minutes for the 15th meeting of the 7th term board of directors … · 2019. 1. 8. · 1 minutes...
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Minutes for the 15th Meeting of the 7th Term Board of Directors
Far EasTone Telecommunications Co., Ltd.
T i m e a n d D a t e : 9 : 3 0 a . m . , M a y 4 , 2 0 1 8
2 0 7 3 9
L o c a t i o n : 3 9 t h F l . , N o 2 0 7 , Tu n - H w a S o u t h R o a d , S e c t i o n 2 , Ta i p e i , Ta i w a n
C h a i r m a n : M r. D o u g l a s To n g H s u S e c r e t a r y : V i v i a n L e e
2
Total Number of Directors is Eleven (11), and all Eleven (11) Directors were presented, where Two (2) Directors were presented by proxy.
Attending Directors
Douglas Tong Hsu Bonnie Peng
Jan Nilsson Keijiro Murayama
( )
(Present by appointing Director Champion Lee as his proxy)
Peter Hsu Champion Lee
Lawrence Juen-Yee Lau
( )
(Present by appointing Independent Director Kurt Roland Hellström as his proxy
Toon Lim
Kurt Roland Hellström Jeff Hsu
Chung Laung Liu
(The attendance sheets are attached)
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Others
Yvonne Li President
T. Y. Yin Executive Vice President
Maxwell Cheng Executive Vice President
Sherman Lee Chief Financial Officer
Eton Shu Executive Vice President
Philip Tseng Executive Vice President
Herman Rao Executive Vice President
Iris Su Chief Auditor
Olivia Chew Senior Vice President
4
Meeting Commenced.
Matters to be Reported
( ) ( )
Report (1): To confirm the minutes of the last board meeting and review the follow-up actions. (Please see Attachment 1)
Resolution The minutes is confirmed and the follow-up actions are acknowledged by all Directors present at the Meeting.
( )
Report (2): To update the resolutions of the Audit Committee Meeting.
Resolution The resolutions of the Audit Committee Meeting are acknowledged by all the Directors present at the Meeting.
( ) ( )
Report (3): Business update (Omitted).
Resolution: That the report of the business update is acknowledged by all the Directors present at the Meeting.
5
( )
( ) ○
Proposed by: Strategy & Finance Division
Report (4): The Q1 2018 consolidated financial statements of the Company.
Explanatory Notes:
1. Please refer to the Attachment 2 for the Q1 2018 consolidated financial statements.
2. This proposal has been submitted to report by the 12th Meeting of the 1st Term Audit Committee on May 3, 2018, and, in
addition, been submitted to the Board of Directors for report as promulgated by the related law.
Resolution: That the subject report is acknowledged by all the Directors present at the Meeting.
6
( )
( ) (International Financial Reporting Standards No.
16, IFRS 16) (International Accounting Standards No. 17, IAS 17)
(1) (2)
。
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Proposed by: Strategy & Finance Division
Report (5): Progress update for the adoption of IFRS(International Financial Reporting Standards) 16 “Leases”.
Explanatory Notes
1. International Financial Reporting Standards No. 16 (IFRS 16) “Leases” will replace International Accounting Standards 17
“Leases” (IAS 17) and become effective on January 1, 2019. IFRS 16 requires a lessee (1) to recognize a right-of-use asset
representing its right to use the underlying leased asset and an equivalent liability representing its obligation to make lease
payments; (2) to reflect the lease expenses through depreciation and interest expenses, not rent expense currently.
2. Taiwan Stock Exchange Corporation (TSE) requests the listing companies to establish an implementation team, prepare a launch
plan to ensure a smooth transformation. TSE also requests the Board of Directors of the listing companies to review the progress
quarterly.
3. The major tasks in the 2018 include (1) adjusting the work flow and management measures, (2) confirming accounting policies,
and (3) confirming the impact for the financial statements. The progress was on track in 2018 Q1. Please refer to the Attachment 3
for the implementation plan and checking list.
Resolution: That the subject report is acknowledged by all the Directors present at the Meeting.
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( )
( )
「 」
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Proposed by: Internal Audit
Report (6): Internal Audit Update.
Explanatory Notes:
Pursuant to the “Regulations Governing Establishment of Internal Control Systems by Public Companies”, Internal Audit updates its
operation as the followings:
1. Audit tasks had been duly executed based on audit plan approved by the Board of Directors.
2. Internal Audit had reported and updated audit task progress and activities in 2018 Q1 Audit Committee’s Meeting.
3. All audit follow-up items were handled by responsible departments through taking planned corrective actions. In the case that
the follow-up items could not be completed as planned, necessary approval from top management should be obtained for
timeline/action modification.
4. This proposal has been submitted to approve by the 12th Meeting of the 1st Term Audit Committee on May 3, 2018, and, in
addition, been submitted to the Board of Directors for report as promulgated by the related law.
Resolution: That the subject report is acknowledged by all the Directors present at the Meeting.
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Matter to be Ratified
( )
( )
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Proposed by: Strategy & Finance Division
Ratification Proposal (1): To review and ratify the disposal of equipment of the Company.
Explanatory Notes:
1. In accordance with the “Handling Procedure for Acquisition and Disposal of Assets" of the Company, the disposal of equipment is
listed below (Omitted) and hereby submitted to the Board of Directors for review and ratification.
2. This proposal has been ratified and approved by the 12th Meeting of the 1st Term Audit Committee on May 3, 2018, and been
submitted, according to Paragraph 1 of the Article 14-5 of the Securities and Exchange Act, to the Board of Directors for
ratification. According to the Article 206 of the Company Act, since the Audit Committee has approved this proposal, the proposal
to be approved by the Board of Directors requires only consent by a majority of the present members of the Board attended by a
majority of the directors. The special resolution mechanisms stipulated by Paragraph 2 of the Article 14-5 of the Securities and
Exchange Act shall not apply.
3. Please review and ratify.
Resolution: That the proposal hereby is ratified by all the Directors present at the Meeting.
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( )
37 43 2G
( )
( )
13
P Proposed by: HR & Facility Division
Ratification Proposal (2): To review and ratify the disposal of real estate in Taichung City of the Company.
Explanatory Notes:
1. The property is located at 1~2, B1F, No.43, Gongyecyu 37th Rd., Situn Dist., Taichung City. Since the original 2G equipment has
been withdrawn from the real estate and the room is not for core equipment, it is considering asset activation. The related
information of the transaction of the real estate is shown as follows: (Omitted)
2. For comparing with market prices, CUSHMAN & WAKEFIELD Ltd. & Hannah Real Estate Appraisal Firm, are engaged to
provide appraisal reports. The outcomes are listed as follows: (Omitted)
According to the appraisal result, the transaction price is rational.
3. According to “Handling Procedure for Acquisition and Disposal of Assets” of the Company, aforesaid transaction has been
approved by Chairman and already completed. It is hereby submitted to the Board Meeting for review and ratification.
4. This proposal has been ratified and approved by the 12th Meeting of the 1st Term Audit Committee on May 3, 2018, and been
submitted, according to Paragraph 1 of the Article 14-5 of the Securities and Exchange Act, to the Board of Directors for
ratification. According to the Article 206 of the Company Act, since the Audit Committee has approved this proposal, the proposal
to be approved by the Board of Directors requires only consent by a majority of the present members of the Board attended by a
majority of the directors. The special resolution mechanisms stipulated by Paragraph 2 of the Article 14-5 of the Securities and
Exchange Act shall not apply.
5. Please review and ratify.
Resolution: That the proposal hereby is ratified by all the Directors present at the Meeting.
14
( )
99/10/5 107/4/1
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Proposed by: HR & Facility Division
Ratification Proposal (3): To review and ratify the appointment of Vice President and above of the Company.
Explanatory Notes:
1. Please review and ratify the list of Vice President and above hired from the period of February 21, 2018 to April 26, 2018.
Name Department Job Title Age Degree School Major Hiring Date Effective Date
Andy Kuo
Enterprise
Product &
Solution
Management
Vice
President Omitted 2010/10/5 2018/4/1
2. Regarding the compensation level ought to be paid to Vice President and above, based on Willis Towers Watson Consultant
Company’s market survey, the annual remuneration is following the Company’s Compensation Management Policy.
3. Please review and ratify.
Resolution: That the proposal hereby is ratified by all the Directors present at the Meeting.
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Matter to be discussed
I. Matters Related to the Shareholders’ Meeting
( )
( ) 1060027112
17
18
Proposed by: Strategy & Finance Division
Discussion Proposal (1): To discuss and approve the amendments to the “Rules of Order for the Board of Directors Meeting”
and other related regulations of the Company.
Explanatory Notes:
1. In order to comply with the amendment of “Regulations Governing Procedure for Board of Directors Meetings of Public
Companies” and “Regulations Governing the Exercise of Powers by Audit Committees of Public Companies” announced by
official letter No. 1060027112 of the Financial Supervisory Commission (“FSC”) dated July 28, 2017, and to meet the operation
in actual and reorganization, it is proposed to amend the Company’s “Rules of Order for the Board of Directors Meeting” and
other related regulations of the Company
2. It is also proposed to amend the regulations of the Company which are listed below:
Reason
Regulations
Regulations
Compliances
Operation in
actual Reorganization
Submitted to
the Audit
Committee
Submitted to the
Shareholders’
Meeting
References
Rules of Order
for the Board of
Directors
Meeting
Articles 5-2 Article 5 None None Attachment 4
The Charter of
the Audit
Committee
Articles 7, 9,
9-1 and 11 Articles 7 None None Attachment 5
Procedures for
Handling
Material Internal
Information
Article 6 Articles 5 and
14 None None Attachment 6
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Ethical
Corporate
Management
Best Practice
Principles
Articles 17 V Report Attachment 7
Operating
Procedures for
Application of
Suspending and
Resuming
Trading of Listed
Securities
Articles 4 None None Attachment 8
Procedures for
performance
evaluation of
Board of
Directors
Meeting
Articles 2 and 3 None None Attachment 9
3. “Ethical Corporate Management Best Practice Principles” has been discussed and approved by the 12th Meeting of the 1st Term
Audit Committee on May 3, 2018, and been submitted, according to the Paragraph 1 of the Article 14-5 of the Securities and
Exchange Act, to the Board of Directors for discussion. According to the Article 206 of the Company Act, since the Audit
Committee has approved this proposal, the proposal to be approved by the Board of Directors requires only consent by a majority
of the present members of the Board attended by a majority of the directors. The special resolution mechanisms stipulated by the
Paragraph 2 of the Article 14-5 of the Securities and Exchange Act shall not apply.
4. Please discuss and approve.
Resolution: That the proposal hereby is approved by all the Directors present at the Meeting, and “Ethical Corporate
Management Best Practice Principles” will be submitted to the 2018 Annual Shareholders’ Meeting for report.
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( )
( )
( )
1%
( )
(Jan Nilsson)
( )
(Jeff Hsu)
(Toon Lim) ( )
(Keijiro Murayama) ( )
( )
21
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Proposed by: Strategy & Finance Division
Discussion Proposal (2): To review and examine the Director candidates’ qualifications.
Explanatory Notes:
1. The tenure of Directors of the Company is three years and the term of Directors of the Seventh term of the Board will expire on
June 17, 2018. According to the Article 195 of the Company Act, new Directors shall be elected at the annual Shareholders’
Meeting of 2018. The term of the newly elected eleven Directors (including three Independent Directors) is three years, effective
from June 14, 2018 to June 13, 2021. Regulations governing the professional qualifications, restrictions on shareholdings and
concurrent positions held, assessment of independence, method of nomination, and other matters for compliance with respect to
independent directors shall be followed.
2. According to the Article 192-1 of the Company Act, the Board of Directors (via this Board Meeting) of the Company and any
shareholders with 1% above shareholding may nominate director candidates. During the period for proposals and nomination, the
Company has received the nomination of eleven director candidates from the major shareholder Yuan Ding Investment Co., Ltd.
as follows:
Title Name Representative of Company’s Name
Director
Douglas Hsu
Yuan Ding Investment Co., Ltd. Peter Hsu
Jan Nilsson
Champion Lee Yuan Ding Co., Ltd.
Jeff Hsu
Toon Lim Ding Yuan International Investment Co., Ltd.
Keijiro Murayama U-Ming Marine Transport Corp.
Bonnie Peng Asia Investment Corp.
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Title Name Representative of Company’s Name
Independent Director
Lawrence Juen-Yee Lau
Chung Laung Liu
Tim Pan
And the shareholders’ nomination letter, candidates list, examination checking list and the related documents, please refer to
Attachment 10.
3. After examination, abovementioned eleven candidates both meet qualification requirements of director or independent director.
The Company will make public announcement about the qualified eight Directors and three Independent Directors candidate
roster after the resolution of Board of Directors.
4. Please discuss and approve.
Resolution: That the proposal hereby is approved by all the Directors present at the Meeting, and will be submitted to the 2018
Annual Shareholders’ Meeting for election.
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( )
( )
( )
(Toon Lim)
Advisor, SingTel Group
Board Director, APT Satellite, HK
( )
(Keijiro Murayama)
Executive Director Asia Business,
Global Business Division, NTT
DOCOMO, Inc.
25
Proposed by: Strategy & Finance Division
Discussion Proposal (3): To discuss and approve the release of the non-competition restriction on directors in accordance with
Article 209 of the Company Act.
Explanatory Notes:
1. According to Article 209 of the Company Act, a Director who does anything for himself or on behalf of another person that is
within the scope of the company's business, shall explain to the Shareholders’ Meeting the essential contents of such an act and
secure its approval.
2. If the Director candidate to be elected as the eighth term Board of Directors actually does anything for himself/herself or on
behalf of another person within the scope of the Company’s business as follows, it is proposed to release the non-competition
restriction for the would-be newly elected directors and their representatives at the annual Shareholders’ Meeting of 2018.
Name Title and Competition Company Major Business Scope
Toon Lim, Representative of Ding Yuan
International Investment Co., Ltd.
Advisor, SingTel Group
Board Director, APT Satellite, HK
Telecommunications Keijiro Murayama, Representative of
U-Ming Marine Transport Corp.
Executive Director Asia Business,
Global Business Division, NTT
DOCOMO, Inc.
3. Please discuss and approve.
Resolution: That the proposal hereby is approved by all the Directors present at the Meeting, and will be submitted to the 2018
Annual Shareholders’ Meeting for discussion and decision.
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( )
( )
1.
(1)
(2)
(3)
(4)
(5)
(6)
2.
(1) ( )
(2)
27
3.
(1)
(2) ( )
(3)
4.
5.
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Proposed by: Strategy & Finance Division
Discussion Proposal (4): To discuss and approve the additions to the agenda of the 2018 Annual Shareholders’ Meeting.
Explanatory Notes:
1. The dates and agenda of the 2018 Annual Shareholders’ Meeting were originally approved by the 14th meeting of the seventh term
Board of Directors on February 23, 2018. In order to comply with operation in actual, it is proposed to added the report matter of
“Revisions to the Ethical Corporate Management Best Practice Principles” report, and discussion proposal of “to release of the
competition restriction on Directors in accordance with Article 209 of the Company Law”, it is therefore necessary to make
additions to the agenda of the 2018 Shareholders’ Meeting of the Company.
2. The proposed agenda of the 2018 Shareholders’ Meeting of the Company is as follows:
(1) Matters to be reported
(i) The 2017 business report
(ii) The 2017 financial statements
(iii) The 2017 Audit Committee’s review report
(iv) The 2017 directors’ and employees’ compensation
(v) The issuance of corporate bonds
(vi) The amendments to the Ethical Corporate Management Best Practice Principles
(2) Matters to be ratified
(i) The 2017 financial statements (including 2017 business report)
(ii) The 2017 retained earnings distribution
(3) Matters to be discussed and election
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(i) To discuss and approve the cash distribution from capital surplus
(ii) Election of new Directors of the Company (The term of the newly elected eleven Directors, including three Independent
Directors)
(iii) To release the non-competition restriction on directors in accordance with Article 209 of the Company Law
(4) Extempore Motion
(5) Motion to Adjourn
3. Please discuss and approve.
Resolution: That the proposal hereby is approved by all the Directors present at the Meeting.
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II. Matters Related to Finance
( )
( ) (WiFi) (MVNE)
( )
( )415,000 5,000 ( 10 )
4,998 94.45%
( )
( )
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Proposed by: Strategy & Finance Division
Discussion Proposal (5): To discuss and approve the merger with Q-ware Communications Co., Ltd, .
Explanatory Notes:
1. Q-ware Communications Co., Ltd. (“Q-ware” hereafter) is engaged in providing services of WiFi access, Mobile Virtual Network
Enabler (MVNE) and customized WiFi solutions. Due to downward business trend and continuous loss, Q-ware already
resolved to conduct NT$ 415,000,000 capital reduction and NT$ 5,000,000($10 per share) capital call in 2018 Annual
Shareholders Meeting which was held on March 5, 2018. The Company subscribed in the amount of NT$ 4,998,000 accordingly.
After Q-ware’s capital reduction and injection, The Company then owns 94.45% of Q-ware.
2. In order to simplify the investment structure, and to integrate WiFi and Mobile Virtual Network services, it is proposed for the
Company to proceed cash merger with Q-ware according to Article 19 of Enterprise Merger and Acquisition Law. The Company
will become the surviving company and Q-ware will be merged into the Company. (Omitted).
3. The record date of the merger is targeted on June 30, 2018. Please refer to Attachment 11 for the Merger Agreement (draft). Please
also refer to Attachment 12 for the Fairness Opinion issued by the independent financial advisor Kau Wei CPAs Firm.
4. In order to execute and perform the Merger Agreement and other relevant documents for the merger transaction, it is proposed that
the Board of Directors authorizes the Chairman or other sub-delegated persons appointed by the Chairman to represent the
Company to proceed with the contract execution, to make any necessary adjustments according to the requests from competent
authorities, to change the record date of the merger, and to deal with all the other related matters about the transaction.
5. This proposal has been discussed and approved by the 12th Meeting of the 1st Term Audit Committee on May 3, 2018, and been
submitted, according to the Paragraph 1 of the Article 14-5 of the Securities and Exchange Act, to the Board of Directors for
discussion. According to the Article 206 of the Company Act, since the Audit Committee has approved this proposal, the proposal
32
to be approved by the Board of Directors requires only consent by a majority of the present members of the Board attended by a
majority of the directors. The special resolution mechanisms stipulated by the Paragraph 2 of the Article 14-5 of the Securities and
Exchange Act shall not apply.
6. Please discuss and approve.
Resolution: That the proposal hereby is approved by all the Directors present at the Meeting.
33
( )
34
Proposed by: NT Division
Discussion Proposal (6): To discuss and approve the additions to the capital expenditure budget for 2018.
Explanatory Notes:
1. In order to provide better network and service quality to our customers as well as to improve customer satisfaction, it is proposed
to approve the additions to the capital expenditure for 2018, the total amount is NT$486 million. Please refer to Attachment 6 for
the detailed project list.
2. This proposal has been discussed and approved by the 12th Meeting of the 1st Term Audit Committee on May 3, 2018, and been
submitted, according to the Paragraph 1 of the Article 14-5 of the Securities and Exchange Act, to the Board of Directors for
discussion. According to the Article 206 of the Company Act, since the Audit Committee has approved this proposal, the proposal
to be approved by the Board of Directors requires only consent by a majority of the present members of the Board attended by a
majority of the directors. The special resolution mechanisms stipulated by the Paragraph 2 of the Article 14-5 of the Securities
and Exchange Act shall not apply.
3. Please discuss and approve.
Resolution: That the proposal hereby is approved by all the Directors present at the Meeting.
35
III. Matter Related to Corporate Governance
( )
( )
( )
( )
( )
( )
( )
( )
( )
36
( )
( )
( )
37
Proposed by: Strategy & Finance Division
Discussion Proposal (7): To discuss and approve the release of recent dual employments and non-competition restriction on
managerial officers of the Company.
Explanatory Notes:
1. According to Article 29 and Article 32 of the Company Act, a managerial personnel of a company shall not concurrently act as a
managerial personnel of another company, nor shall he/she operate, for the benefit of his/her own or others, any business which is
the same kind as that of the company, unless otherwise concurred in by a resolution adopted by a majority vote of the directors at a
meeting of the board of directors attended by a majority of the entire directors of the company.
2. The situation in which the managerial personnel of the Company (position of Vice President and above) concurrently acts as a
managerial personnel of another company and operate, for the benefit of his/her own or others, any business which is the same kind
as or similar to that of the Company is shown as underneath table. Please discuss and approve the release of recent dual
employments and non-competition restriction on the following managerial officers of the Company.
Managerial Personnel Title and Company
Title Name Dual employments Competition
Executive Vice
President & Chief
Financial Officer
Sherman Lee Supervisor of Ding Ding Integrated
Marketing Service Co., Ltd.
Executive Vice
President T.Y. Yin
Chairman of DataExpress Infotech Co.,
Ltd.
Director of ARCOA Communications Co.,
Ltd.
Director of Linkwell Tech. Ltd.
Director of Home Master Technology Ltd.
38
Senior Vice
President
Vivian Lee
Director of ARCOA Communications Co.,
Ltd.
Director of KGEx.com Co., Ltd.
Olivia Chew Director of YuanShi Digital Technology Co.,
Ltd.
Vice President
James Lee Director and President of Q-ware
Communications Co., Ltd.
Brian Chao President of DataExpress Infotech Co.,
Ltd.
Bruce Yu Director of KGEx.com Co., Ltd.
Terrance Yang President of YuanShi Digital Technology Co.,
Ltd.
Andy Tu President of ARCOA Communications
Co., Ltd.
3. Please discuss and approve.
Resolution: That the proposal hereby is approved by all the Directors present at the Meeting.
39
Extempore Motion
None.
Motion to Adjourn
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