Rules Governing the Election of Directors and Supervisors

Article 1
Except where prescribed laws and regulations or the Articles of Incorporation of China Steel Corporation (herein referred to as “CSC”), the election of directors and supervisors shall in all cases be pursuant to the rules stipulated herein.

Article 1-1
The election of CSC’s directors shall be considered the overall composition of the board of directors. Board members shall commonly possess the knowledge, skills, general capacity and disposition required to perform their duties. The board as a whole shall encompass the following abilities:
(1) Judgment of business operations;
(2) Accounting and financial analysis;
(3) Operational management;
(4) Crisis handling;
(5) Industrial knowledge;
(6) International market outlook;
(7) Leadership skills; and
(8) Decision making.
More than half of CSC’s directors shall be persons who have neither a spousal relationship nor a relationship within the second degree of kinship with any other director.

Article 1-2
CSC’s supervisors shall encompass the following qualifications:
(1) Trustworthiness and down-to-earthness;
(2) Righteous judgment;
(3) Professional knowledge;
(4) Abounding experiences; and
(5) Reading ability of financial statements.
In addition to the above qualifications, at least one among all CSC’s supervisors shall be an accounting or financial professional.

Appointments of supervisors shall be made with reference to the provisions on independence contained in the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies, in order to select appropriate supervisors to help strengthen the corporation's risk management and control of finance and operations.
At least one supervisor position must be held by a person having neither a spousal relationship nor a relationship within the second degree of kinship with any other supervisor or with any director.
CSC’s supervisor may not serve concurrently as the director, managerial officer, or any other employee of CSC, and should ideally be domiciled in the Republic of China to be able to promptly fulfill the functions of supervisor.

Article 2
The election of CSC’s directors shall adopt the candidate nomination system and procedures prescribed in Article 192-1 of the Company Law. Independent directors and non-independent directors shall be nominated and listed separately, as well as shall be elected by shareholders from the respective candidate list.
In case of special regulation(s) stipulated in Article 5 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies regarding the nomination of independent directors shall be applied.
The qualification of CSC’s independent directors shall be pursuant to Articles 2, 3, and 4 of the Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies.
The election of CSC’s independent and non-independent directors shall be held together, but the voting shares of ballots for respective winners shall be separately calculated in accordance with the respective seats.

When the number of directors falls below that prescribed in CSC’s Articles of Incorporation due to the dismissal of a director for any reason, a by-election shall be held to fill the vacancy at the next shareholders’ meeting. When the number of directors falls short by one third of the total number prescribed in CSC’s Articles of Incorporation, an extraordinary shareholders’ meeting shall be convened within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

When the number of independent directors falls below that required under the proviso of Article 14-2, paragraph 1 of the Securities and Exchange Act, a by-election shall be held at the next shareholders’ meeting to fill the vacancy. When the independent directors are dismissed en masse, an extraordinary shareholders’ meeting shall be convened within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

The election of CSC’s supervisors shall adopt the candidate nomination system and procedures prescribed in Article 216-1 of the Company Law. Supervisors shall be elected by shareholders from the candidate list.When the number of supervisors falls below that prescribed in CSC’s Articles of Incorporation due to the dismissal of a supervisor for any reason, a by-election to fill the vacancy should ideally be held at the next shareholders’ meeting. When the supervisors are dismissed en masse, an extraordinary shareholders’ meeting shall be convened within 60 days from the date of occurrence to hold a by-election to fill the vacancies.

Article 3
CSC’s preferred shareholders do not have the voting rights for directors and supervisors.

Article 4
CSC's directors and supervisors shall be elected by common shareholders with their cumulative voting rights by way of freely recording the name of individual candidate. Each common share shall have the same number of voting rights as the number of seats available for directors and supervisors. Each common shareholder’s election may focus on one candidate or be split for two or more candidates up to the number of seats available.

Article 5
The Board of Directors shall prepare the same number of ballots as the number of seats available for directors and supervisors to be elected and distribute to each common shareholder who attends the shareholders' meeting. Each attendant common shareholder’s certificate number and weighted number of voting shares shall be printed on his/her ballots.
The voter’s name is replaced by his/her certificate number which is printed on his/her ballots.

For common shareholders who choose to exercise their voting rights by way of electronic transmission, no printed ballots are furnished.

Article 6
The candidates of independent directors, non-independent directors or supervisors who acquire the cast ballots standing for more weighted voting shares shall win the seats available. In case of two or more candidates acquire the same number of weighted voting shares of cast ballots and exceed the specified number of seats available, such candidates shall draw lots to decide who win/wins the seats. The Chairman of shareholders’ meeting (herein referred to as “the Chairman”) shall draw lots on behalf of such candidates/candidate who are/is not present.

Article 7
Before the commencement of election, the Chairman shall appoint three (3) ballot examiners and several ballot counters to perform their related duties. The ballot examiners shall be CSC’s shareholders.

Article 8
The duties of ballot examiners are as follows:
(1) To examine the ballot boxes before the commencement of casting votes
(2) To seal the ballot boxes when the voting is finished, and unseal the ballot boxes subsequently to take out the ballots for the ballot counters’ counting before the immediate commencement of ballot counting
(3) To inspect or confirm the invalid ballots
(4) To check the numbers of ballots and voting shares counted by the ballot counters
(5) To assist Chairman to maintain the order of ballot casting and counting.
The board of directors shall prepare the ballot boxes referring to the sub-paragraph 1 of preceding paragraph.\

Article 9
The voter shall fill the following data in the "candidate" column on ballots according to the candidate list of independent directors, non-independent directors or supervisors before casting his/her ballots into the ballot box:
(1) The candidate’s full name and shareholder’s number if the candidate is CSC’s nature-person shareholder; or the candidate’s full name and identification number of certificate if the candidate is a nature person rather than CSC’s shareholder;
(2) The candidate’s full name and shareholder’s number if the candidate is a legal-person or government shareholder; and
(3) The name and shareholder’s number of the legal-person or government shareholder and the full name of the representative if the candidate is a representative of the legal entity or government shareholder. The respective full name of representatives shall be added to fill in if there are several representatives for the same legal-person or government shareholder.

Article 10
Any of the following circumstances shall cause the ballot(s) invalid:
(1) Without submitting the attendance registration card to complete the registration procedure;
(2) Without using the ballot(s) prepared by the board of directors;
(3) To fill in two or more candidates’ names;
(4) In addition to the candidate's full name, shareholder’s number or identification number of certificate, other characters or scripts are written on the ballot;
(5) To tear the ballot into incomplete one;
(6) Contaminated ballot causes the filled candidate(s) hard to distinguish;
(7) Totally blank ballot;
(8) The blurred handwriting is hard to identify or the handwriting is altered, but correction, addition or deletion of error handwriting shall be excluded;
(9) The filled candidate is a CSC’s shareholder, but his/her or shareholder’s number is different from that shown in the booklet of registered shareholders;
(10) The candidate is a non-shareholder natural person, but his/her name is different from that shown in his/her certificates;
(11) The filled candidate is the representative of a legal-person or government shareholder, but its name and shareholder’s number are different from that shown in the booklet of registered shareholders;
(12) The filled candidate's name is the same as other shareholder’s, but he/she does not fill in his/her shareholder’s number or certificate’s number available for identification marking.
(13) The name(s) of filled candidate(s) is (are) not in the list of nominated candidates for independent directors, non-independent directors or supervisors.

Article 11
The ballots shall be calculated on the spot after finishing the voting. When a ballot’s validity is suspected, its validity shall be decided by the ballot examiners. If there is still a controversy over such a ballot, its validity shall be decided by all ballot examiners’ votes. When the number of “for” and “against” votes by all ballot examiners is equal, such a ballot shall be deemed invalid.

Article 12
After finishing the voting calculation, the ballot examiners shall verify the total number of valid and invalid ballots and fill each of their number and respective weighted number of voting shares in the documentary record. The documentary record shall be passed on to the Chairman to announce the list of winning directors and supervisors on the spot.

Article 13
The ballot examiners shall separate the valid and invalid ballots to seal in respective packages, jointly sign their names on the seals, as well as remark the written words of “invalid ballots” on the seal-side cover of the package. All packages shall be handed over to CSC for safekeeping. All ballots shall be kept for at least one (1) year. However, if a lawsuit regarding election of directors or supervisors has been filed by any shareholder in accordance with Article 189 of the Company Law, the ballots shall be kept until the legal proceedings of the foregoing lawsuit have been concluded.

Article 14
The board of directors shall issue the respective notices for directors or supervisors elected.

Article 15
These rules shall be effective upon approval of the shareholders’ meeting. Any amendment hereof shall require the same process.