||Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies(2008.02.26)
The format and content of proxies to be used for attendance of a shareholders meeting of a public company shall include instructions for filling out the form, the matters entrusted by the shareholder under the proxy, and the basic information of the shareholder, solicitor, and proxy agent. The form shall be attached to the notice of shareholders meeting mailed or transmitted as an electronic document to the shareholders.
Proxy forms to be used for attendance of a shareholders meeting of a public company shall be limited to those printed and issued by the company; The mailing, or transmission as an electronic document, of proxy forms to all shareholders shall be conducted on the same day.
A shareholder who for one year or more has continuously held issued shares of a company in conformance with one of the following conditions may mandate a trust enterprise or agent for stock affairs to act as the solicitor, and the number of shares to be represented by it shall not be subject to the restriction under Article 20:
1. Where a financial holding company, a bank regulated under the Banking Act, or an insurance company regulated under the Insurance Act convenes a shareholders meeting, the shareholder shall hold 10% or more of the total issued shares of the company, provided that when election of directors or supervisors is proposed on the shareholders meeting agenda, the shareholder shall hold 12% or more of the total issued shares of the company;
2. Where a company other than those specified in the preceding subparagraph convenes a shareholders meeting, the shareholder shall hold issued shares of the company in conformance with one of the following conditions:
(1) Has held 10 percent or more of the total number of issued shares of the company.
2. Has held 8 percent or more of the total number of issued shares of the company and, when election of directors or supervisors is on the shareholders meeting agenda, one of the candidates it intends to support meets the qualifications for independent director.
3. Where the consolidated number of shares of the shareholders sharing the same opinion on a proposal in a shareholders meeting meets the number of shares required to be held under the preceding two subparagraphs, such shareholders may jointly make a mandate.
When assigning election votes under proxies obtained through solicitation by a trust enterprise or agent for stock affairs mandated by a shareholder to act as a solicitor in accordance with the preceding paragraph, the number of votes assigned to any independent director candidate the shareholder intends to support shall be greater than those assigned to any non-independent director candidate.
A trust enterprise or agent for stock affairs, under any of the following circumstances, when election of directors or supervisors is on the shareholders meeting agenda, shall not act as a solicitor for a shareholder under paragraph 1 or handle proxy solicitation matters for a solicitor:
1. where it is itself an agent for stock affairs of the public company calling the shareholders meeting.
2. where it is itself a subsidiary of the financial holding company calling the shareholders meeting.
“Subsidiary” in subparagraph 2 of the preceding paragraph means a subsidiary as defined in Article 4 of the Financial Holding Company Act.
A shareholder under paragraph 1 or the responsible person thereof to which any of the circumstances specified in Paragraph 2 of the preceding article applies shall not mandate a trust enterprise or agent for stock affairs to act as the solicitor.
After a shareholder mandates a trust enterprise or agent for stock affairs to act as the solicitor, such shareholder at the current shareholders meeting shall not make any further solicitation, or handle proxy solicitation matters mandated by any solicitor.
Where there is a proposal for election of directors or supervisors in a shareholders meeting, at least one of the shareholders mandating solicitation referred to in Paragraph 1 above shall be the candidate for the directorship or supervisorship; provided this restriction shall not apply if the candidate supported meets the qualifications for independent director.
The literature and advertisement for solicitation of proxies shall contain the following particulars:
1. Express indication item by item as to whether the proposals to be decided in the shareholders meeting are concurred or not; where a proposal concerns the interest of the soliciting shareholder, an explanation shall be given;
2. If there is a disagreement to any of the proposals to be decided in the shareholders meeting, the reasons for the disagreement in connection with the contents of relevant information shall be provided;
3. In connection with statements of proposals for election of directors or supervisors:
(1) purpose for soliciting proxies;
(2) name of the candidate(s) to be supported, shareholders account number, type and number of shares of the company held, current position, academic qualifications, principal experience in last 3 years, management philosophy of the director candidate(s) to be supported, and business transactions with the company; in the case of a juristic person, the information of the responsible person and the resume of the representative to be appointed shall be filled in;
(3) The solicitor shall state whether the situation of holding shares in the name of another person under Article 2 of the Enforcement Rules of the Act exists between the solicitor and the candidate to be supported.
(4) Whether the proprietary shareholding of a solicitor under Article 5 and a mandating shareholder under Article 6, paragraph 1 support the candidate specified in the literature and advertisement for solicitation of proxies.
4. Solicitor's name, identification number, address, shareholder's account number, types and number of shares of the company held, status of any shares it holds in the company that are under pledge or were purchased on margin, place of solicitation, telephone number, and method for delivery of proxies. In the case of a juristic person, the business license number, responsible person's name, address, types and number of shares of the company held, and status of any shares it holds in the company that are under pledge or were purchased on margin shall also be stated;
5. Name, address, and telephone number of the person mandated by the solicitor to handle matters regarding solicitation;
6. After obtaining proxies by solicitation, the solicitor shall attend the shareholders meeting as mandated by the shareholders; a solicitor who violates this provision with resulting harm to a mandating shareholder shall be liable for damages under the provisions of the Civil Code regarding mandate.
7. Other matters to be disclosed according to relevant requirements.
A solicitor or the person mandated to handle matters regarding solicitation shall not solicit proxies outside the place of solicitation, and the contents of the literature and advertisement referred to in the preceding Paragraph shall be expressly disclosed in the place of solicitation.
The management philosophy of the director candidate(s) to be supported referred to in paragraph 1, subparagraph 3, item 2 shall be limited to 200 words; if it exceeds 200 words or the solicitor fails to specify the particulars required to be specified in the literature and advertisements for solicitation of proxies under paragraph 1, the company shall refuse to process the solicitation materials of the solicitor.
Where there is a proposal for election of directors or supervisors on the agenda of the shareholders meeting, the director or supervisor candidate(s) to be supported by the solicitor may not exceed the number of directors or supervisors to be elected according to that shareholders meeting proposal or the articles of incorporation of the company.
Unless otherwise provided in these Regulations, acquisition of proxies shall be restricted as follows:
1.A proxy shall not be obtained in exchange for money or other interest; provided that this rule shall not apply to souvenirs for a shareholders meeting distributed on behalf of the company or reasonable fees paid by a solicitor to a company mandated to handle solicitation matters;
2. A proxy shall not be obtained in the name of another person; and
3. A solicited proxy shall not be used as a non-solicited proxy for attendance of a shareholders meeting.
Souvenirs, if any, distributed in each shareholders meeting shall be limited to one type. If the number of souvenirs are not sufficient for distribution, substitutes with equivalent value may be distributed instead. The distribution of souvenirs in shareholders meetings shall adhere to the principle of fairness.
After the solicitor or the proxy agent has delivered an itemized statement to the company in accordance with Articles 12 and 13 or paid a guarantee deposit of a certain amount, the solicitor or proxy agent may request the company to deliver the souvenirs of the current shareholders meeting, and forward such souvenirs to the shareholder; the company may not refuse such request.
The amount and collection method for the guarantee deposit for the shareholders meeting souvenirs under the preceding paragraph shall be prescribed by the company based on the principle of fairness.
Where there is a proposal for election of directors or shareholders on the agenda of the company shareholders meeting, the proxies shall be tallied and verified by the company's agent for stock affairs or another agent for stock affairs before the shareholders meeting is convened. However, if the company handles its own stock affairs, the company may carry out the tallying and verification itself. The company shall state the tallying and verification institution in the shareholders meeting notice. When the institution is changed, the company shall immediately publicize the new institution on the Market Observation Post System (MOPS).
The content of the verification referred to in the preceding paragraph shall be as follows:
1. Whether the proxy is printed by the company.
2. Whether the shareholder has signed or chopped it.
3. Whether the name of the solicitor or proxy agent is provided, and whether it is correct.
The tallying and verification referred to in paragraph 1 shall be carried out in accordance with laws and regulations and the provisions related to proxy tallying and verification procedures in its internal control system; the aforementioned procedures shall be prescribed in accordance with the provisions related to proxy tallying and verification procedures in the Rules Establishing Standards for the Internal Control Systems of Shareholder Service Units prescribed by the FSC or an FSC-designated institution.
The FSC or an FSC-designated institution may at any time inspect the tallying and verification of proxies. The company or the entity carrying out the tallying and verification may not refuse.
If a company that handles its own stock affairs or an agent for stock affairs violates paragraph 3 and has been issued an official reprimand or penalized by the FSC, it may not continue to handle its own stock affairs or to handle the stock affairs for the company with which the violation was connected.
The FSC or an FSC-designated institution may at any time request a solicitor, a company mandated to handle solicitation matters, a proxy agent, or its related person to provide the shareholders meeting attendance proxies obtained or other relevant documents and/or information, or send personnel to inspect the obtainment of proxies; a solicitor, a company mandated to handle solicitation matters, proxy agent, or related person may not refuse or evade such a request.
These Regulations shall take force as of the date of issuance , except Article 7-1 amended and issued on 15 December 2005, which shall take force from 1 January 2006. Articles 5 and 6 amended and issued on 20 December 2006 shall take force from 1January 2008.