大同股份有限公司

Procedures Governing the Acquisition and Disposal of Assets

Article 1.
The Procedures is formulated in accordance with“Regulations Governing the Acquisition and Disposal of Assets by Public Companies” promulgated by the Financial Supervisory Commission (“Competent Authority”).
The term "assets" as used in the procedures includes the following:
1.
Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, and asset-backed securities.
2.
Real property (including land, houses and buildings, investment property, and construction enterprise inventory) and equipment.
3.
Memberships.
4.
Patents, copyrights, trademarks, franchise rights, and other intangible assets.
5.
Right-of-use assets.
6.
Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables).
7.
Derivatives.
8.
Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law.
9.
Other major assets.
The Company conducts derivatives trading business in accordance with the provisions of the Company’s regulations of “Procedures for Engaging in Derivative Financial Product Transactions”.
As noted above, assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156-3 of the Company Act.
Article 2.
Public announcement and regulatory filing procedures for the Acquisition and Disposal of Assets of the company：
Under any of the following circumstances, the company acquiring or disposing of assets shall publicly announce and report the relevant information on the Competent Authority and Taiwan Stock Exchange Corporation’s designated website in the appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event:
1.
Acquisition or disposal of real property or right-of-use assets thereof from or to a related party, or acquisition or disposal of assets other than real property or right-of-use assets thereof from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more; provided, this shall not apply to trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises.
2.
Merger, demerger, acquisition, or transfer of shares.
3.
Where equipment or right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria:
(1)
A public company with a paid-in capital less than NT$ 100 million reaches a transaction amount of NT$500 million.
(2)
A public company with a paid-in capital more than NT$100 million reaches a transaction amount of NT$1 billion.
4.
Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the company expects to invest in the transaction reaches NT$500 million.
5.
Where an asset transaction other than any of those referred to in the preceding four subparagraphs, or an investment in the mainland China area, reaches 20 percent or more of paid-in capital or NT$300 million; provided, this shall not apply to the following circumstances:
(1)
Trading of domestic government bonds.
(2)
Where done by professional investors—securities trading on securities exchanges or OTC markets, or subscription of ordinary corporate bonds or general bank debentures without equity characteristics (excluding subordinated debt that are offered and issued in the domestic primary market, or subscription or redemption of securities investment trust funds or futures trust funds), or subscription by a securities firm of securities as necessitated by its undertaking business or as an advisory recommending securities firm for an emerging stock company, in accordance with the rules of the Taipei Exchange.
(3)
Trading of bonds under repurchase/resale agreements, or subscription or repurchase of money market funds issued by domestic securities investment trust enterprises
The amount of transactions above shall be calculated as follows:
1.
The amount of any individual transaction within the preceding year.
2.
The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year.
3.
The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of real property or right-of-use assets thereof within the same development project within the preceding year.
4.
The cumulative transaction amount of acquisitions and disposals(cumulative acquisitions and disposals, respectively) of the same security within the preceding year.
"Within the preceding year" as used in the previous paragraph refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Regulations need not be counted toward the transaction amount.
When a public company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within 2 days commencing immediately from the date of occurrence of the event.
The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company, where they shall be retained for 5 years except where another act provides otherwise. Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide public companies with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall meet the following requirements:
1.
May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received.
2.
May not be a related party or de facto related party of any party to the transaction.
3.
If the company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other. When issuing an appraisal report or opinion, the personnel referred to in the preceding paragraph shall comply with the following:
(1) Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence.
(2) When examining a case, they shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case working papers.
(3) They shall undertake an item-by-item evaluation of the comprehensiveness, accuracy, and reasonableness of the sources of data used, the parameters, and the information, as the basis for issuance of the appraisal report or the opinion.
(4) They shall issue a statement attesting to the professional competence and independence of the personnel who prepared the report or opinion, and that they have evaluated and found that the information used is reasonable and accurate, and that they have complied with applicable laws and regulations.
Where any of the following circumstances occurs with respect to a transaction that the company has already publicly announced and reported in accordance with the preceding article, a public report of relevant information shall be made on the information reporting website designated by the Competent Authority and Taiwan Stock Exchange Corporation within 2 days commencing immediately from the date of occurrence of the event:
1.
Change, termination, or rescission of a contract signed in regard to the original transaction.
2.
The merger, demerger, acquisition, or transfer of shares is not completed by the scheduled date set forth in the contract.
3.
Change to the original, publicly announced and reported information.
Information required to be publicly announced and reported in accordance with the preceding provisions on acquisitions and disposals of assets by a subsidiary of the company that is not itself a public company in Taiwan, shall be reported by the company.
The paid-in capital, or total assets of the company, shall be the standard for determining whether or not a subsidiary referred to in the preceding paragraph is subject to paragraph 1 requiring a public announcement and regulatory filing in the event the type of transaction specified therein reaches 20 percent of paid-in capital or 10 percent of the total assets.
The aforementioned Date of occurrence, Related party, Mainland China area investment, and Subsidiaries are defined as follows:
1.
Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of boards of directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.
2.
Related party: As defined in Statement of International Accounting Standards No. 24 recognized by the competent authority.
3.
Mainland China area investment: Refers to investments in the mainland China area conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area announced by the Ministry of Economic Affairs Investment Commission of ROC.
4.
Subsidiaries: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (Section 10 has not been amended, full-text is omitted.)
5.
Investment professional: Refers to financial holding companies, banks, insurance companies, bill finance companies, trust enterprises, securities firms operating proprietary trading or underwriting business, futures commission merchants operating proprietary trading business, securities investment trust enterprises, securities investment consulting enterprises, and fund management companies, which are lawfully incorporated and are regulated by the competent financial authorities of the jurisdiction where they are located.
6.
Securities exchange: "Domestic securities exchange" refers to Taiwan Stock Exchange Corporation; "Foreign securities exchange" refers to any organized securities exchange market that is regulated by the competent securities authorities of the jurisdiction where it is located.
7.
Over-the-counter venue ("OTC venue", "OTC"): "Domestic OTC venue" refers to a venue for OTC trading provided by a securities firm in accordance with the Regulations Governing Securities Trading on the Taipei Exchange; "foreign OTC venue" refers to a venue at a financial institution that is regulated by the foreign competent authority and that is permitted to conduct securities business.
Professional appraiser in the Procedures refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or other fixed assets.
Article 3.
The evaluation procedures for the acquisition and disposal of assets of the Company are as follows:
1.
In acquiring or disposing of real property, equipment, or right-of-use assets thereof where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a domestic government agency, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment or right-of-use assets thereof held for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions:
1.
Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors; the same procedure shall also be followed whenever there is any subsequent change to the terms and conditions of the transaction.
2.
Where the transaction amount is in excess of NT$1 billion, appraisals from two or more professional appraisers shall be obtained.
3.
Where any one of the following circumstances applies with respect to the professional appraiser's results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation(ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:
(1)
The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.
(2)
The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.
4.
No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is applied and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.
2.
The company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company in advance for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or in excess of NT$300 million, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the certified public account needs to use the report of an expert as evidence, the certified public account shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Competent Authority.
3.
Where the Company acquires or disposes of intangible assets or right-of-use assets thereof or memberships and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a domestic government agency, the Company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.
4.
The calculation of the transaction amounts referred to in the preceding three subparagraphs shall be done in accordance with Article 2, paragraph 2 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a certified public accountant's opinion has been obtained need not be counted toward the transaction amount.
5.
Where the company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or the certified public accountant 's opinion.
Article 4.
When the Company intends to acquire or dispose of real property or right-of-use assets thereof from or to a related party, or when it intends to acquire or dispose of assets other than real property or right-of-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by more than half of all audit committee members and submitted to the board of directors for approval, as applied mutatis mutandis under Article 20, Sections 3 and 4:
1.
The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.
2.
The reason for choosing the related party as a trading counterparty.
3.
With respect to the acquisition of real property or right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 5 and Article 6.
4.
The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the company and the related party.
5.
Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.
6.
An appraisal report from a professional appraiser or a certified public accountant's opinion obtained in compliance with the preceding article.
7.
Restrictive covenants and other important stipulations associated with the transaction.
The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with Article 2, paragraph 2 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the board of directors need not be counted toward the transaction amount.
With respect to the types of transactions listed below, when to be conducted between a public company and its parent or subsidiaries, or between its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, the company's board of directors may delegate the board chairman to decide such matters when the transaction is not more than NT$300 million and have the decisions subsequently submitted to and ratified by the next board of directors meeting:
1. Acquisition or disposal of equipment or right-of-use assets thereof held for business use.
2. Acquisition or disposal of real property right-of-use assets held for business use.
When a matter is submitted for discussion by the board of directors pursuant to paragraph 1, 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.
Article 5.
The Company, when acquiring real property or right-of-use assets thereof from a related party shall evaluate the reasonableness of the transaction costs by the following means:
1.
Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.
2.
Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.
Where land and structures thereupon are combined as a single property purchased or leased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.
When acquiring real property or right-of-use assets thereof from a related party and appraises the cost of the real property or right-of-use assets thereof in accordance with the preceding two paragraphs shall also engage a CPA to check the appraisal and render a specific opinion.
When acquiring real property or right-of-use assets thereof from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the preceding article, and the preceding three paragraphs do not apply:
1.
The related party acquired the real property or right-of-use assets thereof through inheritance or as a gift.
2.
More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property or right-of-use assets thereof to the signing date for the current transaction.
3.
The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.
4.
The real property right-of-use assets for business use are acquired by the public company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.
Article 6.
When the results of the company's appraisal conducted in accordance with paragraph 1 and paragraph 2 of the preceding Article are uniformly lower than the transaction price, the matter shall be handled in compliance with Article 7. However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a certified public accountant have been obtained, this restriction shall not apply:
1.
Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions:
(1)
Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.
(2)
Transactions between unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market sale or leasing practices.
2.
Where the Company acquiring real property, or obtaining real property right-of-use assets through leasing, from a related party provides evidence that the terms of the transaction are similar to the terms of transactions involving neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year.
The transactions involving neighboring or closely valued parcels of land in the preceding paragraph in principle refer to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transactions involving similarly sized parcels in principle refers to those by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; “within the preceding year” refers to the year preceding the actual date of acquisition of the real estate or obtainment of the right-of-use assets thereof.
Article 7.
When the Company acquires real property or right-of-use assets thereof from a related party and the results of appraisals conducted in accordance with the preceding two articles are uniformly lower than the transaction price, the following steps shall be taken:
1.
A special reserve shall be set aside in accordance with Paragraph 1 of Article 41 of the Act against the difference between the real property or right-of-use assets thereof transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. Where a public company uses the equity method to account for its investment in another company, then the special reserve called for under Paragraph 1 of Article 41 of the Act shall be set aside pro rata in a proportion consistent with the share of the public company's equity stake in the other company.
2.
The provisions regarding independent directors set out in Subparagraph 2, Paragraph 1, Article 18 of Regulations Governing the Acquisition and Disposal of Assets by Public Companies” shall apply mutatis mutandis to the audit committee, which should be handled in accordance with the provisions of Article 218 of the Company Act.
3.
Actions taken pursuant to the preceding two subparagraphs shall be reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus.
When the Company set aside a special reserve under the preceding paragraph may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchased or leased at a premium, or they have been disposed of, or the leasing contract has been terminated, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the competent authority has given its consent.
When obtaining real property or right-of-use assets thereof from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arms’ length transaction.
Article 8.
The operating procedures for the acquisition or disposal of assets of the company：
The units responsible for implementation, and the transaction process：
1.
Acquisition and disposal of real property or right-of-use assets thereof:
(1)
Where the Company acquires or disposes real property or right-of-use assets thereof, after the executing unit’s evaluation, it shall be handled in accordance with the relevant provisions of the Company's “Authorization and Deputy Systems” and related internal control systems.
(2)
When the Company acquires or disposes of real property, or right-of-use assets thereof, after being submitted for verification according to the pre-existing authority, the user department and the management department shall be responsible for the implementation.
2.
In acquiring or disposing of securities：
(1)
The acquiring or disposing of securities of the company shall be in accordance with its manners of Internal Control Systems. Besides, the amount of authority delegated shall also be in accordance with “authorization and deputy system“ , and relevant provisions in regard to internal control systems.
(2)
The acquiring or disposing of securities of the company, after having presented and approved pursuant to preceding paragraph, shall be implemented by the company’s Directorate-General of Finance, and Accounting.
3.
In acquiring or disposing of other assets：
(1)
The acquiring or disposing of other assets of the company shall be in accordance with its manners of Internal Control Systems. Besides, the amount of authority delegated shall also be in accordance with “the system of authorization and deputy”, and relevant provisions refer to internal control systems.
(2)
The acquiring or disposing of other assets of the company, after having presented and approved pursuant to preceding paragraph, shall be implemented by the company’s user department, Directorate-General of Finance, and Accounting or Administration department.
Article 9.
Total amounts of assets acquired by the company and each subsidiary and limits：
1.
The investment scope of the company shall be in accordance with the articles of incorporation.
2.
The company acquiring or disposing of long-term and short-term investments for every transaction shall not exceed 20 percent of the company's paid-in capital, and accumulated not exceed 15 percent of the company's paid-in capital in the fiscal year
3.
The acquisition or disposal of real property or right-of-use assets of the Company shall not exceed 30% of the total amount of real property and right-to-use assets.
4.
The Company’s annual total amount of the acquisition of the non-business use real property or right-of-use assets thereof shall not exceed 30% of the amount of paid-in capital.
5.
The total amount of the acquisition of non-business use real property or right-of-use assets thereof should not exceed 40% of total assets of each subsidiary of the Company; The amount of investment by each subsidiary of the Company in individual securities should not exceed 40% of each subsidiary’s total amount of assets, and the total amount of all security investments by each subsidiary should not exceed 60% of its total amount of assets.
6.
The subsidiary, which functions as a professional investment company, or otherwise provided in its Article of Incorporation, shall be free from restrictive requirement set out in the preceding paragraph.
Where the limits on acquiring or disposing assets set by a subsidiary of the company that is itself a public company shall be in compliance in the provisions of the limits
Where the transaction amount of acquisition or disposal of assets by the Company or its subsidiary exceeds the limit, the transaction shall be submitted for discussion and approval in advance by the board of directors.
Article 10.
The control procedures for the acquisition and disposal of assets by subsidiaries shall be in compliance with the provisions of the “Implementation procedures for supervision and evaluation by Tatung Co., Ltd. to Subsidiaries and reinvestments”.
Article 11.
Penalties for personnel violating the Procedures shall comply with the company personnel rules and regulations.
Article 12.
The company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a certified public accountant, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage. The opinion of the professionals on the matter can be waived when a public company conducts a merger where the company has direct or indirect 100% shareholding of the total number of issued and outstanding shares or the total capital of its subsidiary or a merger between the company’s subsidiaries where the company has direct or indirect 100% shareholding of the total number of issued and outstanding shares or the total capital of its subsidiaries.
Article 13.
The company participating in a merger, demerger, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to in paragraph 1 of the preceding Article when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply.
Where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the companies participating in the merger, demerger or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.
Article 14.
A company participating in a merger, demerger, or acquisition shall convene a board of directors meeting and shareholders meeting on the same day to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the Competent Authority is notified in advance of extraordinary circumstances and grants consent.
A company participating in a transfer of shares shall call a board of directors meeting on the same day, unless another act provides otherwise or the Competent Authority is notified in advance of extraordinary circumstances and grants consent.
When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall prepare a full written record of the following information and retain it for 5 years for reference:
1.
Basic identification data for personnel: including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or transfer of another company's shares prior to disclosure of the information.
2.
Dates of material events: including the dates of the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting.
3.
Important documents and minutes: including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.
When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall, within 2 days commencing immediately from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out in subparagraphs 1 and 2 of the preceding paragraph for recordation.
Where any of the companies participating in a merger, demerger, acquisition, or transfer of another company's shares is neither listed on an exchange nor has its shares traded on an OTC market, the company(s) so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions of paragraphs 3 and 4.
Article 15.
Every person participating in, or privy to the plan for merger, demerger, acquisition, or transfer of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or transfer of shares.
Article 16.
Public companies participating in a merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares:
1.
Cash capital increase, issuance of convertible corporate bonds, or the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.
2.
An action, such as a disposal of major assets, that affects the company's financial operations.
3.
An event, such as a major disaster or major change in technology, that affects shareholder equity or share price.
4.
An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stock.
5.
An increase or decrease in the number of entities or companies participating in the merger, demerger, acquisition, or transfer of shares.
6.
Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.
Article 17.
The contract for participation by a public company in a merger, demerger, acquisition, or transfer of shares shall record the rights and obligations of the companies participating in the merger, demerger, acquisition, or transfer of shares, and shall also record the following:
1.
Handling of breach of contract.
2.
Principles for the handling of equity-type securities previously issued or treasury stock previously bought back by any company that is extinguished in a merger or that is demerged.
3.
The amount of treasury stock participating companies are permitted under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.
4.
The manner of handling changes in the number of participating entities or companies.
5.
Preliminary progress schedule for plan execution, and anticipated completion date.
6.
Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.
Article 18.
After public disclosure of the information, if any company participating in the merger, demerger, acquisition, or share transfer intends further to carry out a merger, demerger, acquisition, or share transfer with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.
Article 19.
Where any of the companies participating in a merger, demerger, acquisition, or transfer of shares is not a public company, the public company(s) shall sign an agreement with the non-public company whereby the latter is required to abide by the provisions of Article 14, Article 15, and Article 18.
Article 20.
When a matter is submitted for discussion by the board of directors pursuant to the handling procedures, 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.

Adoption or amendment pursuant to the handling procedures, which shall be subject to the consent of one-half or more of all audit committee members and be submitted to the board of directors for a resolution.

If approval of more than half of all audit committee members as required in the preceding paragraph is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.

The terms "all audit committee members" in the preceding paragraph and "all directors" in the preceding paragraph shall be counted as the actual number of persons currently holding those positions.
Article 21.
For the calculation of 10 percent of total assets under the Procedures, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.
In the case of a company whose shares have no par value or a par value other than NT$10—for the calculation of transaction amounts of 20 percent of paid-in capital under these Regulations, 10 percent of equity attributable to owners of the parent shall be substituted; for calculations under the provisions of these Regulations regarding transaction amounts relative to paid-in capital of NT$10 billion, NT$20 billion of equity attributable to owners of the parent shall be substituted.
Article 22.
After the procedures have been approved by the board of directors, they shall be submitted to a shareholders' meeting for approval; the same applies when the procedures are amended.
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