Articles of Association for Remuneration Committee of CSBC Corp., Taiwan

Promulgated per the memo Chuan-Kuan-Zih No. 1000001518 on July 6th, 2011

Amended per the letter Chuan-Guan-Zih No. 1020001919 on November 14, 2013

Amended per the letter Chuan-Guan-Zih No. 1030000487 on March 25, 2014

1. (Basis for instituting the Committee and laying down the Articles of Association)
The Company has instituted the Remuneration Committee (referred to as “the Committee” hereafter), and laid down the Articles of Association for the Committee (referred to as “the Articles of Association”) for abidance, pursuant to Article 14-6 of the Securities and Exchange Act and the “Regulations Governing the Institution and Exercise of Power of Remuneration Committee for TWSE/GTSM-Listed Companies”promulgated by the Financial Supervisory Commission, Executive Yuan,to reinforce corporate governance, and perfect the remuneration system for directorsand managers.
2. (Applicability of these Articles of Association and Contents of Constitution)
Constituting members, number of members, term of appointment, power of office, rule of procedures of the Committee, and resources that the Company should provide for the exercise of its power shall be regulated by the Articles of Association, unless otherwise stipulated by laws.
3. (Number of members, composition and term of appointment of the Committee)
The Committee members are appointed by resolution of the Board of Directors. At least three members shall be appointed, and at least one of them shall be an independent director. One independent director shall be elected by all members to be the convener and chairman of the meeting.
Term of appointment for the Committee members shall be the same as that of the appointing Board of Directors.
When a Committee member is dismissed, resulting in number of members falling short of three, re-appointment shall be made within three months from the day of occurrence by convening a Board meeting.
In case of appointment and changes of the Committee members, the Company shall make announcements on the information declaration website specified by the competent authority within two days from the day of occurrence.
4. (Qualifications of Committee members 1)
The Committee members shall have acquired one of the following professional qualifications, with over five years of working experience:
(1) Lectureship or above in the business, law, finance, accounting or other departments related to the Company’s business of a public or private college or university.
(2) Judge, prosecutor, lawyer, accountant or other specialist professionals and technicians related to the Company’s business, and with a passing certificate of a national exam.
(3) With working experience in business, legal, financial, accounting fields or other areas related to the Company’s business.
An individual shall not be appointed as a Committee member in any one of the following conditions, and he/she shall be dismissed if appointed:
(1) In case of any one condition listed in Article 30 of the Company Act.
(2) Violating the qualifications of Committee members as set down in these Articles of Association.
5. (Qualifications of Committee members 2)
None of the following shall be true for the Committee members in the two years prior to appointment and during the duration of appointment:
(1) An employee of the Company or its associated companies.
(2) A director or supervisor of the Company or its associated companies, but this does not apply to independent director of the Company or its parent companies, or subsidiaries over which the Company holds directly and indirectly over 50% shares of the voting rights.
(3) A natural person shareholder of the Company holding more than 1% of the total issued shares or among the top ten shareholders of the Company, and his/her spouse, his/her minor children or anyone in his/her name.
(4) Spouse, relatives within second-degree relation or direct consanguinity within third-degree relation of the persons listed in the previous three subparagraphs.
(5) Directors, supervisors or employees of a corporate shareholder of the Company which directly holds more than 5% of the total issued shares, or directors, supervisors or employees of the top five corporate shareholders.
(6) Directors, supervisors, managers or shareholders holding over 5% shares of specific companies or organizations with financial or business correspondence with the Company.
(7) Professionals, proprietors, partners, directors, supervisors, managers, and their spouse, of the proprietorships, partnerships, companies or organizations providing commercial, legal, financial, accounting services or consultation, etc. to the Company or associated companies.
The provision concerning the twoyears prior to appointment in the previous paragraph is not applicable to Committee members who had been independent directors of the Company or associated companies or specific companies or organizations with financial or business correspondence with the Company as stated in Subparagraph 2 or Subparagraph 6 above but is now dismissed from the office.
Specific companies or organizations mentioned in Subparagraph 6 of Paragraph 1 refer to those in any one of the following relations with the Company:
(1) Those holding over 20% but not more than 50% of the Company’s total issued shares.
(2) Those companies and their directors, supervisors and shareholders holding 10% of the total shares jointly hold more than 30% of the total issued shares of those companies, and the two parties have financial or business correspondence on record. The aforesaid shareholding includes those held by their spouse, minor children and anyone in their names.
(3) Those companies and their affiliated companies from which the Company earns more than 30% of its operating income.
(4) Those companies and their affiliated companies from which the Company acquired more than 50% of the major materials for products (referring to those materials accounting for over 30% of the total purchase amount, and essential materials that are indispensable to the production) or major commodities (referring to those accounting for over 30% of the total sales income) in terms of either quantity or total purchase amount.
The parent companies and affiliated companies mentioned in Paragraph 1 and the previous paragraph shall be identified according to the provisions of No. 5 and No. 7 of the Statement of Financial Accounting Standards published by the Accounting Research and Development Foundation in Taiwan.
6. (Scope of Power)
The Committee shall faithfully fulfill the following power of office with due diligence of a good manager, and shall propose their recommendations to the Board of Directors for discussion:
(1) Formulate and regularly review the policies, systems, standards and structure of performance appraisal and remuneration for directors and managers.
(2) Regularly evaluate and set the remuneration for directorsand managers.
Managers in the previous paragraph refer to the President, Executive Vice President, Senior Vice President and the financial and accounting managers. The Committee shall adhere to the following principles when exercising their power:
(1) Industrial norm and standard of pay levels shall be taken as reference for the performance appraisal and remuneration of directors and managers. Reasonable relation with the individual performance, the Company’s operating results and the future risks shall also be taken into account.
(2) Directors and managers shall not be guided to engage in behaviors that exceed the Company’s risk appetite in pursuit of better remuneration.
(3) When offering bonuses for short-term performance of directors and high-rank managers, the industry’s characteristics and the nature of the Company’s business shall be taken into consideration when deciding the bonus rate and the time for paying the partly variable remuneration.
Remuneration mentioned in Paragraphs 1 and 3 includes cash remuneration, stock option, stock bonus, retirement benefit or exit pay, various allowances and other material rewards; the categories shall be consistent with the guidelines set out in the content of notice of the publicly published Annual Report of the Company concerning remuneration of directors and managers.
When discussing the Committee’s recommendations, the Board of Directors shall make a comprehensive consideration of the amount of remuneration, payment method and the future risks of the Company, etc.
To reject or amend the Committee’s recommendations, the Board of Directors shall have two thirds of all directors present, and over half of the present directors’ consent. Moreover, specific explanation shall be given in the resolution for the adopted remuneration’s superiority over the Committee’s recommendation according to the above-mentioned comprehensive consideration.
If the remuneration package adopted by the Board of Directors is superior to the Committee’s recommendation, the difference between the two and reasons shall be detailed in the Board meeting’s minutes, which shall also be announced on the information declaration website specified by the competent authority within two days from the day the motion is passed in the Board meeting.
For remuneration matters of the subsidiaries’ directors and managers that have to be approved by the Company’s Board of Directors according to the decision-making guideline of subsidiaries’hierarchical responsibilities, the proposal shall be presented by the Committee and then submitted to the Board of Directors for discussion.
7. (Convening a Meeting and Notice of Meeting)
The Committee shall convene at least two meetings per year. When a Committee meeting is convened, a notice of meeting shall be sent to the Committee members seven days in advance, with the reasons and agenda of the meeting listed in the Notice of Meeting. But this does not apply to emergent situation.
In case of the convener on leave or fails to convene a meeting for some reasons, another independent director in the Committee shall be designated as acting representative; where there is no other independent director in the Committee, the convener shall designate another Committee member as acting representative. If no acting representative is designated, the other Committee members shall elect a person as acting representative.
The Committee shall invite someone from Secretariat Office of the Board to attend meetings as non-voting members, and may invite directors, managers of relevant departments of the Company, internal audit officers, accountants, legal consultants or other persons to attend the meeting as non-voting delegates and provide relevant and necessary information.
8. (Deciding the Agenda and Method of Resolution)
Agenda for the Committee meeting is set down by the convener, and the other members may also propose motions for the Committee’s discussion. Agenda of the meeting shall be provided to the Committee members in advance.
When a Committee meeting is convened, the Company shall set up a sign-in logbook for the present members to sign in, which should be kept as record for future reference.
Committee members shall attend the Committee meetings in person. In case they fail to attend in person, they may authorize another member to attend the meeting; members participating in a meeting via video conference are deemed attending in person.
When authorizing another member to attend the Committee meeting, the Committee members shall present a letter of authorization in each occasion, and list the scope of authorization concerning the reasons and agenda for convening the meeting.
When making a resolution, the Committee shall have over onethird of all members’ consent. A motion is deemed adopted when there is no objection upon the chairman’s consultation when resolving on a matter; this shall have the same effect as voting by ballot. The result of resolution shall be reported on the spot and be recorded in writing.
An acting representative as mentioned in Paragraph 3 shall only be authorized by one person at a time.
9. (Minutes)
Discussion of the Committee shall be recorded in the minutes. The minutes shall faithfully record the following in details:
(1) The number, time and location of the meeting.
(2) Name of the chairman.
(3) Members’ attendance, including the number of persons present, on leave and absent and their names.
(4) Name and title of the non-voting attendees.
(5) Name of record-keeper.
(6) Items reported.
(7) Discussion items: resolution method and result of various motions, objection and reservation opinions of the Committee members.
(8) Extempore motions: name of proposer, resolution method and result of the motions, speech summaries, objection or reservation opinions of the Committee members, experts and otherpersons.
(9) Other matters that should be included.
For resolutions made by the Committee, if the members have made objection or reservation opinions on record or in a written statement, it shall not only be recorded in the minutes, but also announced on the information declaration website specified by the competent authority within two days from the day of occurrence.
The Committee’s sign-in logbook shall be a part of the minutes.
The minutes shall be signed and sealed by the chairman and record-keeper of the meeting, and be sent by post to the Committee membersin the name of the Board of Directors within 20 days after the meeting, copying to the Secretariat Office of the Board. It shall also be reported to the Board of Directors and filed in the Company’s important archive, to be kept for five years.
Before expiry of the aforesaid retention period, if litigation relating to the matters of the Committee arises, the record shall be kept until the litigation ends.
Minutes as mentioned in Paragraph 1 may be prepared and distributed in electronic form.
If the Committee meeting is conducted via video conference, the audio/video data shall be a part of the minutes.
10. (Appointment of Experts)
The Committee may appoint lawyers, accountants or other professionals upon resolution, for necessary audit or provision of advices relating to the matters of their exercise of power. The cost of which shall be borne by the Company.
11. (Authorization of the Committee)
The convener or other Committee members may be authorized to carry out the resolutions made by the Committee and the related execution work, and written reports shall be made to the Committee during the time of execution. The written reports shall be confirmed retroactively or reported in the next Committee meeting when necessary.
12. (Arrangement of Agenda)
The Committee has instituted one executive secretary, to be taken on by the Director of Management. The Department of Management will serve as the meeting office, responsible for planning of the Committee’s agenda, convening of meetings, notice of meetings, procession of meetings, minutes and other related matters. Secretariat Office of the Board may be asked to help with matters relating to the arrangement of agenda, notice of meeting, and minutes.
13. (Implementation)
These Articles of Association shall be implemented after being resolved and adopted by the Board of Directors; the same applies for its amendments.

*This English version is a translation of Articles of Association for Remuneration Committeeof CSBC Corporation in Chinese. In case of any discrepancy, the Chinese version shall prevail.

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