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

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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

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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.

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( )

( ) ○

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.

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( )

( ) (International Financial Reporting Standards No.

16, IFRS 16) (International Accounting Standards No. 17, IAS 17)

(1) (2)

。

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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.


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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.


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Matter to be Ratified

( )

( )

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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

( )

( )

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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


majority of the directors. The special resolution mechanisms stipulated by Paragraph 2 of the Article 14-5 of the Securities and




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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.



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Matter to be discussed

I. Matters Related to the Shareholders’ Meeting

( )

( ) 1060027112

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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) ( )

( )

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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.


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.

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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.


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)

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3.

(1)

(2) ( )

(3)

4.

5.

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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


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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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

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majority of the directors. The special resolution mechanisms stipulated by the Paragraph 2 of the Article 14-5 of the Securities and




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( )

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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


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.



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III. Matter Related to Corporate Governance

( )

( )

( )

( )

( )

( )

( )

( )

( )

36

( )

( )

( )

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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.

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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.



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Extempore Motion

None.

Motion to Adjourn

minutes for the 15th meeting of the 7th term board of directors … · 2019. 1. 8. · 1 minutes...

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