The issuance of Preferred Shares A

Company code: 2882

No: 1

Subject: Cathay FHC announces Board resolution on capital raising through the issuance of Preferred Shares A

Date of events: 2016/09/09

Contents:

1. Date of the board of directors resolution:2016/09/09

2. Source of capital increase funds: Capital raising through issuance of Preferred Shares A

3. Number of shares issued: maximum 1,000,000,000 preferred shares

4. Par value per share: NT$ 10

5. Total monetary amount of the issue: Tentative total amount is NT$35 billion

to NT$50 billion

6. Issue price: NT$55~NT$65

7. Number of shares subscribed by or allotted to employees: 10% of the newly issued Preferred Shares Class A will be reserved for employees' subscription

8. Number of shares publicly sold: 10% of the newly issued Preferred Shares A

9. Ratio of shares subscribed by or allotted as stock dividends to existing shareholders: 80% of the newly issued Preferred Shares A

10. Method of handling fractional shares and shares unsubscribed by the deadline:

The board authorized chairman of the company to identify subscribers of such shares

11. Rights and obligations of the newly issued shares:

(1)The dividend of Preferred Shares A is provisionally capped at 8% per annum on the issue price. The board authorizes the Chairman to determine the dividend rate. Cash dividends will be distributed annually in arrears.

(2)The dividends of Preferred Shares A will be distributed after legal and special reserves.

(3)The Company has sole discretion on the distribution of Preferred Shares A dividends. The dividends are non-cumulative.

(4)Not entitled to the cash or stock dividends derived from earnings or capital reserve.

(5)Rank prior to Common Shares and the repayment shall be capped at respective issue amount upon liquidation.

(6)Not entitled to voting rights and have no rights to vote on election of directors. Holders of outstanding Preferred Shareholders A have mandatory voting rights with respect to agendas that would affect Preferred Shares A in Preferred Shareholders' meetings and in Shareholders' meetings.

(7)Not convertible and the holders have no redemption right.

(8)Perpetual but may be redeemed in whole or in part at issue price at the option of the Company no earlier than the day following the seventh anniversary of the issuance date.

12. Utilization of the funds from the capital increase: Strengthen financial structure of the subsidiaries, enrich working capital, loan repayment, and the funds for long-term strategic development

13. Any other matters that need to be specified: The board authorizes the

Chairman or his designated deputy person to determine details and filing arrangements regarding the fund raising plan and issuance of Preferred

Shares A