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Handbook for 2015 Annual

Meeting of Shareholders

Time and Date: 9:00 a.m., Tuesday, June 2, 2015

Location: No.145, Sec. 3, Ren’ai Rd., Taipei City, Taiwan (Air

Force Officers and Soldiers Activity Center)

Stock Code: 2885

Contents

Meeting Procedure ....................................................................................... 1

Meeting Agenda ........................................................................................... 2

Company Reports

1. The Company’s 2014 Business Report ........................................... 4

2. The Review from the Audit Committee on the 2014 Business

Report, Financial Statement, and Profit Distribution Statement

....................................................................................................... 11

3. Motion for amendments to the Company’s “Ethical Corporate

Management Best Practice Principles” is hereby submitted for

ratification .................................................................................... 13

4. Motion for amendments to the Company’s “Procedures for Ethical

Management and Guidelines for Conduct” is hereby submitted for

ratification .................................................................................... 27

5. Motion for amendments to the Company’s “Guidelines for the

Adoption of Codes of Ethical Conduct” is hereby submitted for

ratification .................................................................................... 44

6. Motion for the propagation and reporting of the related laws about

a same person or same concerned person who holds a same

financial holding company's outstanding voting shares exceeding

the specific percentage is submitted for ratification .................... 50

Proposals

1. Adoption of the 2014 Business Report and Financial Statements

...................................................................................................... 52

2. Adoption of the Proposal for the Distribution of 2014 Profits ..... 64

Discussion

1. Organization of a referendum on the allocation of surpluses for the

issuance of new shares for capital increase. ................................ 68

2. To amend the Company’s “Rules of Procedure for Shareholders

Meetings”. .................................................................................... 70

3. To amend to the Company’s “Procedure for Election of Directors”

...................................................................................................... 75

Extemporary Motions ................................................................................. 80

Appendices ................................................................................................. 81

I. Rules of Procedure for Shareholders Meetings ............................. 82

II. The Articles of Incorporation ........................................................ 90

III. Information on Director Shareholdings of the Company .............. 97

IV. Information on Employee Bonus Sharing and Director

Compensation ............................................................................... 98

V. The impact of stock grants on business performance, earnings per

share, and shareholder return on investment ................................ 99

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Yuanta Financial Holding Co., Ltd

2015 Annual Shareholders’ meeting Meeting Procedures

I. Meeting called to order

II. Chairperson takes the chair

III. Chairperson remarks

IV. Company reports

V. Proposals

VI. Discussion

VII. Extemporary Motions

VIII. Adjournment

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2015 General Shareholders’ Meeting of Yuanta Financial

Holding Co., Ltd.

Time and Date: 9:00 a.m., Tuesday, June 2, 2015

Location: No.145, Sec. 3, Ren’ai Rd., Taipei City, Taiwan (Air Force

Officers and Soldiers Activity Center)

1. Chairperson Remarks

II. Company Reports

1. The Company’s 2014 Business Report.

2. The Review from the Audit Committee on the 2014 Business

Report, Financial Statement, and Profit Distribution Statement.

3. Motion for amendments to the Company’s “Ethical Corporate


ratification.

4. Motion for amendments to the Company’s “Procedures for Ethical


ratification.

5. Motion for amendments to the Company’s “Guidelines for the


ratification.

6. Motion for the propagation and reporting of the related laws about

a same person or same concerned person who holds a same

financial holding company's outstanding voting shares exceeding

the specific percentage is submitted for ratification.

III. Proposals

1. Adoption of the 2014 Business Report and Financial Statements.

2. Adoption of the Proposal for the Distribution of 2014 Profits.

IV. Discussion

1. Organization of a referendum on the allocation of surpluses for the

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issuance of new shares for capital increase.

2. To amend the Company’s “Rules of Procedure for Shareholders

Meetings”.

3. To amend to the Company’s “Procedure for Election of Directors”.

V. Extemporary Motions

VI. Adjournment

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Company Report No. 1

Report: The Company’s 2014 Business Report.

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One. Letter to Shareholders

I. Domestic and international financial environments

(I) Gradual recovery from economic recession in 2014

In 2014, the financial markets of the world’s main economies, the U.S., EU and

Mainland China have remained stable and the central banks of various countries have

maintained an “easy money” policy, so as to return the global economy back from uncertainty.

According to IMF’s forecast, the global economic growth rate is expected to be 2.7%. The

pace of economic recovery varies depending on various economic zones. Economic growth

remained stable in the U.S., with a strong recovery in the employment market, a reduction of

the budget deficit and remarkable performances in the stock and bond markets.

Notwithstanding, due to austerity policies and concerns about inflation, the Eurozone’s

economy remained sluggish and its jobless rate remained high. The real estate bubble and

unresolved concerns regarding municipal bonds led to only moderate economic growth in

Mainland China. The limited stimulation created by Abenomics resulted in low economic

growth in Japan. Weak domestic demand along with sluggish economic growth in Mainland

China and the EU, and the devaluation of the Japanese Yen negatively affected South Korea’s

exports.

Domestically, given private consumption, the recovery in investment, exports, and

improvement in employment, the Directorate General of Budget, Accounting and Statistics

forecasted in November, 2014 that the annual GDP would be 3.43%, higher than 2.23% in

2013. Due to the stable financial market and the changing of domestic accounting policies,

the gains experienced by the domestic financial industry in 2014 was substantial. The average

daily stock turnover in 2014 was over 100 billion and undoubtedly brokerages were the key

beneficiaries of that. Furthermore, without significant loan risk, banks’ revenues from service

charges and financial transactions grew while bank profits hit a new record high. Benefitting

from rising real estate values and real estate disposal gains, the life insurance business also

saw profits rise accordingly in 2014.

(II) The economy is expected to grow moderately in 2015

Looking forward to 2015, the IMF has forecasted that advanced economies will continue

to grow sluggishly and global economic growth will be 3.8%, higher than in 2014. And

although economic growth has been sluggish in Mainland China, this year’s growth rate is

still expected to be above 7%. Notwithstanding, fiscal and debt issues linger in Europe and

the U.S., the U.S. intends to raise interest rates, geographical and political conflicts persist, oil

prices continue to change, and the balance between structural adjustments and the

maintenance of growth in Mainland China will all still render effects on international

economic development.

As far as the domestic economy is concerned, exports are still encountering permanent

structural issues with regional economic integration and industrial competition in Mainland

China. The Directorate General of Budget, Accounting and Statistics estimated in November

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2014 that domestic economic growth will be moderate, predicting approximately 3.5%

growth for 2015. While Taiwan’s financial industry has benefited from economic recovery, it

must be aware of uncertain factors that could arise. The securities business’ performance will

vary depending on whether or not trading volume recovers in the stock market. The banking

industry must pay attention to changes in industrial competitiveness and influence brought on

by potential interest rate hikes in order to prevent the quality of loans from eroding. The life

insurance sector needs to be careful of the impact brought on by changes in the bond and

currency markets when it comes to investment strategies and capital structure.

II. Changes in company organization

The most significant change in the Company’s organization in 2014 includes completing

the share swap for Yuanta Life on January 1, 2014, representing the Company’s official

launch into the life insurance industry and the Company’s mid-term and long-term

management strategies officially moving forward with its three-pillar model (securities,

banking and insurance). Following in line with the government’s mandate to actively develop

Asia’s financial landscape, Yuanta Securities acquired a 53.10% controlling stake (via its

subsidiary Yuanta Securities Asia Financial Services) in Tong Yang Securities, the sixth

largest securities firm listed on the Korea Exchange for NT$ 8 billion on June 11, 2014. It

was then renamed to Yuanta Securities Korea Co., Ltd. (hereinafter referred to as Yuanta

Securities (Korea)) on October 1, 2014 and became the final piece in Yuanta’s Asia Cup

triangle layout (Taiwan, Hong Kong and South Korea). Through the operations in Taiwan,

Hong Kong, Korea and OSU, the Company has built a more versatile wealth management

platform. Meanwhile, the Company has integrated research teams from the three regions to

exchange investment information and to provide a higher quality of financial service. For the

sake of cooperation with multi-national investment banks, the Company has engaged in

mutual recommendations on IPOs, collaborated with financial advisors, and integrated

underwriting channels.

In the future, the Company will continue to adjust the capital structure of its subsidiaries

if business development requires and strengthen the entire group’s competitiveness through

organizational restructuring. In order to create operational synergies, the Company has

adopted a joint channel strategy with its securities and banking operations sharing the same

premises at branch locations. As of the end of December, 2014, a total of 49 securities firms

and bank branches were operating out of the same location, creating great synergy in terms of

integrating resources.

III. Business achievements

In the face of a rapidly changing financial environment, the Company has continued to

capitalize on various business developments in a consistent manner. In 2014, the Company

generated NT$ 16.472 billion in profit after tax, equating to a growth of 114% compared to

2013, behind Taiwan’s recovering economy and stock turnover resurgence. In 2014, the

Company was awarded the “Platinum Award in Financial Performance, Corporate

Governance, Corporate Social Responsibility, Environmental Responsibility and Investors

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Relations” by the internationally renowned financial magazine, The Asset. The Company was

also awarded the “Outstanding Company on Corporate Governance in Taiwan” and “Best

Investor Relations in Taiwan” awards by Corporate Governance Asia. In addition, the

Securities and Futures Institute has awarded Yuanta with an A++ grade under its “Information

Disclosure and Transparency Ranking” for three consecutive years.

Over the past years, the Company’s subsidiary, Yuanta Securities, has received numerous

honors from foreign and domestic professional finance magazines. The honors include “Best

Investment Bank in Taiwan” for the third consecutive year from Euromoney, “Taiwan’s Best

Company in the Securities Industry” from Commonwealth magazine for the ninth

consecutive year, and “Best Broker in Taiwan” from Asiamoney for the tenth consecutive

year. Yuanta was also awarded “House of the Year, Taiwan” from Asia Risk for its

outstanding derivatives products. These awards show the Company’s longstanding presence

in the securities business has won approval from foreign and domestic investors as well as

external professional agencies.

With continuous expansion in asset scale, Yuanta Bank is regarded as a mid-size bank,

and ranks as one of the top banks in its tier based on asset quality. Meanwhile, its core

competencies in driving profits have grown immensely. It is now one of Yuanta Financial

Holdings’ indispensable profit-making engines. As of the end of December 2014, Yuanta

Bank had a total of 88 branches, with assets worth NT$ 698.2 billion. The Bank also posted

strong results with an annual profit after tax of NT$ 4.547 billion, an increase of NT$ 1,495

million (up 49%) from 2013, and an EPS of NT$ 1.21. Moreover, the Bank’s asset quality

remained superior according to industry standards with a 0.19% NPL ratio, a 658.94% NPL

coverage ratio, and a 1.27% loan loss coverage ratio.

Yuanta Life Insurance Co., Ltd. (formerly known as New York Life Insurance Co., Ltd.)

officially joined Yuanta Financial Holdings on January 1, 2014. It has focused its on

stabilizing the management team, integrating with the group’s marketing channels and

enhancing its ability to develop commodity platforms during its first year of operation. Due to

the success of diversified marketing channels and investment of funds, the market share of its

FYPE reached the 1% target at the beginning of the year and the RBC ratio was more than

600% at the end of December, solidifying the operations of Yuanta Life Insurance.

In implementing their respective 2014 business plans, our subsidiaries posted the

following results:

Item Total assets

(NT$1,000)

Revenue

(NT$1,000) [Note 1]

Net income

(NT$1,000) EPS (NT$)

Yuanta

Securities

2013 209,584,718 13,998,101 3,582,926 0.65

2014 236,916,258 16,063,098 10,394,089 1.88

Yuanta Bank [Note 2]

2013 598,604,767 9,327,334 3,052,205 0.81

2014 698,255,509 11,270,562 4,547,150 1.21

Yuanta Life 2013 90,390,289 13,244,110 130,596 0.64

2014 107,772,334 16,921,082 -(251,445) -(0.72)

Yuanta 2013 19,251,668 697,825 391,740 0.70

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Item Total assets

(NT$1,000)

Revenue

(NT$1,000) [Note 1]

Net income

(NT$1,000) EPS (NT$)

Securities

Finance 2014 18,495,933 749,840 406,303 0.81

Yuanta Asset

Management

2013 5,605,560 761,144 414,910 1.38

2014 3,401,520 1,349,407 982,289 3.68

Yuanta

Venture

Capital

2013 3,753,425 280,589 205,653 0.63

2014 3,704,634 396,917 300,867 0.93

Yuanta

Futures

2013 37,104,264 2,393,399 653,867 2.82

2014 37,720,352 2,269,734 870,605 3.75

Yuanta

Securities

Investment

Consulting

2013 458,106 248,939 11,852 0.40

2014 443,290 228,775 469 0.02

Yuanta

Securities

Investment

Trust

2013 4,831,628 1,685,801 460,928 2.03

2014 3,722,255 1,601,182 438,589 1.93

Note1: “Revenue” figures do not include non-operating revenue.

Note 2: “Revenue” figures for Yuanta Bank represent net revenue.

IV. Credit ratings’ dates and results

Domestic and international credit rating agencies recognize the sound quality of the

Company’s assets and operating results. According to the ratings given by the Taiwan Ratings

Corporation pursuant to the new guidelines governing ratings of financial organizations other

than banks on December 12, 2014, it upgraded the long-term and short-term credit ratings of

the Company to “twAA-” and “twA-1+”, respectively, and revised the Company’s outlook to

“stable”. According to the ratings on February 3, 2015, the Company’s long-term and short-

term credit ratings remained “twAA-” and “twA-1+” respectively, and the Company’s

outlook was “stable”. On June 2014, Fitch Ratings maintained the Company’s domestic long-

term and short-term ratings at “AA-(twn)” and “F1+(twn)”, respectively, and international

long-term and short-term ratings at “BBB+” and “F2”, respectively, with a “stable” outlook.

These ratings reflect the Company’s good risk management and capital structure.

The Company is committed to rigorous risk management and pragmatic business

development with a focus on raising the level of asset quality, while continuing to pursue

concrete implementation of good corporate governance practices. As of the end of 2014, the

Company’s debt to equity ratio was 10.35%, the double leverage ratio was 108.56%, and the

capital adequacy ratio was 146.66% (per audit), all highlighting the Company’s sound

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financial structure.

The Company’s recent credit rating results are summarized below:

Rating

category Rating agency

Credit rating

Outlook Effective date Long-

term

Short-

term

International

rating Fitch Ratings BBB+ F2 Stable 2014/06/04

Domestic

rating

Fitch Ratings AA-(twn) F1+(twn) Stable 2014/06/04

Taiwan Ratings

Corp. twAA- twA-1+ Stable 2015/02/03

V. Future business environment and development strategy

The concrete implementation of the Company’s three-pillar model for mid-term and

long-term management strategies for “securities, banking and insurance” in the most recent

years is stated as following: 1. Merge with and acquire Polaris Securities for the effect of

complementary businesses and reap cost-savings, while dedicated to developing new business

lines, continuing to expand overseas, and dispersing the sources of operating revenue in an

effort to lower brokerage service revenues below 50% of the total operating revenue; 2.

Yuanta Bank’s assets grew rapidly to exert economies of scale, with its excellent asset quality,

steadily growing revenues, and its ability to generate profit along the lines of Yuanta

Securities has made it an indispensable piece to the Yuanta Group; 3. Given the need for

insurance and wealth management by the elderly in Taiwan, the Company acquired Yuanta

Life Insurance Co., Ltd. (formerly known as New York Life Insurance Co., Ltd.) to establish

its third major profit-producing business going forward.

In the future, the Company will implement the three-pillar model as its mid-term and

long-term management strategies for “securities, banking and insurance”. The Company will

aim to refine the securities business, closely monitor the quality and quantity of bank

branches and at the same time expand the life insurance business to steadily drive profits and

diversify the Company’s businesses in becoming the “Best Financial Services Provider in the

Asia Pacific Region”. The development strategies of the Company’s main subsidiaries for

2015 are summarized as follows:

(I) Yuanta Securities: Exert the effect of core competitiveness and actively promote

the layout in Asia

To take advantage of the financial authorities’ regulations to boost the stock

market: Daily price fluctuation limits of stock was raised from 7% to 10%; stocks

available for day trading was increased from 200 companies to 380 companies; and the

limits for margin trading and short selling on individual investors and stocks were

canceled. Therefore, the Group’s growth drivers for the brokerage, investment banking

and financial derivatives businesses will be strengthened. Yuanta Securities will

continue exerting its core competitiveness and utilizing these opportunities to

maximize profit and influence in the market.

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Following in line with the financial regulators’ plan to implement the Asian Cup

policy, the Group will expand its footprint in Asia step by step. After setting up Yuanta

Securities Korea Co., Ltd. in completing the golden triangle formation of Yuanta’s

Asian Cup, the plan to acquire AMCI in Indonesia is expected to be completed this year

and will further solidify the Group’s presence in Asia. Yuanta Securities will also utilize

its core competitiveness, integrate financial holdings’ resources, and employ multi-

national business acumen to develop operations in Asia in becoming the best financial

organization in the region.

(II) Yuanta Bank: To adjust asset structure and continue upgrading core competencies

to generate profits

The Bank will continue to uphold service quality by making necessary

adjustments to the business structure, improving capital efficiency, and improving fee

income distribution from all types of financial transactions conducted. In addition to

enhancing the value of its physical outlets, the Bank will invest in e-commerce

platforms and explore business opportunities within mobile payments. The Bank will

also actively seek to set up overseas locations by merging or acquiring in order to

expand its international footprint.

(III) Yuanta Life Insurance: Make good use of the Group’s channels to expand market

share

In preparing for the future change in Taiwan’s population structure, Yuanta Life

Insurance will target three major areas including life after retirement, medical care after

retirement, and retirement care by offering products that cater to customers’ retirement

planning and portfolio diversification needs. With financial channels such as securities

and banking, cross-selling can easily be carried out through the phone or in person by a

capable salesforce. Yuanta Life’s brand and reputation will be built up gradually

through cooperative marketing among the Group’s various business channels and will

play a key role in the company’s ongoing business expansion.

Looking forward to 2015, Yuanta Financial Holdings will continue to uphold the

principle for sound business development and enhance profits behind superior asset quality

and risk management policies. Adjustments to the Company’s business structure will be made

when deemed necessary and cultivation of the Company’s income sources will continually be

applied. Regarding the Company’s overseas presence, Yuanta has set up operations in Hong

Kong, Korea, and the Philippines with management support stemming from Taiwan’s

longstanding headquarters. The next goal is to gradually expand into Greater China in

building a comprehensive multi-national layout in the Asia Pacific Region in order to become

the “Best Financial Services Provider in the Asia Pacific Region”.

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Report: The Review from the Audit Committee on the 2014 Business

Report, Financial Statements, and Profit Distribution Statement.

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Yuanta Financial Holdings

Audit Report from the Audit Committee

In relation to Yuanta Financial Holdings’ 2014 financial statements, and the

business report and earnings distribution plan prepared and submitted by the

board of directors, the financial statements have been reviewed and certified by

accountants Po-Ju Kuo and Ming-Hui Chang of PricewaterhouseCoopers

Certified Public Accountants, who gave an unqualified opinion on the audit

report.

The Audit Committee, after completing the audit of the aforementioned

reports and statements, believes that they are free of material misstatement, and

thus has produced this report according to Article 219 of the Company Act after

obtaining the consent of all Audit Committee members.

Submitted by: 2015 General Shareholders’ Meeting of Yuanta Financial

Holding Co., Ltd.

Audit Committee of Yuanta Financial Holding Co., Ltd.

Convener: Cheng- Ji Lin

March 30, 2015

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Case: Motion for amendments to the Company’s “Ethical Corporate


ratification.

Description:

I. Amend the Company’s “Ethical Corporate Management Best

Practice Principles” in part in accordance with Letter Tai-Cheng-

Chi-Li-Zi No. 1030022825 issued by the Taiwan Stock Exchange

Corporation on November 7, 2014.

II. The comparative list of amended provisions in the Company’s

“Ethical Corporate Management Best Practice Principles” is hereby

submitted for ratification.

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Comparative List of Amended Provisions in Yuanta Financial Holding

Co., Ltd. Ethical Corporate Management Best Practice Principles

Revised Article Current version Description

Article 2 (Prohibition of unethical

conduct)

When engaging in commercial

activities, directors, managers,

employees, and mandataries of the

Company’s or persons having

substantial control over such

companies (“substantial

controllers”) shall not directly or

indirectly offer, promise to offer,

request or accept any improper

benefits, nor commit unethical acts

including breach of ethics, illegal

acts, or breach of fiduciary duty

(“unethical conduct”) for purposes

of acquiring or maintaining

benefits.

Parties referred to in the

preceding paragraph include civil

servants, political candidates,

political parties or members of

political parties, state-run or

private-owned businesses or

institutions, and their directors,

supervisors, managers, employees

or substantial controllers or other

stakeholders.

Article 2 (Prohibition of

unethical conduct)

When engaging in commercial

activities, directors, managers,

employees of the Company’s or

persons having substantial control

over such companies (“substantial

controllers”) shall not directly or

indirectly offer, promise to offer,

request or accept any improper

benefits, nor commit unethical acts

including breach of ethics, illegal

acts, or breach of fiduciary duty

(“unethical conduct”) for purposes

of acquiring or maintaining

benefits.

Parties referred to in the

preceding paragraph include civil

servants, political candidates,

political parties or members of

political parties, state-run or

private-owned businesses or

institutions, and their directors,


or substantial controllers or other

stakeholders.

Add the “mandatory”

in Paragraph 1 herein

to be in line with the

amendments to

Article 2 of the

“Ethical Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed Companies”.

In order to make the

governed scope

complete by

including the

remuneration

committee members

appointed by the

Company’s directors

and others mandated,

add the “mandatory”

herein.

Article 6 (Prevention program)

The Company shall in its own

ethics-based policy clearly and

thoroughly prescribe the specific

ethical management practices and

the programs to forestall unethical

conduct (“prevention programs”),

including operating procedures,

guidelines, and training.

When establishing the

prevention programs, the Company

shall comply with relevant laws and

regulations of the territory where

the Company, the Group and their

business locations are operating.

In the course of developing the


is advised to negotiate with staff,

labor unions members, important

Article 6 (Prevention program)

The Company shall, based on

the management philosophy and

policy, prescribe the programs to

forestall unethical conduct

(“prevention programs”), including

operating procedures, guidelines,

and training.



shall comply with relevant laws and

regulations of the territory where

the Company, the Group and their

business locations are operating.

In the course of developing the


is advised to negotiate with staff,

labor unions members or members

of any other representative entities

Amend the wording

herein to be in line

with Article 6 of the


Management Best

Practice Principles

for TWSE/GTSM


Amend the wording

in Paragraph 1 herein

in order to define that

TWSE/GTSM listed

companies shall

prescribe the specific

ethical management

practices; and, amend

Paragraph 3 herein in

order to encourage

the Company to

Appendix

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trading counterparts, or other

stakeholders.

and interested groups.

negotiate with staff,

labor unions

members, important

trading counterparts,

or other stakeholders

for the prevention

program against

unethical conduct

and also require said

persons to comply

with the Company’s

ethical management

policy.

Article 7 (Scope of prevention

program)



shall analyze which business

activities within its business scope

that are possibly at a higher risk of

being involved in an unethical

conduct, and strengthen the

preventive measures.

The prevention programs

adopted by the Company shall at

least include preventive measures

against the following:

1. Offering and acceptance of

bribes.

2. Illegal political donations.

3. Improper charitable donations

or sponsorship.

4. Offering or acceptance of

unreasonable presents or

hospitality, or other improper

benefits.

5. Misappropriation of trade

secrets and infringement of

trademark rights, patent rights,

copyrights, and other

intellectual property rights.

6. Engaging in unfair competitive

practices.

7. Damage to stakeholders’

interests and rights.

Article 7 (Scope of prevention

program)



shall analyze which business

activities within its business scope

that are possibly at a higher risk of

being involved in an unethical

conduct, and strengthen the

preventive measures.

The prevention programs

adopted by the Company shall at

least include preventive measures

against the following:

1. Offering and acceptance of

bribes.

2. Illegal political donations.

3. Improper charitable donations or

sponsorship.

4. Offering or acceptance of


hospitality, or other improper

benefits.

Add the requirements

to be included under

Paragraph

2.5~Paragraph 2.7




Management Best

Practice Principles

for TWSE/GTSM


Article 8 (Commitment and

implementation)

The Company and the Group

enterprises and entities shall clearly

specify in their rules and external

documents the ethical corporate

Article 8 (Commitment and

implementation)

The Company and the Group

enterprises and entities shall clearly

specify in their rules and external

documents the ethical corporate

Amend the wording




Management Best

Practice Principles

- 16 -


management policies, and the board

of directors and management shall

fulfill the commitment on rigorous

and thorough implementation of

such policies and shall carry out the

policies in internal management and

in commercial activities.

management policies, and the board

of directors and management shall

commit to implement such policies

rigorously and thoroughly, and shall

carry out the policies in internal

management and external

commercial activities.

for TWSE/GTSM


Article 9 (Ethical corporate

management commercial

activities)

The Company shall, based on

the principle of ethical

management, engage in commercial

activities in a fair and transparent

manner.

Prior to any commercial

transactions, the Company shall

take into consideration the legality

of its agents, suppliers, customers,

or other trading counterparts and

whether any of them are involved in

unethical conduct, and shall avoid

any dealings with persons so

involved.

When entering into contracts

with the Company’s agents,

suppliers, customers or other

trading counterparts, the Company

shall include in such contracts terms

requiring compliance with ethical

corporate management policy and

that in the event the trading

counterparts are involved in

unethical conduct, the Company

may at any time terminate or

rescind the contracts.

Article 9 (Ethical corporate

management commercial

activities)

The Company shall engage in

commercial activities in a fair and

transparent manner.

Prior to any commercial

transactions, the Company shall

take into consideration the legality

of its agents, suppliers, customers,

or other trading counterparts and

whether any of them are involved in

unethical conduct record, and shall

avoid any dealings with persons so

involved.

When entering into contracts

with others, the Company is advised

to include in such contracts terms

requiring compliance with ethical

corporate management policy and

that in the event the trading

counterparts are involved in

unethical conduct, the Company

may at any time terminate or

rescind the contracts.

Amend the wording

herein in order to be

in line with Article 9

of the “Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed Companies”

requiring that the

Company shall be

based on the

principle of ethical

management, and the

contracts signed by

the Company with

such trading

counterparts as

agents or suppliers

shall also comply

with such policies.

Article 10 (Prohibition of offering

and acceptance of

bribes)

When conducting business, the

Company and its directors,

managers, employees, mandataries

and substantial controllers, may not

directly or indirectly offer, promise

to offer, request or accept any

improper benefits in whatever form

to or from clients, agents,

contractors, suppliers, public

servants, or other stakeholders.


and acceptance of

bribes)



managers, employees and

substantial controllers, may not

directly or indirectly offer, promise

to offer, request or accept any

improper benefits in whatever form,

including rebate, commission or

facilitation payment, or via other

channels to or from clients, agents,

contractors, suppliers, public

servants, or other stakeholders,

Amend the provision

in order to be in line

with the amendments

to Article 10 of the


Management Best

Practice Principles

for TWSE/GTSM

Listed Companies”

and the addition of

“mandataries” into

Paragraph 1 of

Article 2 of the

Principle, and in

order to simplify the

- 17 -


unless the same complies with the

laws applicable in the place of the

Company’s operation.

examples for

improper benefits to

revert to the

definitions under

Article 3 of the

Principles.

Article 11 (Prohibition of illegal

political donations)

When directly or indirectly

offering a donation to political

parties or organizations or

individuals participating in political

activities, the Company and its

directors, managers, employees,

mandataries and substantial

controllers, shall comply with the

Political Donations Act and their

own relevant internal operational

procedures, and shall not make such

donations in exchange for

commercial gains or business

advantages.

Article 11 (Prohibition of illegal

political donations)

When directly or indirectly

offering a donation to political

parties or organizations or

individuals participating in political

activities, the Company and its

directors, managers, employees and

substantial controllers, shall comply

with the Political Donations Act and

their own relevant internal

operational procedures, and shall

not make such donations in

exchange for commercial gains or

business advantages.

Amend this provision


addition of


Paragraph 1 of

Article 2 of the

Principles.

Article 12 (Prohibition of improper

charitable donations or

sponsorship)

When making or offering

donations and sponsorship, the



and substantial controllers shall

comply with relevant laws and

regulations and internal operational

procedures, and shall not

surreptitiously engage in bribery.

Article 12 (Prohibition of improper

charitable donations or

sponsorship)

When making or offering

donations and sponsorship, the



substantial controllers shall comply

with relevant laws and regulations

and internal operational procedures,

and shall not surreptitiously engage

in bribery.



addition of


Paragraph 1 of

Article 2 of the

Principles.


or acceptance of


hospitality, or other

improper benefits)

The Company and its directors,


and substantial controllers shall not

directly or indirectly offer or accept

any unreasonable presents,

hospitality or other improper

benefits to establish business

relationships or influence

commercial transactions.


or acceptance of


hospitality, or other

improper benefits)

The Company and its directors,


substantial controllers shall not

directly or indirectly offer or accept

any unreasonable presents,

hospitality or other improper

benefits to establish business

relationships or influence

commercial transactions.



addition of


Paragraph 1 of

Article 2 of the

Principles.

Article 14 (Prohibition of

infringement upon

intellectual property

New addition Add the provision in

order to be in line

with the “Ethical

- 18 -


rights)

When conducting the business,

the Company and its directors,

managers, employees, mandataries,


observe applicable laws and

regulations, the Company's internal

operational procedures, and

contractual provisions concerning

intellectual property, and may not

use, disclose, dispose of, or damage

or otherwise infringe intellectual

property rights without the prior

consent of the intellectual property

rights holder.

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed Companies”

and the addition of

Paragraph 2.5 of

Article 7 of the

Principles.

Article 15 (Prohibition of unfair

competitive practices)

The Company shall engage in

business activities in accordance

with applicable competition laws

and regulations.


order to be in line

with the “Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed Companies”

and the addition of

Paragraph 2.6 of

Article 7 of the

Principles.

Article 16 (Prevention of damage

to stakeholders' interest

and right)





observe applicable laws and

regulations and international

standards, and shall set up the

stakeholder section at the

Company's website to prevent

damage to stakeholders' interest and

right.


order to be in line

with the “Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed Companies”

and the addition of

Paragraph 2.7 of

Article 7 of the

Principles.

Article 17 (Organization and

responsibility)

The Company’s directors,



exercise the due care of good

administrators to urge the Company

to prevent unethical conduct,

always review the results of the

preventive measures and

Article 14 (Organization and

responsibility)

The Company’s board of

directors shall exercise the due care

of good administrators to urge the

Company to prevent unethical

conduct, always review the results

of the preventive measures and

continually make adjustments so as

to ensure thorough implementation

I. Amend the

provision to be in

line with Article

17 of the “Ethical

Corporate

Management

Best Practice

Principles for

TWSE/GTSM

Listed

- 19 -


continually make adjustments so as

to ensure thorough implementation

of its ethical corporate management

policies.

To achieve sound ethical

corporate management, the

Company shall establish a dedicated

unit that is under the board of

directors and responsible for

establishing and supervising the

implementation of the ethical

corporate management policies and

prevention programs. The dedicated

unit shall be in charge of the

following matters, and shall report

to the board of directors on a

regular basis:

I. Assisting in incorporating ethics

and moral values into the

Company’s business strategy

and adopting appropriate

prevention measures against

corruption and malfeasance to

ensure ethical management in

compliance with the

requirements of laws and

regulations.

II. Adopting programs to prevent

unethical conduct and setting

out in each program the

standard operating procedures

and conduct guidelines with

respect to the Company’s

operations and business.

III. Planning the internal

organization, structure, and

allocation of responsibilities and

setting up check-and-balance

mechanisms for mutual

supervision of the business

activities within the business

scope that are possibly at a

higher risk for unethical

conduct.

IV. Promoting and coordinating

awareness and educational

activities with respect to the

ethical management policy.

V. Developing a whistle-blowing

system and ensuring its

operating effectiveness.

of its ethical corporate management

policies.

To achieve sound ethical

corporate management, the

Company shall have a dedicated

unit responsible for establishing and

supervising the implementation of

the ethical corporate management

policies and prevention programs.

Companies”, and

amend Paragraph

1 herein by

extending the

regulated subjects

to directors,

managers,

employees,

mandataries and

substantial

controllers to be

in line with

Article 2 of the

Principles.

II. Amend

Paragraph 2

herein based on

Paragraph 2 of

Article 11 of the

“Regulations

Governing

Establishment of

Internal Control

Systems by

Public

Companies”,

requiring that the

Company shall

establish a

dedicated unit

that is under the

board of directors

and responsible

for establishing

and supervising

the

implementation

of the ethical

corporate

management

policies and

prevention

programs, and

shall define the

dedicated unit's

responsibilities.

III. Adjust the item

No. of the

provision.

- 20 -


VI. Assisting the board of directors

and management in auditing

and assessing whether the

prevention measures taken for

the purpose of implementing

ethical management are

effectively operating, and

preparing reports on the regular

assessment of compliance with

ethical management in

operating procedures.

Article 18 (Compliance when

conducting business)

The Company's directors,



comply with laws and regulations

and the prevention programs when

conducting business.

Article 15 (Compliance when

conducting business)

The Company's directors,


substantial controllers shall comply

with laws and regulations and the

prevention programs when

conducting business.

I. Amend the

wording herein to

be in line with the

addition of

“mandataries”

into Paragraph 1

of Article 2 of the

Principles.

II. Adjust the item

No. of the

provision.

Article 19 (Recusal)

The Company shall adopt

policies for preventing conflicts of

interest to identify, monitor and

manage risks possibly resulting

from unethical conduct, and shall

also offer appropriate means for

directors, managers and other

stakeholders attending or present at

board meetings to voluntarily

explain whether their interests

would potentially conflict with

those of the Company.

When a proposal at a given

board of directors meeting concerns

the interest of the Company's

directors or the juristic persons

represented by the directors, the

directors shall state the important

aspects of the relationship of

interest at the given board meeting.

If their participation is likely to

prejudice the interest of the

Company, they may not participate

in discussion of or voting on the

proposal and shall recuse

themselves from the discussion or

the voting, and may not exercise

voting rights as proxy for another

Article 16 (Directors’ and

managers’ recusal)

The Company shall adopt

policies for preventing conflicts of

interest, and shall also offer

appropriate means for directors and

managers to voluntarily explain

whether their interests would

potentially conflict with those of the

Company.

The Company’s directors shall

maintain a high degree of self-

discipline. When a proposal at a


a director's personal interest or the

interest of the juristic person

represented by the director, and

such a relationship is likely to

prejudice the Company’s interest,

that director may express opinions

and answer questions, but may not

participate in the discussion nor

vote on that proposal. Meanwhile,

that director shall recuse himself or

herself when the discussion and

voting is in progress, and may not

I. Amend the

wording in

Paragraph 1

herein to be in

line with Article

19 of the “Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed

Companies”

requiring that the

policy against

conflict of interest

defined by the

Company shall

help identify,

supervise and

manage related

risks. Amend

Paragraph 2 and

Paragraph 3

herein based on

Paragraph 1 of

Article 8 of the

“Regulations

Governing

Procedure for

- 21 -


director. The directors shall exercise

discipline among themselves, and

may not support each other in an

inappropriate manner.

The Company’s directors,


and substantial controllers shall not

take advantage of their positions or

influence in the Company to obtain

improper benefits for themselves,

their spouses, parents, children or

any other person.

exercise voting rights as proxy on

behalf of another director. The

directors shall exercise discipline

among themselves, and may not

support each other in an


The Company’s directors and

managers shall not take advantage

of their positions or influence in the

Company to obtain improper

benefits for themselves, their

spouses, parents, children or any

other person.

Board of

Directors

Meetings of

Public

Companies”, and

in order to prevent

employees,

mandataries and

substantial

controllers from

taking advantage

of their positions

or influence in the

Company to

obtain improper

benefits for

themselves or

others.

II. Adjust the item

No. of the

provision.

Article 20 (Accounting and internal

control)

The Company shall establish

effective accounting systems and

internal control systems for

business activities possibly at a

higher risk of being involved in an

unethical conduct, not have under-

the-table accounts or keep secret

accounts, and conduct reviews

regularly so as to ensure that the

design and enforcement of the

systems are showing results.

The Company’s internal audit

unit shall periodically examine the

Company’s compliance with the

foregoing systems and prepare audit

reports and submit the same to the

board of directors, and may engage

a certified public accountant to

carry out the audit, and may engage

professionals to assist if necessary.

Article 17 (Accounting and internal

control)


effective accounting systems and

internal control systems for

business activities possibly at a

higher risk of being involved in an

unethical conduct, not have under-

the-table accounts or keep secret

accounts, and conduct reviews

regularly so as to ensure that the

design and enforcement of the

systems are showing results.

The Company’s internal audit

personnel shall periodically

examine the Company’s compliance

with the foregoing systems and

prepare audit reports and submit the

same to the board of directors.。

I. Amend to be line

with Article 20 of

the “Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed

Companies”, so

that the

Company's annual

audit plan shall be

drafted by the

Company’s

internal audit

“unit”, and the

Company’s

internal control

shall be audited

according to the

plan and the audit

report shall be

prepared

accordingly.

Meanwhile,

amend the

provision to

require that the

Company shall

retain an external

- 22 -


expert to conduct

the validity audit

on the program to

prevent unethical

conduct in a

timely manner,

and the Company

may retain a

certified public

accountant to

audit the related

contents and, if

necessary, may

retain

professionals to

help the certified

public accountant

conduct the audit.

II. Adjust the item

No. of the

provision.

Article 21 (Operating procedure

and conduct guidelines)


operating procedures and guidelines

in accordance with Article 6 hereof

to guide directors, supervisors,

managers, employees, and

substantial controllers on how to

conduct business. The procedures

and guidelines should at least

contain the following matters:

1. Standards for determining

whether improper benefits have

been offered or accepted.

2. Procedures for offering

legitimate political donations.

3. Procedures and the standard

rates for offering charitable

donations or sponsorship.

4. Rules for avoiding work-related

conflicts of interests and how

they should be reported and

handled.

5. Rules for keeping confidential

trade secrets and sensitive

business information obtained in

the ordinary course of business.

6. Regulations and procedures for

dealing with suppliers, clients

and business transaction

Article 18 (Operating procedure

and conduct guidelines)


operating procedures and guidelines

in accordance with Article 6 hereof

to guide directors, supervisors,

managers, employees, and

substantial controllers on how to

conduct business. The procedures

and guidelines should at least

contain the following matters:

1. Standards for determining

whether improper benefits have

been offered or accepted.

2. Procedures for offering

legitimate political donations.

3. Procedures and the standard

rates for offering charitable

donations or sponsorship.

4. Rules for avoiding work-related

conflicts of interests and how

they should be reported and

handled.

5. Rules for keeping confidential

trade secrets and sensitive

business information obtained in

the ordinary course of business.

6. Regulations and procedures for

dealing with suppliers, clients

and business transaction

Adjust the item No.

of the provision.

- 23 -


counterparties suspected of

unethical conduct.

7. Handling procedures for

violations of these Principles.

8. Disciplinary measures on

offenders.

counterparties suspected of

unethical conduct.

7. Handling procedures for

violations of these Principles.

8. Disciplinary measures on

offenders.

Article 22 (Educational training

and performance

evaluation)

The Company shall

communicate the importance of

ethical corporate management to its

directors, employees, and

mandataries on a regular basis.

The Company shall

periodically organize training and

awareness programs for directors,

supervisors, managers, employees,

mandantaries and substantial

controllers and invite the

Company's commercial transaction

counterparts, so they understand the

Company's resolve to implement

ethical corporate management, the

related policies, prevention

programs, and the consequences of

committing unethical conduct.

The Company shall link ethical

corporate management to employee

performance evaluations and human

resources policy, and establish clear

and effective systems for rewards,

penalties, and complaints.

Article 19 (Educational training

and performance

evaluation)

The Company shall

periodically organize training and

awareness programs for directors,


and substantial controllers and

invite the Company's commercial

transaction counterparts, so they

understand the Company's resolve

to implement ethical corporate

management, the related policies,

prevention programs, and the

consequences of committing

unethical conduct.


corporate management to employee

performance evaluations and human

resources policy, and establish clear

and effective systems for rewards,

penalties, and complaints.

I. Add Paragraph 1

herein to be in

line with the

amendments to

Article 22 of the

“Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed

Companies”, and

to upgrade the

Company’s entire

ethical corporate

management

culture.

II. Paragraphs 1 & 2

herein adjusted

into Paragraphs 2

& 3.


No. of the

provision.

Article 23 (Whistle-blowing

system)

The Company shall adopt a

concrete whistle-blowing system

and scrupulously operate the

system. The whistle-blowing system

shall include at least the following:

1. An independent mailbox or

hotline, either internally

established or publicly

announced, to allow the

Company’s insiders and

outsiders to submit reports.

2. Dedicated personnel or unit

appointed to handle whistle-

blowing system. Any tip

involving a director or senior

Article 20 (Whistle-blowing and

disciplinary system)

The Company shall provide

fair whistle-blowing channels, and

shall keep the complainant’s

identity and contents of the

complaint confidential strictly.

I. To be in line with

the amendments

to Article 23 of

the “Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed

Companies’,

requiring that the

Company shall

adopt a specific

whistle-blowing

system and

implement the

same precisely,

- 24 -


manager shall be reported to the

independent directors.

Categories of reported

misconduct shall be delineated

and standard operating

procedures for the investigation

of each shall be adopted.

3. Documentation of case

acceptance, investigation

processes, investigation results,

and relevant documents.

4. Confidentiality of the identity of

whistle-blowers and the content

of reported cases.

5. Measures for protecting whistle-

blowers from inappropriate

disciplinary actions due to their

whistle-blowing.

6. Whistle-blowing incentive

measures.

When material misconduct or

likelihood of material impairment to

the Company comes to their

awareness upon investigation, the

dedicated personnel or unit

handling the whistle-blowing

system shall immediately prepare a

report and notify the independent

directors or supervisors in written

form.

The Company shall adopt a

well-defined disciplinary and appeal

system for handling violations of

the ethical corporate management

rules, and shall make immediate

disclosure on the Company’s

internal website of the title and

name of the violator, the date and

details of the violation, and the

actions taken in response.

add Paragraph 1.1

~ Paragraph 1.6.

II. Amend Paragraph

herein based on

Article 15 of the

“Regulations

Governing

Establishment of

Internal Control

Systems by Public

Companies”.

Paragraph 2

herein moved to

Article 24.


No. of the

provision.

Article 24 (Disciplinary and appeal

system)

The Company shall adopt and

publish a well-defined disciplinary

and appeal system for handling

violations of the ethical corporate

management rules, and shall make

immediate disclosure on the

Company's internal website of the

date and details of the violation, and

Known as the contents of Paragraph

2 of Article 20 formerly.

The original contents

of Paragraph 2 of

Article 20 were

moved to this

provision, also

requiring that

TWSE/GTSM

companies shall

announce the

disciplinary and

- 25 -


the actions taken in response. appeal system for

handling violations

of the ethical

corporate

management rules.

Article 25 (Disclosure)

The Company shall

continuously promote the ethical

management policy, and disclose

the measures taken for

implementing ethical corporate

management, the status of

implementation on the Company’s

website, annual reports and

prospectus. The Company shall also

disclose its ethical corporate

management best practice principles

on the Market Observation Post

System.

Article 21 (Disclosure)

The Company shall disclose

the status of implementation of its

ethical corporate management

principles on the Company’s

website, annual reports and

prospectus.

I. To be in line with

the amendments

to Article 25 of

the “Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed

Companies”,

amend the

provision to

require that the

Company shall

continuously

promote the

ethical

management

policy.

II. Adjust the item

No. of the

provision.

Article 26 (Discussion of an

amendment to ethical

corporate management

policies and measures)

The Company shall at all times

monitor the development of

relevant local and international

regulations concerning ethical

corporate management and

encourage their directors, managers,

and employees to make suggestions,

based on which the adopted ethical

corporate management policies and

measures taken will be reviewed

and improved with a view to

achieving better implementation of

ethical management.

Article 22 (Discussion of an

amendment to ethical

corporate management

principles)

The Company shall at all times

monitor the development of

relevant local and international

regulations concerning ethical

corporate management and

encourage their directors, managers,

and employees to make suggestions,

based on which the adopted ethical

corporate management principles

will be reviewed and improved with

a view to achieving better

implementation of ethical

management.

I. Amend the

wording herein to

be in line with the

amendments to

Article 26 of the

“Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed

Companies”, in

order to

encourage the

Company to

discuss the ethical

corporate

management

policies and

measures to be

taken from time to

time.

II. Adjust the item

No. of the

- 26 -


provision.

Article 27 (Implementation)

The Principles shall be

implemented after the board of

directors grants the approval, and

shall be reported at a shareholders’

meeting. The same procedure shall

be followed when the Principles

have been amended.

When the ethical corporate

management best practice principles

are submitted for discussion by the

board of directors pursuant to the

preceding paragraph, the board of

directors shall take into full

consideration each independent

director’s opinions. If an

independent director objects to or

expresses reservations about any

matter, it shall be recorded in the

minutes of the board of directors

meeting. An independent director

that cannot attend the board meeting

in person to express objection or

reservations shall provide a written

opinion before the board meeting,

unless there is some legitimate

reason to do otherwise, and the

opinion shall be specified in the

minutes of the board of directors

meeting.

Where the Group enterprises

and organizations which apply the

Principles delegate supervisors, the

requirements about the Company’s

directors, managers, employees,

mandataries or substantial

controllers defined in the Principles

shall apply to the supervisors

mutatis mutandis.

Article 23 (Implementation)

The Principles shall be

implemented after the board of

directors grants the approval, and

shall be reported at a shareholders’

meeting. The same procedure shall

be followed when the Principles

have been amended.

I. Given the audit

committee already

established by the

Company, add

Paragraphs 2 & 3

herein to help

practical

operations, to be

in line with the

amendments to

Article 27 of the

“Ethical

Corporate

Management Best

Practice Principles

for TWSE/GTSM

Listed

Companies”.

II. Adjust the item

No. of the

provision.

- 27 -


Case: Motion for amendments to the Company's “Procedures for Ethical


ratification.

Description:

I. In order to be in line with the amendments made by Taiwan Stock

Exchange Corporation to the Sample Template for “XXX Co., Ltd.

Procedures for Ethical Management and Guidelines for Conduct”,

the Company amended the Company’s “Procedures for Ethical

Management and Guidelines for Conduct” in part upon resolution by

the 28th directors’ meeting of the 6th term on March 30, 2015.

II. The comparative list of amended provisions in the Company’s

“Procedures for Ethical Management and Guidelines for Conduct” is

hereby submitted for ratification.

- 28 -

Comparative List of Amended Provisions in Yuanta Financial Holding

Co., Ltd. Procedures for Ethical Management and Guidelines for Conduct


Article 1 (Purpose of adoption and

scope of application)

The Company engages in commercial

activities following the principles of

fairness, honesty, faithfulness, and

transparency, and in order to fully

implement a policy of ethical

management and actively prevent

unethical conduct, these Procedures for

Ethical Management and Guidelines for

Conduct (hereinafter, “Procedures and

Guidelines”) are adopted pursuant to

Article 21 of Yuanta Financial Holding

Co., Ltd. Ethical Corporate Management

Best Practice Principles and the related

laws and regulations applicable in the

places where the Company and the

Group enterprises and organizations

operate with a view to providing all

personnel of the Company with clear

directions for the performance of their

duties.

Omitted below

Article 1 (Purpose of adoption and

scope of application)

The Company engages in commercial

activities following the principles of

fairness, honesty, faithfulness, and

transparency, and in order to fully

implement a policy of ethical

management and actively prevent

unethical conduct, these Procedures for

Ethical Management and Guidelines for

Conduct (hereinafter, “Procedures and

Guidelines”) are adopted pursuant to

Article 18 of Yuanta Financial Holding

Co., Ltd. Ethical Corporate

Management Best Practice Principles

with a view to providing all personnel

of the Company with clear directions

for the performance of their duties.

Omitted below

To be in line with

Paragraph 1 of

Article 1 of the

Sample Template for

“XXX Co., Ltd.

Procedures for

Ethical Management

and Guidelines for

Conduct”

(hereinafter referred

to as the “Sample

Template”, amend

Paragraph 1 herein

and amend the

quoted provisions.

Article 2 (Applicable subjects)

For the purposes of these Procedures and

Guidelines, the term “personnel of the

Company” refers to any director,

managerial officer, employee,

mandataries and person having

substantial control, of the Company or

its group enterprises and organizations.

Any provision, promise, request, or

acceptance of improper benefit by any

Article 2 (Applicable subjects)

For the purposes of these Procedures

and Guidelines, the term “personnel of

the Company” refers to any director,

managerial officer, employee, and

person having substantial control, of the

Company or its group enterprises and

organizations.

Any provision, promise, request, or

Amend the

provisions herein to

be in line with

Article 2 of the

“Sample Template”.

Appendix

- 29 -


personnel of the Company through a

third party will be presumed to be an act

by the personnel of the Company.

acceptance of money, gratuities, gifts,

commissions, positions, services,

preferential treatment, rebates,

facilitating payments, entertainment,

dining, or other benefits in whatever

form or name by any personnel of the

Company through a third party will be

presumed to be an act by the personnel

of the Company.

Article 5 (Responsible unit)

The Company shall designate the Ethical

Corporate Management Committee as

the dedicated unit (hereinafter referred to

as the Company’s dedicated unit), which

is under the board of directors, and in

charge of the amendment,

implementation, interpretation, and

advisory services with respect to these

Procedures and Guidelines, the

recording and filing of reports, and the

monitoring of implementation. The

dedicated unit shall be responsible for

the following, and submit regular reports

to the board of directors:

I. Assisting in incorporating ethics and

moral values into the Company’s

business strategy and adopting

appropriate prevention measures

against corruption and malfeasance

to ensure ethical management in

compliance with the requirements of

laws and regulations.

II. Adopting programs to prevent

unethical conduct and setting out in

each program the standard operating

procedures and conduct guidelines

with respect to the Company’s

operations and business.

Article 5 (Responsible unit)

The Company authorizes the President

to designate the related departments and

offices to form the unit dedicated

(hereinafter referred to as the

Company’s dedicated unit) in charge of

the amendment, implementation,

interpretation, and advisory services

with respect to these Procedures and

Guidelines, the recording and filing of

reports, and the monitoring of

implementation, and submit regular

reports to the board of directors.

Meanwhile, the President shall also

designate the Legal Dept. to be

responsible for arranging and

coordinating division of labor.

Amend the


be in line with

Article 5 of the


- 30 -


III. Planning the internal organization,

structure, and allocation of

responsibilities and setting up check-

and-balance mechanisms for mutual

supervision of the business activities

within the business scope that are

possibly at a higher risk for unethical

conduct.

IV. Promoting and coordinating

awareness and educational activities

with respect to the ethical

management policy.

V. Developing a whistle-blowing

system and ensuring its operating

effectiveness.

VI. Assisting the board of directors and

management in auditing and

assessing whether the prevention

measures taken for the purpose of

implementing ethical management

are effectively operating, and

preparing reports on the regular

assessment of compliance with

ethical management in operating

procedures.

Article 6 (Prohibition against

providing or accepting

improper benefits)

When providing, accepting, promising,

or requesting, directly or indirectly, the

benefits referred to in Article 4 herein,

except under one of the following

circumstances, the conduct of the given

personnel of the Company shall comply

with the provisions of “Yuanta Financial

Holding Co., Ltd. Ethical Corporate

Management Best Practice Principles”

and these Procedures and Guidelines,


providing or accepting

improper benefits)

When providing, accepting, promising,

or requesting directly or indirectly, any

money, gratuity, service, preferential

treatment, entertainment, dining, or

other benefits, except under one of the

following circumstances, the conduct of

the given personnel of the Company

shall comply with the provisions of

“Yuanta Financial Holding Co., Ltd.

Ethical Corporate Management Best

Amend the


be in line with

Article 6 of the


- 31 -


and the relevant procedures shall have

been carried out:

Deleted

I. The conduct is undertaken to meet

business needs and is in accordance

with local courtesy, convention, or

custom during domestic (or foreign)

visits, reception of guests,

promotion of business, and

communication and coordination.

II. The conduct has its basis in

ordinary social activities that are

attended or others are invited to

hold in line with accepted social

custom, commercial purposes, or

developing relationships.

III. Invitations to guests or attendance

at commercial activities or factory

visits in relation to business needs,

when the method of fee payment,

number of participants, class of

accommodations, and the time

period for the event or visit have

been specified in advance.

IV. Attendance at folk festivals that are

open to and invite the attendance of

the general public.

V. Rewards, emergency assistance,

condolence payments, or

honorariums from the management.

VI. The conduct is undertaken to meet

social courtesy and custom, or

others that meet the Company’s

Practice Principles” and these

Procedures and Guidelines, and the

relevant procedures shall have been

carried out:

I. The conduct is in compliance with

the laws and regulations of the

place where the Corporation is

conducting business operations.

II. The conduct is undertaken to meet

business needs and is in accordance

with local courtesy, convention, or

custom during domestic (or

foreign) visits, reception of guests,

promotion of business, and

communication and coordination.

III. The conduct has its basis in

ordinary social activities that are

attended or others are invited to

hold in line with accepted social

custom, commercial purposes, or

developing relationships.

IV. Invitations to guests or attendance

at commercial activities or factory

visits in relation to business needs,

when the method of fee payment,

number of participants, class of

accommodations, and the time

period for the event or visit have

been specified in advance.

V. Attendance at folk festivals that are

open to and invite the attendance of

the general public.

VI. Rewards, emergency assistance,

condolence payments, or

honorariums from the management.

VII. The conduct is undertaken to meet

social courtesy and custom, or

others that meet the Company’s

- 32 -


requirements. requirements.

Article 7 (Procedures for handling the

acceptance of improper

benefits)

When any personnel of the Company are

provided with or are promised, either

directly or indirectly, by a third party the

benefits referred to in Article 4 herein,

except under any of the circumstances

set forth in the preceding article, the

matter shall be handled in accordance

with the following procedures:

I. If there is no relationship of interest

between the party providing or

offering the benefit and the official

duties of the Company’s personnel,

the personnel shall report to their

immediate supervisor within 3 days

from the acceptance of the benefit,

and the responsible unit shall be

notified if necessary.

II. If a relationship of interest does

exist between the party providing or


duties of the Company's personnel,

the personnel shall return or refuse

the benefit, and shall report to his or

her immediate supervisor and notify

the responsible unit. When the

benefit cannot be returned, then

within 3 days from the acceptance

of the benefit, the personnel shall

refer the matter to the responsible

unit for handling.

Article 7 (Procedures for handling the

acceptance of improper

benefits)

Except under any of the circumstances

set forth in the preceding article, when

any personnel of the Company are

provided with or are promised, either

directly or indirectly, any money,

gratuity, service, preferential treatment,

entertainment, dining, or other benefits

by a third party, the matter shall be

handled in accordance with the

following procedures:

I. If there is no relationship of interest

between the party providing or


duties of the Company’s personnel,

the personnel shall report to their

immediate supervisor within 3 days

from the acceptance of the benefit,

and the responsible unit shall be

notified if necessary.

II. If a relationship of interest does

exist between the party providing

or offering the benefit and the

official duties of the Company's

personnel, the personnel shall

return or refuse the benefit, and

shall report to his or her immediate

supervisor and notify the

responsible unit. When the benefit

cannot be returned, then within 3

days from the acceptance of the

benefit, the personnel shall refer

the matter to the responsible unit

for handling.

“A relationship of interest between the

Amend the


be in line with

Article 7 of the


- 33 -


“A relationship of interest between the

party providing or offering the benefit

and the official duties of the Company’s

personnel,” as referred to in the

preceding paragraph, refers to one of the

following circumstances:

I. When the two parties have

commercial dealings, a relationship

of direction and supervision, or

subsidies (or rewards) for expenses.

II. When a contracting, trading, or

other contractual relationship is

being sought, is in progress, or has

been established.

III. Other circumstances in which a

decision regarding the Company's

business, or the execution or non-

execution of business, will result in

a beneficial or adverse impact.

The Company’s dedicated unit shall,

based on the nature and value of the

benefit under Paragraph 1, make a

proposal that it be returned, accepted on

payment, given to the public, donated to

charity, or handled in another

appropriate manner. The proposal shall

be implemented after being reported and

approved by the President.

party providing or offering the benefit

and the official duties of the Company’s

personnel,” as referred to in the

preceding paragraph, refers to one of

the following circumstances:

I. When the two parties have

commercial dealings, a relationship

of direction and supervision, or

subsidies (or rewards) for

expenses.

II. When a contracting, trading, or

other contractual relationship is

being sought, is in progress, or has

been established.

III. Other circumstances in which a

decision regarding the Company's

business, or the execution or non-

execution of business, will result in

a beneficial or adverse impact.

The Company’s dedicated unit shall,

based on the nature and value of the

property under Paragraph 1, make a

proposal that it be returned, accepted on

payment, given to the public, donated

to charity, or handled in another

appropriate manner. The proposal shall

be implemented after being reported

and approved by the President.


When a proposal at a given board of

directors meeting concerns the interest

of the Company’s directors or the juristic

persons represented by the directors, the

directors shall state the important aspects

of the relationship of interest at the given

board meeting. If their participation is

likely to prejudice the interest of the


The directors of the Company shall


discipline; when a proposal at a board

of directors meeting concerns a

director’s personal interest or the


represented by the director, and such a

relationship is likely to prejudice the

Amend the


be in line with

Article 11 of the


- 34 -


Company, they may not participate in

discussion of or voting on the proposal

and shall recuse themselves from the

discussion or the voting, and may not

exercise voting rights as proxy for

another director. The directors shall

exercise discipline among themselves,

and may not support each other in an


Omitted below

interest of the Company, that director

may express opinions and answer

questions but may not participate in the

discussion nor vote on that proposal. In

addition, that director shall recuse

himself or herself when the discussion

and voting is in progress, and may not

exercise voting rights as proxy on

behalf of another director. The directors

shall exercise discipline among

themselves, and may not support each

other in an inappropriate manner.

Omitted below

Article 12 (Special unit in charge of

confidentiality regime and

its responsibilities and

prohibition of infringement

upon intellectual property

rights)

The Company’s departments/offices

shall pay attention the management,

preservation, and confidentiality of their

intellectual property including business

secrets, trademarks, patents, and

copyright related to the Company, and be

prohibited from disclosing the

Company’s business secrets to another

person and inquiring or collecting the

Company's business secrets irrelevant to

their job duties.

When conducting the business, the

Company’s personnel shall observe

applicable IP laws and regulations, the

Company's internal operational

procedures, and contractual provisions

concerning intellectual property, and

may not use, disclose, dispose of, or

Article 12 (Special unit in charge of

confidentiality regime and

its responsibilities)

The Company’s departments/offices

shall pay attention the management,

preservation and confidentiality of their

business secrets related to the

Company.

New addition

Consolidate Article

13 into Paragraph 1

herein and amend the

wording thereof, and

also add Paragraph

herein, to be in line



- 35 -


damage or otherwise infringe intellectual

property rights without the prior consent

of the intellectual property rights holder.

Article 13 (Prohibition of unfair

competitive practices)

The Company shall engage in business

activities in accordance with Fair Trade

Act and related competition laws &

regulations.


disclosure of confidential

information)

The Company's personnel shall be

prohibited from disclosing the

Company's business secrets to another

person and inquiring or collecting the

Company's business secrets irrelevant

to their job duties.

Consolidate the

provision into

Paragraph 1 of

Article 12, and

amend the provisions




Article 14 (Prevention of damage to

stakeholders’ interest and

right)

The Company shall collect and

comprehend the related laws &

regulations and international standards to

be followed when conducting business,

and shall summarize and publish the

same to the Company’s personnel.

The Company shall set up the

stakeholder section at the Company’s

website to prevent damage to

stakeholders' interest and right.

If any media report or specific fact

identifies that the Company is likely to

impair stakeholders’ interest and right,

the Company shall investigate whether

the fact is true and also submit the

corrective action plan.

The Company’s dedicated unit shall

Article 14 (Prohibition against insider

trading)

The Company’s personnel shall adhere

to the provisions of the Securities and

Exchange Act, and may not take

advantage of undisclosed information

of which they have learned to engage in

insider trading. Personnel are also

prohibited from divulging the

undisclosed information to any other

party in order to prevent another party

from using such information to engage

in insider trading.

Consolidate the

provision into

Paragraph 1 of

Article 15, and

amend the provisions




- 36 -


submit to the board of directors a report

on the circumstances referred to in the

preceding paragraph, and actions taken

and subsequent reviews and corrective

measures.

Article 15 (Prohibition of insider

trading, and non-disclosure

agreement)

The Company’s personnel shall adhere

to the provisions of the Securities and

Exchange Act, and may not take

advantage of undisclosed information of

which they have learned to engage in

insider trading. Personnel are also

prohibited from divulging the

undisclosed information to any other

party in order to prevent another party

from using such information to engage

in insider trading.

Any organization or person outside of

the Company that is involved in any

merger, demerger, acquisition and share

transfer, major memorandum of

understanding, strategic alliance, other

business partnership plan, or the signing

of a major contract by the Company

shall be required to sign a non-disclosure

agreement in which they undertake not

to disclose to any other party any trade

secret or other material information of

the Company acquired as a result, and

that they may not use such information

without the prior consent of the

Company.

Article 15 (Non-disclosure

agreement)

New addition

Any organization or person outside of

the Company that is involved in any

merger, demerger, acquisition and share

transfer, major memorandum of

understanding, strategic alliance, other

business partnership plan, or the

signing of a major contract by the

Company shall be required to sign a

non-disclosure agreement in which they

undertake not to disclose to any other

party any trade secret or other material

information of the Company acquired

as a result, and that they may not use

such information without the prior

consent of the Company.

Consolidate Article

14 into Paragraph 1

herein, and

consolidate the

provision into

Paragraph 2 herein to

be in line with

Article 15 of the


Article 17 (Ethical management

evaluation prior to

development of commercial

relationships)

Article 17 (Ethical management

evaluation prior to

development of

commercial relationships)

Amend the


be in line with

- 37 -


Before developing a commercial

relationship with another party, such as

an agent, supplier, customer, or other

counterparty in commercial dealings, the

Company shall evaluate the legality and

ethical management policy of the party

and ascertain whether the party has been

recorded of unethical conduct, in order

to ensure that the party conducts

business in a fair and transparent manner

and will not request, offer, or take bribes.

When the Company carries out the

evaluation under the preceding

paragraph, it may adopt appropriate

audit procedures for a review of the

counterparty with which it will have

commercial dealings with respect to the

following matters, in order to gain a

comprehensive knowledge of its ethical

management:

I. The enterprise’s nationality, location

of business operations,

organizational structure, and place

where it will make payment.

II. Whether the enterprise has adopted

an ethical management policy.

III. Whether the enterprise has been

recorded of being suspected of

unethical conduct such as bribery or

illegal political contributions by

Judicial Yuan in the most recent year.

Before developing a commercial

relationship with another party, such as

an agent, supplier, customer, or other

counterparty in commercial dealings,

the Company shall evaluate the legality

and ethical management policy of the

party and ascertain whether the party

has a record of unethical conduct, in

order to ensure that the party conducts

business in a fair and transparent

manner and will not request, offer, or

take bribes.

When the Company carries out the

evaluation under the preceding

paragraph, it may adopt appropriate

audit procedures for a review of the

counterparty with which it will have

commercial dealings with respect to the

following matters, in order to gain a

comprehensive knowledge of its ethical

management:

I. The enterprise’s nationality, location

of business operations,

organizational structure, and place

where it will make payment.

II. Whether the enterprise has adopted

an ethical management policy.

III. Whether the enterprise has a record

of being suspected of unethical

conduct such as bribery or illegal

political contributions by Judicial

Yuan in the most recent year.

Article 17 of the


Article 18 (Statement of ethical

management policy to

counterparties in

commercial dealings)

Any personnel of the Company, when

Article 18 (Statement of ethical

management policy to

counterparties in

commercial dealings)

Any personnel of the Company, when

Amend the


be in line with

Article 18 of the

- 38 -


engaging in commercial activities, shall

make a statement to the trading

counterparty about the Company's

ethical management policy and related

rules, and shall clearly refuse to provide,

promise, request, or accept, directly or

indirectly, any improper benefit in

whatever form or name.

engaging in commercial activities, shall

make a statement to the trading

counterparty about the Company's

ethical management policy and related

rules, and shall clearly refuse to

provide, promise, request, or accept,

directly or indirectly, any improper

benefit in whatever form or name,

including rebates, commissions,

facilitating payments, or other improper

benefits provided or accepted through

other channels.


Article 19 (Avoidance of commercial

dealings with unethical

operators)

All personnel of the Company shall

avoid business transactions with any

agent, supplier, customer, or other

counterpart who is suspected of

unethical conduct in commercial

interactions. When the counterpart or

partner in cooperation is found to have

engaged in unethical conduct, the

personnel shall immediately cease

dealing with the counterpart and

blacklist it for any further business

interaction in order to effectively

implement the Company’s ethical

management policy.

Article 19 (Avoidance of commercial

dealings with unethical

operators)

All personnel of the Company shall

avoid business transactions with any

agent, supplier, customer, or other

counterpart who has unethical corporate

management in commercial

interactions. When the counterpart or

partner in cooperation is found to have

engaged in unethical conduct, the

personnel shall immediately cease

dealing with the counterpart and

blacklist it for any further business

interaction in order to effectively

implement the Company’s ethical

management policy.

Amend the


be in line with

Article 19 of the


Article 20 (Stipulation of terms of


contracts)

Before entering into a contract with

another party, the Company shall gain a

thorough knowledge of the status of the

other party’s ethical management, and

shall make observance of the Company’s

ethical management part of the terms

Article 20 (Stipulation of terms of


contracts)

Before entering into a contract with

another party, the Company shall gain a

thorough knowledge of the status of the

other party’s ethical management, and

shall make observance of ethical

management part of the terms and

Amend the


be in line with

Article 20 of the


- 39 -


and conditions of the contract,

stipulating at the least the following

matters:

I. When a party to the contract

becomes aware that any personnel

has violated the terms and conditions

pertaining to prohibition of

acceptance of commissions, rebates,

or other unfair benefits, the party

shall immediately notify the other

party of the violator’s identity, the

manner in which the provision,

promise, request, or acceptance was

made, and the monetary amount or

other unfair benefit that was

provided, promised, requested, or

accepted. The party shall also

provide the other party with pertinent

evidence and cooperate fully with the

investigation. If there has been

resultant damage to either party, the

party may claim damages against the

other party, and may deduct the full

amount of the damages from the

contract price payable.

II. Where a party is discovered to be

engaged in unethical conduct in its

commercial activities, the other party

may terminate or rescind the contract

unconditionally at any time.

III. Specific and reasonable payment

terms, including the place and

method of payment and the

requirement for compliance with

related tax laws and regulations.

conditions of the contract, stipulating at

the least the following matters:

I. When a party to the contract

becomes aware that any personnel

has violated the terms and

conditions pertaining to prohibition

of acceptance of commissions,

rebates, or other unfair benefits, the

party shall immediately notify the

other party of the violator’s

identity, the manner in which the

provision, promise, request, or

acceptance was made, and the

monetary amount or other unfair

benefit that was provided,

promised, requested, or accepted.

The party shall also provide the

other party with pertinent evidence

and cooperate fully with the

investigation. If there has been

resultant damage to either party, the

party may claim damages against

the other party, and may also

deduct the full amount of the

damages from the contract price

payable.

II. Where a party is discovered to be

engaged in unethical conduct in its

commercial activities, the other

party may terminate or rescind the

contract unconditionally at any

time.

III. Specific and reasonable payment

terms, including the place and

method of payment and the

requirement for compliance with

related tax laws and regulations.

- 40 -


Article 21 (Handling of unethical

conduct by personnel of the

Company)

The Company encourages the internal

and external personnel to file a

complaint on unethical conduct or

misconduct, and grants reward subject to

the materiality of the case. The internal

personnel who submit false accusation

or willful accusation will be disciplined,

and removed from their office if the case

is material.

The Company establishes and announces

an independent mailbox or hotline on the

Company’s website and intranet, to

allow the Company's internal and

external personnel to submit reports. The

complainant shall at least provide the

following information:

I. His/her name, and the address, phone

number and email box accessible to

him/her.

II. The violator’s name, or other

information sufficient to identify the

violator's identity.

III. Specific facts and investigable

evidence.

The Company’s related personnel in

charge of complaints shall state in

writing that the complainant's identity

and contents of the complaint will be

kept confidential. The Company also

undertakes to protect the complainant

from being treated improperly due to the

complaint, and has the Company’s

dedicated unit process the complaint in

the following manners:

I. The complaint involving the

general employees shall be

submitted to the department head,

while the complaint involving

directors or high-rank management

shall be submitted to independent

directors.

II. The Company’s dedicated unit and

the head or personnel in charge of

Article 21 (Handling of unethical

conduct by personnel of

the Company)

New addition

New addition

Upon discovering or receiving a

complaint about any personnel's

involvement in unethical conduct, the

Company shall ascertain the relevant

facts without delay; if it is verified that

there is indeed a violation of applicable

laws and regulations or the Company's

policy and procedures of ethical

management, the Company shall

immediately require the violator to

cease the conduct and shall make an

appropriate disposition. When

necessary, the Company will institute

legal proceedings and seek damages to

safeguard its reputation and its rights

and interests.

With respect to the unethical conduct

that has occurred, the Company shall

charge relevant units with the task of

reviewing the internal control system

and relevant procedures and proposing

corrective measures to prevent a

Add Paragraph 1 and

Paragraph 2 herein,

and consolidate the

provision into

Paragraph 3 herein

and amend the

wording, to be in line



- 41 -


the complaint referred to in the

preceding sub-paragraph shall

verify the relevant facts

immediately, and the related

departments shall provide

assistance, if necessary.

III. If it is verified that the violator is

indeed in violation of applicable

laws or the Company’s ethical

management policies and

procedures, the Company shall

immediately require the violator to

cease the conduct and shall make

an appropriate disposition. When

necessary, the Company will

institute legal proceedings and seek

damages to safeguard its reputation

and its interests and rights.

IV. The acceptance of complaint,

investigation process, and

investigation result shall be

documented in writing and

maintained for five years in

electronic form, if applicable. In the

case of any legal proceedings

related to the complaint initiated

prior to expiration of the

maintenance period, the related

information shall be maintained

continuously until the proceedings

are concluded.

V. If the complaint is proven to be true

upon investigation, the Company

shall charge relevant units with the

task of reviewing the internal

control system and relevant

procedures and proposing

corrective measures to prevent a

recurrence of the same unethical

recurrence of the same unethical

conduct.

The responsible unit of the Company

shall submit to the board of directors a

report on the unethical conduct, actions

taken, and subsequent reviews and

corrective measures.

- 42 -


conduct.

VI. The Company’s dedicated unit shall

submit to the board of directors a

report on the complaint, and actions

taken and subsequent reviews and

corrective measures.

Article 23 (Establishment of a system

for rewards, penalties, and

complaints, and related

disciplinary measures)

The Company’s dedicated unit shall

organize internal propagations and

communicate the importance of ethical

corporate management to its directors,

employees, and mandataries on a regular

basis.


management to employee performance

evaluations and human resources policy,

and establish clear and effective systems

for rewards, penalties, and complaints.

If any personnel of the Company

seriously violates ethical conduct, the

Company shall dismiss the personnel

from his or her position or terminate his

or her employment in accordance with

applicable laws and regulations or the

personnel policy and procedures of the

Company.

The Company shall make immediate

disclosure on the Company’s internal

website of the date and details of the

violation, and the actions taken in

response.

Article 23 (Establishment of a system

for rewards, penalties, and

complaints, and related

disciplinary measures)

New addition


management to employee performance

evaluations and human resources

policy, and establish clear and effective

systems for rewards, penalties, and

complaints.

If any personnel of the Company

seriously violates ethical conduct, the

Company shall dismiss the personnel

from his or her position or terminate his

or her employment in accordance with

applicable laws and regulations or the

personnel policy and procedures of the

Company.

The Company shall make immediate

disclosure on the Company’s internal

website of the name and title of the

violator, the date and details of the

violation, and the actions taken in

response.

Add Paragraph 1

herein, and adjust

Paragraphs 1 ~ 3 as

Paragraphs 2 ~ 4, to

be in line with

Article 23 of the


Further, amend the

wording in Paragraph

4 to be in line with

the enforcement of

Personal Information

Protection Act.

Article 24 (Enforcement)

These Procedures and Guidelines, and

Article 24 (Enforcement)

These Procedures and Guidelines, and

Add Paragraph 2

herein and also

- 43 -


any amendments hereto, shall be

implemented after adoption by

resolution of the board of directors, and

shall be delivered to each supervisor and

reported to the shareholders meeting.

The same procedure shall be followed

when the principles have been amended.

When the Procedures and Guidelines are

submitted for discussion by the board of

directors, the board of directors shall

take into full consideration each

independent director’s opinions. If an

independent director objects to or

expresses reservations about any matter,

it shall be recorded in the minutes of the

board of directors meeting. An

independent director that cannot attend

the board meeting in person to express

objection or reservations shall provide a

written opinion before the board

meeting, unless there is some legitimate

reason to do otherwise, and the opinion

shall be specified in the minutes of the

board of directors meeting.

Where the Group enterprises and

organizations which apply the Principles

delegate supervisors, the requirements

about the Company's directors,

managers, employees, mandataries and

substantial controllers defined in the

Principles shall apply to the supervisors

mutatis mutandis.

any amendments hereto, shall be

implemented after adoption by

resolution of the board of directors, and

shall be delivered to each supervisor

and reported to the shareholders

meeting. The same procedure shall be

followed when the principles have been

amended.

New addition

New addition

Paragraph 3 about

the requirements

applicable to

supervisors mutatis

mutandis, to be in

line with Article 24

of the “Sample

Template”.

- 44 -


Case: Motion for amendments to the Company’s “Guidelines for the


ratification.

Description:

I. In order to be in line with the amendments made by Taiwan Stock

Exchange Corporation to the Sample Template for the “Guidelines

for the Adoption of Codes of Ethical Conduct for TWSE/GTSM

Listed Companies”, the Company amended the Company’s

“Guidelines for the Adoption of Codes of Ethical Conduct” in part

upon resolution by the 28th directors’ meeting of the 6th term on

March 30, 2015.

II. The comparative list of the amended provisions in the Company’s

“Guidelines for the Adoption of Codes of Ethical Conduct” is

hereby submitted for ratification.

- 45 -

Comparative List of Amended Provisions in Yuanta Financial Holding Co.,

Ltd. Guidelines for the Adoption of Codes of Ethical Conduct


Article 14: (Prevention of

potential conflicts of

interest)





a director’s personal interest or the


represented by the director, and such

a relationship is likely to prejudice

the Company’s interest and the

director considers or the board of

directors resolves that he/she should

recuse himself/herself, the director

shall recuse himself or herself.

If the director considers that it

should be impossible for him/her to

deal with the situation in an

objective manner or a manner

favorable to the Company, or the

related transaction or relationship

should be likely to cause conflict of

interest, the director shall state the

same voluntarily and deal with or

avoid the situation in a timely

manner.

Where the Company’s director and

manager, or their spouses, parents,

relatives within the second degree of

kinship and the entities in which

Article 14: (Prevention of

potential conflicts of

interest)





a director’s personal interest or the


represented by the director, and

such a relationship is likely to

prejudice the Company’s interest

and the director considers or the

board of directors resolves that

he/she should recuse

himself/herself, the director shall

recuse himself or herself.

If the director considers that it

should be impossible for him/her to

deal with the situation in an

objective manner or a manner

favorable to the Company, or the

related transaction or relationship

should be likely to cause conflict of

interest, the director shall state the



manner.

Where the Company’s director and

manager, or their spouses, direct

blood relatives, relatives within the

third degree of kinship and the

Amend the wording

in Paragraph 3 and

the degree of kinship,

according to the

amended provisions

in Article 2(1) of the

Sample Template for

the “Guidelines for

the Adoption of

Codes of Ethical

Conduct for

TWSE/GTSM Listed

Companies”.

Appendix

- 46 -


they are hired participate in the

Company’s business transactions,

due to their position and powers, the

director and manager shall state the



manner.

entities in which they are hired

participate in the Company’s

business transactions, due to their

position and powers, the director

and manager shall state the same

voluntarily and deal with or avoid

the situation in a timely manner.

Article 22: (Encouraging reporting

on misconduct)


managers shall enhance the

propagation on awareness of ethics

and encourage that the Company’s

personnel, when they discover or

reasonably suspect any activity in

violation of a law or regulation or

the Code, shall report to their

supervisor, chief internal auditor, or

other appropriate individual

immediately, pursuant to the

relevant regulations.

Notwithstanding, they are prohibited

from framing up any person.

The Company prohibits any

vengeance or threat against the

personnel who submit the report

referred to in the preceding

paragraph. If any incidents of

vengeance, threat or harassment

occur, the Company shall take

adequate measures immediately.

Article 22: (Obligation to report

and submit complaints)


managers shall at any time

propagate awareness of ethics and

encourage that the Company’s

personnel, when they discover or

reasonably suspect any activity in

violation of a law or regulation or

the Code, shall, immediately

pursuant to the related requirements,

report and submit complaint,

provided that they are prohibited

from framing up any person.

The violator reported or complained

shall not engage in any vengeance or

threat against the personnel who

submit the report referred to in the

preceding paragraph. If any

personnel suffers from vengeance,

threat, or harassment therefore, they

shall report to their supervisor, chief

internal auditor, or other appropriate

individual immediately, and the

Company shall take adequate

measures immediately.

According to the

amended provisions

in Article 2(7) of the

Sample Template for

the “Guidelines for

the Adoption of

Codes of Ethical

Conduct for

TWSE/GTSM Listed

Companies”,

emphasize in the

provision that the

Company encourages

the complaint against

misconduct, and

expressly defines the

personnel dedicated

to accepting the

complaints, and also

prohibits any

vengeance or threat

against the

complainants.

Article 23: (Disciplinary and Article 23: (Disciplinary and I. Amend the

- 47 -


remedial procedure)

If any personnel of the Company are

suspected of violating the related

laws and regulations seriously, the

Company shall pursue their civil and

criminal liabilities to protect the

interest and right of the Company

and its shareholders. The others who

are held violating the relevant

requirements provided in the Code

shall, according to the personnel

regulations and rules, be disciplined

in a timely manner. For the

responsible supervisors who fail to

correct them or to take measures

pursuant to the Company’s

requirements upon awareness of the

truth, the same shall apply.

The Company’s personnel who

violate the Code shall be reported

and disciplined by the responsible

unit pursuant to the relevant

procedures. The disciplined

personnel who disagree with the

discipline may apply for

reconsideration in writing by

submitting new fact and evidence

with 10 days upon awareness of the

discipline. The Company shall take

the concerned party’s appeal into

consideration and take appropriate

measures.

Any director or manager who

violates the Code and is held against

laws upon a court's judgment in the

first instance, or held against laws

upon resolution by the Company’s

remedial procedure)

If any personnel of the Company are

suspected of violating the related

laws and regulations seriously, the

Company shall pursue their civil and

criminal liabilities to protect the

interest and right of the Company

and its shareholders. In the case of

the Company’s personnel, they shall

be governed by the personnel

regulations and rules, and the

Company shall render adequate

discipline. For the unit supervisors

who fail to correct them or take

measures pursuant to the Company’s

requirements upon awareness of the

truth, the same shall apply.

The Company’s personnel who

violate the Code shall be reported

and disciplined by the responsible

unit pursuant to the relevant

procedures. When the Company

renders discipline against the

concerned party, the concerned

party may bear the burden of proof

and file an appeal. The Company

shall take the concerned party’s

appeal into consideration and take

appropriate measures.

Any director or manager who

violates the Code and is held against

laws upon a court's judgment in the

first instance, or held against laws

upon resolution by the Company’s

board of directors, and the board of

directors renders discipline, the

Company shall immediately on

wording in

Paragraph 1

herein in part.

II. Amend the

wording herein,

according to the

amended

provisions in

Article 2(8) of the

Sample Template

for the

“Guidelines for

the Adoption of

Codes of Ethical

Conduct for

TWSE/GTSM

Listed

Companies”.

The specific

procedures for the

appeal system are

stated in

Paragraph 2

herein.

III. Delete the name

and job title of the

personnel in

violation of the

Code, according

to the amended

provisions in

Article 2(8) of the

Sample Template

for the

“Guidelines for

the Adoption of

Codes of Ethical

Conduct for

TWSE/GTSM

Listed

Companies”.

- 48 -


board of directors, and the board of

directors renders discipline, the

Company shall immediately on

MOPS disclose the date and cause of

the violation, violated guidelines,

and the actions taken in response.

MOPS disclose his/her job title,

name, and the date and cause of the

violation, violated guidelines, and

the actions taken in response.

Article 24: (Procedures for

exemption)

Any exemption for directors or

managers from compliance with the

Code shall be adopted upon

approval of more than 3/4 of the

present directors at a directors’

meeting attended by more than 2/3

of the whole directors.

In the case of the preceding

circumstances, the Company shall

immediately on MOPS disclose

information on the date on which the

board of directors adopted the

resolution for exemption, opposing

or qualified opinions voiced by any

independent directors, and the period

of, reasons for, and principles behind

the application of the exemption.

Article 24: (Procedures for

exemption)

Any exemption for directors or

managers from compliance with the

Code shall be adopted upon

approval of more than 3/4 of the

present directors at a directors’

meeting attended by more than 2/3

of the whole directors.

In the case of the preceding

circumstances, the Company shall

immediately on MOPS disclose

information on the name and job title

of the personnel granted the

exemption, the date on which the

board of directors adopted the

resolution for exemption, the period

of, reasons for, and principles behind

the application of the exemption.

Delete the name and

job title of the

personnel granted the

exemption and adds

the opposing or

unqualified opinions

voiced by any

independent

directors, according

to the amended

provisions in Article

3 of the Sample

Template for the

“Guidelines for the

Adoption of Codes of

Ethical Conduct for

TWSE/GTSM Listed

Companies”.

Article 25: (Method of disclosure)

The Code shall be disclosed at the

Company’s website, annual report

and prospectus, and MOPS. The

same shall apply where the Code is

amended.

Article 25: (Method of disclosure)

The Code shall be disclosed in the

Company’s annual report and

prospectus, and MOPS. The same

shall apply where the Code is

amended.

Amend the wording

herein, according to

the amended

provisions in Article

4 of the Sample

Template for the

“Guidelines for the

Adoption of Codes of

Ethical Conduct for

TWSE/GTSM Listed

Companies”.

Article 26: (Enforcement)

The Company shall define the

Article 26: (Enforcement)

The Company shall define the

Amend the wording

in part.

- 49 -


relevant management regulations in

accordance with the principles and

related matters referred to in the

Code.

The Company’s subsidiaries shall

define their own codes of ethical

conduct according to the Code and

the related laws and regulations

applicable to their respective

business lines.

Any personnel of the Company’s

subsidiaries who violate the codes of

ethical conduct shall be immediately

reported to the Company and

disciplined pursuant to the relevant

requirements.

relevant management regulations in

accordance with the principles and

related matters referred to in the

Code.

The Company’s subsidiaries shall

define their own codes of ethical

conduct according to the Code and

the related laws and regulations

applicable to their respective

business lines.

Any personnel of the Company’s

subsidiaries who violate the codes of

ethical conduct shall be immediately

reported to the Company and

disciplined pursuant to the relevant

requirements.

- 50 -


Case: Motion for the propagation and reporting of the related laws about a

same person or same concerned person who holds a same financial

holding company's outstanding voting shares exceeding the specific

percentage is submitted for ratification.

Description:

I. The matter is handled in accordance with the FSC's Letter Ching-

Kuan-Ying-Kou-Tzu No. 1060005190 of January 31, 2012.

II. The contents of the related laws to be propagated are stated as

following:

1. According to Paragraph 2 and Paragraph 3 of Article 16 of the

Financial Holding Company Act, the same person or same

concerned person who singly, jointly or collectively holds more

than five percent of a financial holding company's outstanding

voting shares shall report such fact to the Financial Supervisor

Commission (“FSC”) within ten days from the day of holding;

the preceding provision applies to each cumulative increase or

decrease in the shares of the same person or same concerned

person by more than one percent thereafter; and, a same person

or same concerned person who holds more than ten percent,

twenty-five percent or fifty percent of the financial holding

company’s outstanding voting shares shall apply for prior

approval of the FSC. The definitions of the same person and

same concerned person, and shares or capital to be excluded are

expressly stated in Article 4 and Article 5 of the Financial

Holding Company Act.

- 51 -

2. Where the same person or same concerned person who holds

voting shares issued by a financial holding company without

filing a report with the FSC or obtaining approval from the FSC

in accordance with Paragraph 10 of Article 16 of the same

Article, the excess shares held by such same person or same

concerned person shall not have voting rights and shall be

disposed of within the given period prescribed by the FSC.

Meanwhile, the FSC may also fine the shareholder in

accordance with Paragraph 60 of the same Article for more

than NT$2 million but less than NT$10 million. If the

shareholder is elected to be a director, supervisor or any other

responsible person of the financial holding company, the

Company shall also consider stating the reasons why the

shareholder commits the unethical or unfair conduct referred to

in the Sub-Paragraph 13 of Article 3 of the “Regulations

Governing Qualification Requirements for the Promoter or

Responsible Persons of Financial Holding Companies and

Concurrent Serving Restrictions and Matters for Compliance

by the Responsible Persons of a Financial Holding Company”

and, therefore, and may not act as the responsible person.

3. The related requirements and forms may be accessed on the

Company’s webpage (investors relations > shareholder

structure > reporting of shareholding).

- 52 -

Proposal 1: Proposed by the Board of Directors

Proposal: Adoption of the 2014 Business Report and Financial Statements.

Description:

I. Yuanta Financial Holdings’ Financial Statements 2014 were audited

by independent auditors, Po-Ru Kuo and Ming-Hui Chang of

PricewaterhouseCooper Certified Public Accountants, who issued

the Standard Unqualified Opinions. The Financial Statements

described above and the Business Report of 2014 have been audited

by the Audit Committee and considered correct, and the audit report

(on page 9) is issued by the committee.

II. Adoption of the Business Report (on page 4), Audit Report and the

Financial Statements

Resolution:

53

PWCR14004069

Report of Independent Accountants

To the Board of Directors and Stockholders of Yuanta Financial Holdings Co., Ltd.

We have audited the accompanying consolidated balance sheets of Yuanta Financial Holdings Co., Ltd. and its subsidiaries as of December 31, 2014 and 2013 and the related consolidated statements of comprehensive income, of changes in equity and of cash flows for the years ended December 31, 2014 and 2013. These consolidated financial statements are the responsibility of Yuanta Financial Holdings Co., Ltd.’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements of Financial Institutions by Certified Public Accountants” and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Yuanta Financial Holdings Co., Ltd. and its subsidiaries as of December 31, 2014 and 2013, and their financial performance and cash flows for the years ended December 31, 2014 and 2013 in conformity with the “Regulations Governing the Preparation of Financial Reports by Financial Holding Companies”, “Regulations Governing the Preparation of Financial Reports by Securities Issuers”, “Regulations Governing the Preparation of Financial Reports by Public Banks”, “Regulations Governing the Preparation of Financial Reports by Securities Firms”, “Regulations Governing the Preparation of Financial Reports by Futures Commission Merchants”, “Regulations Governing the Preparation of Financial Reports by Insurance Companies” and International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations as endorsed by the Financial Supervisory Commission.

PricewaterhouseCoopers Certified Public Accountants

CPA: Po-Ru Kuo (Signature)

Ming-Hui Chang (Signature)

Former Securities and Futures Bureau (SFB) of the Executive Yuan

Certificate No.: Jin-Guan-Cheng-Shen-Zi No.1000035997

Former Securities and Futures Commission of the Ministry of Finance

Certificate No.: (2002) Tai-Tsai-Cheng-(6) No.79059

March 30, 2015

------------------------------------------------------------------------------------------------------------------------------------- The accompanying consolidated financial statements are not intended to present the financial position and results of operations and of cash flows in

accordance with accounting principles generally accepted in countries and jurisdictions other than the Republic of China. The standards, procedures and

practices in the Republic of China governing the audit of such financial statements may differ from those generally accepted in countries and

jurisdictions other than the Republic of China. Accordingly, the accompanying consolidated financial statements and report of independent accountants

are not intended for use by those who are not informed about the accounting principles or auditing standards generally accepted in the Republic of

China, and their applications in practice.

YUANTA FINANCIAL HOLDING CO., LTD. AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan Dollars)

54

December 31, 2014 December 31, 2013

ASSETS AMOUNT % AMOUNT %

11000 Cash and cash equivalents $ 47,061,183 4 $ 27,229,111 3

11500 Due from Central Bank and call

loans to other banks

79,474,507 6 85,619,265 10

12000 Financial assets at fair value through

profit or loss

260,202,179 20 91,573,183 11

12100 Available-for-sale financial assets –

net

114,343,183 9 43,612,700 5

12500 Bills and bonds purchased under

resale agreements

17,643,207 2 250,724 -

13000 Receivables – net 120,659,190 9 98,302,239 11

13200 Current income tax assets 1,613,255 - 1,239,819 -

13300 Assets held for sale – net 33,096 - 1,309,054 -

13500 Bills discounted and loans – net 451,629,582 35 397,268,743 46

13700 Reinsurance contract assets – net 368,588 - - -

14500 Held-to-maturity financial assets –

net

51,295,128 4 7,204,646 1

15000 Investments accounted for using

equity method – net

1,927,479 - 805,483 -

15100 Restricted assets – net 1,837,531 - 152,682 -

15500 Other financial assets – net 75,024,970 6 60,446,473 7

18000 Investment property – net 7,976,225 1 4,222,882 1

18500 Property and equipment – net 13,379,104 1 12,417,996 1

19000 Intangible assets – net 27,042,475 2 25,497,006 3

19300 Deferred income tax assets 3,742,095 - 1,064,109 -

19500 Other assets – net 16,508,415 1 6,877,941 1

TOTAL ASSETS

$ 1,291,761,392 100 $ 865,094,056 100

(Continued)

YUANTA FINANCIAL HOLDING CO., LTD. AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS

(Expressed in thousands of New Taiwan dollars)

55

December 31, 2014 December 31, 2013

LIABILITIES AND EQUITY AMOUNT % AMOUNT %

21000 Due to Central Bank and other banks $ 5,681,005 1 $ 13,072,480 1

22000 Financial liabilities at fair value through

profit or loss

85,309,269 7 29,582,483 3

22500 Bills and bonds sold under repurchase

agreements

89,313,850 7 23,440,116 3

22600 Commercial paper payable – net 14,825,780 1 8,509,446 1

23000 Payables 129,540,019 10 63,540,151 7

23200 Current income tax liabilities 3,146,491 - 4,593,107 1

23500 Deposits and remittances 555,769,170 43 470,505,829 54

24000 Bonds payable 54,683,089 4 31,002,148 4

24400 Other borrowings 9,250,609 1 1,106,179 -

24600 Provisions 104,201,853 8 2,157,166 -

25500 Other financial liabilities 40,635,589 3 41,772,374 5

29300 Deferred income tax liabilities 1,838,207 - 1,020,822 -

29500 Other liabilities 12,512,579 1 13,159,292 2

TOTAL LIABILITIES 1,106,707,510 86 703,461,593 81

31000 Equity attributable to owners of the

parent company

31100 Share capital

31101 Common stock 101,410,666 8 98,937,235 11

31500 Additional paid-in capital 33,648,021 3 33,634,947 4

32000 Retained earnings

32001 Legal reserve 5,030,700 - 4,259,700 1

32003 Special reserve 909,427 - 2,772,158 -

32011 Unappropriated earnings 24,194,266 2 15,653,335 2

32500 Other equity interest

32500 Other equity interest 4,522,016 - 3,153,871 1

39500 Non-controlling interests 15,338,786 1 3,221,217 -

TOTAL EQUITY 185,053,882 14 161,632,463 19

TOTAL LIABILITIES AND EQUITY $ 1,291,761,392 100 $ 865,094,056 100


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Expressed in thousands of New Taiwan dollars, except earnings per share amounts)

56

2014 2013 Change

AMOUNT % AMOUNT % Percentage%

41000 Interest income $ 20,008,841 36 $ 13,584,232 47 47

51000 Less: Interest expense ( 6,647,768 ) ( 12 ) ( 4,122,641 ) ( 14 ) 61

49600 Net interest income 13,361,073 24 9,461,591 33 41

Net non-interest income

49800 Net service fee and commission income 12,839,831 23 10,110,462 35 27

49810 Net income from insurance operations 9,092,537 17 - - -

49820 Gains on financial assets and financial liabilities at

fair value through profit or loss

4,240,248 8 3,205,456 11 32

49825 Gains on investment property 1,596,178 3 14,473 - 10929

49830 Realized gains on available-for-sale financial

assets

2,528,770 5 1,017,848 4 148

49840 Realized gains on held-to-maturity financial assets 31,440 - - - -

49870 Foreign exchange gains 2,418,976 4 1,798,205 6 35

49880 Gains (losses) on reversal of impairment loss ( 380,822 ) ( 1 ) 8,404 - ( 4631 )

49890 Share of profit or loss of associates and joint

ventures accounted for using the equity method

( 17,384 ) - ( 123,359 ) - ( 86 )

49921 Net gain on sale of non-performing loans 1,020,640 2 797,888 3 28

49945 Consultation service income 1,504,348 3 1,590,268 5 ( 5 )

49999 Net other miscellaneous income 1,208,096 2 816,333 3 48

49990 Gain from a bargain purchase 5,639,807 10 - - -

49700 Total net non-interest income 41,722,665 76 19,235,978 67 117

Net profit 55,083,738 100 28,697,569 100 92

58100 Bad debt expense and guarantee liability

provisions

( 1,257,054 ) ( 2 ) ( 722,551 ) ( 2 ) 74

58300 Net change in provisions for insurance liabilities ( 9,681,361 ) ( 18 ) - - -

Operating expenses

58501 Employee benefit expense ( 14,457,596 ) ( 26 ) ( 10,882,041 ) ( 38 ) 33

58503 Depreciation and amortization expense ( 2,339,768 ) ( 4 ) ( 2,038,303 ) ( 7 ) 15

58599 Other general and administrative expenses ( 9,460,137 ) ( 17 ) ( 5,957,803 ) ( 21 ) 59

58500 Total operating expenses ( 26,257,501 ) ( 47 ) ( 18,878,147 ) ( 66 ) 39

61000 Consolidated income from continuing operations

before income tax

17,887,822 33 9,096,871 32 97

61003 Income tax expense ( 1,462,878 ) ( 3 ) ( 1,019,550 ) ( 4 ) 43

69005 Consolidated net income 16,424,944 30 8,077,321 28 103

Other comprehensive income (loss)

69501 Translation gain and loss on the financial

statements of foreign operating entities

460,774 1 553,565 2 ( 17 )

69511 Unrealized gain or loss on available-for-sale

financial assets

1,203,127 2 ( 950,638 ) ( 3 ) ( 227 )

69531 Actuarial gain or loss on defined benefit plans ( 141,427 ) ( 1 ) ( 265,104 ) ( 1 ) ( 47 )

69541 Share of other comprehensive income of

associates and joint ventures accounted for using

the equity method

4,409 - - - -

69591 Income tax relating to components of other

comprehensive income and loss

( 77,910 ) - 42,059 - ( 285 )

69500 Current other comprehensive income (loss)

(net of tax)

1,448,973 2 ( 620,118 ) ( 2 ) ( 334 )

69700 Current comprehensive income $ 17,873,917 32 $ 7,457,203 26 140

Consolidated net income attributable to:

69901 Parent company $ 16,472,023 30 $ 7,709,994 27 114

69903 Non-controlling interests ( 47,079 ) - 367,327 1 ( 113 )

$ 16,424,944 30 $ 8,077,321 28 103

Consolidated comprehensive income attributable

to:

69951 Parent company $ 17,721,696 32 $ 7,037,785 25 152

69953 Non-controlling interests 152,221 - 419,418 1 ( 64 )

$ 17,873,917 32 $ 7,457,203 26 140

Earnings per share (in New Taiwan Dollars)

70000 Basic earnings per share $ 1.62 $ 0.76

71000 Diluted earnings per share $ 1.59 $ 0.75


CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


- 57 -

Equity attributable to owners of the parent

Retained Earnings Other equity interest

Common stock

Additional paid-in

capital

Legal reserve

Special reserve

Undistributed

earnings

Translation gain

and loss on the

financial statements

of foreign operating

entities

Unrealized gain

on available-for-

sale financial

assets

Treasury stock

Non-controlling

interests

Total equity

For the year ended December 31, 2013

Balance, January 1, 2013 $ 100,162,105 $ 34,251,758 $ 3,646,713 $ 2,681,046 $ 14,309,689 ( $ 2,083,016 ) $ 5,688,395 ( $ 727,074 ) $ 3,116,365 $ 161,045,981

Appropriation and distribution of 2012 earnings (Note)

Legal reserve - - 612,987 - ( 612,987 ) - - - - -

Special reserve - - - 91,112 ( 91,112 ) - - - - -

Cash dividends - - - - ( 5,441,548 ) - - - - ( 5,441,548 )

Consolidate net income for the period - - - - 7,709,994 - - - 367,327 8,077,321

Other comprehensive income for the period - - - - ( 220,701 ) 545,758 ( 997,266 ) - 52,091 ( 620,118 )

Total comprehensive income for the period - - - - 7,489,293 545,758 ( 997,266 ) - 419,418 7,457,203

Treasury stocks distributed to employees - ( 2,488 ) - - - - - - - ( 2,488 )

Acquisition of treasury stocks - - - - - - - ( 1,115,865 ) - ( 1,115,865 )

Treasury stocks retired ( 1,224,870 ) ( 618,069 ) - - - - - 1,842,939 - -

Recognition of additional paid-in capital from subsidiaries - 3,746 - - - - - - - 3,746

Changes in non-controlling interests - - - - - - - - ( 314,566 ) ( 314,566 )

Balance, December 31, 2013 $ 98,937,235 $ 33,634,947 $ 4,259,700 $2,772,158 $ 15,653,335 ( $ 1,537,258 ) $ 4,691,129 $ - $ 3,221,217 $ 161,632,463


Balance, January 1, 2014 $ 98,937,235 $ 33,634,947 $ 4,259,700 $2,772,158 $ 15,653,335 ( $ 1,537,258 ) $ 4,691,129 $ - $ 3,221,217 $ 161,632,463

Appropriation and distribution of 2013 earnings (Note)

Legal reserve - - 771,000 - ( 771,000 ) - - - - -

Special reserve - - - ( 1,862,731 ) 1,862,731 - - - - -

Cash dividends - - - - ( 6,430,920 ) - - - - ( 6,430,920 )

Stock dividends 2,473,431 - - - ( 2,473,431 ) - - - - -

Consolidate net income for the period - - - - 16,472,023 - - - ( 47,079 ) 16,424,944

Other comprehensive income for the period - - - - ( 118,472 ) 649,659 718,486 - 199,300 1,448,973

Total comprehensive income for the period - - - - 16,353,551 649,659 718,486 - 152,221 17,873,917

Recognition of additional paid-in capital from subsidiaries - 13,074 - - - - - - - 13,074

Changes in non-controlling interests - - - - - - - - 11,965,348 11,965,348

Balance, December 31, 2014 $ 101,410,666 $ 33,648,021 $ 5,030,700 $ 909,427 $ 24,194,266 ( $ 887,599 ) $ 5,409,615 $ - $ 15,338,786 $ 185,053,882

Note: For the years ended December 31, 2013 and 2012, $44,009 and $27,129 of remunerations to directors and $2,019 and $5,426 of bonus to employees were deducted from the consolidated statements of comprehensive income.


CONSOLIDATED STATEMENTS OF CASH FLOWS


For the years ended December 31,

2014 2013

- 58 -

CASH FLOWS FROM OPERATING ACTIVITIES

Consolidated income from continuing operations before tax $ 17,887,822 $ 9,096,871

Adjustments to reconcile consolidated income from continuing

operations before tax to net cash used in operating activities

Income and expenses having no effect on cash flows

Depreciation 1,125,583 1,065,528

Amortization 1,214,185 972,775

Provisions for (reversal of) bad debt expenses ( 467,104 ) 1,329,710

Accrued discount amortization of convertible corporate bonds 153,735 119,383

Interest expense 6,494,033 4,003,258

Interest income ( 20,008,841 ) ( 13,584,232 )

Dividend income ( 1,909,896 ) ( 1,672,546 )

Realized gain on available-for-sale financial assets ( 1,249,894 ) ( 605,425 )

Financial asset impairment losses 206,547 26,415

Non-financial asset impairment losses (recovery) 174,275 ( 34,819 )

Share of the loss of associates and joint ventures accounted for

using the equity method 17,384 123,359

Gain on disposal of assets held for sale ( 149,159 ) -

(Gain) loss on disposal of investment property ( 1,333,002 ) 3,799

Gain from sale or retirement of property and equipment 714 2,919

Net change in insurance liabilities 10,045,027 -

Property and equipment reclassified to expenses 756 -

Gain from bargain purchase ( 5,639,807 ) -

Changes in assets/liabilities relating to operating activities

Net changes in assets relating to operating activities

Increase in due from Central Bank and call loans to other banks ( 2,135,619 ) ( 942,360 )

(Increase) decrease in financial assets at fair value through profit or loss ( 50,921,522 ) 3,129,845

Increase in available-for-sale financial assets ( 9,594,123 ) ( 6,922,375 )

Decrease in bonds purchased under resale agreements 6,865,366 -

Increase in receivables ( 19,629,240 ) ( 12,943,862 )

Increase in bills discounted and loans ( 34,749,945 ) ( 22,804,828 )

Decrease in reinsurance contract assets 35,940 -

(Increase) decrease in held-to-maturity financial assets ( 16,044,265 ) 206,942

Decrease in restricted assets 326,845 33,750

Increase in other financial assets ( 12,890,366 ) ( 3,748,425 )

Increase in other assets ( 4,245,623 ) ( 410,499 )

Net changes in liabilities relating to operating activities

(Decrease) increase in due to Central Bank and other banks ( 7,391,475 ) 2,140

Increase in financial liabilities at fair value through profit or loss 29,708,503 7,500,074

Increase in payables 61,170,207 11,925,956

Increase in deposits and remittances 25,779,163 35,106,199

Decrease in provisions ( 4,425,164 ) ( 50,501 )

Decrease in other financial liabilities ( 3,015,799 ) ( 5,192,502 )

Decrease in other liabilities ( 1,325,645 ) ( 3,616,038 )

Cash (used in) provided by operations ( 35,920,404 ) 2,120,511

Interest received 17,009,740 13,688,255

Dividend received 1,868,321 1,804,662

Interest paid ( 5,431,291 ) ( 4,098,783 )

Income tax paid ( 2,667,201 ) ( 1,945,886 )

Net cash (used in) provided by operating activities ( 25,140,835 ) 11,568,759

(Continued)


CONSOLIDATED STATEMENTS OF CASH FLOWS



2014 2013

- 59 -

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of available-for-sale financial assets $ 1,455,246 $ -

Acquisition of investments accounted for under the equity method - ( 460,568 )

Proceeds from disposal of investments accounted for using equity method 1,515 -

Acquisition of investment property ( 283,370 ) ( 312,934 )

Proceeds from disposal of investment property 4,849,679 111,705

Acquisition of property and equipment ( 733,750 ) ( 716,844 )

Proceeds from disposal of property and equipment 112,851 24,615

Acquisition of intangible assets ( 119,329 ) ( 8,774 )

Proceeds from disposal of intangible assets 193,831 19,199

Proceeds from disposal of assets held for sale 1,309,941 230,560

Acquisition of subsidiaries (net of cash received) 5,092,403 -

Net cash provided by (used in) investing activities 11,879,017 ( 1,113,041 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase (decrease) in bills and bonds sold under repurchase agreements 41,279,488 ( 7,238,568 )

Repayment of corporate bonds ( 9,931,860 ) -

Increase in commercial paper payable 6,080,925 3,079,000

Decrease in other borrowings ( 1,626,414 ) ( 1,232,149 )

Acquisition of treasury stocks - ( 1,115,865 )

Payment of cash dividends ( 7,021,912 ) ( 5,441,548 )

Decrease in non-controlling interests ( 48,775 ) ( 314,567 )

Issuance of financial bonds 8,000,000 -

Issuance of corporate bonds 5,030,000 -

Net cash provided by (used in) financing activities 41,761,452 ( 12,263,697 )

Net effect of foreign exchange rate changes on cash and cash equivalents 444,544 503,017

Net increase (decrease) in cash and cash equivalents 28,944,178 ( 1,304,962 )

Cash and cash equivalents at beginning of period 99,970,276 101,275,238

Cash and cash equivalents at end of period $ 128,914,454 $ 99,970,276

Components of cash and cash equivalents:

Cash and cash equivalents as per consolidated balance sheet $ 47,061,183 $ 27,229,111

Due from Central Bank and call loans to other banks qualified as cash and

cash equivalents as defined by IAS 7 64,210,064 72,490,441

Bills and bonds purchased under resale agreements qualified as cash and

cash equivalents as defined by IAS 7 17,643,207 250,724

Cash and cash equivalents at end of reporting period $ 128,914,454 $ 99,970,276

- 60 -

Yuanta Financial Holding Co., Ltd.

Individual Balance Sheets

December 31, 2014 and 2013

(Expressed In Thousands of New Taiwan Dollars)

ASSETS

December 31,

2014

December 31,

2013 LIABILITIES AND EQUITY

December 31,

2014

December 31,

2013

Cash and cash equivalents $ 9,140 $ 2,298,713 Commercial paper payable- net $ 469,915 $ 599,764

Financial assets at fair value through Payables 4,311,445 3,525,017

profit or loss - 3,542 Current income tax liabilities 2,145,884 2,139,859

Available-for-sale financial assets- net 16,262 15,140 Bonds payable- net 10,624,562 16,002,148

Receivables- net 2,031,012 1,311,518 Liabilities reserve 4,164 6,363

Current income tax assets 957,846 977,977 Other liabilities 17,387 83,249

Equity investments accounted for under Total liabilities 17,573,357 22,356,400

the equity method- net 184,221,824 175,685,709

Property and equipment- net 37,718 47,798 Equity

Intangible assets- net 4,763 3,255 Common stock 101,410,666 98,937,235

Deferred income tax assets- net 1,176 411,292 Additional paid-in capital 33,648,021 33,634,947

Other assets- net 8,712 12,702 Retained earnings

Legal reserve 5,030,700 4,259,700

Special reserve 909,427 2,772,158

Undistributed earnings 24,194,266 15,653,335

Other equity 4,522,016 3,153,871

Total equity 169,715,096 158,411,246

Total assets $ 187,288,453 $ 180,767,646 Total liabilities and equity $ 187,288,453 $ 180,767,646

61


Individual Statements of Comprehensive Income

For the years ended December 31, 2014 and 2013

(Expressed in Thousands of New Taiwan Dollars, Except for Earnings per Share)


2014 2013

Revenues

Share of the profit or loss of associates and joint

ventures accounted for using the equity method

$ 17,535,077 $ 8,413,948

Realized gain on available-for-sale financial assets 339 306

(Loss) gain on financial assets and liabilities at fair

value through profit or loss

( 3,542 )

6,074

Other revenues 17,636 1,875

17,549,510 8,422,203

Expenses and losses

Operating expenses ( 545,087 ) ( 434,554 )

Other expenses and losses ( 285,930 ) ( 322,127 )

( 831,017 ) ( 756,681 )

Income from continuing operations before income tax 16,718,493 7,665,522

Income tax (expense) benefit ( 246,470 ) 44,472

Net income 16,472,023 7,709,994

Other comprehensive income

Unrealized gain (loss) on available-for-sale

financial assets

1,122 ( 350 )

Actuarial gain or loss on defined benefit plans 2,284 856

Share of other comprehensive income of the

subsidiaries, associates and joint ventures

accounted for using the equity method

1,246,267 ( 672,715 )

Other comprehensive income 1,249,673 ( 672,209 )

Total comprehensive income $ 17,721,696 $ 7,037,785

Earnings per share (in dollars)

Basic earnings per share $ 1.62 $ 0.76

Diluted earnings per share $ 1.59 $ 0.75

- 62 -


Individual Statement of Change in Equity


(Expressed in Thousands of New Taiwan Dollars)

Retained Earnings Other equity

Common stock

Additional paid-in capital

Legal reserve

Special reserve

Undistributed earnings

Translation gain and loss

on the financial

statements of foreign

operating entities

Unrealized gain on

available-for- sale financial

assets

Treasury stock

Total equity


Balance, January 1, 2013 $100,162,105 $ 34,251,758 $ 3,646,713 $ 2,681,046 $ 14,309,689 ( $ 2,083,016 ) $ 5,688,395 ( $ 727,074 ) $ 157,929,616

Appropriation of 2012 earnings (Note)

Legal reserve - - 612,987 - ( 612,987 ) - - - -

Special reserve - - - 91,112 ( 91,112 ) - - - -

Cash dividends - - - - ( 5,441,548 ) - - - ( 5,441,548 )

Consolidate net income for the period - - - - 7,709,994 - - - 7,709,994

Other comprehensive income for the period - - - - ( 220,701 ) 545,758 ( 997,266 ) - ( 672,209 )

Total comprehensive income for the period - - - - 7,489,293 545,758 ( 997,266 ) - 7,037,785

Treasury stocks distributed to employees - ( 2,488 ) - - - - - - ( 2,488 )

Acquisition of treasury stocks - - - - - - - ( 1,115,865 ) ( 1,115,865 )

Treasury stocks retired ( 1,224,870 ) ( 618,069 ) - - - - - 1,842,939 -

Recognition of additional paid-in capital from subsidiaries - 3,746 - - - - - - 3,746

Balance, December 31, 2013 $98,937,235 $ 33,634,947 $ 4,259,700 $ 2,772,158 $ 15,653,335 ( $ 1,537,258 ) $ 4,691,129 $ - $ 158,411,246


Balance, January 1, 2014 $98,937,235 $ 33,634,947 $ 4,259,700 $ 2,772,158 $ 15,653,335 ( $ 1,537,258 ) $ 4,691,129 $ - $ 158,411,246

Appropriation of 2013 earnings (Note)

Legal reserve - - 771,000 - ( 771,000 ) - - - -

Special reserve - - - ( 1,862,731 ) 1,862,731 - - - -

Cash dividends - - - - ( 6,430,920 ) - - - ( 6,430,920 )

Stock dividends 2,473,431 - - - ( 2,473,431 ) - - - -

Consolidate net income for the period - - - - 16,472,023 - - - 16,472,023

Other comprehensive income for the period - - - - ( 118,472 ) 649,659 718,486 - 1,249,673

Total comprehensive income for the period - - - - 16,353,551 649,659 718,486 - 17,721,696

Recognition of additional paid-in capital from subsidiaries - 13,074 - - - - - - 13,074

Balance, December 31, 2014 $101,410,666 $ 33,648,021 $ 5,030,700 $ 909,427 $ 24,194,266 ( $ 887,599 ) $ 5,409,615 $ - $ 169,715,096

Note: For the years ended December 31, 2013 and 2012, $44,009 and $27,129 of remunerations to directors and $2,019 and $5,426 of bonus to employees were deducted from the consolidated statements of comprehensive income.

63


Individual Statement of Cash Flows


(Expressed In Thousands of New Taiwan Dollars)


2014 2013

Cash Flows From Operating Activities

Profit before tax $ 16,718,493 $ 7,665,522

Adjustment items

Income and expenses without cash flow impact

Depreciation 31,567 31,362

Amortization 938 1,115

Loss (gain) on financial assets and financial liabilities at fair

value through profit or loss 3,542 ( 6,074 )

Interest expenses 161,635 202,463

Interest income ( 9,420 ) ( 574 )

Dividend income ( 339 ) ( 306 )

Share of the profit or loss of associates and joint ventures

accounted for using the equity method ( 17,535,077 ) ( 8,413,948 )

(Gain) loss from sale of property and equipment ( 1,411 ) 2

Expense transfers of property and equipment 64 167

Accrued discount amortization of convertible corporate bonds 122,414 119,383

Loss from early redemption of bonds payable of convertible

corporate bonds - 50

Change in assets/liabilities relating to operating activities

Decrease in receivables 166,058 279,679

Decrease (increase) in other assets 3,990 ( 591 )

Increase (decrease) in payables 92,839 ( 117,567 )

Increase in liabilities reserve 85 108

Increase in other liabilities 28,599 ( 75,249 )

Interest received 9,958 36

Cash dividend received 15,423,642 9,505,392

Cash paid for interest ( 197,920 ) ( 202,353 )

Income tax paid ( 60,724 ) ( 874,077 )

Net cash provided by operating activities 14,958,933 8,265,038

Cash Flows From Investing Activities

Increase in equity investments accounted for under the equity

method ( 6,165,000 ) -

Cash refund proceeds from share of capital reduction of investee

company accounted for under the equity method 1,000,000 1,000,000

Acquisition of property and equipment ( 23,997 ) ( 3,210 )

Proceeds from disposal of property and equipment 1,411 -

Acquisition of intangible assets - ( 749 )

Net cash (used in) provided by investing activities ( 5,187,586 ) 996,041

Cash Flows From Financing Activities

Decrease in commercial paper payable - net ( 130,000 ) ( 442,000 )

Repayment of corporate bonds ( 5,500,000 ) ( 1,000 )

Decrease in other borrowings and overdrafts - ( 20,000 )

Cash dividend distribution ( 6,430,920 ) ( 5,441,548 )

Cash paid for repurchase of treasury stock - ( 1,115,865 )

Net cash used in financing activities ( 12,060,920 ) ( 7,020,413 )

Net (decrease) increase in cash and cash equivalents ( 2,289,573 ) 2,240,666

Cash and cash equivalents at beginning of period 2,298,713 58,047

Cash and cash equivalents at end of period $ 9,140 $ 2,298,713

64

Proposal 2: Proposed by the Board of Directors

Proposal: Adoption of the Proposal for the Distribution of 2014 Profits.

Description:

I. The Company’s unappropriated earnings at the beginning of 2014

were 7,840,715,611NTD. The calculations by the actuary

conducted in accordance with the International Accounting

Standard No.19, “Employee Benefits” confirmed that the net loss

of the employee defined benefit plan amounted to

118,473,069NTD in 2014. The unappropriated earnings became

7,722,242,542NTD upon adjustments.

II. After taking into account an after-tax net profit of

16,472,023,024NTD in 2014, and the deduction of a legal reserve

of 10% (1,647,202,303NTD) from the after-tax net profit in 2014,

the total distributable net profits amounted to 1,647,202,303NTD.

Meanwhile, Yuanta Securities Asia Financial Services acquired the

equity of Tongyang Securities in Korea and the external auditor

calculated the gain from bargain purchase generated by the

acquisition as 5,639,806,525NTD based on the “Amortization

Report of Acquisition Price” issued by KPMG Samjong in Korea,

in accordance with the IFRS No. 3. According to the Letter Jin-

Guan-Yin-Fa-Zi No. 10310006310, “a financial holding company,

public bank, or public bills finance company shall provide the

special reserve equivalent, if any, to the increase in retained

earnings generated from the gain from bargain purchases

recognized upon merger and acquisition of it per se or its

subsidiary, if any”. Therefore, after provision of the special

reserve, 5,639,806,525NTD, the distributable earnings were

16,907,256,738NTD.

65

III. A detailed description of the motion for distribution of earnings is

provided below:

1. The balance of the after-tax net profits in 2014 after deduction

of the legal reserve and special reserve was

9,185,014,196NTD. The Company planned to distribute cash

dividends and stock dividends of 6,449,718,354NTD and

2,738,087,990NTD, respectively. Based on the calculated

number of outstanding shares (a total of 10,141,066,594) at the

time of the resolution of the 28th meeting of the 6th board, a

cash dividend of 0.636NTD and a stock dividend of 0.27NTD

should be distributed per share. The total dividend per share

was 0.906NTD. The unappropriated earnings from early 2014

should be utilized to cover insufficient amounts.

2. In 2014, the Company planned to allocate 0.5%

(45,925,071NTD) of the balance as remuneration to directors,

while 0.002707077% (2,486,454NTD) should be allocated as

employee bonuses, both in cash. The remuneration and bonus

have all been recognized as 2014 operating expenses, which

were already deducted from the net profit after tax of the

current period.

IV. If the number of outstanding shares changes due to the repurchase

of Company shares, issuance of convertible bonds into shares, or

the transfer, conversion and cancellation of treasury shares, the

Company authorizes the Board to recalculate the cash dividend

payout ratio and the capital increase and share allotment ratio

based on the number of outstanding shares on the ex-dividend date

and date set for dividend distribution (capital increase/share

allotment base date).

66

V. The cash dividends allocated to each shareholder shall be

calculated until 1NTD, and rounded off below. The total of

fractional cash dividends less than 1NTD shall be transferred to the

Company’s Employee Benefits Committee.

VI. After the cash dividends stated in the proposal for the distribution

of 2014 profits have been ratified by resolution of the general

shareholder meeting in 2015, the board is authorized to determine

matters related to the distribution such as the setting of the ex-

dividend date. After the stock dividends have been ratified by

resolution of the general shareholder meeting in 2015 and reported

to and approved by the competent authorities, the board is

authorized to set the base date for the distribution of stock

dividends (capital increase/share allotment base date) and

determine other related matters. Dividends are allocated based on

the shareholding ratio of shareholders on the ex-dividend date and

date for dividend distribution (capital increase/share allotment base

date).

VII. The proposal for distribution of 2014 profits has been reviewed by

the audit commission, which considers the proposal proper, and the

audit report is represented on page 9.

VIII. The adoption of the presentation of the proposal for distribution of

2014 profits.

Resolution:

67

Yuanta Financial Holding Co., Ltd

Profit Distribution Statement

For the years 2014 (Expressed In Thousands of New Taiwan Dollars)

Initial unappropriated earnings 7,840,715,611

Deduct: Net actuarial loss after tax from defined

benefit plan 2014 (118,473,069)

Unappropriated earnings upon adjustment 7,722,242,542

Add: 2014 after-tax net profits 16,472,023,024

Deduct: Legal Reserve (1,647,202,303)

Deduct: Special Reserve (5,639,806,525)

Distributable earnings 16,907,256,738

Distribution items

Shareholder bonus - cash dividends (6,449,718,354)

Shareholder bonus - stock dividends (2,738,087,990)

Final unappropriated earnings 7,719,450,394

Notes:

Allotment of compensation for board members (0.5%) 45,925,071

Allotment of employee bonuses - cash 2,486,454

Sum of compensation for board members and

employee bonuses 48,411,525

Chairman of Board: Rong Jou Wang Managers: Tony Shen Chief Accountant: Wei Ning Chang

68

Discussion 1: Proposed by the Board of Directors

Proposal: Organization of a referendum on the allocation of surpluses for

the issuance of new shares for capital increase.

Description:

I. In line with the business development requirements and a

strengthening of the financial structure of the Company, according

to the Article 240 of the Company Act, it is planned to issue

273,808,799 shares for capital increase as a stock dividend of

2,738,087,990NTD in the context of the profit distribution

proposal starting in 2014. The face value of each share shall be

10NTD. Based on the calculated number of outstanding shares (a

total of 10,141,066,594) at the time of the resolution of the 28th

meeting of the 6th board on March 30, 2015, a total of 27 new

bonus shares shall be issued per 1000 shares held.

II. If the number of outstanding shares changes due to the repurchase

of Company shares, issuance of convertible bonds into shares, or

the transfer, conversion and cancellation of treasury shares, the

Company authorizes the Board to recalculate the capital increase

and share allotment ratio based on the number of outstanding

shares on the base date set for stock dividend distribution (capital

increase/share allotment base date).

III. After the issuance of new shares for capital increase has been

ratified by resolution of the general shareholder meeting in 2015

and reported to and approved by the competent authorities, the

board is authorized to set the base date for the distribution of stock

dividends (capital increase/share allotment base date) and

determine other related matters. Allotments are based on the

shareholding ratio of shareholders on base date (capital

69

increase/share allotment base date). As for the allotment of

fractional shares, shareholders may combine said shares into one

share within five days after the base date for capital increase and

share allotment. The chairperson of the board is authorized to

contact designated persons and allow them to subscribe to

remaining fractional shares based on their face value.

IV. The rights and obligations pertaining to new shares issued for

capital increase shall be identical to those pertaining to common

shares.

V. Implementation of a referendum.

Resolution:

70


Proposal: Amendments to the “Rules of Procedure for Shareholders

Meetings”.

Description:

I. In order to enhance the efficiency of shareholders’ meetings and

secure the rights of shareholders, the Company would like to

amend Articles 3, 6, 7, and 13 of the Company’s Rules of

Procedure for Shareholders Meetings in accordance with the

“XXX Co., Ltd. Rules of Procedure for Shareholders Meetings”

amended by the Taiwan Stock Exchange Corporation.

II. The presentation of the comparison table of partial amendments

and the draft of the “Rules of Procedure for Shareholders

Meetings” is attached.

Resolution:

71

The comparison table of partial amendments of “Yuanta Financial Holding Co., Ltd.

Rules of Procedure for Shareholders Meetings”


Article 3

Except where laws and regulations

apply, the Company’s shareholders’

meeting shall be convened by the

Board.

The matters of shareholders’ meeting

notice, compilation of meeting

handbook, and uploads shall be

conducted in accordance with the

Company Act, Securities and Exchange

Act, Regulations Governing Content

and Compliance Requirements for

Shareholders’ meeting Agenda

Handbook of Public Companies, and

relevant regulations promulgated by

competent authority. In addition, 15

days before the date of the shareholders

meeting, the Company shall also have

prepared the shareholders meeting

agenda and supplemental meeting

materials and made them available for

review by shareholders at any time.

The meeting agenda and supplemental

materials shall also be displayed at the

Company and its shareholder services

agent as well as being distributed on-

site at the meeting place.

The notice and proclamation shall

specify the cause of the assemblage;

the notice shall be delivered via

electronic measures with the agreement

from the counterpart.

Election or dismissal of directors,

amendments to the Articles of

Incorporation, the dissolution, merger,

demerger of the corporation, or any

matter under Paragraph 1 of Article

Article 3

Except where laws and regulations

apply, the Company’s shareholders’

meeting shall be convened by the

Board.

The matters of shareholders’ meeting

notice, compilation of meeting

handbook, and uploads shall be

conducted in accordance with the

Company Act, Securities and

Exchange Act, Regulations Governing

Content and Compliance

Requirements for Shareholders’

meeting Agenda Handbook of Public

Companies, and relevant regulations

promulgated by competent authority.

The notice and proclamation shall

specify the cause of the assemblage;

the notice shall be delivered via

electronic measures with the

agreement from the counterpart.

Election or dismissal of directors,

amendments to the Articles of

Incorporation, the dissolution, merger,

demerger of the corporation, or any

matter under Paragraph 1 of Article

185 of the Company Act, and Articles

Amend Article 3 in

accordance with

“XXX Co., Ltd.

Rules of Procedure

for Shareholders

Meetings”, and

amend the wording in

Paragraph 2 and

Paragraph 3 herein,

subject to the

practical operation.

Appendix

72


185 of the Company Act, Articles 26-1

and 43-6 of the Securities and

Exchange Act, and Articles 56-1 and

60-2 of Regulations Governing the

Offering and Issuance of Securities by

Securities Issuers shall be set out in the

notice of the reasons for convening the

shareholders meeting. None of the

above matters may be raised by an

extraordinary motion.

(Paragraphs 5 to 8 have not been

revised and therefore are omitted.)

26-1 and 43-6 of the Securities and

Exchange Act shall be set out in the

notice of the reasons for convening the

shareholders meeting. None of the

above matters may be raised by an

extraordinary motion.



Article 6



Shareholders and their proxies

(collectively, “shareholders”) shall

attend shareholders meetings based on

attendance cards, sign-in cards, or

other certificates of attendance. The

Company shall not add the requirement

for additional identification documents

for a shareholder’s attendance to the

meeting. Solicitors soliciting proxy

forms shall also bring identification

documents for verification.



Article 6



Shareholders and their proxies

(collectively, “shareholders”) shall

attend shareholders meetings based on

attendance cards, sign-in cards, or

other certificates of attendance.

Solicitors soliciting proxy forms shall

also bring identification documents for

verification.



Amend Article 6 in

accordance with

“XXX Co., Ltd.

Rules of Procedure

for Shareholders

Meetings”, and


Paragraph 3 herein,

subject to the


Article 7



It is recommended that the

shareholders’ meeting convened by the

Board of Directors shall be chaired by

the Chairman of Board in person, and a

majority of the members of the Board

of Directors and at least one

independent director and one member

Article 7



It is recommended that the

shareholders’ meeting convened by

the Board of Directors, a majority of

the members of the Board of Directors

should attend the meeting.

Amend Article 7 in

accordance with

“XXX Co., Ltd.

Rules of Procedure

for Shareholders

Meetings”, and


Paragraph 3 herein,

subject to the


73


representative of each of the functional

committees shall be present at a

shareholders’ meeting in person. The

attendance hereto shall be recorded in

the minute of the shareholders’

meeting.





Article 13



The voting of proposals shall be

approved by more than 50% of the

voting powers from present

shareholders unless the Company Act

and the Articles of Incorporation

regulate otherwise. At the time of a

vote, for each motion, the chairperson

or a person designated by the

chairperson shall first announce the

total number of voting rights

represented by the attending

shareholders, followed by a poll of the

shareholders for each motion. After the

conclusion of the meeting, on the same

day it is held, the results for each

motion, based on the numbers of votes

for, against and the number of

abstentions, shall be entered into the

Market Observation Post System. The

proposal will be regarded as approved

with no objection from all present

shareholders after the chairperson is

consulted. When shareholders have

objections (dissention or abstention in

written form or electronic measures)

against a proposal, the decision on the

proposal shall be decided by a vote.


Article 13



The voting of proposals shall be

approved by more than 50% of the

voting powers from present

shareholders unless the Company Act

and the Articles of Incorporation

regulate otherwise. At the time of a

vote, for each motion, the chairperson

or a person designated by the

chairperson shall first announce the

total number of voting rights

represented by the attending

shareholders, followed by a poll of the

shareholders. After the conclusion of

the meeting, on the same day it is

held, the results for each motion,

based on the numbers of votes for,

against or the number of abstentions,

shall be entered into the Market

Observation Post System. The

proposal will be regarded as approved

with no objection from all present

shareholders after the chairperson is

consulted. When shareholders have

objections (dissention or abstention in

written form or electronic measures)

against a proposal, the decision on the

proposal shall be decided by a vote.


Amend Article 13 in

accordance with

“XXX Co., Ltd.

Rules of Procedure

for Shareholders

Meetings”, and


Paragraph 5 herein,

subject to the


74




75


Proposal: To amend to the Company’s “Procedure for Election of

Directors”.

Description:

I. In order to enhance the corporate governance, the Company

amended Articles 3, 5, 6 and 13 of the Company’s “Rules of

Procedure for Election of Directors” in accordance with the “XXX

Co., Ltd. Procedures for Election of Directors and Supervisors”

promulgated by Taiwan Stock Exchange Corporation.

II. The presentation of the comparison table of partial amendments

and the draft of the “Procedure for Election of Directors” is

attached.

Resolution:

76

The comparison table of partial amendments of “Yuanta Financial Holding Co., Ltd.

Procedure for Election of Directors”


Article 3

The select of the Company’s director

shall take the overall deployment of the

board of directors into consideration.

The composition of the board members

shall take diversification into

consideration, and diversified policies

shall be defined based on the needs for

the board’s operation, operating type

and development, including but not

limited to the standards oriented

toward the following two major

directions:

1. Basic qualification and value:

gender, age, nationality and culture,

et al.

2. Professional knowledge and skill:

professional background (e.g. law,

accounting, industry, finance,

marketing or technology), know-

how and industry experience, et al.

The Board members shall possess the

knowledge, skill and literacy required

to implement the job, and the required

abilities are listed as follows:

1. The ability of operational

judgment.

2. The ability of accounting and

financial analysis.


management (including the

operational management to

Article 3

The select of the Company’s director

shall take the overall deployment of

the board of directors into

consideration. The Board members

shall possess the knowledge, skill and

literacy required to implement the job,

and the required abilities are listed as

follows:


judgment.

2. The ability of accounting and

financial analysis.


management (including the

operational management to

subsidiary).

4. The ability of crisis management.

5. Knowledge of the industry.

6. International market viewpoint.

7. Leadership.

8. The ability of decision-making.

9. The knowledge and ability of risk

management.

Amend Paragraph 1

herein, add the

wording in Paragraph

5 herein, and adjust

Paragraph 1,

Paragraph 2 and

Paragraph 3 into

Paragraph 2,

Paragraph 3 and

Paragraph 4 in

accordance with

Article 3 of the “XXX

Co., Ltd. Procedures

for Election of

Directors and

Supervisors”.

Appendix

77


subsidiary).

4. The ability of crisis management.

5. Knowledge of the industry.

6. International market viewpoint.

7. Leadership.

8. The ability of decision-making.

9. The knowledge and ability of risk

management.

There shall be no more than half of the

numbers of directors with the

relationship of spouse or two degrees

of kinship.


comply with the regulations of

“Regulations Governing Qualification

Requirements for the Promoter or

Responsible Persons of Financial

Holding Companies and Concurrent

Serving Restrictions and Matters for

Compliance by the Responsible

Persons of a Financial Holding

Company.”

The Company’s board of directors shall

consider adjusting the composition of

the board members according to the

performance appraisal result.

There shall be no more than half of the

numbers of directors with the

relationship of spouse or two degrees

of kinship.


comply with the regulations of

“Regulations Governing Qualification

Requirements for the Promoter or

Responsible Persons of Financial

Holding Companies and Concurrent

Serving Restrictions and Matters for

Compliance by the Responsible

Persons of a Financial Holding

Company.”

(New addition)

Article 5

The election of the Company’s

directors (including independent

directors) shall comply with the

procedure of the nomination system

regulated in Article 192-1 of the

Company Act. In order to review

Article 5

The election of the Company’s

directors (including independent

directors) shall comply with the

procedure of the nomination system

regulated in Article 192-1 of the

Company Act.

Amend the wording

herein in accordance

with Article 6 of

“XXX Co., Ltd.

Procedures for

Election of Directors

and Supervisors”.

78


whether the qualifications, academic

education and work experience of

candidates for director meet the

circumstances referred to in Article 30

of the Company Act, the Company

shall not add the requirement for

additional qualification certificates and

documents, and shall provide the

review results to shareholders for

reference to help elect competent

directors.

Where directors are discharged from a

position for any reason that leads the

number of directors to less than five

persons, the Company shall hold a by

election in the most recent

shareholders’ meeting. Where the

vacancy of directors reaches one third

of the seats regulated by charters, the

Company shall hold an interim

shareholders’ meeting for by-election

within 60 days of the occurrence of the

fact.

Where the number of independent

directors falls short of relevant

regulations of the proviso of Paragraph

1 of Article 14-2 of Securities and

Exchange Act and the Taiwan Stock

Exchange Corporation Rules

Governing Review of Securities

Listings, the Company shall hold a by-


shareholders’ meeting; where all

independent directors discharge from

Where directors are discharged from a

position for any reason that leads the

number of directors to less than five

persons, the Company shall hold a by


shareholders’ meeting. Where the

vacancy of directors reaches one third

of the seats regulated by charters, the

Company shall hold an interim

shareholders’ meeting for by-election

within 60 days of the occurrence of

the fact.

Where the number of independent

directors falls short of relevant

regulations of the proviso of

Paragraph 1 of Article 14-2 of

Securities and Exchange Act and the

Taiwan Stock Exchange Corporation

Rules Governing Review of Securities

Listings, the Company shall hold a by-


shareholders’ meeting; where all

independent directors discharge from

79


the position, the Company shall hold

an interim shareholders’ meeting for

by-election within 60 days of

occurrence of the fact.

the position, the Company shall hold

an interim shareholders’ meeting for

by-election within 60 days of

occurrence of the fact.

Article 6

The Company’s election of directors

shall adopt the cumulative voting

system. Each share will have voting

rights in number equal to the directors

to be elected, and may be cast for a

single candidate or distribute among

multiple candidates.

Article 6

The Company’s election of directors

shall adopt the single nominal

cumulative electoral method. Each

share will have voting rights in

number equal to the directors to be

elected, and may be cast for a single

candidate or split among multiple

candidates.

Amend the wording

herein in accordance

with Article 7 of

“XXX Co., Ltd.

Procedures for

Election of Directors

and Supervisors”.

Article13

The voting rights shall be calculated on

site immediately after the end of the

poll, and the chairperson shall

announce the voting result on the site,

including the name list of persons

elected as directors and votes won by

them respectively.

The ballots for the election referred to

in the preceding paragraph shall be

sealed with the signatures of the

monitoring personnel and kept in

proper custody for at least one year.

Where shareholders file a lawsuit

according to Article 189 of the

Company Act, said video and audio

data shall be kept until the resolution of

the litigation.

Article13

The voting rights shall be calculated

on site immediately after the end of

the poll, and the chairperson shall

announce the name list of persons

elected as directors on the site.

(New addition)

Amend the wording

herein and add

Paragraph 2 herein in

accordance with

Article 13 of “XXX

Co., Ltd. Procedures

for Election of

Directors and

Supervisors”.

80

Extemporary Motions

81

Appendices

82

I. Yuanta Financial Holding Co., Ltd. Rules and Procedures of

Shareholder Meetings

Approved by the promoter meeting on December 10, 2001

Rephrased and approved by the shareholders’ meeting on June 29, 2007

Revised and approved by the shareholders’ meeting on June 13, 2008



Revised and approved by the shareholders’ meeting on May 31, 2013

Article 1 The “Rules and Procedures of Shareholder Meetings” are adopted pursuant to the

Article 12 of the Company’s “Corporate Governance Principles,” in order to establish

sound corporate governance system of shareholders’ meeting, enhance the supervision

function, and strengthen the management function.

Article 2 Except where other laws or regulations apply, the shareholders’ meeting rules shall

follow these Rules.

Article 3 Except where laws and regulations apply, the Company’s shareholders’ meeting shall be

convened by the Board.

The matters of shareholders’ meeting notice, compilation of meeting handbook, and

uploads shall be conducted in accordance with the Company Act, Securities and

Exchange Act, Regulations Governing Content and Compliance Requirements for

Shareholders’ meeting Agenda Handbook of Public Companies, and relevant

regulations promulgated by competent authority.

Election or dismissal of directors, amendments to the Articles of Incorporation, the

dissolution, merger, demerger of the corporation, or any matter under Paragraph 1 of

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

Exchange Act shall be set out in the notice of the reasons for convening the

shareholders meeting. None of the above matters may be raised by an extraordinary

motion.

Shareholders, holding 1% of issued shares or above, may make a written proposal to the

shareholders’ meeting agenda of the Company. The limit of the number of the proposal

is one; whichever exceeds one proposal will not be listed in the agenda. In addition, the

Board shall not list any proposals from shareholders which fall to any situation

regulated in all subparagraphs of Paragraph 4 of Article 172-1 in the agenda.

The Company shall proclaim the acceptance of shareholder proposals, acceptance place

and period before the book closure date of the shares before the shareholders’ meeting,

and the proposal acceptance period shall be no less than ten days.

The word count for the proposals from shareholders is limited to 300 words; that

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exceeding 300 words will not be listed in the agenda; the proposed shareholders shall

attend the shareholders’ meeting in person or authorizing others and participate in the

discussion of the proposal.

The Company should notify the shareholders who drafted the proposal of the

processing outcome before the notification day of shareholders' meeting and list the

agenda in compliance with this article in the notification of shareholders' meeting. The

Board should explicate the reasons why those shareholder proposals not listed as

agenda are so treated.

Article 4 Shareholders may attend the shareholders’ meeting with the presentation the letter of

authorization printed by the Company, which specifying the scope of authorization and

authorized agent, in every shareholders’ meetings.

A shareholder is limited to present one letter of authorization and one authorized agent.

The letter of authorization shall be delivered to the Company five days before the

shareholders’ meeting. In the case of repeat of letter of authorization, the first arrived

letter of authorization shall prevail. The letter of authorization proclaiming to revoke

former ones shall be excluded.

After the letter of authorization has been delivered to the Company, shareholders, who

want to attend the shareholders’ meeting in person or want to exercise voting powers in

written form or electronic measures, shall revoke the letter of authorization in written

form at latest two days before the shareholders’ meeting. Where the revocation of the

letter of authorization goes past the time limit, the voting power exercised by the

authorized agent shall prevail.

Article 5 The place for convening a shareholders’ meeting shall be held inside the premises of the

Company, or any other place convenient for presence of shareholders, and suitable for

holding of the said meeting. The time for commencing the said meeting shall not be

earlier than 9 o’clock in the morning or later than 3 o’clock in the afternoon. The

independent directors’ opinions in the selection of time and location of the meeting

should be fully considered.

Article 6 The Company shall state the time, location, and other important matters in the

shareholders’ meeting notice.

The aforementioned shareholder registration time shall be at least thirty minutes before

the meeting begins. The registration desk shall be staffed by sufficient and competent

personnel.

Shareholders and their proxies (collectively, “shareholders”) shall attend shareholders

meetings based on attendance cards, sign-in cards, or other certificates of attendance.

Solicitors soliciting proxy forms shall also bring identification documents for

verification.

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The Company should prepare a sign-in book for attending shareholders or allow

shareholders to submit sign-in cards in lieu of signing in.

The Company should issue the following to shareholders attending the shareholders’

meeting: Meeting agenda handbooks, annual reports, attendance certificates, voting

material for matters of deliberation, and other materials for the meeting. Where there is

an election for the directors of the board, ballots should also be issued.

If a government agency or a juristic person is a shareholder, it may appoint more than

one representative to attend the shareholders’ meeting. When a juristic person serves as

an agent to attend the shareholders’ meeting, it may only appoint one person as a

representative at the meeting.

Article 7 If a shareholders’ meeting is called by the board of directors, the board chairman shall

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

or cannot exercise his powers and authority, an agent acting on his behalf shall be

appointed according to the regulations in the Company Act.

If a director acts on behalf of the Chairman, the director should have served more than

six months as a director and understand the financial situation of the Company. This

rule applies if the Chairman is an agent of a juristic person.

It is recommended that the shareholders’ meeting convened by the Board of Directors, a

majority of the members of the Board of Directors should attend the meeting.

If the shareholders’ meeting is convened by persons with authority to call a meeting

other than the Board of Directors, the chairman shall be the person with said authority.

Where more than two persons have such authority, they should appoint one as the

Chairman.

The Company may designate its attorney, certified public accountant, or other relevant

persons to attend the meeting.

Article 8 The Company should record with audio and video devices the whole process of the

shareholders’ meeting, beginning at the signing of shareholders, the process of the

meeting, and casting and counting the ballots, continuously and without any

interruption.

Said video and audio data should be kept for at least one year. Where shareholders file a

lawsuit according to Article 189 of the Company Act, said video and audio data shall be

kept until the resolution of the litigation.

Article 9 The calculation case of the attendance share of the shareholders shall be the number of

share processed. The attendance shares shall be counted in accordance with the present

attendance card adding the voting shares exercised via written or electronic measures.

The chairperson shall call the meeting to order on the time of meeting. Where

85

shareholders representing over 50% of issued shares are not present, the chairperson

may proclaim the delay of the meeting. Only two delays are allowed, and the delay time

shall no more than one hour. When the shareholders’ meeting is delayed two times with

no shareholders representing one third of issued shares, the chairperson shall proclaim

the meeting to be adjourned.

Where the shareholders’ meeting, prescribed in former Paragraph, with shareholders

representing over one third of issued shares presented in the meeting, the chairperson

may make false resolutions in accordance with regulation of Paragraph 1 of Article 175

of the Company Act and inform shareholders with false resolutions and reassemble

another shareholders’ meeting within a month.

Where shareholders representing 50% of issued shares appear before the end of

shareholders’ meeting, the chairperson may again propose false resolutions to the

shareholders’ meeting for a re-vote in accordance with the regulation of Article174 of

the Company Act.

Article 10 Where the shareholders’ meeting is assembled by the Board, the Board shall stipulate

the meeting agenda. The shareholders’ meeting shall progress in accordance of arranged

agenda, which can only be changed by the resolution of the shareholders’ meeting.

The shareholders’ meeting assembled by persons with authority to assemble other than

the Board shall apply the regulation of preceding Paragraph.

Before arranged agendas in preceding two Paragraphs during the meeting (including

extempore motions) comes to an end, the chairperson shall not proclaim he

adjournment of the shareholders’ meeting without a resolution of the shareholders’

meeting. If so, the other members of the Board shall assist shareholders at present in

continuing the meeting and electing a person as chairperson with more than 50% vote

of assent from of the shareholders at present in accordance with legal procedure.

The chairperson shall offer adequate opportunities for explanation and discussion on the

proposals and amendments or extempore motions brought up by shareholders. Where

the chairperson thinks the proposals and amendments or extempore motions brought up

by shareholders is ready to vote, the chairperson may proclaim the closure of discussion

and proceed to vote.

Article 11 Shareholders attended the shareholders’ meeting shall fill the opinion sheet with speech

summary, shareholder account number (or attendance tag number), and account name

before making speeches, and the chairperson stipulates the speech order.

Shareholders attended the shareholders’ meeting who turn in an opinion sheet without

making a speech will be regarded as expressing no opinion. Where speech content does

not match the record of the opinion sheet, the speech content shall prevail.

Every shareholder’s speech to single proposal shall be no more than twice, unless the

chairperson agrees so, and each speech shall be no more than five minutes. Where the

86

speech from the shareholders violates the regulations or goes beyond the scope of the

proposal, the chairperson may stop the speech.

Where shareholders attended the shareholders’ meeting are speaking, the chairperson

shall stop other shareholders from speaking and interrupting the speech unless the

chairperson or speaking shareholder agree so.

Where corporate shareholders assign more than two representatives to the shareholders’

meeting, only one representative is allowed to speak to single proposal.

The chairperson may reply in person or assign relevant personnel to reply after

shareholders attended the shareholders’ meeting spoke.

Article 12 The voting in the shareholders’ meeting shall be calculated in accordance with shares.

The resolution of the shareholders’ meeting shall no count the shares of nonvoting

shareholders into the total shares of issued shares.

Where shareholder interests are against the interest of the Company, the shareholders

shall neither vote to the matters in the shareholders’ meeting nor exercise the voting

power of the shareholders as an agent.

The non-voting shares prescribed in preceding Paragraph shall not be counted in the

vote weightings of the present shareholders.

Except for the trust enterprises or shares agencies approved by the securities competent

authority, the voting power of the agents who are simultaneously authorized by more

than two shareholders shall be no more than 3% of the total issued voting shares, and it

will not count otherwise.

Article 13 Shareholders have one voting power per share, and this rule does not apply to limited

shareholders or shareholders without voting power regulated in Paragraph 2 of Article

179 of the Company Act.

Where the Company convenes a shareholders’ meeting, the Company may adopt

electronic measures or written forms of exercising voting power. Where the voting

power is exercised in electronic or written form, the exercise measure shall be specified

in the meeting notice. Shareholders exercising voting powers in written form or

electronic measures shall be regarded as attending the shareholders’ meeting in person.

Shareholders by such actions will be regarded as waiving the right to vote on extempore

motions and amendments to the proposals of the meeting. Therefore, the Company shall

avoid revising extempore motions and proposals.

The indications from shareholders exercising the voting power in written form or

electronic measures prescribed in preceding Paragraph shall be delivered to the

Company two days before the shareholders’ meeting. Where there are repeat

indications, the first that arrived shall prevail.

The proclamation revoking indication shall exclude. Shareholders who want to attend

the shareholders’ meeting after exercising the voting power in written form or by

87

electronic measures, shall revoke the indication of measures of exercising voting power

in the same way of exercising voting power two days before the shareholders’ meeting.

Where the revocation of indication goes past the time limit, the voting power exercising

in written form or electronic measures shall prevail. Where the shareholders exercise

the voting power in written form or electronic measures and authorize agents to the

shareholders’ meeting, the exercise of the voting power by the authorized agents shall

prevail.

The voting of proposals shall be approved by more than 50% of the voting powers from

present shareholders unless the Company Act and the Articles of Incorporation regulate

otherwise. At the time of a vote, for each motion, the chairperson or a person designated

by the chairperson shall first announce the total number of voting rights represented by

the attending shareholders, followed by a poll of the shareholders. After the conclusion

of the meeting, on the same day it is held, the results for each motion, based on the

numbers of votes for, against or the number of abstentions, shall be entered into the

Market Observation Post System. The proposal will be regarded as approved with no

objection from all present shareholders after the chairperson is consulted. When

shareholders have objections (dissention or abstention in written form or electronic

measures) against a proposal, the decision on the proposal shall be decided by a vote.

Where there are amendments or alternatives to single proposal, the chairperson decide

the voting order of such alone with original proposal. Where one of the proposals is

approved, other proposals will be regarded as vetoed and shall not be voted again.

The chairperson assigns the scrutinizers and tellers of the proposal voting, but the

scrutinizers shall possess the shareholder identity while the counting of votes shall be

public within the shareholders’ meeting place.

Ballot counting for resolutions or election agenda should be performed inside the

location of the shareholders’ meeting. The results, including the number of votes cast,

must be declared immediately after the ballots are counted and recorded.

Article 14 Where there is an election of the directors of the board, the election should be

performed according to the Company’s regulations. The outcome of the election,

including the list of the elected board members and the votes they received, should be

immediately declared.

The ballots in said election should be sealed and signed by the election supervisor for at

least a year. Where shareholders file a lawsuit according to Article 189 of the Company

Act, said video and audio data shall be kept until the resolution of the litigation.

Article 15 Proposals of the shareholders’ meeting shall be written in proposal minutes signed or

inked by the chairperson, and the proposal minute shall be distributed to each

shareholder within twenty days after the shareholders’ meeting. The production and

88

distribution of the proposal minute may be done in electronic measures.

The Company may proceed to distribute the proposal minutes to shareholders by

uploading the minutes onto the Market Observation Post System.

The proposal minutes shall be recorded in accordance with the year, month, date, place,

name of the chairperson, resolutions, and the summary and the result of proposal and be

stored as the Company exists.

The resolutions prescribed in preceding Paragraph refer to the proposals with no

objections from the shareholders after chairperson consulted. The resolution recorded as

“proposals with no objections from the shareholders after chairperson consulted;”

Where there are objections to the proposals from shareholders, the resolution shall

record the adoption of voting measure and the voting weights and weights ratio.

Article 16 The Company shall explicitly reveal the statistical table of the solicitation shares

solicited by solicitors and the shares of authorized by authorized agents in accordance

with required formation on the day and in the place of shareholders’ meeting.

Where the resolutions of the shareholders’ meeting belong to laws and regulations and

crucial information regulated by the Taiwan Stock Exchange Corporation, the Company

shall upload the contents of such resolutions onto the Market Observation Post System

within the regulated time period.

Article 17 Meeting staff operating the shareholders’ meeting shall wear ID tag or badge.

The chairperson shall direct picketers or security to maintain the order of the

shareholders’ meeting place. Picketers and security shall wear the badges or ID tags

with words of “Picketer” while assisting to maintain the order of the shareholders’

meeting place.

Where shareholders speak through equipment not equipped by the Company in the

shareholders’ meeting place with speakers, the chairperson shall stop the speech.

Where shareholders disobey the verbal directions from the chairperson on violating

rules of shareholders’ meeting and disobeying the correction from the chairperson, and

interfering with the progress of shareholders’ meeting, the chairperson may direct

picketers or security to guide the person out of the meeting place.

Article 18 The chairperson may deliberate the time and proclaim breaks when the shareholders’

meeting is in progress. Where an emergency situation happens, the chairperson may

decide to temporarily put the meeting on hold and proclaim the time of resume of

meeting in accordance of the situation.

Where the proposals (including extempore motion) of arranged agenda of the

shareholders’ meeting come to an end and the place of meeting is unavailable for use,

the shareholders’ meeting may make a resolution on finding an alternative place to

continue the meeting.

89

The shareholders’ meeting may make a resolution on adjourning or continuing the

meeting within five days in accordance with the regulation of Article 182 of the

Company Act.

Article 19 The shareholders’ meeting procedures shall be implemented after the shareholders’

meeting grants approval. The same procedure shall be followed when the principles

have been revised.

90

II. Yuanta Financial Holding Company’s “Articles of Incorporation”

Chapter 1: General Principles

Article 1 This Company is licensed by the government and organized in accordance with

Financial Holding Company Act, Company Act, and other laws and regulations in

order to enhance its economies of scale and achieve overall business effectiveness.

Article 2 The Company is named “Yuanta Financial Holding Co., Ltd.”

Article 3 The Company has established a parent company in Taipei; when necessary, pursuant to

a board resolution, domestic branches in other locations or foreign branches shall be

established after requesting and obtaining the approval of the competent authority.

Article 4 The Company shall issue its announcements as prescribed in laws and regulations or by

publication in a generally-circulated daily newspaper in the place of the parent

company.

Chapter 2: Business Activities

Article 5 The Company is in the H801011 financial holding company industry category.

Article 6 The Company shall have the following business scope:

1. The Company may invest in the following enterprises:

(1) Banks.

(2) Bills finance enterprises.

(3) Credit card enterprises.

(4) Trust enterprises.

(5) Insurance enterprises.

(6) Securities enterprises.

(7) Futures enterprises.

(8) Venture capital enterprises.

(9) Investment in foreign financial institutions approved by the competent

authority.

(10) Other financial services enterprises recognized by the competent authority.

2. Management of the invested enterprises in the foregoing subparagraphs.

3. The Company may apply to the competent authority for approval of enterprises

other than those listed in the first paragraph, but may not participate in their

operation.

4. Other related business approved by the competent authority.

Article 7 The Company specializes in investment, and its total investment in other enterprises is

not subject to the limit of 40% of the Company’s paid-in capital prescribed in Article

13 of the Company Act.

91

Chapter 3: Company Stock

Article 8 The Company has total authorized capital of NT$125 billion, which consists of 12.5

billion shares, with a face value of NT$10 per share, which the Board has been

authorized to issue in stages.

Article 9 The Company’s stock shall generally be registered, and at least three of the Company’s

directors shall sign or affix their seals to shares. Stock shall be issued after attestation

by the competent authority or an issuance attestation organization approved by the

competent authority.

When the Company issues new stock, all shares for that issuance shall be printed in one

printing, and shall be deposited with the centralized securities depository enterprise.

The Company may exchange all shares for securities with a greater face value when

requested by the centralized securities depository enterprise.

The Company does not need to print shares for its issued stock, and likewise in the case

of other negotiable securities, but must register stock with the centralized securities

depository enterprise.

Article 10 Except when the requirements of other laws or securities rules apply, the Company’s

stock affairs shall be handled in accordance with the “Regulations Governing the

Administration of Shareholder Services of Public Companies”.

Article 11 The Company shall suspend the transfers of stocks sixty days prior to the shareholders’

meeting, thirty days prior to the special shareholders’ meeting, or five days prior to the

record date for the distribution of dividends, bonuses or other interests.

Chapter 4: Shareholders’ Meeting

Article 12 Shareholders’ meetings shall consist of regular and interim meetings. Except where

other legal regulations apply, all meetings shall be convened by the board in accordance

with the law. Regular shareholders’ meetings shall be held within six months after the

end of each accounting year; interim shareholders’ meetings shall be convened in

accordance with the law when necessary.

Article 13 The Company’s shareholders shall have one vote for each share. Except where other

legal requirements apply, shareholders representing a majority of the total number of

issued shares shall attend each shareholders’ meeting; resolutions shall be passed upon

receiving the consent of attending shareholders representing a majority of votes

present.

Article 14 If a shareholder cannot personally attend a shareholders’ meeting, that shareholder may

explicitly appoint one proxy agent to attend on his behalf within a scope of

authorization upon presentation of a proxy letter issued by the Company. Apart from

the case of a trust enterprise or stock affairs agent organization approved by the

competent authority, when one person is appointed a proxy by two or more

92

shareholders, the votes represented by that person may not exceed 3% of the votes for

the total number of issued shares; when the proxy’s votes exceed this threshold, the

excess votes shall not be counted.

The letter of authorization in the foregoing paragraph shall be delivered to the

Company five days prior to the shareholders’ meeting. When there are repeated letters

of authorization, the first letter shall take precedence; this restriction shall not apply,

however, when a shareholder states that he has withdrawn a previous proxy

appointment.

Article 15 Except where other legal regulations apply, resolutions concerning the following

matters may be passed at shareholders’ meetings:

1. Establishment of an audit committee and revision of the Company’s Articles of

Incorporation.

2. Election of directors.

3. Acknowledgement of statistical books produced by the Board and reports of the

audit committee; resolutions concerning distribution of earnings and appropriation

of funds to cover losses.

4. Resolutions concerning increase or decrease of capital.

5. Other important matters and matters that should be decided by the shareholders’

meeting in accordance with laws and regulations.

Chapter 5: The Board of Directors and Directors

Article 16 The Company shall establish a Board consisting of from 9 to 15 persons; directors shall

be selected by the shareholders’ meeting in accordance with law.

Article 16-1

The Company shall, in accordance with Article 14-2 and Article 183 of the Securities

and Exchange Act, establish 3 to 5 independent directors among the number of

directors in the foregoing article.

In the election of directors, each share shall have the same number of votes as the

number of directors to be elected, and shareholders may give all of such votes to one

candidate or distribute them among several candidates. The persons receiving the

largest numbers of votes represented on the recovered ballots shall be elected directors;

independent directors and non-independent directors shall be elected together, but their

election lists shall be calculated separately.

Article 16-2

The Company shall employ a candidate nomination system to elect directors (include

independent directors), wherein the Board and shareholders holding more than 1% of

the total number of issued shares may propose a list of director candidates; following

review by the Board concerning whether candidates possess criteria needed by

directors, the list of candidates will be submitted to the shareholders’ meeting so that

93

shareholders can select directors from the list.

Director candidate nomination acceptance and announcement shall be handled in

accordance with the relevant requirements of the Company Act and Securities and

Exchange Act.

Article 16-3

The Company shall organize an audit committee consisting of all independent directors

as prescribed in Article 14-4 of the Securities and Exchange Act. The exercise of

powers by the audit committee and its members, and other relevant matters, shall be

handled in accordance with relevant requirements of the Securities and Exchange Act.

Article 16-4

The Company shall establish a remuneration committee; the committee’s

organizational rules shall be determined by the Board in accordance with relevant laws

and regulations.

Article 17 The total number of shares held by all Company directors may not less than the

percentage prescribed by the competent authority.

Article 18 Directors shall serve three-year terms, and may serve consecutive terms if reelected.

When a director’s term has expired, and he or she has not been reelected, that director

shall continue to perform his or her duties until the newly elected directors assume their

position.

The Company may purchase liability insurance for directors pursuant to a Board

resolution.

Article 19 The Board shall not separately establish a managing director; the directors shall select

one of their number as a chairman, and may select one of their number as a vice

chairman when necessary.

Apart from the compensation in Article 33, the chairman’s salary may not exceed 1.5

times that of the president, and the vice chairman’s salary may not exceed 1.25 times

that of the president; salary shall be determined by a resolution of the board.

Other compensation and benefits received by the chairman and vice chairman shall be

provided in accordance with relevant Company regulations or in line with standards in

the industry. The Board shall be authorized to set the severance pay of the chairman

and vice chairman on the basis of their level of participation in Company operations,

value of their contributions, and industry standards.

The Board shall be authorized to determine the compensation of the independent

directors on the basis of the prevailing standards in the industry. However, independent

directors may not participate in the distribution of remuneration pursuant to Article 33.

Article 20 Internally, the chairman is the chairman of the shareholders’ meeting and Board, and

externally the chairman represents the Company. In case the chairman is on leave of

absence, or cannot exercise his powers and authority, the vice chairman shall act in lieu

of him. If there is no vice chairman, or the vice chairman is also on leave of absence, or

cannot exercise his powers and authority, the chairman shall designate a managing

94

director to act in lieu of him; if the chairman does not designate a director, the

managing directors or directors shall elect one from among themselves to act in lieu of

the chairman.

Article 21 The directors shall form a board. Except where other laws and regulations apply, Board

meetings shall be convened by the chairman. Except where other legal requirements

apply, resolutions of the Board shall be passed when a majority of directors are present,

and a majority of those directors present gives their consent.

The board of directors to convene notification may be made by fax or e-mail.

Article 22 Directors shall personally attend Board meetings. If, for any reason whatsoever, a

director cannot attend a meeting, that director may issue a letter of authorization

designating another director to act on behalf of the absent director; however, a director

may act as the representative of only one other director.

Article 23 The Board shall possess the following powers:

1. Approval of the Company’s business strategies and plans.

2. Approval of the Company’s budget and review of final accounting results.

3. Approval of the Company’s organizational rules.

4. Approval of the Company’s major rules.

5. Approval of the Company’s planned capital increase or decrease and stock issues.

6. Drafting of resolutions concerning the Company’s distribution of earnings or

make-up of losses.

7. Resolutions concerning the Company’s corporate bond issues.

8. Resolutions concerning repurchase of the Company’s stock.

9. Appointment and dismissal of the Company’s management personnel, and

financial, accounting, risk management, legal compliance, and internal audit

executives.

10. Approval of the acquisition or disposition of major assets.

11. Determination of the dates of the Company’s shareholders’ meetings and interim

shareholders’ meetings.

12. Determination of managers’ performance evaluation standards and compensation

standards, and the directors’ compensation structure and system.

13. Other matters prescribed by law or authorized by the shareholders’ meeting.

Article 24 (deleted)



Article 27 In accordance with law, the Company’s statutory responsible person may concurrently

hold a post at a subsidiary.

Article 28 The Company’s directors shall be given travel allowances and conference attendance

fees based on prevailing standards in the industry.

Article 28-1 (deleted)

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Chapter 6: Managers

Article 29 The Company shall have one president responsible for managing all business at the

Company in accordance with Board decisions.

The president may, upon authorization by the board, represent the Company in

implementing major external matters.

The Company may establish several executive vice presidents, vice presidents, and

assistant vice presidents to assist the president in handling the Company’s business.

The Company’s Board shall establish one chief auditor, who shall occupy a rank

equivalent to that of a vice president, and shall manage audit matters with an

independent and objective spirit. A secretarial office with one chief secretary of the

Board shall be established; the chief secretary shall bear responsibility for board-related

matters. One chief risk officer shall be established to bear responsibility for relevant

risk control work in connection with various businesses.

The president, chief auditor, deputy chief auditor, chief secretary, and risk control

officer shall be nominated by the chairman and appointed and dismissed pursuant to

approval of the board.

Article 30 The Company may establish departments in accordance with its business needs, and

assign one person to be the manager of each department.

The president shall recommend candidates for personnel at the level of vice

president, assistant vice president, and departmental manager to the chairman, who

shall perform appointment or dismissal upon obtaining the board’s consent.

Article 31 Except in the case of powers granted to the shareholders’ meeting and Board by legal

regulations and the Company’s Articles of Incorporation, the management shall possess

the right to perform all necessary operating actions on behalf of the Company; the

scope of management powers shall be as prescribed in the Company’s rules and

regulations in all cases.

Chapter 7: Final Accounting and Distribution of Earnings

Article 32 The Company’s accounting year shall be from January 1 to December 31 of each year.

At the end of each accounting year, the Board shall prepare the following statements

and reports, which shall be submitted to the shareholders’ meeting for

acknowledgement in accordance with statutory procedures:

1. Report of operations.

2. Financial statements.

3. Resolution concerning the distribution of earnings or the make-up of losses.

Article 33 If the Company has a profit at the year’s final accounting, it shall first pay profit-

seeking-enterprise income tax and make-up any losses from past years, and then make

contributions to the statutory reserve and special reserve in accordance with law; of the

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remainder, 0.5% shall constitute directors’ bonuses and 0.01%-0.5% shall constitute

employees’ bonuses. The Board shall draft a distribution proposal for the remaining

balance together with undistributed earnings from past years; the distribution of

earnings shall be implemented after requesting and obtaining the approval of the

shareholders’ meeting. Employees’ bonuses shall be issued as stock bonuses, and shall

also be given to all employees of subordinate companies meeting certain criteria.

The Board shall determine the certain criteria referred to in the foregoing paragraph.

Article 34 In order to broaden our scope of business and enhance our earning potential, the

Company adopts a residual dividend policy, taking into consideration the Company’s

long-term financial planning and relevant statutes and regulations. The principle of

dividend distribution requires that the Company first calculates distributable earnings

based on the foregoing article and the audited net profit. Then the Company shall

appropriate funds according to its operation plans from the distributable earnings. The

remainder shall be distributed as a cash dividend, but the cash dividend should be no

lower than forty percent of the current year’s distributable earnings.

Chapter 8: Supplementary Provisions

Article 35 The Board shall determine the Company’s organizational rules and other major rules.

Article 36 All matters not specified in these Articles of Incorporation shall be handled on the basis

of the Financial Holding Company Act, Company Act, and other relevant laws and

provisions.

Article 37 These Articles of Incorporation were established on December 10, 2001, and

implemented after passage by the founder’s conference or shareholders’ meeting;

likewise in the case of revisions.

First revision on May 24, 2002

Second revision on June 6, 2003

Third revision on June 11, 2004

Fourth revision on June 29, 2005

Fifth revision on December 28, 2006

Sixth revision on June 29, 2007

Seventh revision on June 18, 2010

Eighth revision on June 28, 2011

Ninth revision on June 21, 2012

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III. Information on Director Shareholdings of the Company

The list of shareholding of all directors recoded on the shareholder roster

until the book closure date of this shareholders’ meeting:

Base Date: April 4, 2015

Title Name Date elected Term

(years)

Possessed when

Elected

Current Number of

Shares Possessed Remarks

Shares Ratio

(%) Shares

Ratio

(%)

Director Rong Jou

Wang 05.31.2013 3 years

77,656,165 0.79% 79,597,569 0.79%

Representative

of Modern

Investments Director

Tony

Shen 05.31.2013 3 years

Director Michael

Ma 05.31.2013 3 years

384,282,549 3.88% 393,889,612 3.88%

Representative

of Tsun Chueh


Jun Long

Fang 05.31.2013 3 years

Director Hsian

Dao Chiu 05.31.2013 3 years

2,388,215 0.02% 2,447,920 0.02%

Representative

of Hsu Tong


Ming

Heng Ho 05.31.2013 3 years

Independent

Director

Dah

Hsian

Seetoo

05.31.2013 3 years 0 0 0 0

Independent

Director

Cheng Ji

Lin 05.31.2013 3 years 0 0 0 0

Independent

Director

Lai Ping

Chi 05.27.2014 2 years 0 0 0 0

Total 464,326,929 4.69% 475,935,101 4.69%

Explanation:

1. The current number of issued shares of the Company is 10,141,066,594 shares. The legal

number of shares held by all directors is 160,000,000 shares in accordance with the regulations

of Article 26 of Securities and Exchange Act and “Rules and Review Procedures for Director

and Supervisor Share Ownership Ratios at Public Companies.”

2. The Company has an audit committee, and the regulation of supervisor share ownership does not

apply to the Company

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IV. Information on Employee Bonus Sharing and Director Compensation

The information of 2014 surplus distribution proposed and

approved by the Board that shall be revealed by the Company is as

follows:

1. If the Company has a profit at the year’s final accounting, it

shall first pay profit-seeking-enterprise income tax and make-up

any losses from past years, and then make contributions to the

statutory reserve and special reserve in accordance with law; of

the remainder, 0.5% shall constitute directors’ bonuses and

0.01%-0.5% shall constitute employees’ bonuses. The Board

shall draft a distribution proposal for the remaining balance

together with undistributed earnings from past years; the

distribution of earnings shall be implemented after requesting

and obtaining the approval of the shareholders’ meeting.

Employees’ bonuses shall be issued as stock bonuses, and shall

also be given to all employees of subordinate companies

meeting certain criteria.

The Board shall determine the certain criteria referred to in the

foregoing paragraph.

2. In accordance with the Company’s Articles of Incorporation, the

Company’s 2014 earnings appropriation, the cash bonus

distributed to employees is 2,486,454NTD, and the directors’

compensation is 45,925,071NTD.

99

V. The effects of stock grants proposed on business performance,

earnings per share and return on shareholders’ investment:

Not applicable (the Company did not publish any financial

forecast in 2015. Therefore, it is impossible to estimate the income,

EPS, or pro forma data.)

Documents

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