEIB is able to establish unique image

and fortify loyalty in its “HAPPY GO INSIDE” credit cards. Cooperating with Formosa

Group to launch FEIB Formosa co-branded card and Far Eastern Toll Collection to

launch FEIB eTag co-branded card, the Bank expands its customer base in the

transportation sector. The implementations of various innovative e-commerce and

M-commerce plans shall serve existing customers. Furthermore, with enhanced

risk management and Database Management for segmentation of customer groups,

cardholder convenience is improved and high-profit products become more

competitive to increase revenues for the Bank.

(3) Corporate Banking Business:

FEIB continues to focus on target customers, seize overall growth momentum of

the industrial value chain to develop new customers and new markets. Cultivate in

depth the quality clients and understand their operational plans to seek business

opportunities. Establish risk asset ceiling to optimize asset scale and composition.

The Bank adopts multi-products marketing, promotes e-commerce, strengthens

customer relations, and builds up steady funding and deposit structure. Deepen

Corporate Finance business, transfer opportunity wealth into basic and long-term

wealth, initiate financial consulting new types of business, and engage in value-added

and differentiating services. The Bank endeavors to develop RMB businesses with

diversified deployment to seek opportunities in the Greater China region.

(4) Financial Markets Business

FEIB provides highly professional financial products and services to customers,

focuses on its niche products, and consolidates the leading positions of core products

such as convertible bond asset swaps and FX margin trading. Additionally, the Bank

develops Capital Market products, strengthens TMU and ACH businesses, and

increases Non-bank revenues. The Bank also has a solid financial structure with

excellent asset and liability management. FEIB enhances its asset quality by managing

both profitability and risk management, thus, developing highly competitive financial

transaction products. The Bank is also actively creating innovative services and

cultivating existing customer relations to expand new client group through leading

online platform of FX margin trading and convertible bond asset swaps.


15

Attachment II Independent auditors’ report & 2013 Financial Statements

(English Translation of a Report Originally Issued in Chinese)

16

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Thousands of New Taiwan Dollars)

December 31, 2013 December 31, 2012 January 1, 2012

ASSETS Amount % Amount % Amount %

CASH AND CASH EQUIVALENTS $ 4,397,645 1 $ 5,596,551 1 $ 6,002,314 1

DUE FROM THE CENTRAL BANK AND OTHER BANKS 88,827,255 18 82,818,608 18 86,739,190 20

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 18,795,444 4 16,110,835 3 13,806,866 3

DERIVATIVE FINANCIAL ASSETS FOR HEDGING 111,034 - 180,242 - 252,233 -

SECURITIES PURCHASED UNDER RESALE AGREEMENTS 23,006,325 5 23,741,992 5 850,505 -

RECEIVABLES, NET 20,672,272 4 20,781,182 4 21,950,813 5

DISCOUNTS AND LOANS, NET 292,517,032 59 280,219,426 60 269,460,381 61

AVAILABLE-FOR-SALE FINANCIAL ASSETS 21,735,693 4 11,865,864 3 14,945,412 3

HELD-TO-MATURITY FINANCIAL ASSETS 3,105,972 1 2,224,301 1 3,927,905 1

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD 2,365,826 - 2,368,548 1 2,472,387 1

DEBT INVESTMENTS WITH NO ACTIVE MARKET 8,477,868 2 10,713,828 2 9,293,780 2

OTHER FINANCIAL ASSETS, NET 2,748,522 1 3,059,511 1 2,634,750 1

PROPERTY AND EQUIPMENT, NET 2,814,164 1 2,879,693 1 2,943,673 1

INTANGIBLE ASSETS, NET 1,830,904 - 1,868,048 - 1,905,193 1

DEFERRED TAX ASSETS 576,972 - 928,575 - 1,115,762 -

OTHER ASSETS, NET 206,250 - 226,072 - 552,761 -

TOTAL $ 492,189,178 100 $ 465,583,276 100 $ 438,853,925 100


17


CONSOLIDATED BALANCE SHEETS



LIABILITIES AND EQUITY Amount % Amount % Amount %

LIABILITIES

Due to the Central Bank and other banks $ 13,782,129 3 $ 11,674,958 3 $ 11,785,731 3

Financial liabilities at fair value through profit or loss 7,288,065 1 3,745,032 1 4,384,840 1

Derivative financial liabilities for hedging 12,631 - 12,819 - 13,093 -

Payables 13,502,992 3 5,560,371 1 4,495,320 1

Current tax liabilities 10,870 - 113,131 - 124,723 -

Deposits and remittances 398,305,940 81 391,933,266 84 369,998,562 84

Bank debentures 27,103,885 6 23,072,123 5 20,230,280 5

Other financial liabilities 2,060,491 - 1,908,070 - 2,211,286 -

Provisions 754,125 - 697,845 - 690,680 -

Other liabilities 414,966 - 432,374 - 427,437 -

Total liabilities 463,236,094 94 439,149,989 94 414,361,952 94

EQUITY ATTRIBUTABLE TO OWNERS OF THE BANK

Share capital 23,621,182 5 22,422,596 5 21,185,604 5

Capital surplus 34,923 - 22,348 - 19,706 -

Retained earnings

Legal reserve 2,511,684 - 1,742,672 - 1,030,702 -

Special reserve 179,722 - 4,554 - 4,554 -

Unappropriated earnings 2,903,770 1 2,405,786 1 2,228,393 1

Total retained earnings 5,595,176 1 4,153,012 1 3,263,649 1

Other equity

Exchange differences on translating foreign operations 16,264 - 9,131 - 12,762 -

Unrealized gain (loss) on available-for-sale financial assets (314,461 ) - (173,800 ) - 10,252 -

Total other equity (298,197 ) - (164,669 ) - 23,014 -

Total equity 28,953,084 6 26,433,287 6 24,491,973 6

TOTAL $ 492,189,178 100 $ 465,583,276 100 $ 438,853,925 100

The accompanying notes are an integral part of the consolidated financial statements.

18


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In Thousands of New Taiwan Dollars, Except Per Share Amounts)

For the Year Ended December 31

Percentage

Increase

2013 2012 (Decrease)

Amount % Amount % %

INTEREST INCOME $ 11,263,921 118 $ 9,644,265 113 17

INTEREST COST 6,379,554 67 5,499,120 64 16

NET INTEREST INCOME 4,884,367 51 4,145,145 49 18

NONINTEREST INCOME AND GAINS, NET

Net service fee income 2,896,139 30 2,571,922 30 13

Net gain on financial assets and liabilities at fair value

through profit or loss 1,097,798 12 1,070,616 13 3

Net gain on available-for-sale financial assets 47,402 - 303,111 4 (84 )

Net foreign exchange gain 199,908 2 21,830 - 816

Net gain on reversal of provision for asset impairment

loss 780 - 44,803 - (98 )

Share of profit (loss) of associates 61,148 1 (89,375) (1 ) 168

Gain on nonperforming receivables acquired 242,560 3 289,342 3 (16 )

Others 57,527 1 150,513 2 (62 )

Total noninterest income and gains, net 4,603,262 49 4,362,762 51 6

NET PROFIT 9,487,629 100 8,507,907 100 12

REVERSAL OF PROVISION FOR POSSIBLE LOSSES

AND GUARANTEE OBLIGATIONS RESERVE 68,604 - 257,746 3 (73 )

OPERATING EXPENSES

Employee benefits expense 3,544,628 37 3,415,377 40 4

Depreciation and amortization 230,519 3 253,351 3 (9 )

(Continued)


19


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



Percentage

Increase


Amount % Amount % %

Other general and administrative expenses 2,217,979 23 2,181,968 26 2

Total operating expenses 5,993,126 63 5,850,696 69 2

INCOME BEFORE INCOME TAX 3,563,107 37 2,914,957 34 22

INCOME TAX EXPENSE 501,837 5 364,192 4 38

NET INCOME FOR THE YEAR 3,061,270 32 2,550,765 30 20

OTHER COMPREHENSIVE LOSS

Exchange differences on translating foreign operations 7,133 - (3,631 ) - 296

Unrealized loss on available-for-sale financial assets (125,353 ) (1 ) (172,637 ) (2 ) (27 )

Share of other comprehensive loss of associates (14,628 ) - (11,866 ) - 23

Other comprehensive loss for the year (132,848 ) (1 ) (188,134 ) (2 ) (29 )

TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 2,928,422 31 $ 2,362,631 28 24

NET INCOME ATTRIBUTABLE TO:

Owners of the Bank $ 3,061,270 32 $ 2,550,765 30 20

Non-controlling interests $ - - $ - - -

TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE

TO:

Owners of the Bank $ 2,928,422 31 $ 2,362,631 28 24

Non-controlling interests $ - - $ - - -

EARNINGS PER SHARE

Basic $ 1.30 $ 1.09

Diluted $ 1.20 $ 1.08 The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)

20


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


Equity Attributable Share Capital Capital Surplus BALANCE, JANUARY 1, 2012 $ 21,185,604 $ 19,706 Appropriation of the 2011 earnings

Legal reserve - - Cash dividends - NT$ 0.250 per share - - Stock dividends - NT$ 0.534 per share 1,131,311 -

1,131,311 - Net income for the year ended December 31, 2012 - - Other comprehensive loss for the year ended December 31, 2012 - - Total comprehensive income (loss) for the year ended December 31, 2012 - - Employees' bonus - stock 105,681 2,642 BALANCE, DECEMBER 31, 2012 22,422,596 22,348 Share of special reserve of an associate - - Appropriation of the 2012 earnings

Legal reserve - - Special reserve - - Cash dividends - NT$ 0.230 per share - - Stock dividends - NT$ 0.493 per share 1,105,434 -

1,105,434 - Net income for the year ended December 31, 2013 - - Other comprehensive income (loss) for the year ended December 31, 2013 - - Total comprehensive income (loss) for the year ended December 31, 2013 - - Employees' bonus - stock 93,152 12,575 BALANCE, DECEMBER 31, 2013 $ 23,621,182 $ 34,923


21


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


to Owners of the Bank

Other Equity Exchange Differences Unrealized

Retained Earnings on Translating Gain (Loss) on Unappropriated Foreign Available-for-sale

Legal Reserve Special Reserve Earnings Operations Financial Assets Total Equity $ 1,030,702 $ 4,554 $ 2,228,393 $ 12,762 $ 10,252 $ 24,491,973 711,970 - (711,970 ) - - - - - (529,640 ) - - (529,640 ) - - (1,131,311 ) - - - 711,970 - (2,372,921 ) - - (529,640 ) - - 2,550,765 - - 2,550,765 - - (451 ) (3,631 ) (184,052 ) (188,134 ) - - 2,550,314 (3,631 ) (184,052 ) 2,362,631 - - - - - 108,323 1,742,672 4,554 2,405,786 9,131 (173,800 ) 26,433,287 - 1,368 - - - 1,368 769,012 - (769,012 ) - - - - 173,800 (173,800 ) - - - - - (515,720 ) - - (515,720 ) - - (1,105,434 ) - - - 769,012 173,800 (2,563,966 ) - - (515,720 ) - - 3,061,270 - - 3,061,270 - - 680 7,133 (140,661 ) (132,848 ) - - 3,061,950 7,133 (140,661 ) 2,928,422 - - - - - 105,727 $ 2,511,684 $ 179,722 $ 2,903,770 $ 16,264 $ (314,461 ) $ 28,953,084

The accompanying notes are an integral part of the consolidated financial statements.

22

FAR EASTERN INTERNATIONAL BANK LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS



2013 2012

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 3,563,107 $ 2,914,957

Adjustments for:

Depreciation 189,220 212,395

Amortization 41,299 40,956

Reversal of provision for possible losses and guarantee obligations reserve (68,604 ) (257,746 )

Net valuation loss on financial assets and liabilities at fair value through profit

or loss 927,647 254,491

Interest cost 6,379,554 5,499,120

Interest income (11,263,921 ) (9,644,265 )

Dividend income (75,482 ) (86,040 )

Shares of loss (profit) of associates (61,148 ) 89,375

Net gain on reversal of provision for asset impairment loss (780 ) (44,803 )

Recovery of written-off credits 1,380,855 1,207,993

Others (28,545 ) (181,117 )

Changes in operating assets and liabilities

Increase in due from the Central Bank and other banks (1,741,893 ) (726,600 )

Increase in financial assets at fair value through profit or loss (3,612,256 ) (2,558,402 )

Decrease (increase) in receivables 107,630 (217,637 )

Increase in discounts and loans (13,392,924 ) (11,108,906 )

Decrease (increase) in available-for-sale financial assets (10,047,589 ) 3,554,394

Decrease (increase) in held-to-maturity financial assets (894,829 ) 1,711,719

Decrease (increase) in debt investments with no active market 2,236,740 (1,370,505 )

Increase (decrease) in due to the Central Bank and other banks 2,107,171 (110,773 )

Increase (decrease) in financial liabilities at fair value through profit or loss 3,108,608 (336,061 )

Increase in payables 8,367,347 915,161

Increase in deposits and remittances 6,372,674 21,934,704

Interest received 11,265,053 9,673,900

Dividends received 75,482 86,040

Interest paid (6,482,692 ) (5,365,610 )

Income tax paid (233,167 ) (198,304 )

Net cash generated from (used in) operating activities (1,781,443 ) 15,888,436

(Continued)


23




2013 2012

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds of the disposal of buildings and land held for sale $ 18,140 $ 373,213

Acquisition of property and equipment (123,497 ) (149,895 )

Proceeds of the disposal of property and equipment 80 709

Decrease (increase) in other financial assets 92,578 (426,965 )

Increase in other assets (2,473 ) (61,554 )

Increase in an investment accounted for using equity method - (55,652 )

Net cash used in the acquisition of subsidiaries - (9,819 )

Dividends received from associates 50,611 58,250

Return of investment settlement measured at cost - 1,408

Net cash generated from (used in) investing activities 35,439 (270,305 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds of the issuance of Euro Convertible Bonds 4,481,250 -

Proceeds of the issuance of bank debentures 4,000,000 3,000,000

Redemption of bank debentures (4,000,500 ) (86,440 )

Increase (decrease) in other financial liabilities 152,421 (303,216 )

Increase (decrease) in other liabilities (14,151 ) 142,510

Cash dividends (515,720 ) (529,640 )

Net cash generated from financing activities 4,103,300 2,223,214

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (25,115 ) (2,803 )

NET INCREASE IN CASH AND CASH EQUIVALENTS 2,332,181 17,838,542

CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 100,225,182 82,386,640

CASH AND CASH EQUIVALENTS, END OF THE YEAR $ 102,557,363 $ 100,225,182

(Continued)

24



Reconciliation of the amounts in the consolidated statements of cash flows with the equivalent items reported in the consolidated

balance sheets is as follows:

December 31,

2013

December 31,

2012

January 1,

2012

Cash and cash equivalents in consolidated balance sheets $ 4,397,645 $ 5,596,551 $ 6,002,314

Due from the Central Bank and other banks in accordance with the definition of “cash and cash equivalents” in IAS 7 “Statement of Cash Flows” 75,153,393 70,886,639 75,533,821

Securities purchased under resale agreements in accordance with the definition of “cash and cash equivalents” in IAS 7 “Statement of Cash Flows” 23,006,325 23,741,992 850,505

Cash and cash equivalents in consolidated statements of cash

flows $ 102,557,363 $ 100,225,182 $ 82,386,640 The accompanying notes are an integral part of the consolidated financial statements.

(Concluded)


25

26

FAR EASTERN INTERNATIONAL BANK LTD.

BALANCE SHEETS



ASSETS Amount % Amount % Amount %

CASH AND CASH EQUIVALENTS $ 4,350,071 1 $ 5,509,841 1 $ 5,806,874 1

DUE FROM THE CENTRAL BANK AND OTHER BANKS 88,827,255 18 82,818,608 18 86,739,190 20

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS 18,795,444 4 16,110,835 3 13,806,866 3

DERIVATIVE FINANCIAL ASSETS FOR HEDGING 111,034 - 180,242 - 252,233 -

SECURITIES PURCHASED UNDER RESALE AGREEMENTS 23,006,325 5 23,741,992 5 850,505 -

RECEIVABLES, NET 20,465,440 4 19,959,548 4 21,128,549 5

DISCOUNTS AND LOANS, NET 292,517,032 59 280,219,426 60 269,460,381 62

AVAILABLE-FOR-SALE FINANCIAL ASSETS 21,735,693 4 11,865,864 3 14,945,412 3

HELD-TO-MATURITY FINANCIAL ASSETS 3,105,972 1 2,223,302 1 3,926,306 1

INVESTMENTS ACCOUNTED FOR USING EQUITY METHOD 2,661,857 1 2,796,761 1 2,843,101 1

DEBT INVESTMENTS WITH NO ACTIVE MARKET 8,477,868 2 10,713,828 2 9,293,780 2

OTHER FINANCIAL ASSETS, NET 2,661,695 - 2,973,537 1 2,548,826 1

PROPERTY AND EQUIPMENT, NET 2,809,277 1 2,872,607 1 2,931,980 1

INTANGIBLE ASSETS, NET 1,830,904 - 1,868,048 - 1,905,193 -

DEFERRED TAX ASSETS 576,972 - 928,575 - 1,115,762 -

OTHER ASSETS, NET 172,847 - 176,878 - 121,168 -

TOTAL $ 492,105,686 100 $ 464,959,892 100 $ 437,676,126 100


27


BALANCE SHEETS



LIABILITIES AND EQUITY Amount % Amount % Amount %

LIABILITIES

Due to the Central Bank and other banks $ 13,782,129 3 $ 11,674,958 3 $ 11,785,731 3

Financial liabilities at fair value through profit or loss 7,288,065 1 3,745,032 1 4,384,840 1

Derivative financial liabilities for hedging 12,631 - 12,819 - 13,093 -

Payables 13,443,426 3 5,496,351 1 4,414,558 1

Current tax liabilities 5,277 - 75,457 - 94,676 -

Deposits and remittances 398,665,473 81 392,441,861 84 370,373,644 85

Bank debentures 27,103,885 6 23,072,123 5 20,230,280 4

Other financial liabilities 1,695,525 - 908,005 - 810,883 -

Provisions 754,125 - 697,845 - 690,680 -

Other liabilities 402,066 - 402,154 - 385,768 -

Total liabilities 463,152,602 94 438,526,605 94 413,184,153 94

EQUITY

Share capital 23,621,182 5 22,422,596 5 21,185,604 5

Capital surplus 34,923 - 22,348 - 19,706 -

Retained earnings

Legal reserve 2,511,684 - 1,742,672 - 1,030,702 -

Special reserve 179,722 - 4,554 - 4,554 -

Unappropriated earnings 2,903,770 1 2,405,786 1 2,228,393 1

Total retained earnings 5,595,176 1 4,153,012 1 3,263,649 1

Other equity

Exchange differences on translating foreign operations 16,264 - 9,131 - 12,762 -

Unrealized gain (loss) on available-for-sale financial assets (314,461 ) - (173,800 ) - 10,252 -

Total other equity (298,197 ) - (164,669 ) - 23,014 -

Total equity 28,953,084 6 26,433,287 6 24,491,973 6

TOTAL $ 492,105,686 100 $ 464,959,892 100 $ 437,676,126 100

The accompanying notes are an integral part of the financial statements.

28


STATEMENTS OF COMPREHENSIVE INCOME



Percentage

Increase


Amount % Amount % %

INTEREST INCOME $ 11,263,165 122 $ 9,605,071 117 17

INTEREST COST 6,378,340 69 5,488,916 67 16

NET INTEREST INCOME 4,884,825 53 4,116,155 50 19

NONINTEREST INCOME AND GAINS, NET

Net service fee income 2,461,361 27 1,994,676 25 23

Net gain on financial assets and liabilities at fair

value through profit or loss 1,097,798 12 1,070,616 13 3

Net gain on available-for-sale financial assets 47,402 1 303,111 4 (84 )

Net foreign exchange gain 201,117 2 23,105 - 770

Net gain on reversal of provision for asset

impairment loss 780 - 56,247 1 (99 )

Share of profit of associates 231,254 2 195,112 2 19

Gain on nonperforming receivables acquired 227,193 2 238,799 3 (5 )

Others 53,041 1 176,213 2 (70 )

Total noninterest income and gains, net 4,319,946 47 4,057,879 50 6

NET PROFIT 9,204,771 100 8,174,034 100 13

REVERSAL OF PROVISION FOR POSSIBLE LOSSES

AND GUARANTEE OBLIGATIONS RESERVE 68,526 1 257,656 3 (73 )

OPERATING EXPENSES

Employee benefits expense 3,373,247 37 3,237,836 39 4

Depreciation and amortization 226,311 3 243,382 3 (7 )

Other general and administrative expenses 2,147,178 23 2,097,480 26 2

Total operating expenses 5,746,736 63 5,578,698 68 3

(Continued)


29


STATEMENTS OF COMPREHENSIVE INCOME



Percentage

Increase


Amount % Amount % %

INCOME BEFORE INCOME TAX 3,526,561 38 2,852,992 35 24

INCOME TAX EXPENSE 465,291 5 302,227 4 54

NET INCOME FOR THE YEAR 3,061,270 33 2,550,765 31 20

OTHER COMPREHENSIVE LOSS

Exchange differences on translating foreign

operations 7,133 - (3,631 ) - 296

Unrealized loss on available-for-sale financial assets (125,353 ) (1 ) (172,637 ) (2 ) (27 )

Share of other comprehensive loss of associates (14,628 ) - (11,866 ) - 23

Other comprehensive loss for the year (132,848 ) (1 ) (188,134 ) (2 ) (29 )

TOTAL COMPREHENSIVE INCOME FOR THE YEAR $ 2,928,422 32 $ 2,362,631 29 24

EARNINGS PER SHARE

Basic $ 1.30 $ 1.09

Diluted $ 1.20 $ 1.08


(Concluded)

30


STATEMENTS OF CHANGES IN EQUITY


Share Capital Capital Surplus BALANCE, JANUARY 1, 2012 $ 21,185,604 $ 19,706 Appropriation of the 2011 earnings

Legal reserve - - Cash dividends - NT$ 0.250 per share - - Stock dividends - NT$ 0.534 per share 1,131,311 -

1,131,311 - Net income for the year ended December 31, 2012 - - Other comprehensive loss for the year ended December 31, 2012 - - Total comprehensive income (loss) for the year ended December 31, 2012 - - Employees' bonus - stock 105,681 2,642 BALANCE, DECEMBER 31, 2012 22,422,596 22,348 Share of special reserve of an associate - - Appropriation of the 2012 earnings

Legal reserve - - Special reserve - - Cash dividends - NT$ 0.230 per share - - Stock dividends - NT$ 0.493 per share 1,105,434 -

1,105,434 - Net income for the year ended December 31, 2013 - - Other comprehensive income (loss) for the year ended December 31, 2013 - - Total comprehensive income (loss) for the year ended December 31, 2013 - - Employees' bonus - stock 93,152 12,575 BALANCE, DECEMBER 31, 2013 $ 23,621,182 $ 34,923


31


STATEMENTS OF CHANGES IN EQUITY


Other Equity Exchange Differences Unrealized

Retained Earnings on Translating Gain (Loss) on Unappropriated Foreign Available-for-sale

Legal Reserve Special Reserve Earnings Operations Financial Assets Total Equity $ 1,030,702 $ 4,554 $ 2,228,393 $ 12,762 $ 10,252 $ 24,491,973 711,970 - (711,970 ) - - - - - (529,640 ) - - (529,640 ) - - (1,131,311 ) - - - 711,970 - (2,372,921 ) - - (529,640 ) - - 2,550,765 - - 2,550,765 - - (451 ) (3,631 ) (184,052 ) (188,134 ) - - 2,550,314 (3,631 ) (184,052 ) 2,362,631 - - - - - 108,323 1,742,672 4,554 2,405,786 9,131 (173,800 ) 26,433,287 - 1,368 - - - 1,368 769,012 - (769,012 ) - - - - 173,800 (173,800 ) - - - - - (515,720 ) - - (515,720 ) - - (1,105,434 ) - - - 769,012 173,800 (2,563,966 ) - - (515,720 ) - - 3,061,270 - - 3,061,270 - - 680 7,133 (140,661 ) (132,848 ) - - 3,061,950 7,133 (140,661 ) 2,928,422 - - - - - 105,727 $ 2,511,684 $ 179,722 $ 2,903,770 $ 16,264 $ (314,461 ) $ 28,953,084


32


STATEMENTS OF CASH FLOWS



2013 2012

CASH FLOWS FROM OPERATING ACTIVITIES

Income before income tax $ 3,526,561 $ 2,852,992 Adjustments for:

Depreciation 186,327 203,361 Amortization 39,984 40,021 Reversal of provision for possible losses and guarantee obligations reserve (68,526 ) (257,656 ) Net valuation loss on financial assets and liabilities at fair value through profit

or loss 927,647 254,491 Interest cost 6,378,340 5,488,916 Interest income (11,263,165 ) (9,605,071 ) Dividend income (75,482 ) (86,040 ) Shares of profit of associates (231,254 ) (195,112 ) Net gain on reversal of provision for asset impairment loss (780 ) (56,247 ) Recovery of written-off credits 1,380,855 1,207,993 Others (28,545 ) (103,933 ) Changes in operating assets and liabilities

Increase in due from the Central Bank and other banks (1,741,893 ) (726,600 ) Increase in financial assets at fair value through profit or loss (3,612,256 ) (2,558,402 ) Decrease (increase) in receivables (507,850 ) 189,428 Increase in discounts and loans (13,392,924 ) (11,108,906 ) Decrease (increase) in available-for-sale financial assets (10,047,589 ) 3,554,394 Decrease (increase) in held-to-maturity financial assets (895,829 ) 1,711,119 Decrease (increase) in debt investments with no active market 2,236,740 (1,370,505 ) Increase (decrease) in due to the Central Bank and other banks 2,107,171 (110,773 ) Increase (decrease) in financial liabilities at fair value through profit or loss 3,108,608 (336,061 ) Increase in payables 8,371,354 932,091 Increase in deposits and remittances 6,223,612 22,068,217

Interest received 11,264,063 9,634,920 Dividends received 75,482 86,040 Interest paid (6,481,031 ) (5,355,594 ) Income tax paid (163,320 ) (142,719 )

Net cash generated from (used in) operating activities (2,683,700 ) 16,210,364

CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment (122,802 ) (145,243 ) Proceeds of the disposal of property and equipment 80 709 Decrease (increase) in other financial assets 93,431 (834,914 )

(Continued)


33


STATEMENTS OF CASH FLOWS



2013 2012

Decrease (increase) in other assets $ 1,191 $ (58,586 ) Dividends received from subsidiaries and associates 352,898 285,238 Increase in an investment accounted for using equity method - (55,652 ) Net cash used in the acquisition of subsidiaries - (9,819 ) Return of investment settlement measured at cost - 1,408

Net cash generated from (used in) investing activities 324,798 (816,859 )

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds of the issuance of Euro Convertible Bonds 4,481,250 - Proceeds of the issuance of bank debentures 4,000,000 3,000,000 Redemption of bank debentures (4,000,500 ) (86,440 ) Increase in other financial liabilities 787,520 97,122 Increase in other liabilities 2,784 75,528 Cash dividends (515,720 ) (529,640 )

Net cash generated from financing activities 4,755,334 2,556,570

EFFECTS OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (25,115 ) (2,803 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 2,371,317 17,947,272 CASH AND CASH EQUIVALENTS, BEGINNING OF THE YEAR 100,138,472 82,191,200 CASH AND CASH EQUIVALENTS, END OF THE YEAR $ 102,509,789 $ 100,138,472

Reconciliation of the amounts in the statements of cash flows with the equivalent items reported in the balance sheets is as follows:

December 31,

2013 December 31,

2012 January 1,

2012 Cash and cash equivalents in balance sheets $ 4,350,071 $ 5,509,841 $ 5,806,874 Due from the Central Bank and other banks in accordance with the definition of “cash and cash equivalents” in IAS 7 “Statement of Cash Flows” 75,153,393 70,886,639 75,533,821 Securities purchased under resale agreements in accordance with the definition of “cash and cash equivalents” in IAS 7 “Statement of Cash Flows” 23,006,325 23,741,992 850,505 Cash and cash equivalents in statements of cash flows $ 102,509,789 $ 100,138,472 $ 82,191,200


(Concluded)

34

Attachment III Supervisor's Review Report on the 2013 Business Operations and Financial Statements To the 2014 General Shareholders’ Meeting of Far Eastern International Bank

In accordance with Article 219 of the Company Law, we have examined the

Business Report, the Earnings Distribution Proposal, and Financial Statements

submitted by the Board of Directors for the year ending 2013 which had been

audited by CPA J.H. Chen and C.S. Yang of Deloitte & Touche, and found

them in order.

General Supervisor Humphrey Cheng Supervisor Shi-Chun Hsu Supervisor Linin Day

March 4, 2014


35

Attachment IV Report of Article 25 of the Banking Act

(i) According to the Gin-Guan-Yin-Kong-Zi No. 10060005191 Order of the Financial

Supervisory Commission (referred to as the “FSC” hereinafter) dated January 31, 2012,

banks should have Article 25 of the Banking Law scheduled in the shareholders’ meeting

one year before the election year to remind shareholders of the relevant provisions.

(ii) Reporting matters are as follows:

1. According to Article 25 Paragraph 2 of the Banking Law, the same person or the same

related party who has individually, jointly or collectively held over 5% voting shares

issued by the same bank must report it to the competent authorities within ten days

from the issuing date, and similarly, a cumulative increase or decrease of 1%

shareholding beyond the 5% shareholding threshold.

2. According to Article 25 Paragraph 3 of the Banking Law, the same person or the same

related party who intends to individually or jointly or collectively hold over 10%, 25%,

or 50% voting shares issued by the same bank must report it separately to the

competent authorities for approval in advance.

3. According to Article 25 Paragraph 4 of the Banking Law, the shares held by a third

party on behalf of the same person or the same related party by trust, appointment

or other contract, agreement, and authorization should be included in the shareholding

of the same related party.

4. According to Article 25 Paragraph 5 of the Banking Law, before the implementation

of the clauses amended on December 9, 2008, the same person or the same related

party who has individually or jointly or collectively held over 5% but below 15% voting

shares issued by the same bank, must report it to the competent authorities within

six months from the implementing date. The shareholding ratio at the time of reporting

can be maintained if it is reported to the competent authorities before the deadline. If

the original shareholding ratio exceeds 10%, the first-time increase in shareholding

should be reported to the competent authorities for approval in advance.

5. According to Article 25 Paragraph 6 of the Banking Law, the guidelines for the same

person or the same related party to apply for approval in accordance with Paragraph

3 or the proviso of Paragraph 5 regarding the qualification, enclosures, intended

shareholding acquisition, purpose, source of funds, and other requirements are to

be stipulated by the competent authorities.

36

6. According to Article 25 Paragraph 8 of the Banking Law, the same person or the

shareholder and the spouse, and minors who have collectively held over 1% voting

shares issued by the same bank must report it to the bank by the shareholder.

(iii) According to Article 25.1 of the Banking Law, the same person referred to in Article 25

of the Banking Law means the same natural person or juristic person; the same related

party means the related party of the same natural person or juristic person. The related

party of the same natural person includes the shareholder, spouse, second-degree blood

relatives, an enterprise that is with over 1/3 voting shares or capital held by them, and

an enterprise or juridical association within which they act as chairman, president, or a

majority of the directors. The related party of the same juristic person includes the juristic

person and the chairman, president, the spouse of the president, second-degree blood

relatives, an enterprise that has over 1/3 voting shares or capital held by them, and the

enterprise or juridical association and the affiliate of the juristic person that they act as

chairman, president, or a majority of the directors.

(iv) Violation of shareholders against Article 25 Paragraph 2, Paragraph 3, or Paragraph 5 of

the Banking Law by failing to report to the competent authorities or holding bank voting

shares without authorization, the excessive shareholding is without voting rights and it

will be ordered by the competent authorities to be disposed of before the deadline.

Moreover, the FSC may charge a fine of NT$2 million ~ NT$10 million in accordance

with Article 128 Paragraph 3 of the Banking Law. When being elected as a director,

supervisor, or an officer of the bank in the future, the FSC may consider having the

offender disqualified as the person-in-charge due to the offense of dishonesty and

misconduct stated in Article 3 Paragraph 13 of the “Regulations Governing Qualification

Requirements and Concurrent Serving Restrictions and Matters for Compliance by the

Responsible Persons of Banks.”

(v) Violation of shareholders against Article 25 Paragraph 8 of the Banking Law by failing

to report, the FSC may charge a fine of NT$0.5 million ~ NT$2.5 million in accordance

with Article 131 Paragraph 1 of the Banking Law.

(vi) This motion was resolved at the 11th board meeting of the 8th term on March 4, 2014.


37

Attachment V Report of Subordinated Financial Debentures issued in 2013

(i) Handled in accordance with Article 246 of the Company Law.

(ii) Completion of the Bank’s 2013 secondary financial bond offering is as follows:

Term 2013 1st Secondary Financial Bond

Board

resolution date

Resolution reached in the 4th board meeting of the 8th

term on 3.20.2013

Issuing date 11.6.2013~11.6.2020

Amount NT$4 billion

Per Annum Fixed rate 2.1%

Reasons for

offering

1. Enhance capital adequacy ratio, strengthen capital structure, and

develop businesses.

2. Obtain mid-term and long-term working capital, improve assets and

liabilities structure, and reduce operational risk.

Repayment

method Repayment of principal at maturity

Security method No security A

pproval authority

Unit Financial Supervisory Commission

Date 5.8.2013

Doc. No. Gin-Guan-Yin -Guo-Zi No. 10200123660 Order

Note Completely issued

(iii) This motion was resolved during the 11th board meeting of the 8th term on March 4,

2014.

38

Attachment VI Amendment to the Rules Governing the Conduct of Shareholders’ Meeting of Far Eastern International Bank

Section Proposed changes Current Articles Reasons

Article 2

The location for shareholders’ meeting shall be the Company’s place of business or a place convenient for attendance by shareholders (or by proxies) that is suitable to holding of this meeting. The meeting shall be held between 9:00AM and 3:00PM. The meeting notice of the shareholders’ meeting shall state the registration time, location and other important information. The aforesaid registration time shall start at least thirty minutes before the beginning of the meeting. The registration desk shall be featured with clear instructions and competent staffs. When convening shareholders’ meeting, the Company shall incorporate electronic vote casting as one of the alternative ways to cast the vote, and the procedure of electronic casting shall be written in the notice of shareholders’ meeting. Shareholders who vote via electronic casting is deemed as presented in person. With respect to extemporary motions, amendments of the original proposals, and substitute proposals raised in the shareholders’ meeting, those who vote via electronic casting shall be considered as abstain. Shareholders (or proxies) shall attend shareholders meeting based on attendance cards, sign-in cards, or other certificates of attendance. Solicitors soliciting proxy forms shall also bring identification documents for verification. Shareholders (or proxies) when attending the meeting shall hand in sign-in cards.

The location for shareholders’ meeting shall be the Company’s place of business or a place convenient for attendance by shareholders (or by proxies) that is suitable to holding of this meeting. The meeting shall be held between 9:00AM and 3:00PM. The shareholders (or proxies) when attending the meeting shall wear admission badge and hand in sign-in cards. When convening shareholders’ meeting, the Company shall incorporate electronic vote casting as one of the alternative ways to cast the vote, and the procedure of electronic casting shall be written in the notice of shareholders’ meeting. Shareholders who vote via electronic casting is deemed as presented in person. With respect to extemporary motions, amendments of the original proposals, and substitute proposals raised in the shareholders’ meeting, those who vote via electronic casting shall be considered as abstain.

I. In order to protect the shareholders’ rights to participate the meeting and enhance the efficiency of the meeting procedure, the paragraph 2 and 4 are added. The wording of the last part in paragraph 2 is revised and moved to paragraph 4.


39


Article 2

Number of shareholders in attendance shall be calculated based on the number of attending shares, which equals to the sum of number of shares shown on the signed attended forms and the number of voting shares via electronic casting. The Company may appoint lawyers, accountants or related personnel to attend the shareholders’ meeting. The personnel in charge of handling the affaires of the meeting shall wear identification badge or armband. For a shareholders’ meeting convened by the board of directors, the chairman of the board of directors shall preside at the meeting. If the chairman of the board of directors is on leave or unable to exert the rights, the vice-chairman of the board of directors shall preside instead. If the position of vice-chairman is vacant or the vice-chairman is on leave or unable to exert the rights, the chairman of the board of directors shall designate a director to preside at the meeting. If no director is so designated, the chairman of the meeting shall be elected by the board of directors from among themselves. When a director serves as chairman, the director shall be one who has held that position for six months or more and who understands the financial and business conditions of the Bank. The same shall be true for a representative of a juristic person director that serves as chairman. For a shareholders’ meeting convened by any other person having the convening right, he/she shall act as the chairman of that meeting; if there are two or more persons having the convening right, the chairman of the meeting shall be elected from among themselves. The complete processes of the meeting shall be recorded by voice and video recorders and all the records shall be

Number of shareholders in attendance shall be calculated based on the number of attending shares, which equals to the sum of number of shares shown on the signed attended forms and the number of voting shares via electronic casting. The Company may appoint lawyers, accountants or related personnel to attend the shareholders’ meeting. The personnel in charge of handling the affaires of the meeting shall wear identification badge or armband. For a shareholders’ meeting convened by the board of directors, the chairman of the board of directors shall preside at the meeting. If the chairman of the board of directors is on leave or unable to exert the rights, the vice-chairman of the board of directors shall preside instead. If the position of vice-chairman is vacant or the vice-chairman is on leave or unable to exert the rights, the chairman of the board of directors shall designate a director to preside at the meeting. If no director is so designated, the chairman of the meeting shall be elected by the board of directors from among themselves. For a shareholders’ meeting convened by any other person having the convening right, he/she shall act as the chairman of that meeting; if there are two or more persons having the convening right, the chairman of the meeting shall be elected from among themselves. The complete processes of the meeting shall be recorded by voice or video recorders and all the records shall be

II. The sequence of the

original Paragraph 4 ~ Paragraph 8 are moved to Paragraph 5 ~ Paragraph 9.

III. The paragraph 8 is

amended to reflect the responsibility of the chairman of the Meeting, who has to explain the proposed resolutions and material information of the Company and reply the inquiries raised by shareholders.

IV. In order to reproduce the

whole process of the shareholders’ meeting to

40


Article 2 kept by the Company for a minimum period of at least one year. If a shareholder files a lawsuit pursuant to Article 189 of the Company Law, the video and audio records shall be retained until the conclusion of the litigation.

kept by the Company for a minimum period of at least one year.

clarify the meeting related arguments, the paragraph 9 is amended accordingly

Article 11 In regards to the resolution of proposals, unless otherwise provided for in the relevant law and regulation or Company’s articles of incorporation, resolution shall be passed by a majority of the voting rights represented by the shareholders (or proxies) attending the meeting. The proposal for a resolution shall be deemed approved if no objection expressed by shareholders casting their votes via electronic casting, and if the chairperson inquires and receives no objection from shareholders in attendance in person. The validity of such approval has the same effect as if the resolution has been put to vote. Should objection of a proposal be expressed, such proposal shall be put to vote. All proposals may be put to vote one after the other by its sequence, or may be put to vote together and numbers of votes for each proposal are counted separately. Whichever way of the voting procedures shall be decided by the chairperson. If there are amendments or substitute proposals for the same proposal, the sequence of which to be put to vote shall be decided by the chairperson. If one of the two proposals has been approved, the other shall be deemed rejected without requirement to put it to vote. The results of voting and election shall be announced after the vote calculation on the spot and kept for records.

In regards to the resolution of proposals, unless otherwise provided for in the relevant law and regulation or Company’s articles of incorporation, resolution shall be passed by a majority of the voting rights represented by the shareholders (or proxies) attending the meeting. The proposal for a resolution shall be deemed approved if no objection expressed by shareholders casting their votes via electronic casting, and if the chairperson inquires and receives no objection from shareholders in attendance in person. The validity of such approval has the same effect as if the resolution has been put to vote. Should objection of a proposal be expressed, such proposal shall be put to vote. All proposals may be put to vote one after the other by its sequence, or may be put to vote together and numbers of votes for each proposal are counted separately. Whichever way of the voting procedures shall be decided by the chairperson. If there are amendments or substitute proposals for the same proposal, the sequence of which to be put to vote shall be decided by the chairperson. If one of the two proposals has been approved, the other shall be deemed rejected without requirement to put it to vote. The results of voting shall be reported on the spot and kept for records.

To ensure the shareholders can receive the results and sufficient information of the voting and election immediately, the paragraph 5 is amended accordingly.


41

Attachment VII Amendment to the Articles of Incorporation of Far Eastern International Bank


Article 15 The Bank shall have nine (9) to fifteen (15) Directors, and three (3) to five (5) Supervisors, all to be elected among the shareholders with capacity at a shareholders’ meeting. The directors shall include not less than two Independent Directors, and not less than one-fifth of the director seats shall be held by the Independent Directors. A candidate nomination system shall be adopted for the election of Directors and Supervisors. The shareholders shall elect the Directors and Supervisors from the list of candidates of Directors and Supervisors. Any matters relating to nomination shall be handled in accordance with Article 192-1 of the Company Act and the relevant laws and regulations. The Bank’s Audit Committee is organized by all independent directors in accordance with the provisions of the Securities Exchange Act. Members of the Audit Committee, the exercise of authorities, and other binding matters are processed in accordance with the governing law or the organizational regulations. The organic regulation of the Audit Committee is separately prescribed by the Board of Directors. The number of total shares owned by the Directors and the Supervisors shall be prescribed in accordance with the ‘Regulation Governing the Shareholding Percentage of Directors and Supervisors and its Verification of Publicly Traded Companies’.

The Bank shall have nine (9) to fifteen (15) Directors, and three (3) to five (5) Supervisors, all to be elected among the shareholders with capacity at a shareholders’ meeting. The directors shall include not less than two Independent Directors, and not less than one-fifth of the director seats shall be held by the Independent Directors. A candidate nomination system shall be adopted for the election of Directors and Supervisors. The shareholders shall elect the Directors and Supervisors from the list of candidates of Directors and Supervisors. Any matters relating to nomination shall be handled in accordance with Article 192-1 of the Company Act and the relevant laws and regulations. The number of total shares owned by the Directors and the Supervisors shall be prescribed in accordance with the ‘Regulation Governing the Shareholding Percentage of Directors and Supervisors and its Verification of Publicly Traded Companies’.

Pursuant to Article 14-4 of the Securities Exchange Act and the Gin-Guan-Jheng-Fa-Zi No. 10200531121 Order dated December 31, 2013 by the Financial Supervisory Commission, the Bank upon the expiry of the term of the incumbent directors and supervisors (June 26, 2015), shall establish an audit committee to replace supervisors. The Article is hereby amended.

Article 20 The Power of the Board of Directors shall be as follows: (1) To review and approve any

corporate rules or regulations;

The Power of the Board of Directors shall be as follows: (1) To review and approve any

corporate rules or regulations;

The text amendment is processed in accordance with Article 34-1 Paragraph 1 Section 8 of the ”Corporate

42


Article 20 (2) To review and approve business plan;

(3) To propose as to the increase or decrease of capital;

(4) To decide as to whether to establish, to revoke, or to change any of the branches and/or representative offices of the Bank;

(5) To review important contracts; (6) To prepare and compile budgets

and settlement of accounts; (7) To decide as to whether to buy or

sell real estates; (8) To propose as to the appropriation

of profits or surplus; (9) To review and approve big loan

applications and important businesses;

(10) To Review and approve the appointment and dismissal of officers and managers of Finance, Accounting, Risk Management, Legal Compliance, and Internal Audit;

(11) To review and approve the appointment and dismissal of each department head of both the administrative and business units.

(12) To review matters assigned by the Chairman of the Board of Directors and the proposals submitted by the President;

(13) To carry out the resolutions of the shareholders’ meeting;

(14) To perform any other functions as may be prescribed by laws and regulations.

(2) To review and approve business plan;


(4) To decide as to whether to establish, to revoke, or to change any of the branches and/or representative offices of the Bank;

(5) To review important contracts; (6) To prepare and compile budgets

and settlement of accounts; (7) To decide as to whether to buy or

sell real estates; (8) To propose as to the appropriation

of profits or surplus; (9) To review and approve big loan

applications and important businesses;

(10) To handle matters related to the appointment of the President and Executive Vice Presidents;

(11) To review and approve the

appointment and dismissal of each department head of both the administrative and business units.

(12) To review matters assigned by the Chairman of the Board of Directors and the proposals submitted by the President;



Governance Best-Practice Principles for Banking” and by referring to Article 5-2 Paragraph 1 Section 6 of the Bank’s “Rules of Procedure for Board of Directors Meeting.”

Article 23

The Bank’s management includes President, Executive Vice Presidents, Heads of Business Unit, Deputy Executive Vice Presidents, Department Heads (Managers and Officers), and Branch Managers. The Bank shall appoint: a President to manage the overall business of the Bank in accordance with the policy adopted by the Board of Directors; and a number of managers at all levels are

The Bank shall appoint: a President to manage the overall business of the Bank in accordance with the policy adopted by the Board of Directors; and a number of Executive Vice Presidents

The definition of the management in Paragraph 1 is added in response to the needs of business operation. The original content of the paragraph has been realigned to Paragraph 2, with the text amended accordingly.


43


Article 23 appointed to assist the President. Besides, the Bank shall also appoint one Chief Auditor to manage the overall auditing matters of the Bank. Appointment and dismissal of the above-mentioned personnel shall be approved by a majority vote of the Directors present at a Meeting of Board of Directors.

and a number of managers to assist the President. Besides, the Bank shall also appoint one Chief Auditor to manage the overall auditing matters of the Bank. Appointment and dismissal of the above-mentioned personnel shall be approved by a majority vote of the Directors present at a Meeting of Board of Directors.

Article 29 These Articles of Incorporation were established on May 14, 1990 and shall be effective as of the date on which they are approved by the competent authority. ‧ Omitted ‧

These Articles of Incorporation were established on May 14, 1990 and shall be effective as of the date on which they are approved by the competent authority. ‧ Omitted ‧

※The Twenty-second amendment was made on June 26, 2012 by the Shareholders’ Meeting.

※The Twenty-third amendment was made on June 19, 2013 by the Shareholders’ Meeting.

※The Twenty-fourth amendment was made on June 24, 2014 by the Shareholders’ Meeting.

The amendment of Articles of Incorporation shall take effect on approval by the shareholders’ meeting. According to Article 14-4 of the Securities Exchange Act, the Article of Incorporation regarding the establishment and regulations of an Audit Committee should be implemented after the expiry of the term of the incumbent directors and supervisors and the election of new directors and supervisors. The supervisors and the Articles of Incorporation regarding supervisors should be repealed on the establishment date of the Audit Committee.

※The Twenty-second amendment was made on June 26, 2012 by the Shareholders’ Meeting.

※The Twenty-third amendment was made on June 19, 2013 by the Shareholders’ Meeting.

The amendment of Articles of Incorporation shall take effect on approval by the shareholders’ meeting.

I The 24th amendment is

added in Paragraph 1.

II. The transitional provision

for establishing an Audit

Committee is added in

Paragraph 2.

44

Attachment VIII Amendment to the Procedure of Asset Acquisition or Disposal of Far Eastern International Bank


Article 3 Scope of Assets I. Securities: Including investment in

stocks, bonds, corporate bonds, financial bonds, fund securities, depositary receipts, call (put) warrants, beneficiary certificate, and asset-based securities.

II. Real estate (including land, buildings and house, investment-oriented real estate, land use rights, and construction industry inventories) and equipment.

(Others omitted) X. The provision of 10% of total assets

in the Regulations Governing the Acquisition and Disposal of Assets is based on the total assets amount in the most recent independent or individual financial report that is stipulated in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Scope of Assets I. Securities: Including investment in

stocks, bonds, corporate bonds, financial bonds, fund securities, depositary receipts, call (put) warrants, beneficiary certificate, and asset-based securities.

II. Real estate (including construction industry inventories) and other fixed assets.

(Others omitted)

I. In line with Article 3 of the “Guidelines for Handling Acquisition and Disposal of Assets by Public Companies” (hereinafter referred to as the “Guidelines”), the text of Paragraph 2 is to be amended with land, building and house, and investment-oriented real estate, and land use rights included in the definition of real estate; additionally, the text will be amended in accordance with the IFRSs adopted.

II. Paragraph 10 will be added pursuant to the requirements specified in Article 33.2 of the Guidelines in order to define the provision of 10% of total assets that is based on the total assets amount in the most recent independent or individual financial report.

Article 4

Definition of terms (Others omitted) II. Acquisition or disposal of assets by

legal merger, split, purchase, or transfer of shares: Refers to acquisition or disposal of assets by merger, split, or purchase in accordance with the Business Merger & Acquisition Law, Financial Holding Company Law, Financial Institutions Merger Act, or any other law, or issuance of new shares for the transfer of shares from other companies (hereinafter referred to

Definition of terms (Others omitted) II. Acquisition or disposal of assets by

legal merger, split, purchase, or transfer of shares: Refers to acquisition or disposal of assets by merger, split, or purchase in accordance with the Business Merger & Acquisition Law, Financial Holding Company Law, Financial Institutions Merger Act, or any other law, or issuance of new shares for the transfer of shares from other companies (hereinafter referred to

I. The text of Paragraph 2 is adjusted pursuant to the amendment of Article 4 Paragraph 2 of the Guidelines and Article 156 of the Company Law.

II. Paragraph 3 and Paragraph 4 will be combined into Paragraph 3 pursuant to the provision of Article 4 Paragraph 3 of the Guidelines. Also, the Company is to finalize the definition of related party


45


Article 4

as “transfer of shares”) in accordance with Article 156 Paragraph 8 of the Company Law.

III. Related party and subsidiary: It should be recognized in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

IV. Professional appraiser: Real Estate

appraisers or other appraisers who may engage in real estate and equipment appraisal business lawfully.

V. Date of occurrence: Refers to the signing date of the transaction, the payment date, commission closing date, the transfer date, the Board resolution date, or the date the trade party and transaction amount can be sufficiently verified (whichever is sooner). For investors who are subject to the approval of the competent authorities, the dates referred to above or the date receiving approval from the competent authorities (whichever is sooner) shall prevail.

VI. Investment in Mainland China: Refers to the investment in Mainland China in accordance with the “Regulations Governing Approval for Engaging in Investment or Technical Cooperation in the Mainland Area” by the Investment Commission of the Ministry of Economic Affairs.

VII. The aforementioned “within one year” refers to the year before the date of the acquisition or disposal of assets; also, the announced part

as “transfer of shares”) in accordance with Article 156 Paragraph 6 of the Company Law.

III. Related party: It is defined in accordance with the Statement of Financial Accounting Standards No. 6 published by the ROC Accounting Research and Development Foundation (hereinafter referred to as the Accounting Research and Development Foundation).

IV. Subsidiary: It is defined in accordance with the Statement of Financial Accounting Standards No. 5 and No. 7 published by the Accounting Research and Development Foundation.

V. Professional appraiser: Real Estate appraisers or other appraisers who may engage in real estate and other fixed assets appraisal business, in a lawful manner.

VI. Date of occurrence: Refers to the signing date of the transaction, the payment date, commission closing date, the transfer date, the Board resolution date, or the date the trade party and transaction amount can be sufficiently verified (whichever is sooner). For investors who are subject to the approval of the competent authorities, the dates referred to above or the date receiving approval from the competent authorities (whichever is sooner) shall prevail.

VII. Investment in Mainland China: Refers to the investment in Mainland China in accordance with the “Regulations Governing Approval for Engaging in Investment or Technical Cooperation in the Mainland-Area” by the Investment Commission of the Ministry of Economic Affairs.

VIII. The aforementioned “within one year” refers to the year before the date of the acquisition or disposal of assets; also, the announced part

and subsidiary in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. In addition, current Paragraph 5 - Paragraph 9 is realigned to Paragraph 4 - Paragraph 8.

III. The text of Paragraph 4 will be amended pursuant to the adoption of IFRSs; so is Paragraph 7.

46


Article 4

is excluded. VIII. The aforementioned “most recent

financial statements” refers to the Bank’s publishing the financial statements audited or reviewed by a CPA prior to the acquisition or disposal of assets.

is excluded. IX. The aforementioned “most recent

financial statements” refers to the Bank’s publishing the financial statements audited or reviewed by a CPA prior to the acquisition or disposal of assets.

Article 7

Regulations for Handling Acquisition and Disposal of Real Estate or Equipment I. Assessment and operating

procedures. The Bank is to handle the acquisition or disposal of assets and equipment in accordance with the relevant provisions of the Bank.

II. Trading conditions and authorized amount decision-making procedures (I) The acquisition or disposal of

real estate should be analyzed with a report presented to the board of directors for review and approval by referring to the announced value, assessed value, actual transaction price of the real estate property in the adjacent area, and the proposed transaction conditions and price.

(II) The acquisition or disposal of equipment should be processed by inquiry, parity, negotiation, or tender; and in addition, should be approved progressively in accordance with the Bank’s decentralized approval authority. A price that is beyond the authorization of the president should be presented to the Board of Directors for approval.

III. Undertaking Unit

The Bank’s acquisition or disposal of real estate or equipment is to be implemented by the Secretariat.

IV. Real estate or equipment appraisal report

Regulations for Handling Acquisition and Disposal of Real Estate or Other Fixed Assets I. Assessment and operating

procedures. The Bank is to handle the acquisition or disposal of real estate and other fixed assets in accordance with the relevant provisions of the Bank.

II. Trading conditions and authorized amount decision-making procedures (I) The acquisition or disposal of

real estate should be analyzed with a report presented to the board of directors for review and approval by referring to the announced value, assessed value, actual transaction price of the real estate property in the adjacent area, and the proposed transaction conditions and price.

(II) The acquisition or disposal of other fixed assets should be processed by inquiry, parity, negotiation, or tender; also, should be approved progressively in accordance with the Bank’s decentralized approval authority. A price that is beyond the authorization of the president should be presented to the Board of Directors for approval.

III. Undertaking Unit The Bank’s acquisition or disposal of real estate or other fixed assets is to be implemented by the Secretariat.

IV. Real estate or other fixed assets appraisal report

I. The subject title and the text of Paragraph 1 to Paragraph 4 regarding other fixed assets and machines and equipment for business will be amended pursuant to the provision of Article 9 of the Guidelines.

II. In addition, the text of Paragraph 4 Section 3 will be amended pursuant to the amendment of Article 4 Paragraph 3 of the Guidelines.


47


Article 7 For the Bank’s acquisition or disposal of real estate or equipment (except for transactions conducted with government agencies, proprietary land commissioned to build, leased land commissioned to build, or the equipment for business acquired or disposed), a transaction amount over 20% of the paid-in capital or NT$300 million shall require an appraisal report obtained from a professional appraiser before the date of occurrence; in addition, it must meet the following requirements: (Others omitted) (III) For the appraisal findings of a

professional appraiser under one of the following circumstances, unless the appraisal result of the assets acquired is higher than the transaction amount or the assets disposed is lower than the transaction amount, it should be processed in accordance with the Auditing Standards (SFAS) No. 20, published by the ROC Accounting Research and Development Foundation (hereinafter referred to as the Accounting Research and Development Foundation). Additionally, a specific opinion should be issued on the root cause of the discrepancy and the adequacy of the trading price.

(Others omitted)

For the Bank’s acquisition or disposal of real estate or other fixed assets (except for transactions conducted with government agencies, proprietary land commissioned to build, leased land commissioned to build, or machines and equipment for business acquired or disposed), a transaction amount over 20% of the paid-in capital or NT$300 million shall require an appraisal report obtained from a professional appraiser before the date of occurrence; in addition, it must meet the following requirements: (Others omitted) (III) For the appraisal findings of a

professional appraiser under one of the following circumstances, unless the appraisal result of the assets acquired is higher than the transaction amount or the assets disposed is lower than the transaction amount, it should be processed in accordance with the Auditing Standards (SFAS) No. 20 published by the Accounting Research and Development Foundation. Additionally, a specific opinion should be issued on the root cause of the discrepancy and the adequacy of the trading price.

(Others omitted)

Article 8

Regulations for Handling Acquisition and Disposal of Marketable Securities (Others omitted) IV. Opinions of experts

For the acquisition or disposal of securities, the Bank should obtain the subject company’s most recent financial statements audited or reviewed by CPAs as a reference prior to the date of occurrence to

Regulations for Handling Acquisition and Disposal of Marketable Securities (Others omitted) IV. Opinions of experts

For the acquisition or disposal of securities, the Bank should obtain the subject company’s most recent financial statements audited or reviewed by CPAs as a reference prior to the date of occurrence to

48


Article 8 evaluate the transaction price: (I) For a transaction amount over

20% of the paid-in capital or NT$300 million, the CPA should be consulted prior to the date of occurrence to express an opinion on the reasonableness of the transaction price. The report of experts needed by the CPA, if any, should be processed in accordance with Auditing Standards No. 20 published by the Accounting Research and Development Foundation, unless there is a public quote of the securities available in an active market, or it is otherwise provided by the Financial Supervisory Commission.

(Others omitted)

evaluate the transaction price: (I) For a transaction amount over

20% of the paid-in capital or NT$300 million, the CPA should be consulted prior to the date of occurrence to express an opinion on the reasonableness of the transaction price. The report of experts needed by the CPA, if any, should be processed in accordance with Auditing Standards No. 20 published by the Accounting Research and Development Foundation, unless there is a public quote of the securities available in an active market, or it is otherwise provided by the Financial Supervisory Commission of the Executive Yuan.

(Others omitted)

The Financial Supervisory Commission, Executive Yuan has been restructured as the Financial Supervisory Commission since July 1, 2012; therefore the text of Paragraph 4 Section (1) is amended accordingly.

Article 9

Regulations for Handling Related Party Transactions (Others omitted) II. Assessment and operating

procedures For the Bank’s real estate acquired from or disposed to the related party, or the assets other than real estate acquired from or disposed to the related party for an amount over 20% of the paid-in capital, 10% of the total assets, or NT$300 million (except for the trade of government bonds, bond with repurchase or redemption conditions, and purchase or redemption of the domestic money market funds), the following information should be submitted to the Board of Directors and Supervisors for approval in order to have a contract signed and payment made: (I) The purpose, necessity, and

expected benefits of the acquisition or disposal of assets;

(II) Reasons for choosing the related party as a trading counterpart;

Regulations for Handling Related Party Transactions (Others omitted) II. Assessment and operating

procedures For the Bank’s real estate acquired from or disposed to the related party, or the assets other than real estate acquired from or disposed to the related party for an amount over 20% of the paid-in capital, 10% of the total assets, or NT$300 million, the following information should be submitted to the Board of Directors and Supervisors for approval in order to have a contract signed and payment made: (I) The purpose, necessity, and

expected benefits of the acquisition or disposal of assets;

(II) Reasons for choosing the related party as a trading

I. The related party transaction exempted from the requirement of information submission to the board of directors and supervisors for approval is added in Paragraph 2 pursuant to the provision of Article 14 Paragraph 1 of the Guidelines.


49


Article 9

(III) The relevant information for assessing the reasonableness of the scheduled trading conditions pursuant to Paragraph 3 Section (1) and Section (4) of this Article for acquiring real estate from a related party;

(IV) Related party’s initial acquisition date and price, trade counterpart and its relationship with the company and related party, etc.

(V) Estimate the monthly cash flow within the year from the expected contract month and assess the necessity of trade and reasonableness of fund usage.

(VI) The appraisal report of a professional appraiser or the opinions of a CPA is acquired in accordance with the provisions of Paragraph 1 of this Article.

(VII) Trade conditions and other important agreements;

When reporting the foregoing requirements to the Board of Directors for discussion, the opinions of independent directors should be taken into consideration fully. The objection or qualified opinion of independent directors, if any, should be stated in the minutes of the relevant board meeting.

III. Assessment of transaction cost reasonableness

(Others omitted) (V) If the real estate acquired from

the related party by the Bank is assessed to be lower than the transaction price in accordance with Paragraph 3 Section (1) and (2) of the Article, the following matters should be processed. Moreover, if the Bank and the public companies that have investments in the Bank valued with the equity method have special reserve appropriated in accordance with the provisions referred to above, the special

counterpart; (III) The relevant information for

assessing the reasonableness of the scheduled trading conditions pursuant to Paragraph 3 Section (1) and Section (4) of this Article for acquiring real estate from a related party;

(IV) Related party’s initial acquisition date and price, trade counterpart and its relationship with the company and related party, etc.

(V) Estimate the monthly cash flow within the year from the expected contract month and assess the necessity of trade and reasonableness of fund usage.

(VI) The appraisal report of a professional appraiser or the opinions of a CPA is acquired in accordance with the provisions of Paragraph 1 of this Article.

(VII) Trade conditions and other important agreements;

When reporting the foregoing requirements to the Board of Directors for discussion, the opinions of independent directors should be taken into consideration fully. The objection or qualified opinion of independent directors, if any, should be stated in the minutes of the relevant board meeting.

III. Assessment of transaction cost reasonableness

(Others omitted) (V) If the real estate acquired from

a related party by the Bank is assessed to be lower than the transaction price in accordance with Paragraph 3 Section (1) and (2) of the Article, the following matters should be processed. Moreover, if the Bank and the public companies that have the investments in the Bank valued with the equity method have special reserve appropriated in accordance with the provisions

II. The Financial Supervisory

Commission, Executive Yuan has been restructured as the Financial Supervisory Commission since July 1, 2012; therefore the text of Paragraph 3 Section (5) is amended accordingly.

50


Article 9

reserve cannot be used until the assets acquired at high prices are with the recognized valuation loss, disposed of, compensated appropriately, or restituted, or no unreasonableness is evidenced, and with the approval of the Financial Supervisory Commission.

1. The Bank should have a

special reserve appropriated for the difference between the real estate price and estimated cost in accordance with Article 41 Paragraph 1 of the Securities Exchange Act, and it may not be distributed or capitalized for stock shares distribution. The public companies invested in the Bank under the equity method should have special reserve appropriated respectively, to the appropriate amount and shareholding ratio in accordance with Article 41 Paragraph 1 of the Securities Exchange Act.

2. Supervisors should have it handled in accordance with Article 218 of the Company Law.

3. The process of Paragraph 3 Section (5).1 and (5).2 of this Article should be reported to the shareholders’ meeting and the transaction details should be disclosed in the annual report and prospectus.

(VI) For real estate acquired from a related party by the Bank under one of the following circumstances, it should be handled in accordance with

referred to above, the special reserve cannot be used until the assets acquired at high prices are with a recognized valuation loss, disposed of, compensated appropriately, or restituted, or no unreasonableness is evidenced, and with the approval of the Financial Supervisory Commission of the Executive Yuan. 1. The Bank should have a

special reserve appropriated for the difference between the real estate price and estimated cost in accordance with Article 41 Paragraph 1 of the Securities Exchange Act and it may not be distributed or capitalized for stock shares distribution. The public companies invested in the Bank under the equity method should have special reserve appropriated respectively to the appropriated amount and a shareholding ratio in accordance with Article 41 Paragraph 1 of the Securities Exchange Act.

2. Supervisors should have it handled in accordance with Article 218 of the Company Law.

3. The process of Paragraph 3 Section (5).1 and (5).2 of this Article should be reported to the shareholders’ meeting and the transaction details should be disclosed in the annual report and prospectus.

(VI) For real estate acquired from a related party by the Bank under one of the following circumstances, it should be handled in accordance with

III. The construction of

proprietary land or leased land commissioned to a related party pursuant to Article 15 Paragraph 4 of the Guidelines is similar to joint construction in nature;


51


Article 9

Paragraphs 1 and Paragraph 2 of the Article related to the assessments and operating procedures but not Paragraph 3 Section (1), (2), and (3) related to the assessment of transaction cost reasonableness. 1. Related party has assets

acquired by inheritance or bestowal.

2. The related party had contracted to acquire the real estate for over five years from the transaction date.

3. Real estate is acquired by signing a contract for joint construction, proprietary land commissioned to build, or leased land commissioned to build with a related party.

(VII) For real estate acquired from the related party by the Bank with any breach of business operation evidenced, it should be handled in accordance with Paragraph 3 Section (5) of the Article.

IV. Loan amount authorization procedure and the implementation unit. The acquisition or disposal of equipment for business between the Bank and its subsidiaries should be reported to the board of directors with the relevant information enclosed for approval by the Secretariat in advance. However, if it is for an amount less than NT$300 million, the Chairman is authorized to have it approved directly for operation and presented to the board of directors for ratification afterwards.

Paragraphs 1 and Paragraph 2 of the Article related to the assessments and operating procedures but not Paragraph 3 Section (1), (2), and (3) related to the assessment of transaction cost reasonableness. 1. Related party has assets

acquired by inheritance or bestowal.

2. The related party had contracted to acquire the real estate for over five years from the transaction date.

3. Sign a construction contract with the related party to acquire the real estate.

(VII) For real estate acquired from the related party by the Bank with any breach of business operation evidenced, it should be handled in accordance with Paragraph 3 Section (5) of the Article.

IV. Loan amount authorization procedure and the implementation unit. The acquisition or disposal of machines and equipment for business between the Bank and its subsidiaries should be reported to the board of directors with the relevant information enclosed for approval by the Secretariat in advance. However, if it is for an amount less than NT$300 million, the Chairman is authorized to have it approved directly for operation and presented to the board of directors for ratification afterwards.

therefore, Paragraph 3 Section (6).3 is amended to stipulate that the requirements of Paragraph 3 Section (1) – (3), regarding having the transaction cost reasonableness assessed for the real estate acquired from a related party, is not applicable if the real estate is acquired by having the proprietary land or leased land commissioned to a related party for construction; however, Section (1) and Section (2) remain effective.

IV. The text of Paragraph 4 regarding machines and equipment for business is amended pursuant to the introduction of the International Financial Reporting Standards (IFRSs).

V. The text of the remaining paragraphs is amended accordingly.

Article 10

Regulations for Handling Acquisition and Disposal of Membership Card or Intangible Assets (Others omitted) IV. Membership card or intangible

assets assessments report For the Bank’s acquisition or disposal of membership card or intangible

Regulations for Handling Acquisition and Disposal of Membership Card or Intangible Assets (Others omitted) IV. Membership card or intangible

assets assessments report For the Bank’s acquisition or disposal of membership card or intangible

The transaction of intangible assets conducted with government agencies is exempted from the requirement of having a CPA contracted to express an opinion on the reasonableness of a transaction price pursuant to

52


Article 10 assets for an amount over 20% of paid-in capital or NT$300 million, except for the transactions conducted with government agencies, a CPA should be contracted prior to the date of occurrence to express an opinion on the reasonableness of the transaction price which should be processed in accordance with Auditing Standard No. 20 of the Accounting Research and Development Foundation.

assets for an amount over 20% of paid-in capital or NT$300 million, a CPA should be contracted prior to the date of occurrence to express an opinion on the reasonableness of the transaction price which should be processed in accordance with Auditing Standard No. 20 of the Accounting Research and Development Foundation.

Article 11 of the Guidelines.

Article 12

Regulations for Handling Acquisition and Disposal of Financial Derivatives (Others omitted)

(VI) The management authorized by the Board shall have derivatives trading managed in accordance with the following principles: 1. Regularly assess the

adequacy of the current risk management measures and have it processed in accordance with the “Guidelines for Handling Acquisition and Disposal of Assets by Public Companies” and the Regulations.

2. Take necessary measures for any nonconforming trade and profit and loss; also, report it immediately to the Board of Directors. Independent directors must attend the board meeting to express an opinion.

III. If personnel are authorized to handle derivatives transactions in accordance with the Regulations, it should be reported to the most recent board meeting.

IV. For derivatives transactions, the related data of the transaction type, amount, the Board meeting / general Board meeting resolution date, and matters that should be carefully assessed in accordance with Paragraph 2 Section (4), Section (5).2, and Section (6).1 of

Regulations for Handling Acquisition and Disposal of Financial Derivatives (Others omitted)

(VI) The management authorized by the Board shall have derivatives trading managed in accordance with the following principles: 1. Regularly assess the

adequacy of the current risk management measures and have it processed in accordance with the “Procedures.”

2. Take necessary measures for any nonconforming trade and profit and loss; also, report it immediately to the Board of Directors. Independent directors must attend the board meeting to express an opinion.

III. A Derivative Transaction Log should be established with the related data of the derivatives transaction type, amount, date, and Board meeting resolution date, and matters that should be carefully assessed in accordance with Paragraph 2 Section (4), Section (5).2, and Section (6).1 of the Articles should be documented in the Log for future reference.

I. Pursuant to the provision of Article 20 Paragraph 3 of the Guidelines, Paragraph 3 is added regarding the derivatives trade of the Bank, if personnel are authorized to handle it in accordance with the Regulations, it should be reported to the most recent board meeting. The current Paragraph 3 and Paragraph 4 are realigned to Paragraph 4 and Paragraph 5.

II. In addition, Paragraph 4 regarding the process of derivatives transaction data reservation for record is amended in accordance with the actual practice.


53


Article 12 the Article must be reserved for future reference.

V. Internal audit system Internal auditors should appraise the adequacy of derivative transactions internal control regularly and randomly; and in addition, audit on a monthly basis the compliance of the Trade Department engaged in derivative transactions with an audit report composed. Supervisors should be informed in writing for any major nonconformity identified.

IV. Internal audit system

Internal auditors should appraise the adequacy of derivative transactions internal control regularly and randomly; and in addition, audit on a monthly basis the compliance of the Trade Department engaged in derivative transactions, with an audit report composed. Supervisors should be informed in writing of any major nonconformities that are identified.

Article 14

Information Disclosure Procedure I. Announcement and declaration

matters and standards (I) It is for real the estate acquired

from or disposed to the related party, or the assets other than real estate acquired from or disposed to the related party for an amount over 20% of the paid-in capital, 10% of the total assets, or N$300 million, except for the trade of government bonds, bonds with repurchase or redemption conditions, and purchase or redemption of the domestic money market funds.

(II) Engaged in the merger, split, acquisition, or transfer of shares.

(III) Derivative trading losses amount to the threshold of a collective contract or an individual contract defined in the Procedures.

(IV) Engaged in the transaction of assets, disposition of claims, or investment in Mainland China other than the ones in the preceding three paragraphs with a transaction amount over 20% of the paid-in capital or NT$300 million. However, except for the following conditions: 1. Trade of government bonds; 2. Marketable securities traded

by professional investors at domestic and overseas Stock

Information Disclosure Procedure I. Announcement and declaration

matters and standards (I) It is for real estate acquired

from or disposed to the related party, or assets other than real estate acquired from or disposed to the related party for an amount over 20% of the paid-in capital, 10% of the total assets, or N$300 million, except for the trade of government bonds and bonds with repurchase or redemption conditions.

(II) Engaged in the merger, split,

acquisition, or transfer of shares. (III) Derivative trading losses amount

to the threshold of a collective contract or an individual contract defined in the Procedures.

(IV) Engaged in the transaction of assets, disposition of claims, or investment in Mainland China other than the ones in the preceding three paragraphs with a transaction amount over 20% of the paid-in capital or NT$300 million. However, except for the following conditions: 1. Trade of government bonds; 2. Marketable securities traded

by professional investors at domestic and overseas Stock

I. Pursuant to the provision of Article 30 Paragraph 1 Section 1 and 4 (3) of the Guidelines, the purchase or redemption of domestic money market funds is exempted from the requirement of an announcement. The text of Paragraph 1 Section (1) and (4).3 is amended accordingly.

II. Pursuant to the provision of Article 30 Paragraph 1 Section 4 (2) of the Guidelines, marketable securities subscribed by securities firms at the primary market in accordance with the governing law are exempted from the requirement of an announcement. The text of Paragraph 1 Section (4).2 is amended accordingly.

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Article 14

Exchanges or Securities Firms, or marketable securities subscribed by securities firms at the primary market in accordance with the governing law.

3. Trade of bonds with repurchase or redemption conditions, and purchase or redemption of domestic money market funds.

4. The acquisition or disposal of assets that are equipment for business purposes, traded with a non-related party for an amount less than NT$500 million.

5. Real estate is acquired by proprietary land commissioned to build, leased land commissioned to build, joint construction for building sharing, joint construction for percentage sharing, or joint construction for sales sharing with an amount less than NT$500 million.

(V) The transaction amount in the last four paragraphs is calculated as follows: 1. The amount of each

transaction; 2. The transaction amount of

the underlying subject acquired from or disposed to the same counterpart cumulatively within one year;

3. The transaction amount of the real estate in the same development project acquired or disposed (acquisition and disposition is accumulated separately) cumulatively within one year;

4. The transaction amount of the same marketable security acquired or disposed (acquisition and disposition

Exchanges or Securities Firms.

3. Trade of bonds with repurchase or redemption conditions.

4. The acquisition or disposal of

assets that are machines and equipment for business purposes, traded with non-related party for an amount less than NT$500 million.

5. Real estate is acquired by proprietary land commissioned to build, leased land commissioned to build, joint construction for building sharing, joint construction for percentage sharing, or joint construction for sales sharing with an amount less than NT$500 million.

(V) The transaction amount in the last four paragraphs is calculated as follows: 1. The amount of each

transaction; 2. The transaction amount of

the underlying subject acquired from or disposed to the same counterpart cumulatively within one year;

3. The transaction amount of the real estate in the same development project acquired or disposed (acquisition and disposition is accumulated separately) cumulatively within one year;

4. The transaction amount of the same marketable security acquired or disposed (acquisition and disposition

III. The text of Paragraph 1

Section (4).4 regarding machine and equipment for business will be amended pursuant to the adoption of IFRSs.

IV. The Financial Supervisory

Commission, Executive Yuan has been restructured as the Financial Supervisory Commission since July 1, 2012; therefore the text of Paragraph 3 Section (1), (2), and (5) are amended accordingly


55


Article 14

is accumulated separately) cumulatively within one year;

(VI) The aforementioned “within one year” in the preceding paragraph refers to the year before the occurrence date of the transaction and the requirement of announcement is exempted in accordance with the Regulations.

II. Announcement and declaration The Bank’s acquisition or disposal of assets, subject to the mandatory announcement of Paragraph 1 of this Article with a reportable amount, should be processed for announcement and declaration within two days from the date of occurrence.

III. Announcement and declaration procedure (I) The Bank should have the

relevant information published on the website designated by the Financial Supervisory Commission for the purpose of announcement and declaration.

(II) The Bank should have the

derivatives trade of the Bank and non-domestic subsidiaries up to the end of the last month published in the mandatory format on the website designated by the Financial Supervisory Commission before the 10th day of each month.

(III) If the Bank’s mandatory

announcement items are found with errors or omissions that must be corrected, all mandatory announcement items should be announced and declared again.

(IV) The Bank should have the contract, minutes of meeting, Log, appraisal reports, and written opinions of the CPAs, lawyers, or securities

is accumulated separately) cumulatively within one year;

(VI) The aforementioned “within one year” in the preceding paragraph refers to the year before the occurrence date of the transaction and the requirement of announcement is exempted in accordance with the Regulations.

II. Announcement and declaration The Bank’s acquisition or disposal of assets, subject to the mandatory announcement of Paragraph 1 of this Article with a reportable amount, should be processed for announcement and declaration within two days from the date of occurrence.

III. Announcement and declaration procedure (I) The Bank should have the

relevant information published on the website designated by the Financial Supervisory Commission, Executive Yuan for the purpose of announcement and declaration.

(II) The Bank should have the derivatives trade of the Bank and non-domestic subsidiaries up to the end of the last month published in the mandatory format on the website designated by the Financial Supervisory Commission, Executive Yuan before the 10th day of each month.

(III) If the Bank’s mandatory announcement items are found with errors or omissions that must be corrected, all mandatory announcement items should be announced and declared again.

(IV) The Bank should have the contract, minutes of meeting, Log, appraisal reports, and written opinions of the CPAs, lawyers, or securities

56


Article 14

underwriters related to the acquisition or disposal of assets reserved at the Bank’s for at least five years, unless otherwise provided by law.

(V) In any of the following circumstances, the Bank’s handling transaction announcement and declaration, in accordance with the Regulations, should have the relevant information published on the website designated by the Financial Supervisory Commission within two days from the date of occurrence.

1. The originally signed contract

has been changed, terminated, or cancelled.

2. The merger, split, acquisition, or transfer of shares has not been completed in accordance with the schedule.

3. The original announcement and declaration has been changed.

IV. Format of announcement The format of the announcement for the mandatory announcement items and content according to the Regulations is illustrated in the “Guidelines for Handling Acquisition and Disposal of Assets by Public Companies” and is attached.

underwriters related to the acquisition or disposal of assets reserved at the Bank’s for at least five years, unless otherwise provided by law.

(V) Under any of the following circumstances, the Bank’s handling transaction announcement and declaration, in accordance with the Regulations, should have the relevant information published on the website designated by the Financial Supervisory Commission, Executive Yuan within two days from the date of occurrence. 1. The originally signed contract

has been changed, terminated, or cancelled.

2. The merger, split, acquisition, or transfer of shares has not been completed in accordance with the schedule.

3. The original announcement and declaration has been changed.

IV. Format of announcement The format of the announcement for the mandatory announcement items and content according to the Regulations is illustrated in the “Guidelines for Handling Acquisition and Disposal of Assets by Public Companies” and is attached.


57

Attachment IX Current shareholding of Directors and Supervisors

Book closure date: 26 April 2014

Position Name of persons

or companies Representatives

appointed Number of

shares held Percentage of shares held

Chairperson Yu Ding Industrial Co., Ltd.

Ching-Ing Hou 8,443,753 0.31%

Vice Chairman Douglas Tong Hsu - 5,267,667 0.19%

Independent Director,Managing Director

Ben C.B. Chang - 0 0

Executive Director Oriental Union Chemical Corp.

Shaw Y. Wang 48,176,549 1.77%

Tsung-Ming Chung 48,176,549 1.77%

Director

Ta Juh Chemical Fiber Co., Ltd.

Eli Hong 19,305,531 0.71%

Asia Cement Corp.

Thomas Chou 65,120,828 2.39%

Min-Teh Yu 65,120,828 2.39%

Independent Director Bing Shen - 0 0

The combined shareholding of all directors on the book closure date 146,314,328 5.37%

The minimum required combined shareholding of all directors by law 65,450,838 2.40%

Resident Supervisor Far Eastern New Century Corp.

Humphrey Cheng 72,458,863 2.66%

Supervisor

Far Eastern New Century Corp.

Shi-Chun Hsu 72,458,863 2.66%

YDT Technology International Company.

Linin Day 2,424,870 0.09%

The combined shareholding of all supervisors on the book closure date 74,883,733 2.75%

The minimum required combined shareholding of all supervisors by law 6,545,083 0.24%

Note: The holdings of individual representatives are excluded from total shareholding calculations.

58

Attachment X Impact of the Stock Dividend Distribution on Operating Results, Earnings per Share and Shareholders’ Return on Investment Not applicable.


59

Attachment XI Information about employee bonuses and remuneration to

Directors and Supervisors The 2013 Earnings Distribution were resolved by the Board of Directors on 4 March 2014. The

information regarding employee bonuses, Directors and supervisors are as underneath:

(1) It is proposed to distribute NT$124,321,022 for employee bonuses (in stocks) and

NT$41,440,341 for Directors and supervisors remuneration.

(2) As the employee bonuses and remuneration to Directors and supervisors are different from

recognized estimated amount, the difference, reasons, and measures should be disclosed:

Not applicable.

Note: Pursuant to the rule issued by Financial Supervisory Commission (the Gin-Guan-Jheng-

Shen-Zi No. 1010059296 Order) on 28 December 2012.

60

GENERAL INFORMATION I Articles of Incorporation of Far Eastern International Bank Chapter I. General Provisions

Article 1

The purpose of this Bank is to support the government policy of financial internationalization

and liberalization and to promote the development of domestic economy and industry. The

Bank shall be named FAR EASTERN INTERNATIONAL BANK CO. LTD. and be incorporated

as a Company Limited by Shares in accordance with the Bank Law and the Company Law of

the Republic of China.

The English name of the Bank is to be FAR EASTERN INTERNATIONAL BANK.

Article 2

The head office of the Bank shall be located in Taipei, Taiwan, the Republic of China. Whenever

deemed necessary to facilitate or promote business, the Bank may establish sub-organizations

in any appropriate locations both at home and abroad.

Chapter II. Business of the Bank

Article 3

The business of the Bank shall be categorized as H101021 Commercial Banking Industry.

Article 3 bis

The scope of business of the Bank shall be as follows:

(1) To accept check deposits;

(2) To accept demand deposits;

(3) To accept time deposits;

(4) To provide short or long term loans;

(5) To accept discounted notes;

(6) To invest in government bonds, short term bills, corporate bonds and financial bonds;

(7) To engage in domestic and foreign remittance;

(8) To accept commercial bill of exchange;

(9) To issue local and foreign letters of credit;

(10) To engage in local and foreign guarantee service;

(11) To act as a collecting and paying agent;

(12) To act as agent for selling government bonds, treasury bills, corporate bonds and company

stocks;

(13) To engage in credit card business;

(14) To engage in custodial and warehousing business;

(15) To engage in safe boxes leasing business;


61

(16) To buy and sell foreign cash and traveler’s check;

(17) To provide guarantee service to export foreign exchange transaction, import foreign exchange

transaction, general incoming and outgoing remittance, foreign exchange deposits, foreign

exchange loans, and foreign exchange guaranteed payment;

(18) To provide foreign exchange collateralized account service;

(19) To engage in derivative financial products business to the approval of the central competent

authority;

(20) To provide factoring service subject to the approval of the central competent authority;

(21) To issue financial bonds;

(22) To underwrite the issuance of corporate bonds;

(23) To provide the services as designated by the provisions of Trust Business Law;

(24) To engage in the securities business (to buy and sell securities as an agent);

(25) To sell gold bars, gold coins, and silver coins as an agent;

(26) To provide agent’s service related to the above-mentioned business or subject to the approval

of the central competent authority;

(27) To engage in other related business subject to the approval of the central competent authority.

Chapter III. Shares

Article 4

The total authorized capital of the Bank is to be Thirty Five Billion New Taiwan Dollars

(NT$45,000,000,000), Three billion and Five Hundred Million (4,500,000,000) common shares

with a par value of Ten New Taiwan Dollars (NT$10) per share, which may be partially issued,

from time to time, by the Board of Directors under authorization.

Issuance of Preferred Stock shall not exceed the amount described above.

Article 4 bis

The Bank has issued Series A Registered Preferred Stock. The rights, obligations, and other

important terms and conditions are listed as follows:

1. Should there be surplus after the closing of annual accounts, the Bank shall pay all taxes and

make up the loss of the previous years in compliance with the law. Should there be further

surplus, legal reserve and special reserve shall be retained in compliance with the law and the

relevant provisions of the Articles of Incorporation. After that, the remaining surplus together

with the unallocated surplus of the last year shall first be paid for the dividends of the current

year and the unpaid dividends of the previous years on the Series A Preferred Stock.

2. The dividends of Series A Preferred Stock shall be marked up based on the fixed interest rate

of the one-year time deposit issued by the Chunghwa Post Co., Ltd. The mark-up shall be

limited up to 4% per annum and calculated based on the actual selling price. After the books

of accounts are recognized in the yearly Shareholders’ Meeting, the Board of Directors shall

separately set a standard date for paying such dividends.

The payment of the dividends of Series A Preferred Stock of the current year shall be calculated

based on the actual issuing days from the issue date in proportion to the days of the total year.

62

The issue date means the standard date of capital increase. The payment of the dividends

in the redemption year shall thus be calculated based on the actual issuing days in proportion

to the days of that total year.

3. Should there be no surplus after the closing of the annual accounts, or should the surplus be

insufficient for the payment of the dividends of Series A Preferred Stock of the current year,

or should the payment of the dividends of Series A Preferred Stock result in the falling of the

capital adequacy ratio of the Bank below the minimum requirement prescribed by the law or

the competent authority and the payment of dividends be thus suspended, such insufficient

portion of dividends shall be accumulated and be paid in priority order in the later years with

surplus.

4. The remaining assets of the Bank shall be distributed to the holders of the Series A Preferred

Stock in preference to the holders of the Common Stock provided, however, that such

distribution shall not exceed the total issuing value and any dividends owed.

5. The holders of the Series A Preferred Stock shall have no voting and election rights in the

Shareholders’ Meeting; but they shall have the right to be elected to be directors or supervisors.

6. Except the right of receive the dividends as provided in Sub-paragraph 2 of this Paragraph,

the holders of the Series A Preferred Stock shall have no right to the distribution of the cash

or capital set aside from the surplus and capital surplus, available to the holders of the Common

Stock.

7. In case of the issuing of new stock by the Bank due to capital increase, the holders of the

Series A Preferred Stock shall have the same pre-emptive right to purchase the new stock

like the holders of the Common Stock.

8. Commencing from the second day of the third anniversary from the issue date of the Series

A Preferred Stock, except during the time when the transfer of shares is suspended in

accordance with the law, the holders of the Series A Preferred Stock shall have the right, at

any time, to convert the Series A Preferred Stock, in full or in part, into shares of Common

Stock of the Bank at the conversion rate of one-to-one. The rights and obligations of the

Common Stock so converted shall be the same as those of the other original Common

Stock.

9. Should any shares of the Series A Preferred Stock be converted into shares of the Common

Stock before the standard date of distribution of dividends, the holders shall not have the right

to the distribution of the dividends of Preferred Stock in the current and following years.

However, the outstanding dividends of such Series A Preferred Stock in the previous years

shall still be paid, in priority order, in the same year or the following years.

10. The Series A Preferred Stock shall be perpetual without maturity date. Commencing from the

second day of the fifth anniversary of the issue date, if permitted by the law and the competent

authority, the Bank may, at any time, redeem, at the actual issuing price, the whole or a part

of the Series A Preferred Stock in circulation. Should the Bank fail to redeem the Series A

Preferred Stock before the fifth anniversary of the issue date, an additional one percent per

annum shall be increased to its dividends commencing from the second day of the fifth

anniversary of the issue date.


63

The Board of the Directors shall be authorized to prescribe the dividend rate of the Series A

Preferred Stock at the actual issue date according to the conditions of the current capital market

and subject to the restrictions as provided in the Sub-paragraph 2 of the preceding Paragraph.

Article 5

The share certificate of the Bank shall be numbered, bearing the joint signatures or seals of three

Directors, and issued only after it is duly underwritten in accordance with the Law.

The shares issued by the Bank need not be witnessed by printed share certificate but shall be

registered with a securities central depository institution; and at the time of issuing new shares,

the Bank may print a share certificate witnessing the total shares so issued but shall arrange to

safe-keep such share certificate at a securities central depository institution.

At the request of any securities central depository institution, the Bank may re-issue share

certificates witnessing large number of shares in exchange for those certificates witnessing small

number of shares.

The Bank may issue special shares certificates.

If the Bank wishes to merge with another company, matters relating to such merger need not be

decided by the resolution of special shareholders’ meeting.

Article 6

Any matter relating to share transactions of the Bank shall be handled in accordance with ‘the

Regulation Governing the Handling of Share Transactions by Publicly Traded Companies’ and

other relevant laws and regulations.

Article 7

Registration of transfer of a share certificate shall be suspended within sixty (60) days prior to

a regular shareholders’ meeting, or thirty (30) days prior to a special shareholders’ meeting, or

five (5) days prior to the date set for distributing dividends, bonuses, or other benefits.

Chapter IV. Shareholders’ Meetings

Article 8

Meetings of shareholders of the Bank are of two kinds, namely: regular meetings of shareholders

and special meetings of shareholders. Unless otherwise defined in the laws and regulations, the

meetings ard called by the Board of Directors according to law. A regular meeting of shareholders

shall be called by the board of directors within six months after the conclusion of each business

year. A special meeting of shareholders may be called by the law whenever they deem it

necessary.

Article 9

Notice of a regular meeting of shareholders shall be given to each shareholder and publicly

announced thirty (30) days prior to the date of meeting. Notice of a special meeting of shareholders

shall be given to each shareholder and publicly announced fifteen (15) days prior to the date of

meeting. The notice shall state the time, place, and the reasons for calling the meeting.

64

Article 10

Unless otherwise provided in the Company Law, a quorum of the meeting of shareholders shall

consist of shareholders holding more than half the total outstanding shares issued by the Bank,

resolutions of shareholders shall be made by a majority vote of shareholders present in person.

Article 11

The powers of the meeting of shareholders shall be as follows:

(1) To prescribe and amend the Articles of Incorporation;

(2) To elect the directors and supervisors;

(3) To review the books prepared by the board of directors and the supervisors’ reports;

(4) To review proposals governing the increase or decrease of the share capital of the Bank;

(5) To distribute profit or make up the deficit;

(6) To resolve on any other important matters or those as provided in the Company Law.

Article 12

When the shareholder is unable to attend the Shareholders’ Meeting, the entrusted deputy may

attend the meeting and exercise the shareholder’s rights according to Article 177 of the Company

Act. The entrusted deputy is not the shareholder only.

Unless the Company Law provides otherwise, the designation of a proxy by any shareholder

shall be subject to the ‘Regulation Governing the Attendance by Proxy of Shareholders’

Meetings of Publicly Traded Companies’.

Article 13

Unless the Company Law or the Articles of Incorporation of the Bank should provide otherwise,

the meetings of shareholders shall be presided over in accordance with the Rules of Proceedings

for Meetings of Shareholders of the Bank.

Article 14

The resolutions at the Shareholder’s Meeting shall be documented in the Meeting minutes. The

Meeting minutes shall be signed or stamped by the Chairman and the resolutions shall be

exercised according to Article 183 of the Company Act.

Chapter V. Board of Directors, Supervisors and Managers

Article 15

The Bank shall have nine (9) to fifteen (15) Directors, and three (3) to five (5) Supervisors, all to

be elected among the shareholders with capacity at a shareholders’ meeting. The directors shall

include not less than two Independent Directors, and not less than one-fifth of the director seats

shall be held by the Independent Directors. A candidate nomination system shall be adopted

for the election of Directors and Supervisors. The shareholders shall elect the Directors and

Supervisors from the list of candidates of Directors and Supervisors. Any matters relating to

nomination shall be handled in accordance with Article 192-1 of the Company Act and the

relevant laws and regulations.


65

The number of total shares owned by the Directors and the Supervisors shall be prescribed in

accordance with the ‘Regulation Governing the Shareholding Percentage of Directors and

Supervisors and its Verification of Publicly Traded Companies’.

Article 16

The tenure in office of the Directors and Supervisors shall be three (3) years. All Directors and

Supervisors are eligible for re-election.

Article 17

Three to five Managing Directors shall be elected by and from among the Directors. The Managing

Directors shall include not less than one Independent Director, and not less than one-fifth of

the Managing Director seats shall be held by Independent Directors. The Chairman and Vice

Chairman of the Board of Directors shall be elected by and from among the Managing Directors.

Directors and Managing Directors shall form the Board of Directors and the Board of Managing

Directors respectively.

The Board of Managing Directors shall carry out the functions of the Board of Directors while

the Board of Directors is in recess. A Resident Supervisor shall be elected by and from among

the Supervisors.

One to Two Executive Directors shall be elected by and from among the Board of Directors.

The Executive Directors shall attend meetings of the Board of Managing Directors but shall not

vote.

Article 18

The Chairman of the Board of Directors shall externally represent the Bank and internally preside

over the shareholders’ meetings, the meetings of the Board of Directors, and the meetings of the

Board of Managing Directors. If, for temporary leave or other reasons, the Chairman is unable

to exercise his powers, the Vice Chairman of the Board of Directors shall act on his behalf; and

if the Vice Chairman likewise is unable to exercise his powers, the Chairman of the Board may

designate one Managing Director to act on his behalf. In the absence of such designation, the

Managing Directors or Directors shall elect one among themselves to exercise these powers.

Article 19

Regular meetings of the Board of Directors shall be convened once every three (3) months with

invitation of presence by the Supervisors; and meetings of the Board of Managing Directors may

convene from time to time.

In calling a meeting of the board of directors, a notice setting forth therein the subject(s) to be

discussed at the meeting shall be given to each director and supervisor no later than 7 days prior

to the scheduled meeting date by means of personal delivery, fax, electronic mail, or postal

delivery; however, in the case of emergency, the meeting may be convened at any time by the

same means of notice as provided above.

66

If a Director is unable to attend the meeting, he may appoint another Director to act on his

behalf at the meeting in accordance with the law.

The preparation and distribution of the minutes of meeting of the Board of Directors may be

effected by means of electronic transmission.

Article 20

The Power of the Board of Directors shall be as follows:

(1) To review and approve any corporate rules or regulations;

(2) To review and approve business plan;


(4) To decide as to whether to establish, to revoke, or to change any of the branches and/or

representative offices of the Bank;

(5) To review important contracts;

(6) To prepare and compile budgets and settlement of accounts;

(7) To decide as to whether to buy or sell real estates;

(8) To propose as to the appropriation of profits or surplus;

(9) To review and approve big loan applications and important businesses;

(10) To handle matters related to the appointment of the President and Executive Vice Presidents;

(11) To review and approve the appointment and dismissal of each department head of both the

administrative and business units.

(12) To review matters assigned by the Chairman of the Board of Directors and the proposals

submitted by the President;



Article 21

The Powers of the Supervisors shall be as follows :

(1) To investigate and review as to the status of the business and financial conditions of the

Bank.

(2) To audit the books of accounts, documents and financial statements;

(3) To check the inventory;

(4) To supervise the performance of the employees and expose malfeasance or dereliction

on the part of the employees.

(5) To perform any other functions as may be prescribed by laws and regulation.

Article 22

The Board of Directors shall be authorized to resolve on the remunerations of the directors and

supervisors based on their contribution to the operation of the Bank and the comparable level

as offered by the other companies in the same trade.


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Article 23

The Bank shall appoint: a President to manage the overall business of the Bank in accordance

with the policy adopted by the Board of Directors; and a number of Executive Vice Presidents

and a number of managers to assist the President. Besides, the Bank shall also appoint one

Chief Auditor to manage the overall auditing matters of the Bank. Appointment and dismissal

of the above-mentioned personnel shall be approved by a majority vote of the Directors

present at a Meeting of Board of Directors.

Chapter VI. Accounting

Article 24

The fiscal year of the Bank shall be from January 1st to December 31st, and based on the calendar

years of the Republic of China. There shall be two accounting periods in a year. June 30 shall

be the settling date for the 1st period and December 31 that for the second period. At the end

of the fiscal year, an annual settlement of accounts shall be conducted.

Article 25

For the purpose of settling the accounts of the Bank, the Board of Directors shall prepare a report

on operations, financial statements, and proposals for distribution of net profits or for covering

of losses, and present them to the Supervisor for examination thirty (30) days prior to the regular

meeting of shareholders. The Supervisor shall prepare a report and present it to the regular

meeting of shareholders for acceptance.

The above-mentioned statements and the supervisor’s report shall be kept at the Bank, ten (10)

days prior to the regular meeting of shareholders, for the inspection by the shareholders; and

such shall be reported to the competent authority and the Central Bank for reference within fifteen

(15) days after the regular meeting of shareholders.

Article 26

In case of net profits after settlement of accounts for each fiscal year, the Bank shall first pay up

all necessary taxes and recover all the losses incurred in the previous years, if any, before setting

aside a legal reserve of thirty per cent (30%) of the net profit and appropriating, according to law

and regulations, a special surplus reserve. The remaining amount together with the accumulated

retained profits of the last year shall first be distributed to the dividends of Preferred Stock.

After having had certain portion set aside based on the condition of operation, the remaining

dividends shall be appropriated as follows:

(1) Dividends of shareholders: To be ninety-two per cent (92%) and equally distributed to the

shareholders according to their share-holding; but in case of capital increase the dividends

distributable on the newly increased shares of the year shall be decided by the resolution of

a shareholders’ meeting;

(2) Remuneration of Directors and Supervisors: To be two per cent (2%) and the method of

distribution is to be decided by the meeting of Directors;

(3) Employees bonus: To be six per cent (6%).

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Before the above-mentioned legal reserve reaches the amount of total paid-in capital, the

maximum appropriation of cash dividends shall not exceed fifteen percent (15%) of the total

paid-in capital.

Allocation of profits as prescribed under Paragraph 1 above shall be proposed by the Board of

Directors in accordance with the existing circumstances at the time, taking into account the

future development plan of the Bank. Any allocation of cash dividend shall, in principle, be no

less than 10% of the total stock interest and stock dividends to be distributed that year.

Chapter VII. Supplemental Provisions

Article 27

Rules governing the organization of the Bank, and other rules and regulations shall be separately

prescribed by the Board of Directors.

Article 28

The matters not provided for in the Articles of Incorporation of the Bank shall be dealt with in

accordance with the Bank Law, the Company Law, and other relevant financial laws and

regulations.

Article 29

These Articles of Incorporation were established on May 14, 1990 and shall be effective as of

the date on which they are approved by the competent authority.

※ The first amendment was made, on December 9, 1991, by the Promoters’ Meeting.

※ The second amendment was made, on May 21, 1993, by the Shareholders’ Meeting.

※ The third amendment was made, on May 19, 1995, by the Shareholders’ Meeting.

※ The fourth amendment was made, on May 22, 1996, by the Shareholders’ Meeting.

※ The Fifth Amendment was made on May 21, 1997, by the Shareholders’ Meeting.

※ The Sixth amendment was made on May 20, 1998, by the Shareholders’ Meeting.

※ The Seventh amendment was made on May 19, 1999, by the Shareholders’ Meeting.

※ The Eighth amendment was made on April 28, 2000, by the Shareholders’ Meeting.

※ The Ninth amendment was made on May 11, 2001, by the Shareholders’ Meeting.

※ The Tenth amendment was made on June 5, 2002, by the Shareholders’ Meeting.

※ The Eleventh amendment was made on May 29, 2003 by the Shareholders’ Meeting.

※ The Twelfth amendment was made on April 16, 2004 by the Shareholders’ Meeting.

※ The Thirteenth amendment was made on June 27, 2006 by the Shareholders’ Meeting.

※ The Fourteenth amendment was made on June 20, 2007 by the Shareholders’ Meeting.

※ The Fifteenth amendment was made on June 20, 2007 by the Shareholders’ Meeting.

※ The Sixteenth amendment was made on June 6, 2008 by the Shareholders’ Meeting.

※ The Seventeenth amendment was made on June 6, 2008 by the Shareholders’ Meeting.

※ The Eighteenth amendment was made on June 10, 2009 by the Shareholders’ Meeting.


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※ The Nineteenth amendment was made on June 10, 2009 by the Shareholders’ Meeting.

※ The Twentieth amendment was made on June 21, 2010 by the Shareholders’ Meeting.

※ The Twenty-first amendment was made on June 15, 2011 by the Shareholders’ Meeting.

※ The Twenty-second amendment was made on June 26, 2012 by the Shareholders’ Meeting.

※ The Twenty-third amendment was made on June 19, 2013 by the Shareholders’ Meeting.

The amendment of Articles of Incorporation shall take effect on approval by the Shareholders’

meeting.

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II Rules Governing the Conduct of Shareholders’ Meeting of Far Eastern International Bank

As last amended on June 26, 2012

Article 1 The shareholders’ meeting of the Company shall be held according to the rules herein.

Article 2 The location for shareholders’ meeting shall be the Company’s place of business or a place convenient for attendance by shareholders (or by proxies) that is suitable to holding of this meeting. The meeting shall be held between 9:00AM and 3:00PM.

The shareholders (or proxies) when attending the meeting shall wear admission badge and hand in signed attendance form.

When convening shareholders’ meeting, the Company shall incorporate electronic vote casting as one of the alternative ways to cast the vote, and the procedure of electronic casting shall be written in the notice of shareholders’ meeting. Shareholders who vote via electronic casting is deemed as presented in person. With respect to extemporary motions, amendments of the original proposals, and substitute proposals raised in the shareholders’ meeting, those who vote via electronic casting shall be considered as abstain.

Number of shareholders in attendance shall be calculated based on the number of attending shares, which equals to the sum of number of shares shown on the signed attended forms and the number of voting shares via electronic casting.

The Company may appoint lawyers, accountants or related personnel to attend the shareholders’ meeting.

The personnel in charge of handling the affaires of the meeting shall wear identification badge or armband.

For a shareholders’ meeting convened by the board of directors, the chairman of the board of directors shall preside at the meeting. If the chairman of the board of directors is on leave or unable to exert the rights, the vice-chairman of the board of directors shall preside instead. If the position of vice-chairman is vacant or the vice-chairman is on leave or unable to exert the rights, the chairman of the board of directors shall designate a director to preside at the meeting. If no director is so designated, the chairman of the meeting shall be elected by the board of directors from among themselves. For a shareholders’ meeting convened by any other person having the convening right, he/she shall act as the chairman of that meeting; if there are two or more persons having the convening right, the chairman of the meeting shall be elected from among themselves.

The complete processes of the meeting shall be recorded by voice or video recorders and all the records shall be kept by the Company for a minimum period of at least one year.

Article 3 The chairperson shall announce starting of the meeting when the attending shareholders (or proxies) represent more than half of the total shares issued in public. The chairperson may announce postponement of meeting if the legal quorum is not present after the designated meeting time. Such postponement is limited to two times and the aggregated postponed time shall not exceed one hour. If quorum is still not present after two postponements but the attending shareholders (or proxies) represent more than one third of the total shares issued in public, tentative resolution/s may be passed with respect to ordinary resolution/s by a majority of those present.


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After proceeding with the aforesaid tentative resolutions, the chairperson may put the tentative resolutions for re-voting over the meeting if and when the shares represented by the attending shareholders (or proxies) reached the legal quorum.

Article 4 If the shareholders’ meeting is convened by the board of directors, the agenda shall be designated by the board of directors. The meeting shall proceed in accordance with the designated agenda and shall not be amended without resolutions.

If the meeting is convened by person, other than the board of directors, having the convening right, the provision set out in the preceding paragraph shall apply mutatis mutandis.

Except with shareholders’ resolution, the chairperson shall not declare adjournment of the meeting before the first two matters set out in the agendas (including extemporary motions) are concluded. During the meeting, if the chairperson declares adjournment of the meeting in violation of the preceding rule, a new chairperson may be elected by a resolution passed by majority of the attending shareholders to continue the meeting.

When the meeting is adjourned by resolution, the shareholders shall not elect another chairperson to continue the meeting at the same location or another venue.

Article 5 The shareholders (or proxies) shall complete statement slip setting out the number of his/her attendance card, name and statement brief before speaking, and the chairperson will designate the order in which each person is to speak during the session.

No statement will be considered to have been made if the shareholder (or proxies) merely completes the statement slip without speaking at the meeting. If there are any discrepancies between the content of the statement slip and the speech made, the statement to be adopted shall be the statement confirmed.

Article 6 Any proposal for the agendas shall be submitted in written form. Except for the proposals set out in the agenda, any proposal by the shareholders (or proxies) to amend, substitute or to initiate extemporary motions with respect to the original proposal shall be seconded by other shareholders (or proxies). The same rule shall apply to any proposal to amend the agenda and motion to adjourn the meeting. The shares represented by the proponents and the seconders shall reach 100,000.

Article 7 The explanation of proposal shall be limited to 5 minutes. The statement of inquiry and reply shall be limited to 3 minutes per person. The time may be extended for 3 minutes with the chairperson’s permission.

The chairperson may restrain shareholders (or proxies) from speaking if that shareholders (or proxies) speak overtime, speak beyond the allowed frequency or content of the speech is beyond the scope of the proposal. When a shareholder (or proxy) is speaking, other shareholder (or proxy) shall not interrupt without consent of the chairperson and the speaking shareholder (or proxy). Any disobedient of the preceding rule shall be prohibited by the chairperson. Article 15 of this meeting rule shall apply if the disobedient do not follow the chairperson’s instructions.

Article 8 For the same proposal, each person shall not speak more than 2 times.

When a juristic person is a shareholder, only one representative shall be appointed to attend the meeting.

If more than two representatives were appointed to attend the meeting, only one representative is allowed to speak.

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Article 9 After speaking by the attending shareholder (or proxy), the chairperson may reply in person or assign relevant officer to reply.

Over the proposal discussion, the chairperson may conclude the discussion in a timely manner and where necessary announce discussion is closed.

Article 10 For proposal in which discussion has been concluded or closed, the chairperson shall submit it for voting.

No discussion or voting shall proceed for matters unrelated to the proposal.

The personnel responsible for overseeing and counting of the votes for resolutions shall be appointed by the chairperson with the consent of the shareholders (or proxies). The person responsible for vote overseeing shall be of the shareholder status.

Article 11 In regards to the resolution of proposals, unless otherwise provided for in the relevant law and regulation or Company’s articles of incorporation, resolution shall be passed by a majority of the voting rights represented by the shareholders (or proxies) attending the meeting.

The proposal for a resolution shall be deemed approved if no objection expressed by shareholders casting their votes via electronic casting, and if the chairperson inquires and receives no objection from shareholders in attendance in person. The validity of such approval has the same effect as if the resolution has been put to vote.

Should objection of a proposal be expressed, such proposal shall be put to vote. All proposals may be put to vote one after the other by its sequence, or may be put to vote together and numbers of votes for each proposal are counted separately. Whichever way of the voting procedures shall be decided by the chairperson.

If there are amendments or substitute proposals for the same proposal, the sequence of which to be put to vote shall be decided by the chairperson. If one of the two proposals has been approved, the other shall be deemed rejected without requirement to put it to vote.

The results of voting shall be reported on the spot and kept for records.

Article 12 During the meeting, the chairperson may at his/her discretion declare time for break.

Article 13 The meeting shall be adjourned if encountering an air-raid alarm during the meeting. The meeting shall resume one hour after the alarm is lifted.

Article 14 The chairperson may maintain the meeting order by instructing the security guards. The security guards shall wear the armband for identification when helping maintaining the venue order.

Article 15 The shareholders (or proxies) shall obey the instructions of the chairperson and security guards in terms of maintaining the order. The chairperson or security guards may exclude the persons disturbing the shareholders’ meeting from the meeting.

Article 16 For matters not governed by the rules specified herein, shall be governed according to Company Law, Securities Exchange Act and the other related laws and regulations.

Article 17 The regulations will be implemented with the approval of the Preparatory Commission. The amendment of the regulations will be implemented after it is resolved in the shareholders’ meeting.

207207 2626.272726.27/F 207 Tun Hwa S.Road,Sec.2,Taipei26.27/F 207 Tun Hwa S.Road,Sec.2,TaipeiTel:(02)2378-6868 Fax:(02)2377-9000Tel:(02)2378-6868 Fax:(02)2377-9000Swift Code : FEINTWTPSwift Code : FEINTWTPhttp://www.feib.com.twhttp://www.feib.com.tw

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