FPC — AGM Information 2019

Jun 18, 2019

FORMOSA PLASTICS CORPORATION

2019ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK

(This English translation is prepared in accordance with the Chinese version and is for reference purposes only. If there are any inconsistency between the Chinese original and this translation, the Chinese version shall prevail.)

JUNE 11, 2019

Table of Contents

Meeting Procedure……………..………………………………. page 1 Meeting Agenda……………….……………..………………… page 2 Report Items…………………………………………………… page 3 Ratification Items……………………………………………… page 21 Discussion Items ……..…………………………….………….. page 23 Appendices………………………………………………..…… page 71

1. Independent Auditor’s Report

2. Articles of Incorporation of the Company

3. Rules of Procedure for Shareholders’ Meeting of the Company

4. Procedures for Acquisition and Disposal of Assets of the Company

5. Procedures for Engaging in Derivatives Transaction of the Company

6. Procedures for Loaning Funds to other Parties of the Company

7. Procedures for Providing Endorsements and Guarantees to other Parties of the Company

8. Current Shareholdings of Directors of the Company

9. Information regarding the Proposed Employees and Directors’ Compensation approved by the Board of Directors of the Company

10. Effect upon Business Performance and Earnings per Share of the Company by the Stock Dividend Distribution Proposed at the 2018 Annual Shareholders’ Meeting

FORMOSA PLASTICS CORPORATION

2019 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

1. Call Meeting to Order

2. Chairman’s Address

3. Report Items

4. Ratification Items

5. Discussion Items

6. Extraordinary Motions

7. Meeting Adjourned

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FORMOSA PLASTICS CORPORATION

2019 ANNUAL SHAREHOLDERS’ MEETING AGENDA

• Time : 2:00 p.m., Tuesday, June 11, 2019

• Venue : 2F, International Ballroom at Sunworld Dynasty Hotel, Taipei (NO. 100, Dun Hua North Road, Taipei, Taiwan)

1. Report Items

• (1) 2018 Business Report

• (2) Audit Committee’ Review Report on the 2018 Financial Statements

• (3) Distribution of 2018 Employees Compensation

• (4) Issue of 2018 Domestic Unsecured Ordinary Corporate Bonds

2. Ratification Items

• (1) Please approve the 2018 Business Report and Financial Statements as required by the Company Act.

• (2) Please approve the Proposal for Distribution of 2018 Profits as required by the Company Act.

3. Discussion Items

• (1) Amendment to the Procedures for Acquisition and Disposal of Assets of the Company. Please discuss and resolve.

• (2) Amendment to the Procedures for Engaging in Derivatives Transactions of the Company. Please discuss and resolve.

• (3) Amendment to the Procedures for Loaning Funds to other Parties of the Company. Please discuss and resolve.

• (4) Amendment to the Procedures for Providing Endorsements and Guarantees to other Parties of the Company. Please discuss and resolve.

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Report Items

1. About the Company’s results of operation for fiscal year 2018, please refer to Business Report for further details (on page 5 of the Handbook.) which is hereby reported for record.

2. The Company’s Audit Committee members reviewed the 2018 Business Report and Financial Statements and issued their Review Report according to the applicable laws. Please refer to Audit Committee’s Review Report (on page 20 of the Handbook.)

3. The company has issued the report on compensation distributed to its employees for 2018. The pre-tax profit prior to deducting employees’ compensation distributable for 2018 is NT$57,120,324,829. The company has no accumulated losses. Adopted by the Board Meeting on March 25, 2019, 0.13% of the profit is allocated as employees’ compensation in accordance with Article 39 of the Articles of Incorporation. The total allocated amount is NT$74,166,956, which shall be distributed in cash. The above is hereby reported for record.

4. Issue of NT$9.3 Billion Domestic Unsecured Ordinary Corporate Bonds in 2018

5. (1)To raise long-term funds to build and expand current plant, to replace current plant and equipment, to pay off loans, to fund the working capital, and to invest in domestic or overseas business, the Board of Directors resolved on Mar. 22, 2018 to issue domestic unsecured ordinary corporate bonds of NT$10 Billion in 2018. To consider the market interest rate and the actual need, the Company only issued the bonds of NT$9.3 Billion on June 26, 2018, which was reported to the Board of Directors on Dec. 17, 2018. The rest of unissued bonds of NT$0.7 Billion was not applied for Taipei Exchange.

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(2)A summary of the major terms of the aforementioned bonds are as follows:

are as	follows:
Tranche	Size (NT$ billion)	Coupon Rate(%,fixed annual rate)	Tenor (Year)	Principal Repayment Year
A	5.2	0.82	5	Half of the principal shall be repaid upon the end of the fourth year and the fifth year, respective from the date of issue.
B	2.7	0.93	7	Half of the principal shall be repaid upon the end of the sixth year and the seventh year, respective from the date of issue.
C	1.4	1.09	10	Half of the principal shall be repaid upon the end of the ninth year and the tenth year, respective from the date of issue.
Coupon Frequency	Annual. Interest shall be paid as simple interest rate.

The above is hereby reported for record.

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Formosa Plastics Corporation 2018 Business Report

1. 2018 Business Report:

The Company (Formosa Plastics Corporation) generated consolidated sales of TWD230.37bn in 2018, reaching 102% of its target of TWD224.38bn and was up 11% from TWD206.71bn generated in 2017. Consolidated pretax profit came in at TWD57.09bn in 2018, reaching 98% of its target of TWD58.32bn and was up 4% from TWD54.90bn generated in 2017.

Global economics has been in turmoil in 2018. In the first three quarters for 2018, the strong global economic growth has led to higher demand for petrochemical. Oil price jumped by 24% driven by production cut from major oil producing countries such as OPEC and Russia. Moreover, demand for alumina, paper, home appliance and epoxy resins have increased thanks to industry boom in automotive, construction, e-commerce and home appliance. The decreasing supply driven by capacity maintenance, production outages, or production reduction on environmental inspection of other companies, has pushed up prices and spreads for caustic soda, AN, MMA and ECH. However, amid the uncertainties brought by US-China trade tension, global economy and international trade have been deteriorated in 4Q18. While the US is driving its economic growth, pressures on oil prices have been weighted on. The US thus increased its oil production, which resulted in around 40% of decline in oil price and led to the sharp collapse in ethylene, propylene, and petrochemical product prices. Product spreads and sales volume have decreased as downstream clients have therefore turned to hold a more conservative, wait-and-see stance on its procurement.

In summary, the Company has completed the phase 1 and phase 2 Ningbo 42K tpa PP plant debottleneck project, and well-managed its equipment safety to maintain a stable operation, which have resulted in 91% capacity utilization rate in 2018, higher than 90% in 2017. Meanwhile, the Company has been developing overseas markets aggressively and increasing sales contribution from high-valued

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differentiated products. As a result, the Company’s consolidated operating profit of TWD25.34bn in 2018 increased 15% from 2017, which was a record high level for the Company in the past 7 years. Moreover, cash dividend incomes from Nanya Plastics Corp., Formosa Chemicals & Fibre Corp., Nanya Technology Corp. were TWD7.51bn, and equity investment incomes from Formosa Petrochemical Corp. and FPC-USA, Formosa Sumco Technology Corp., were TWD24.07bn in 2018, which supported the Company’s consolidated pretax profit to break the 2017 record high level at TWD57.09bn in 2018, and reaching the highest level in the past 64 years since the Company established.

In 2018, the US economy has been on growing under the “First Priority” strategy and the positive effect from tax reduction, which has led to global economic recovery. However, the US has adopted trade protection measures to resolve its long-term trade deficit with China, and resulted in the US-China trade war. Starting from July 2018, China and the US have both raised their tariffs towards each other, resulting in the restructure of global supply chain, and dragged down the global economic growth and export. The International Monetary Fund (IMF) and the World Bank have both revised down their forecasts on global GDP growth. Due to a close trade relationship between the two major economies, it’s inevitable for Taiwan to suffer from the impact of trade war, leading to the decline in both export momentum and economic growth.

In addition, Taiwan’s economic growth has shown weak momentum. Taiwan has stayed in the last place among the Four Asian Tigers over the past 4 years and was not able to keep up the pace with global economic growth. Aside from being impacted by the global economy trend, the society brimming with the ideology of environmental protection is also attributed to the weak momentum. According to Taiwan’s Environmental Protection Agency(EPA), over 70% of the PM 2.5 problem is generated from traffic, the transport from other regions, and from natural occurrence, while the petrochemical and power industry, which have long been misunderstood by the public, only make up 2% and 2.9%, respectively, to the problem. The two industries together only account for less than 5% of

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the problem, which is even lower than the 6.2% generated from catering industry, however, the two industries have been consider by the crowd as the chief culprit of PM 2.5. The industries have long been suffering from the stigma, and many long term investment projects were stuck under the unreasonable EPA review system. The environmental regulations have also became stricter gradually without considering whether the best feasible technique is achievable, which is very unfavorable to the long term domestic industry development.

On the other hand, both China and the US, the two economic majors in the world, are emphasizing "driving the economy through manufacturing industry ". The two countries even rolled out tax reduction and fee cuts to attract manufacturing investments, and expand new petrochemical capacities. In the long run, Taiwan’s industry development would thus be limited.

In addition, the government's energy policy of "replacing nuclear power with green energy; replacing coal-based power plant with natural gas-based power plant" is posing a great risk to the stability of electricity supply, which will adversely affect the development of Taiwan's economy. Besides, the increase in tax rate from 17% to 20% for corporates in Taiwan is exactly on the opposite of the world trend of “tax reduction”. This could potentially weaken corporates’ competitiveness in the world and hollow out the domestic industry development as corporates would be force to switch out from Taiwan to seek for investment opportunities overseas.

Furthermore, while export accounts for more than 60 percent of Taiwan GDP, Taiwan’s participation in the international Free Trade Agreement (FTA) coverage is poor at less than 10%. Facing the growing trade protectionism, unimproved cross-strait relations, the preferential tariffs enjoyed by ASEAN 10 plus one, the effective of “Comprehensive and Progressive Agreement for Trans-Pacific Partnership Agreement (CPTPP)” since 30 December 2018, and the upcoming formation of “Regional Comprehensive Economic Partnership Agreement (RCEP)” in Asia, of which Taiwan has been excluded in the discussion, Taiwan will be marginalized, and our industries will find it very difficult to survive and

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development if Taiwan government is not actively seeking for solutions on the breakthrough for the trade tariff obstacle.

Thus, the Company expects the government, aside from grasping the opportunity of industry restructure brought out under US-China trade war, should roll out a fiscal tax with investment incentives, renew the tax incentives in “Statute for Upgrading Industry”, amend the irrational environmental assessment process and loosen the environmental regulation restrictions. Particularly, the environmental issues should be assessed based on scientific data in order to dissolve the populist atmosphere. Meanwhile, the government should revisit the energy policy, formulate electricity allocation pragmatically and propose reasonable supporting measures for energy transition to provide stable, abundant and clean electricity and to build a friendly investment environment to attract and enhance businesses’ confidence in investing in Taiwan. Also, in order to make a breakthrough of the above difficulties and to keep businesses in Taiwan and develop sustainably, the government should understand the market mechanism and the problem of the unequal trade tariff towards the globalization roadmap, as well as make effort to join RCEP, CPTPP and sign FTA with main trading partners.

In view of the difficulty in domestic investment and the uncertainties brought out by US-China trade tension, in 2018, the Company developed the application of artificial intelligence (AI) technology thoroughly to ensure the improvement of the working environment and avoid operational issues, in order to improve product quality, production and management efficiency. In an effort to popularize AI concept to all employees and to cultivate AI talents, the Company provides the four-stage systematic training courses from the basics, practice, and project practice to "Taiwan Artificial Intelligence School". In the meantime, the Company also interacts and cooperates with other companies, established an AI exchange platform to hold competitions, and set up an AI R&D studio at Renwu plant to develop AI technology and to accelerate progress on AI development. In 2018, 6 projects have been completed and introduced into application with annual benefit at TWD24m. There are 115 ongoing

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projects going forward, and the estimated annual benefit is at TWD142m.

Aside from this, by promoting Industrial 4.0 and the automatic selling system, production and sales efficiency has come into effect on PVC, PE and PP automatic selling system, and the Company has expanded the application towards other products. Meanwhile, in order to increase the product quality, optimize the operation and formulation and dispatch the power units, the Company has improved the production process and launched 42 improvement projects through instant and historical production data analysis. By the end of 2018, 29 projects had been completed with annual benefit of TWD70m, and the implementation of the rest 13 projects are expected to be completed by end of 2019.

Moreover, in order to promote the transformation plan of the Renwu complex, the establishment of the composite material center, the industrial 4.0 and artificial intelligence research and development center, and the dye-sensitized battery mass production plant, in March 2019, has been passed by the Ministry of the Interior to change 12.3 hectares of part of the land in Renwu District to a kind of industrial zone.

At the same time, 13 office buildings, including the 2 founders' offices in the Kaohsiung plant, the birthplace of Formosa Plastics Group, were registered as monument by the Kaohsiung City Government. The “Wang Yung-ching and Wang Yung-tsai Park” will be established in the 2.5 hectares original site. Moreover, in respect of the Formosa Building’s urban renewal plan, the Company invested TWD4,675m by a quarter of the shareholding among Formosa Group, together with Nanya Plastics Corp., Formosa Chemicals & Fibre Corp., and Formosa Petrochemical Corp., to purchase three office buildings, and lands, etc, located in “T-CBD”, Taipei’s Neihu District.

In an attempt to develop circular economy, promote project improvements, reduce the consumption of water, energy, and the liquid usage volume per unit, the Company accomplished 620 projects in 2018 and resulted in a total benefit of TWD320m. The Company established an innovation platform to hold seminars for time to time to boost up the innovation atmosphere. There have been more than 147 ideas proposed on

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an accumulated basis so far. By the means mentioned above, the Company is able to gradually pursue the rationalization, strengthen the business essence, overcome the operating difficulties and continue to grow the business.

The Company and its China Ningbo subsidiary mainly produce plastics and chemical fiber raw materials. In 2018, sales volume of PVC increased 3% to 1,661K tons mainly due to the continued market diversification with higher sales in Southeast Asia, New Zealand, Australia, and higher PVC demand for infrastructure ahead of the India’s general election in 2019. Sales volume of caustic soda was 1,437K tons in 2018, similar to the level last year, as the incremental caustic soda demand in Indonesia and Middle East for aluminum and Rayon was offset by the slowing global economy and market oversupply caused by the import ban on caustic soda to India that have not obtained the Bureau of Indian Standards’ approval in 4Q18.

Although the clients’ re-stocking demand in HDPE was conservative given weaker-than-expected HDPE demand for pipe due to the delay in coal-to-gas project in China and the US-China trade tension, the Company have aggressively diversified the market into Southeast Asia and Africa’s pipe material market and expanded to differentiated products like blow molding grade and cable grade HDPE products. As a result, the Company’s sales volume in HDPE was 489K tons in 2018, similar to that of last year. The Company’s EVA sales volume was 276K tons in 2018, up 12% from 2017 as there was no new capacity addition in China and no maintenance shutdown of EVA plant in Mailiao complex. The Company’s LLDPE sales volume was 162K tons in 2018, down 22% from 2017 given (1) oversupply in LLDPE market on tight competition due to new supply additions from India and the US, and (2) production reduction as the FOB prices couldn’t cover the Company’s variable cost.

The Company’s AE sales volume was 538K tons in 2018, increased 6% from 2017 driven by (1) higher re-stocking demand from downstream clients given tight supply resulted from heavy maintenance shutdown from peers in first half of 2018 and operational issue from Brazil peers and, (2)

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increased sales volume in Southeast Asia, India and Southern America. The Company’s carbon fiber sales volume was 5.4K tons in 2018, up 14% from 2017 due to the stable incremental demand for wind power and the demand recovery from Taiwanese and foreign clients given strategic production reduction from Japanese peers. The Company’s sales volume of NBA, which is mainly for captive use by AE plants, increased 6% to 232K tons in 2018 due to a sharp decreased in supply given heavy turnarounds from China and Southeast Asia peers in first half of 2018. Sales volume of SAP increased largely by 38% from 2017 to 182K tons in 2018 mainly due to (1) demand recovery in Central America, (2) order win from international clients and took the advantage of ASEAN tariff exemption for sales into Southeast Asia, and (3) aggressive development for new clients in Africa.

Sales volume of PP increased 2% from 2017 to 958K tons in 2018 given better demand for the newly-developed fiber grade and extruded sheet products, as well as to sales expansion into Southern Asia and Central America market. Sales volume in AN and MMA increased 3% and 4% from 2017 to 277K tons and 83K tons in 2018, respectively, on the severer environmental inspection in China and operational issue from peers. Sales volume of ECH decreased 5% from 2017 to 89K tons in 2018 due to lower-than-expected downstream product epoxy demand.

In terms of capacity expansion, in order to strengthen its competitiveness, the Company has been aggressively expanding its capacities and conducting debottleneck projects, including the debottleneck project of SAP plant in Mailiao, which will raise its SAP capacities by 10K tons to 70K tons, and it is expected to be completed by end of 2020. And in Ningbo, there are PP plant debottleneck project, which will increase its PP capacity by 30K tons to 522K tons after the project is completed in 2Q19; SAP plant debottleneck project, which will increase its SAP capacity by 10K tons to 100K tons after construction completed in 3Q19; AA plant debottleneck project, which will increase AA capacity by 10K tons to 330K tons, which is scheduled to completed in 2Q19; and the project of the new PDH plant, which will have 600K tons propylene

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capacity and is expected to complete and start production in 3Q21. In addition, the Company is building a new 400K tons HDPE plant in Texas, USA, scheduled to be completed in 2Q19. Furthermore, in Kaohsiung, the Company’s storage tank in Qianzhen District will be moved to the Phase II Intercontinental petrochemical zone. The Company has rent the land and dock from Port of Kaohsiung Taiwan International Ports Corporation for petrochemical usage and will build 12 storage tanks and 1 salt warehouse, which are expected to be completed in 2Q22.

In terms of equity investments, FPC-USA (22.61% owned by the Company) generated pretax profit of USD1,000m in 2018, up 5% from 2017, mainly due to (1) increase demand for petrochemical driven by the improving US economy, (2) increase sales volume from 2017 given stable production, and (3) rising product price following rising crude price in the first three quarters in 2018. Also, the paste PVC plant in Delaware has stopped operating since August 2018 due to old facilities and poor profitability. In 2019, business should decline comparing to 2018 given significant capacity additions in ethylene and downstream polyethylene capacities in Northern America, which leads to the expected falling prices of petrochemical products, and the rising feedstock prices in ethane, propane and butane. In order to expand production scale and continue to leverage on shale gas’ low cost advantage, aside from the 1.2m tons ethane cracker expansion project, FPC-USA is conducting the construction of a 400K tpa LDPE plant and a 250K tpa PP plant in Taxes, which are scheduled to start production starting from 2Q19 and can contribute to earnings.

In addition, profit loss of Fujian Fuxin Special Steel Co., Ltd. (29.17% owned by the Company) in 2018 has further expanded from 2017 given (1) higher raw material LME nickel price on the back of environmental inspection in China, (2) intensified pricing competition from Indonesian peers on new supply additions, and (3) shrinking demand in 4Q18 on US-China trade tension. Fujian Fuxin expects the global steel market should continue to decline, prices should fall as a result of the intensifying pricing competition. However, Fujian Fuxin is expected to

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decrease profit loss as Fujian Fuxin will expand the sales in super ferritic stainless steel differentiated products and increase the hot rolling OEM for Formosa Ha Tinh Steel Corporation. In order to enlarge the synergy of vertical integration and enhance the competitiveness, Fujian Fuxin is conducting the new cold rolling mill plant project with 300K tpa capacity, and expects the plant to start production by 2Q20.

Furthermore, Formosa Ha Tinh Steel Corporation, which the Company owns 11.43% equity stake, is constructing an integrated steel plant in Ha Tinh Province, Vietnam, with 7.1mn tpa steel billet capacity. The two blast furnaces have started production in May 2017 and May 2018, respectively. Sales volume has reached to 4.95m tons in 2018 and the production and selling condition has been smooth so far, the product quality has received clients’ affirmation.

Moreover, Formosa Mitsui Advanced Chemicals Co., Ltd., with 5,000 tpa lithium-ion battery solution capacity per year, which the Company owns 50% equity stake, are mainly supplying to electric vehicle and electric bus companies, and it will keep developing new clients. In order to expand the business scale, Formosa Mitsui Advanced Chemicals is conducting on the third phase of capacity expansion of 15K tons, and expects to complete the construction by end of 2019.

In terms of research and development, the Company spent TWD2.2bn on R&D in 2018, accounted for 1% of the Company’s revenues. These R&D expenses were mainly spent on developing new formulation, improving production process, increasing product quality, conserving energy consumption, and developing human resources, in order to increase production capacity and lower cost, and to increase technical skills through cooperating with industry peers. Meanwhile, in order to conduct R&D on industrial production technique and to commercialize specialty products, the Company launched 49 R&D projects, including low polymerization degree paste resin, semi-solid electrolyte of lithium-ion battery, dye-sensitized cell electric curtain, injection & compression cap grade HDPE, high VA & Low melt index grade EVA, ultra-thin prelaminated diaper and odorless SAP, carbon fiber reinforced thermoplastic

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unidirectional tape, vinyl ester compatible sizing, gas phase process EPP expanded PP beads and high fluidity impact copolymer PP. The development in differentiated products and the enhancement in value-added products perform well.

Moreover, the Company further enhanced the development of key technology and applied for both domestic and international patent. In 2018, the Company has received approval on 9 patents, and as of the end of 2018, the Company has a total of 148 effective patents. Meanwhile, the Company will continue to work with both domestic and international industry experts, government, and academic area, as well as to establish a virtual laboratory to accelerate the interaction and resources integration of research development and production, as well as to speed up the process of commercialization. Also, in order to further strengthen the competitiveness, the Company will incorporate new technologies such as Internet of Things, Automation, and Green Technology to upgrade and expand its R&D capabilities in the area of compounds, circular economy, aerospace and medical materials.

In addition to cooperating with academic research institutions such as National Cheng Kung University and the Industrial Technology Research Institute in August 2018 on the technology development of the capture and reuse of flue gas carbon dioxide for the improvement on eco-friendly environment, the Company cooperated with the Ministry of Economic Affairs and the Industrial Technology Research Institute, to build the world's only automated dye-sensing battery test line in National Chiao Tung University, Tainan campus in December 2018. The dye-sensing battery can be widely used in the wireless sensor for the Internet of Things and the power supply for daily necessities.

On the operational safety and environmental protection front, the Company has always been putting equal emphasis on industry developments and environmental protection. As of the end of 2018, the accumulated investments on operational safety, environmental protection, and firefighting has reached TWD22.7bn, which was mainly spent on controlling pollution, saving energy, reducing waste and greenhouse gases,

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and improving operational safety and firefighting. The Company’s pollution treatment and emissions are better than national regulatory standards.

In 2018, there were 9 business units and 5 employees praised by competent authority. Among them, Mailiao PVC plant, HDPE plant, LLDPE plant, AN plant and MMA plant were all praised by Yunlin County and Ministry of Labor for strong performance on occupational safety and health. Mailiao PVC even received the “Occupational Safety 5-Star Award” from Yunlin County given the three consecutive years of praise awarded. Linyuan PP plant obtained the role model award money by Ministry of Economic Affairs for strong performance on energy conservation. Meanwhile, Linyuan plant were also praised by Kaohsiung Environmental Protection Bureau for its excellent performance on energy conservation with cross-departmental cooperation. Also, Renwu and Mailiao plant were praised by Ministry of Health and Welfare for strong performance on creating a safe and healthy working environment.

In term of water and energy conservation and greenhouse emissions reduction, in 2018, the Company accomplished 460 improvement projects. Total water saved amounted to 5,340 tons/day while greenhouse gas emissions reduction reached 73,826 tons/year. Other ongoing 345 improvement projects would further conserve water by 3,375 tons/day and reduce greenhouse gas emissions by 168,124 tons/year.

Besides, the Company is promoting AI into operational safety, including the establishment of GPS system for employee safety, “Production Safety Management (PSM)” operations, equipment diagnosis, and continue to promote the “Execution Implementation SOP – Full Participation”, “Advanced Simulation” and, as a result to reduce abnormal operation and to secure the operation. At the same time, to conduct deep review and improvement on equipment, electronic equipment, and control systems that have regular breakdown in order to reduce operational risks. Moreover, in view of increasing environmental regulations, the Company has established short, mid, and long-term improvement plans for in-plant equipment components to strengthen the control on leakage, and set up

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FTIR to monitor air quality instantly, conducted the improvement project on the elimination of white smoke for Renwu and Linyuan plant, and organized a “zero-wastewater-emission promotion group” to promote wastewater reduction, aiming at zero emissions and reducing environmental impact.

2. Business Performance:

The consolidated revenue in 2018 was TWD230.37bn, an increase of TWD23.66bn over the previous year of TWD206.71bn. Operating profit was TWD25.34bn with an 11% of operating margin after deducting COGS of TWD193.06bn and operating expenses of TWD11.97bn. Plus non-operating income of TWD31.75bn (included equity investment income of TWD24.08bn), the pretax profit was TWD57.09bn in 2018, increase 4% from 2017.

3. 2019 Business Performance Target and Outlook:

Looking into 2019, global agencies such as International Monetary Fund (IMF) and World Bank have revised down their forecast on 2019 global GDP growth given the impact from US-China trade tension, slowdown in China’s economic growth, Brexit risk, coupled with the impact from tightening monetary policies from Euro zone and US. The reasons above are likely to pressure the economic growth in the major economies.

IHS forecasts global ethylene capacity will increase around 7 million tons in 2019, mainly concentrated in North America, and Asia. In terms of demand, based on the global ethylene demand growth of 1.1x of GDP growth, incremental demand should be 6.2 million tons in 2019. Add that global ethylene capacity maintenance shutdowns are 1 million tons lower than in 2017, global ethylene supply is rather sufficient. Among the new capacities, 3 new ethylene plants with a total of 4.5 million tons of capacity from DowDuPont, ExxonMobil and Chevron Phillips Chemical have already started production. In 2019, there are 5 ethylene plants from FPC-USA, Sasol, Lotte, Indorama and Shintech, with a total of 4.68 million tons of capacity to come on stream. Net ethylene capacity increase

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from above companies are 9.18 million tons in total with incremental PE capacity to be over 6 million tons, which have impacted global PE market gradually. Due to the oversupply in PE market in North America, companies have cost advantage on low shale gas feedstock price, and most of the new capacities will primarily be exported. It is expected that the impact on petrochemical market in Asia will become serious increasingly in 2019.

In addition, looking into the historical upturn and downturn of global economic cycle, there was a recession in every 10 years, such as the Asian Financial Crisis in 1998, Global Financial Crisis in 2008, and 2018 could have reached the end of the economy upturn in the decade. Moreover, the petrochemical industry had remained its upcycle in four consecutive years since 2015 and the peak could have already ended in 2018. It is expected to face a challenging year of decline in 2019.

Nevertheless, in order to stabilize and mitigate the impact from trade tension, China government has rolled out measures such as the easing of environmental control, financial deleveraging, reduction on import tariffs, corporate taxes and fees, and the increase in export tax rebates. In the meantime, to expand spending on infrastructure improves domestic demand. These measures could help to improve the downstream plastic processing industry. Furthermore, although the US is now experiencing the slower pace in economy growth, petrochemical demand should not shrink sharply, which should be supported by the large domestic market in the US, the US presidential election in 2020, of which President Trump would create a favorable environment on both financials and economy, and the expectation on the growth in global economy in 2019.

However, there are still many variables that might affect global economic growth and petrochemical industry, which includes (1) the development of US-China trade tension, (2) the monetary policy in EU and US, (3) Brexit development, (4) the geopolitical risks in Middle East, (5) the trend of crude oil prices. The Company will still need to respond prudently when it comes to the potential problems mentioned above.

In the new year, facing the uncertainties brought by US-China trade

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tension and the environment under the unpredictable global market changes, the Company has prepared for the long resistance war. In view of the fact that AI is the key to future growth and competitiveness, the Company will expand its application into selling and production optimization, distillation tower energy saving, intelligent monitoring system maintenance, automatic optical inspection (AOI) image recognition, instrument digitization, product defect identification and other improvements, in order to avoid operational issue to ensure a smooth production, improve product yield and customer’s quality satisfaction, as well as reduce energy and raw material consumption to lower cost. In the meantime, to strengthen the Company’s long-term competitiveness via full implementation of AI model through rapid replication between plants.

Aside from this, the Company’s scheduled maintenance shutdowns in 2019 are lower than that in 2018. Although there will be fewer days of maintenance shutdown for ethylene capacity in Taiwan in 2019 from 2018, the Company will seek for imports to cover the shortfall in raw material, aiming to reach the target of “full production and sales”. Also, in an attempt to elevate sales volume for differentiated products and business operation, the Company will implement flexible sales strategies, diversify market into emerging markets such as India, Bangladesh, Southeast Asia, New Zealand, Australia and Africa, continue to expand sales agents in each region, and set up overseas warehouses in Vietnam and Bangladesh under the opportunity of international trade flow and supply chain restructure trend.

Meanwhile, the Company will continue to implement the review for strategy regarding to production, sales, research for each product, and will continue to hold innovation presentations, enhance the R&D and innovation, focus on the R&D of forward-looking products, recyclable and biodegradable green plastics, and continue to promote the circular economy to create an eco-friendly environment, as well as to develop new high value-added compounds for new applications to boost the Company's profit. In addition, the Company will aggressively promote the transformation program of Renwu complex, other capacity expansion and

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debottleneck projects. Through the efforts above, the Company expects to strengthen its business and to save growth momentum, and accordingly, to make the breakthrough of the challenges in 2019 in a constructive pace and achieve another new record in 2019.

Chairman: Jason Lin President: Jason Lin In-charge Accountant: Chia-Tse Chang

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Formosa Plastics Corporation

Audit Committee’ Review Report

The Board of Directors has prepared the Company’s 2018 Business Report, Financial Statements, including Consolidated and Individual Financial Statement, and Proposal for Profits Distribution. The CPA firm of KPMG was retained to audit Formosa Plastics Corporation’s Financial Statements and has issued an audit report relating to Financial Statements. The Business Report, Financial Statements, and Proposal for Profits Distribution have been reviewed and determined to be correct and accurate by the Audit Committee members of Formosa Plastics Corporation. According to the Securities and Exchange Act and the Company Act, we hereby submit this report. Please be advised accordingly.

Formosa Plastics Corporation Chairman of the Audit Committee: Chi-Lin, Wei

March 25, 2019

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Ratification Items Proposal 1

Proposal: For approval of the 2018 Business Report and Financial Statements as required by the Company Act.

Proposed by the Board of Directors

Explanation:

• 1.The preparation of the Company’s 2018 Consolidated and Individual Financial Statements were The completed.

• aforementioned Financial Statement were reviewed by the Audit Committee and approved by the Board Meeting on March 25, 2019, and audited by independent auditors, Mr. Astor Kou and Mr. Winston Yu, of KPMG. The aforesaid Financial Statements together with the Business Report were reviewed by the Audit Committee, which the Audit Committee’ Review Report is presented.

• 2.For the aforementioned Business Report, please refer to page 5 through page 19 of the Meeting Handbook. As for the Financial Statements, please refer to page 62 through page 69 of the Handbook. Please approve the Business Report and the Financial Statements.

Resolution:

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Ratification Items Proposal 2

Proposal: For Approval of the Proposal for Distribution of 2018 Profits as required by the Company Act.

Proposed by the Board of Directors

Attachment:

Please refer to page 70 of the Handbook for the Statement of Profits Distribution, which has been reviewed by the Audit Committee members of Formosa Plastics Corporation and approved by the Board of Directors on March 25, 2019.

Resolution:

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Discussion Items Proposal 1

Proposal: Amendment to the Procedures for Acquisition and Disposal of Assets of the Company submitted for discussion.

Proposed by the Board of Directors Explanation: To comply with the requirements provided in the order Jin-Guan-Zheng-Fa-Zi No. 1070341072 dated November 26, 2018 by the Financial Supervisory Commission, certain articles of the Procedures for Acquisition and Disposal of Assets provided by the Company have been amended. The comparison table for articles before and after amendment is hereby attached. Please determine whether the amendments are reasonable.

Article before Amendment

Article 1:

When acquiring or disposing of the following assets, Formosa Plastics Corporation (hereinafter referred to as the “Company”) and its subsidiaries shall follow the Procedures for Acquisition or Disposal of Assets (hereinafter referred to as the “Procedures”):

1. Investments in stocks, government bonds, corporate bonds, bank debentures, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, asset-backed securities, etc.

2. Real property (including land, houses and buildings, investment property, and land use rights) and equipment.

3. Memberships.

4. Patents, copyrights, trademarks, franchise rights, and other intangible assets.

5. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables).

Article after Amendment

Article 1:

When acquiring or disposing of the following assets, Formosa Plastics Corporation (hereinafter referred to as the “Company”) and its subsidiaries shall follow the Procedures for Acquisition or Disposal of Assets (hereinafter referred to as the “Procedures”):

1. Investments in stocks, government bonds, corporate bonds, bank debentures, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, asset-backed securities, etc.

2. Real property (including land, houses and buildings, investment property) and equipment.

3. Memberships.

4. Patents, copyrights, trademarks, franchise rights, and other intangible assets.

5. Right-of-use assets.

6. Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables).

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• 6.Derivatives.

7.Derivatives.

7.Assets acquired or disposed through mergers, demergers, acquisitions, or assignment of shares in accordance with law.

8.Assets acquired or disposed through mergers, demergers, acquisitions, or assignment of shares in accordance with law.

• 8.Other major assets.

• 9.Other major assets. Article 2:

Article 2: Article 2: The limit amount of investments for The limit amount of investments for non-operating real property or securities (the non-operating real property and right-of-use original investment), by the Company and each assets or securities (the original investment), by subsidiary, shall not exceed 60% of the book the Company and each subsidiary, shall not value of total assets; for an individual securities exceed 60% of the book value of total assets; investment, the limit amount shall not exceed for an individual securities investment, the limit 50% of the foresaid limit amount, i.e. 30% of amount shall not exceed 50% of the foresaid the book value of total assets. limit amount, i.e. 30% of the book value of total assets.

	assets.
Article 3:	Article 3:
Terms used in these Procedures are defined as	Terms used in these Procedures are defined as
follows:	follows:
1. Derivatives: Forward contracts, options	1. Derivatives: Forward contracts, options
contracts, futures contracts, leverage	contracts, futures contracts, leverage
contracts, swap contracts, and compound	contracts,orswap contracts, whose value is
contracts combining the above products,	derived froma specifiedinterest rate,
whose value is derived from assets, interest	financial instrument price, commodity price,
rates, foreign exchange rates, indexes or	foreign exchangerate, index of prices or
other interests. The term "forward contracts"	rates, credit rating or credit index, or other
does not include insurance contracts,	variable; or hybrid contracts combining the
performance contracts, post-sale service	above contracts; or hybrid contracts or
contracts, long-term lease contract, and	structured products containing embedded
long-term procurement (sales) agreements.	derivatives. The term "forward contracts"
2. Assets acquired or disposed through mergers,	does not include insurance contracts,
demergers, acquisitions, or assignment of	performance contracts, post-sales service
shares in accordance with law: Refers to	contracts, long-term leasing contracts, and
assets acquired or disposed through mergers,	long-term purchase (sales)contracts.
demergers, or acquisitions conducted under	2. Assets acquired or disposed through mergers,
the Business Mergers and Acquisitions Act,	demergers, acquisitions, or assignment of
Financial HoldingCompanyAct,Financial	shares in accordance with law: Refers to

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Institutions Merger Act and other acts, or to shares acquired from another company through issuance of new shares of its own as the consideration therefor (hereinafter "acquisition of shares") under paragraph 8 of Article 156 of the Company Act.

1. Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

2. Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.

3. Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of Board of Directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.

4. Mainland China area investment: Refers to investments in the Mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.

assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institutions Merger Act and other acts, or to shares acquired from another company through issuance of new shares of its own as the consideration therefor (hereinafter "acquisition of shares") under Article 156-3 of the Company Act.

1. Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

2. Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.

3. Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of Board of Directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.

4. Mainland China area investment: Refers to investments in the Mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the

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		Mainland Area.
Article 4: Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Company with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions in relation to the assets acquired or disposed, shall not be a related party of any party to the transaction.		Article 4: Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Company with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions in relation to the assets acquired or disposed, shallmeet the following requirements: 1. May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received. 2. May not be a related party or de facto related party of the Company. 3. If the Company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other.
		1.
		2.
		3.
Article 6: Where an acquisition or disposition of assets of the Company shall be approved by the Board of Directors accordingto the Procedures or other		Article 6: Where an acquisition or disposition of assets of the Company shall be approved by the Board of Directors accordingto the Procedures or other

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relevant laws, the independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

A major asset transaction or a derivatives transaction shall be approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If approval of more than half of all audit committee members is not obtained, the procedures may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

Article 7:

In acquiring or disposing of real property or equipment where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government institution, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions: 1. Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be proposed for approval in advance by the Board of Directors, and the same procedure shall be followed for any future changes to

relevant laws, the independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

A major asset transaction or a major derivatives transaction shall be approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If approval of more than half of all audit committee members is not obtained, the procedures may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

Article 7:

In acquiring or disposing of real property, equipment, or right-of-use assets thereof where the transaction amount reaches 20 percent of the Company's paid-in capital or NT$300 million or more, the Company, unless transacting with a domestic government institution, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment or right-of-use assets thereof for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions: 1. Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be proposed for approval in advance by the

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the terms and conditions of the transaction.

1. Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.

2. Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation of Republic of China (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:

3. (1) The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.

4. (2) The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.

5. No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

Board of Directors; the same procedure shall also be followed for any subsequent changes to the terms and conditions of the transaction.

1. Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.

2. Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation of Republic of China (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:

3. (1) The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.

4. (2) The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.

5. No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have

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			elapsed, an opinion may still be issued by the originalprofessional appraiser.
Article8-1: In acquiring or disposing ofmembership cards orintangible assets where the transaction amount reaches 20 percent or more of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government institution, shall obtain a CPA’s opinion on the reasonableness of the transaction price prior to the date of occurrence of the event. The CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation.			Article9: In acquiring or disposing of intangible assetsor right-of-use assets thereof or membership cards where the transaction amount reaches 20 percent or more of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with adomestic government institution, shall obtain a CPA’s opinion on the reasonableness of the transaction price prior to the date of occurrence of the event. The CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation.
Article8-2: The calculation of the transaction amounts referred to in the preceding three articles shall be done in accordance with paragraph 2 of Article26, herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.			Article10: The calculation of the transaction amounts referred to in the preceding three articles shall be done in accordance with paragraph 2 of Article28,herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.
Article9: Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.			Article11: Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.
Article10: Where the Company acquires or disposes of assets shall be conducted bythe authorization			Article12: Where the Company acquires or disposes of assets shall be conducted bythe authorization

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to the Chairman by the Board of Directors in accordance with the authorization limits of the Company.

Article 11: When the Company engages in any acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised in compliance with the provisions of the Chapter 2 and this Chapter, if the transaction amount reaches 10 percent or more of the Company's total assets, the Company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of Chapter 2. The calculation of the transaction amount referred to in the preceding paragraph shall be made in accordance with Article 8-1. Article 12:

When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the Company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of money market funds issued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the Board of Directors:

to the Chairman by the Board of Directors in accordance with the authorization limits of the Company.

Article 13:

When the Company engages in any acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised in compliance with the provisions of the Chapter 2 and this Chapter, if the transaction amount reaches 10 percent or more of the Company's total assets, the Company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of Chapter 2. The calculation of the transaction amount referred to in the preceding paragraph shall be made in accordance with Article 10.

Article 14:

When the Company intends to acquire or dispose of real property or right-of-use assets thereof from or to a related party, or when it intends to acquire or dispose of assets other than real property or right-of-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the Company's total assets, or NT$300 million or more, except in trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of money market funds issued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been

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	1. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2. The reason for choosing the related party as a trading counterparty. 3. With respect to the acquisition of real property from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article13through15. 4. The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party. 5. Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization. 6. An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article. 7. Restrictive covenants and other important stipulations associated with the transaction. The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with paragraph 2 of Article 26herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the Board of Directors need not be counted toward the transaction amount. With respect to theacquisition or disposal of business-use equipmentbetween the Company	approved by the Board of Directors: 1. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2. The reason for choosing the related party as a trading counterparty. 3. With respect to the acquisition of real propertyor right-of-use assets thereoffrom a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 15through17. 4. The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party. 5. Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization. 6. An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article. 7. Restrictive covenants and other important stipulations associated with the transaction. The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with paragraph 2 of Article 28herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the Board of Directors need not be counted toward the transaction amount.

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and its parent or subsidiaries, the Company's With respect to the types of transactions listed Board of Directors may pursuant to Article 10 below, when to be conducted between the delegate the Chairman to decide such matters Company and its parent or subsidiaries, or when the transaction is within a certain amount between its subsidiaries in which it directly or and have the decisions subsequently proposed indirectly holds 100 percent of the issued shares to and ratified by the next Board of Directors or authorized capital, the Company's Board of meeting. Directors may pursuant to Article 12, delegate When a matter is proposed for discussion by the the Chairman to decide such matters when the Board of Directors pursuant to paragraph 1 of transaction is within a certain amount and have this Article, the independent Directors' opinions the decisions subsequently proposed to and specifically expressing dissent or reservations ratified by the next Board of Directors meeting: about any matter shall be included in the 1. Acquisition or disposal of equipment or minutes of the Board of Directors meeting. right-of-use assets thereof held for business The matters for which paragraph 1 requires use. submitted to the Board of Directors for a 2. Acquisition or disposal of real property resolution shall first be approved by more than right-of-use assets held for business use. half of all audit committee members. If the When a matter is proposed for discussion by the approval by more than half of all audit Board of Directors pursuant to paragraph 1 of committee members is not obtained, the this Article, the independent Directors' opinions aforesaid matter may be implemented if specifically expressing dissent or reservations approved by more than two-thirds of all about any matter shall be included in the Directors, and the resolution of the Audit minutes of the Board of Directors meeting. Committee shall be recorded in the minutes of The matters for which paragraph 1 requires the Board of Directors meeting. submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting. Article 13: Article 15: The Company shall evaluate the reasonableness The Company shall evaluate the reasonableness of the transaction costs by the following means of the transaction costs by the following means

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if it intends to acquire real property from a related party:

1. Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

2. Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.

Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.

When acquiring real property from a related party, the Company shall evaluate the cost of the real property in accordance with paragraph 1 and paragraph 2 and shall also engage a CPA to review the evaluation and render a specific opinion.

if it intends to acquire real property or right-of-use assets thereof from a related party:

1. Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

2. Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.

Where land and structures thereupon are combined as a single property purchased or leased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph. When acquiring real property or right-of-use assets thereof from a related party, the Company shall evaluate the cost of the real property or right-of-use assets thereof in accordance with the preceding two paragraphs and shall also engage a CPA to review the

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		evaluation and render a specific opinion.
Article14: Where the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with Article12, and Article13does not apply: 1. The related party acquired the real property through inheritance or as a gift. 2. More than 5 years have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction. 3.The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.		Article16: Where the Company acquires real propertyor right-of-use assets thereoffrom a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with Article14, and Article15does not apply: 1. The related party acquired the real property or right-of-use assets thereofthrough inheritance or as a gift. 2. More than 5 years have elapsed from the time the related party signed the contract to obtain the real propertyor right-of-use assets thereofto the signing date for the current transaction. 3. The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land. 4. The real property right-of-use assets for business use are acquired by the Company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.
Article15: When the results of the Company's appraisal conducted in accordance with paragraph 1 and paragraph 2 of Article13are uniformly lower than the transaction price, the matter shall be handled in compliance with Article16. However, where the following circumstances exist, and objective evidence has been submitted and specific opinions on		Article17: When the results of the Company's appraisal conducted in accordance with paragraph 1 and paragraph 2 of Article15are uniformly lower than the transaction price, the matter shall be handled in compliance with Article18. However, where the following circumstances exist, and objective evidence has been submitted and specific opinions on

34

re pr A 1.	asonableness have been obtained from a ofessional real property appraiser and a CPA, rticle 16 shall not apply: Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions: (1) Where undeveloped land is appraised in accordance with the means in the preceding two articles, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower. (2)Completedtransactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices. (3) Completed leasing transactions by unrelated parties for other floors of the same property from within the preceding year, where the transaction terms are	reasonableness have been obtained from a professional real property appraiser and a CPA, Article 16 shall not apply: 1. Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions: (1) Where undeveloped land is appraised in accordance with the means in the preceding two articles, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower. (2)Transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property marketsale or leasingpractices. 2. Where the Company acquiring real property, or obtaining real property right-of-use assets through leasing,from a related party provides evidence that the terms of the

reasonableness have been obtained from a professional real property appraiser and a CPA, Article 16 shall not apply:

• 1.Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions:

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similar after calculation of reasonable transaction are similar to the terms of price discrepancies among floors in transactions for the acquisition of accordance with standard property neighboring or closely valued parcels of land leasing market practices. of a similar size by unrelated parties within 2. Where the Company acquiring real property the preceding year. from a related party provides evidence that Transactions for neighboring or closely valued the terms of the transaction are similar to the parcels of land in the preceding paragraph in terms of transactions completed for the principle refers to parcels on the same or an acquisition of neighboring or closely valued adjacent block and within a distance of no more parcels of land of a similar size by unrelated than 500 meters or parcels close in publicly parties within the preceding year. announced current value; transaction for Completed transactions for neighboring or similarly sized parcels in principle refers to closely valued parcels of land in the preceding transactions completed by unrelated parties for paragraph in principle refers to parcels on the parcels with a land area of no less than 50 same or an adjacent block and within a distance percent of the property in the planned of no more than 500 meters or parcels close in transaction; within the preceding year refers to publicly announced current value; transaction the year preceding the date of occurrence of the for similarly sized parcels in principle refers to acquisition of the real property or right-of-use transactions completed by unrelated parties for assets thereof. parcels with a land area of no less than 50 percent of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property.

acquisition of the realproperty.
Article16:	Article18:
Where the Company acquires real property	Where the Company acquires real propertyor
from a related party and the results of appraisals	right-of-use assets thereoffrom a related party
conducted in accordance withArticle 13	and the results of appraisals conducted in
through 15are uniformly lower than the	accordance withthe preceding three Articlesare
transaction price, the following steps shall be	uniformly lower than the transaction price, the
taken:	following steps shall be taken:
1. A special earnings reserve shall be set aside	1. A special earnings reserve shall be set aside
in accordance with paragraph 1 of Article 41	in accordance with paragraph 1 of Article 41
of the Securities and Exchange Act against	of the Securities and Exchange Act against
the difference between the real property	the difference between the real propertyor
transactionprice and the appraised cost,and	right-of-use assets thereoftransactionprice

36

such difference may not be distributed or used for capital increase by issuance of new shares. Where the Company uses the equity method to account for its investment in another company, then the special earnings reserve called for under paragraph 1 of Article 41 of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company.

and the appraised cost, and such difference may not be distributed or used for capital increase by issuance of new shares. Where the Company uses the equity method to account for its investment in another company, then the special earnings reserve called for under paragraph 1 of Article 41 of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company.

1. Audit Committee shall supervise the the other company. Company’s execution of the aforesaid matter. 2. Audit Committee shall supervise the 3. Actions taken pursuant to subparagraph 1 Company’s execution of the aforesaid matter. and subparagraph 2 shall be reported to a 3. Actions taken pursuant to the preceding two shareholders meeting, and the details of the subparagraphs shall be reported to a transaction shall be disclosed in the annual shareholders meeting, and the details of the report and any investment prospectus. transaction shall be disclosed in the annual The Company having set aside a special report and any investment prospectus. earnings reserve under the preceding paragraph The Company having set aside a special may not utilize the special earnings reserve earnings reserve under the preceding paragraph until it has recognized a loss on decline in may not utilize the special earnings reserve market value of the assets it purchased at a until it has recognized a loss on decline in premium, or they have been disposed of, or market value of the assets it purchased or leased adequate compensation has been made, or the at a premium, or they have been disposed of, or status quo ante has been restored, or there is the leasing contract has been terminated, or other evidence confirming that there was adequate compensation has been made, or the nothing unreasonable about the transaction, and status quo ante has been restored, or there is the securities competent authority has given its other evidence confirming that there was consent. nothing unreasonable about the transaction, and When the Company obtains real property from the securities competent authority has given its consent.

When the Company obtains real property from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arm’s length transaction.

When the Company obtains real property or right-of-use assets thereof from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arm’s length

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transaction.

	transaction.
Article17: Any derivatives trading of the Company shall be conducted in accordance with the “Procedures for Engaging in Derivatives Transactions” of the Company, and when doing so, the Company shall pay attention to issues of risk management and auditing to fulfill the Internal Control System of the Company.	Article19: Any derivatives trading of the Company shall be conducted in accordance with the “Procedures for Engaging in Derivatives Transactions” of the Company, and when doing so, the Company shall pay attention to issues of risk management and auditing to fulfill the Internal Control System of the Company.
Article18: The Company that conducts a merger, demerger, acquisition, or assignment of shares shall, prior to convening the Board of Directors to resolve on the matter, engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and propose the opinion to the Board of Directors for deliberation and approval. However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by the company of a subsidiary in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the Company directly or indirectly holds 100 percent of the respective subsidiaries’ issued shares or authorized capital.	Article20: The Company that conducts a merger, demerger, acquisition, or assignment of shares shall, prior to convening the Board of Directors to resolve on the matter, engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and propose the opinion to the Board of Directors for deliberation and approval. However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by the company of a subsidiary in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the Company directly or indirectly holds 100 percent of the respective subsidiaries’ issued shares or authorized capital.
Article19: The Company participating in a merger, demerger, or acquisition shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger,demerger,or acquisitionprior to the	Article21: The Company participating in a merger, demerger, or acquisition shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger,demerger,or acquisitionprior to the

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shareholders meeting, together with the expert opinion referred to in Article 18 when sending notice of the shareholders meeting, for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply. Where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the Company shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

Article 20:

When the Company participates in a merger, demerger, or acquisition, it shall convene a board of directors meeting and shareholders meeting on the same date on which the other companies participating in the merger, demerger, or acquisition convene their board of directors and shareholders meeting to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the securities competent authority is notified in advance of extraordinary circumstances and grants consent. The Company and other companies participating in an assignment of shares shall call their respective board of directors meeting on the same day, unless another act provides otherwise

shareholders meeting, together with the expert opinion referred to in Article 20 when sending notice of the shareholders meeting, for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply. Where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the Company shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

Article 22:

When the Company participates in a merger, demerger, or acquisition, it shall convene a board of directors meeting and shareholders meeting on the same date on which the other companies participating in the merger, demerger, or acquisition convene their board of directors and shareholders meeting to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the securities competent authority is notified in advance of extraordinary circumstances and grants consent. The Company and other companies participating in an assignment of shares shall call their respective board of directors meeting on the same day, unless another act provides

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or the securities competent authority is notified in advance of extraordinary circumstances and grants consent. When the Company participates in a merger, demerger, acquisition, or assignment of shares, it shall prepare a full written record of the following information and retain the record for 5 years for reference. In addition, the information set out in the subparagraphs 1 and 2 of the following paragraph shall be reported in the prescribed format and via the Internet-based information system to the securities competent authority for recordation within two days commencing immediately from the date of passage of a resolution by the Board of Directors.

otherwise or the securities competent authority is notified in advance of extraordinary circumstances and grants consent. When the Company participates in a merger, demerger, acquisition, or assignment of shares, it shall prepare a full written record of the following information and retain the record for 5 years for reference. In addition, the information set out in the subparagraphs 1 and 2 of the following paragraph shall be reported in the prescribed format and via the Internet-based information system to the securities competent authority for recordation within two days commencing immediately from the date of passage of a resolution by the Board of Directors.

1. Basic identification data for personnel: 1. Basic identification data for personnel: Including the occupational titles, names, and Including the occupational titles, names, and national ID numbers (or passport numbers in national ID numbers (or passport numbers in the case of foreign nationals) of all persons the case of foreign nationals) of all persons involved in the planning or implementation involved in the planning or implementation of any merger, demerger, acquisition, or of any merger, demerger, acquisition, or assignment of shares prior to disclosure of assignment of shares prior to disclosure of the information. the information.

2. Dates of material events: Including the 2. Dates of material events: Including the signing of any letter of intent or signing of any letter of intent or memorandum of understanding, the memorandum of understanding, the engagement of a financial or legal advisor, engagement of a financial or legal advisor, the execution of a contract, and the the execution of a contract, and the convening of a board of directors meeting. convening of a board of directors meeting.

3. Important documents and minutes: Including 3. Important documents and minutes: Including merger, demerger, acquisition, and share merger, demerger, acquisition, and share transfer plans, any letter of intent or transfer plans, any letter of intent or memorandum of understanding, material memorandum of understanding, material contracts, and minutes of board of directors contracts, and minutes of board of directors meetings. meetings.

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Where the Company participating in a merger, demerger, acquisition, or assignment of shares is neither listed on an exchange nor has its shares traded on an OTC market, the Company shall enter into an agreement with such party and shall comply with the preceding paragraph of this Article.

Article 21:

Every person participating in or privy to the plan for merger, demerger, acquisition, or assignment of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or assignment of shares. Article 22:

When participating in a merger, demerger, acquisition, or assignment of shares, the Company shall not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or assignment of shares: 1. Capital increase by cash injection, issuance of convertible corporate bonds, or the issuance of stock dividend, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities. 2. An action, such as a disposal of major assets that affects the company's financial operations.

Where the Company participating in a merger, demerger, acquisition, or assignment of shares is neither listed on an exchange nor has its shares traded on an OTC market, the Company shall enter into an agreement with such party and shall comply with the preceding paragraph of this Article.

Article 23:

Every person participating in or privy to the plan for merger, demerger, acquisition, or assignment of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or assignment of shares. Article 24:

• When participating in a merger, demerger, acquisition, or assignment of shares, the Company shall not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or assignment of shares: 1. Capital increase by cash injection, issuance of convertible corporate bonds, or the issuance of stock dividend, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.

• 1. An action, such as a disposal of major assets that affects the company's financial operations.

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1. An event, such as a major disaster or major change in technology that affects shareholder equity or share price.

2. An event, such as a major disaster or major change in technology that affects shareholder equity or share price.

3. An adjustment where any of the companies 4. An adjustment where any of the companies participating in the merger, demerger, participating in the merger, demerger, acquisition, or assignment of shares buys acquisition, or assignment of shares buys back treasury stock. back treasury stock.

4. An increase or decrease in the number of 5.An increase or decrease in the number of entities or companies participating in the entities or companies participating in the merger, demerger, acquisition, or assignment merger, demerger, acquisition, or assignment of shares. of shares.

5. Other terms/conditions that the contract 6. Other terms/conditions that the contract stipulates may be altered and that have been stipulates may be altered and that have been publicly disclosed. publicly disclosed.

Article 23: Article 25: The contract for participation by the Company The contract for participation by the Company in a merger, demerger, acquisition, or in a merger, demerger, acquisition, or assignment of shares shall record the rights and assignment of shares shall record the rights and obligations of the companies participating in obligations of the companies participating in the merger, demerger, acquisition, or the merger, demerger, acquisition, or assignment of shares, and shall also record the assignment of shares, and shall also record the following: following: 1. Handling of breach of contract. 1. Handling of breach of contract. 2. Principles for the handling of equity-type 2. Principles for the handling of equity-type securities previously issued or treasury stock securities previously issued or treasury stock previously bought back by any company that previously bought back by any company that is extinguished in a merger or that is is extinguished in a merger or that is demerged. demerged.

1. The amount of treasury stock participating 3. The amount of treasury stock participating companies are permitted under law to buy companies are permitted under law to buy back after the record date of calculation of back after the record date of calculation of the share exchange ratio, and the principles the share exchange ratio, and the principles for handling thereof. for handling thereof.

2. The manner of handling changes in the 4. The manner of handling changes in the number of participating entities or number of participating entities or companies. companies.

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1. Preliminary progress schedule for plan execution, and anticipated completion date.

2. Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

Article 24:

After public disclosure of the information, if the Company participating in the merger, demerger, acquisition, or assignment of shares intends further to carry out a merger, demerger, acquisition, or assignment of shares with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or assignment of share ; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the Board of Directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

Article 25:

Where any of the companies participating in a merger, demerger, acquisition, or assignment of shares is not a public company, the Company shall sign an agreement with the non-public company in accordance with the provisions of Article 20, Article 21, and Article 24.

Article 26:

Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant

1. Preliminary progress schedule for plan execution, and anticipated completion date.

2. Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

Article 26:

After public disclosure of the information, if the Company participating in the merger, demerger, acquisition, or assignment of shares intends further to carry out a merger, demerger, acquisition, or assignment of shares with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or assignment of share ; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the Board of Directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

Article 27:

Where any of the companies participating in a merger, demerger, acquisition, or assignment of shares is not a public company, the Company shall sign an agreement with the non-public company in accordance with the provisions of Article 22, Article 23, and Article 26.

Article 28:

Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant

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• information on the securities competent information on the securities competent authority's designated website in the authority's designated website in the appropriate format as prescribed by regulations appropriate format as prescribed by regulations within 2 days commencing immediately from within 2 days commencing immediately from the date of occurrence of the event: the date of occurrence of the event: 1. Acquisition or disposal of real property from 1. Acquisition or disposal of real property or or to a related party, or acquisition or right-of-use assets thereof from or to a disposal of assets other than real property related party, or acquisition or disposal of from or to a related party where the assets other than real property or right-of-use transaction amount reaches 20 percent or assets thereof from or to a related party more of paid-in capital, 10 percent or more where the transaction amount reaches 20 of the Company's total assets, or NT$300 percent or more of paid-in capital, 10 percent million or more; provided, this shall not or more of the Company's total assets, or apply to trading of government bonds or NT$300 million or more; provided, this shall bonds under repurchase and resale not apply to trading of domestic government agreements, or subscription or repurchase of bonds or bonds under repurchase and resale money market funds issued by domestic agreements, or subscription or repurchase of securities investment trust enterprises. money market funds issued by domestic

• 1. Merger, demerger acquisition, or assignment securities investment trust enterprises. of shares. 2. Merger, demerger, acquisition, or assignment
• 1. Losses from derivatives trading reaching the of shares. limits on aggregate losses or losses on 3. Losses from derivatives trading reaching the individual contracts set out in the procedures limits on aggregate losses or losses on adopted by the Company. individual contracts set out in the procedures
• 1. Where the type of asset acquired or disposed adopted by the Company. is equipment/machinery for business use, the 4. Where equipment/machinery or right-of-use trading counterparty is not a related party, assets thereof for business use are acquired or and the transaction amount is more than disposed of, and furthermore the trading NT$1 billion. counterparty is not a related party, and the
• 1. Where land is acquired under an arrangement transaction amount is more than NT$1 on engaging others to build on the company's billion. own land, engaging others to build on rented 5.Where land is acquired under an arrangement land, joint construction and allocation of on engaging others to build on the company's housing units, joint construction and own land, engaging others to build on rented allocation of ownership percentages, or joint land, joint construction and allocation of construction and separate sale, and the housing units,g units, units,, joint construction and allocation oint construction and allocation

• 5.Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units,g units, units,, joint construction and allocation oint construction and allocation

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• amount the Company expects to invest in the of ownership percentages, or joint transaction is more than NT$500 million. construction and separate sale, and

• 1. An asset transaction other than any of those furthermore the trading counterparty is not a referred to in the preceding five related party, and the amount the Company subparagraphs, a disposal of receivables by a expects to invest in the transaction is more financial institution, or an investment in the than NT$500 million. mainland China area where the transaction 6. An asset transaction other than any of those amount reaches 20 percent or more of paid-in referred to in the preceding five capital or NT$300 million or more, provided subparagraphs, a disposal of receivables by a this shall not apply to the following financial institution, or an investment in the circumstances: mainland China area where the transaction (1) Trading of government bonds. amount reaches 20 percent or more of paid-in (2) Trading of bonds under repurchase/resale capital or NT$300 million or more, provided agreements or the subscription or this shall not apply to the following circumstances:

• (2) Trading of bonds under repurchase/resale agreements or the subscription or repurchase of money market funds issued by domestic securities investment trust enterprises.

• The amount of transactions above shall be calculated as follows: 1.The amount of any individual transaction.

• (1) Trading of domestic government bonds. (2) Trading of bonds under repurchase/resale agreements or the subscription or repurchase of money market funds issued by domestic securities investment trust enterprises.

• 2.The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year.

• The amount of transactions above shall be calculated as follows:

• The amount of any individual transaction. 2. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year.

• 3.The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year.

• The cumulative transaction amount of real property or right-of-use assets thereof acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year.

• 4.The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

• "Within the preceding year" as used in the paragraph 2 refers to the year preceding the date of occurrence of the current transaction.

• The cumulative transaction amount of acquisitions and disposals (cumulative

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	Items duly announced in accordance with these Procedures need not be counted toward the transaction amount.		acquisitions and disposals, respectively) of the same security within the preceding year. "Within the preceding year" as used in the paragraph 2 refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Procedures need not be counted toward the transaction amount.
	Article27: When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days from the date when is the Company becomes aware of the error or omission.		Article29: When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days from the date when is the Company becomes aware of the error or omission.
	Article28: The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company headquarters, where they shall be retained for 5 years except where another act provides otherwise.		Article30: The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company headquarters, where they shall be retained for 5 years except where another act provides otherwise.
	Article29: Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with theArticle 26 through 28,a public report of relevant information shall be made on the information reporting website designated by the securities competent authority within 2 days commencing immediately from the date of occurrence of the event:		Article31: Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with thepreceding three Articles,a public report of relevant information shall be made on the information reporting website designated by the securities competent authority within 2 days commencing immediately from the date of occurrence of the event:

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1. Change, termination, or rescission of a 1. Change, termination, or rescission of a contract signed in regard to the original contract signed in regard to the original transaction. transaction.

1. Change, termination, or rescission of a contract signed in regard to the original transaction.	1. Change, termination, or rescission of a contract signed in regard to the original transaction.	1. Change, termination, or rescission of a contract signed in regard to the original transaction.
	2. The merger, demerger, acquisition, or assignment of shares is not completed by the scheduled date set forth in the contract. 3. Change to the originally publicly announced and reported information.	2. The merger, demerger, acquisition, or assignment of shares is not completed by the scheduled date set forth in the contract. 3. Change to the originally publicly announced and reported information.
	Article30: Information required to be publicly announced and reported in accordance with the provisions of Chapter6on acquisitions and disposals of assets by a subsidiary of the Company that is not a public company in Taiwan shall be reported by the Company. The paid-in capital or total assets of the Company shall be the standard for determining whether or not a subsidiary referred to in the preceding paragraph is subject toparagraph 1 of Article 26requiring a public announcement and regulatory filingin the event the type of transaction specified therein reaches 20 percent of paid-in capital or 10 percent of the total assets.	Article32: Information required to be publicly announced and reported in accordance with the provisions ofthe precedingChapter on acquisitions and disposals of assets by a subsidiary of the Company that is not a public company in Taiwan shall be reported by the Company. The paid-in capital or total assets of the Company shall be the standard for determining whether or not a subsidiary referred to in the preceding paragraph is subject tothe threshold requiring a public announcement and regulatory filingunder paragraph 1 of Article 28.
	Article31: The Company’s controlling and monitoring procedures towards the acquisition or disposal of assets by its subsidiaries are as follows: 1. The Company shall urge its subsidiaries to establish and execute their own “Procedures for Acquisition of Disposal of Assets”. 2. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall deliver a written notice to the Company of this kind of violation. The Companyshall know the condition of dealing	Article33: The Company’s controlling and monitoring procedures towards the acquisition or disposal of assets by its subsidiaries are as follows: 1. The Company shall urge its subsidiaries to establish and execute their own “Procedures for Acquisition of Disposal of Assets”. 2. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall deliver a written notice to the Company of this kind of violation. The Companyshall know the condition of dealing

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with the violation(s) and of the resulting improvements.	with the violation(s) and of the resulting improvements.
Article32: Should there be any violation of the procedures when the persons-in-charge of the Company deal with acquisition or disposal of assets, subsequent penalization is subject to the relevant HRpolicies of the Company.	Article34: Should there be any violation of the procedures when the persons-in-charge of the Company deal with acquisition or disposal of assets, subsequent penalization is subject to the relevant HRpolicies of the Company.
Article 33: (Deleted)
Article34: For the calculation of 10 percent of total assets under this Procedures, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.	Article35: For the calculation of 10 percent of total assets under this Procedures, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.
Article35: After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the procedures may be implemented if approved by more than two-thirds of all Directors,and the	Article36: After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the procedures may be implemented if approved by more than two-thirds of all Directors,and the

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	resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.	resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

Resolution:

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Discussion Items Proposal 2

Proposal: Amendment to the Procedures for Engaging in Derivatives Transactions of the Company submitted for discussion.

Proposed by the Board of Directors Explanation: To comply with the requirements provided in the order Jin-Guan-Zheng-Fa-Zi No. 1070341072 dated November 26, 2018 by the Financial Supervisory Commission, certain articles of the Procedures for Engaging in Derivatives Transactions of the Company have been amended. The comparison table for articles before and after amendment is hereby attached. Please determine whether the amendments are reasonable.

Article before Amendment

Article 1:

The “Procedures for Engaging in Derivatives Transactions” (hereinafter referred to as the “Procedures”) of Formosa Plastics Corporation (hereinafter referred to as the “Company”) was established in accordance with Article 17 of the “Procedures for Acquisition or Disposal of Assets” of the Company.

Article 2:

Derivatives referred to herein are defined as forward contracts, options contracts, futures contracts, leverage contracts, swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests.

Article after Amendment

Article 1:

The “Procedures for Engaging in Derivatives Transactions” (hereinafter referred to as the “Procedures”) of Formosa Plastics Corporation (hereinafter referred to as the “Company”) was established in accordance with Article 19 of the “Procedures for Acquisition or Disposal of Assets” of the Company.

Article 2:

Derivatives referred to herein are defined as forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived from a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives.

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Article 3:

Forward contracts referred to herein do not include insurance contracts, performance contracts, after-sales service contracts, long-term lease contracts, and long-term purchase (sales) contracts.

Article 14: The derivatives trading positions of the Company shall be evaluated at least once a week by the in-charge department, but the hedging transactions made for business purposes shall be evaluated at least twice a month. The manager of the in-charge department shall pay attention to the risk control and monitoring of derivatives transactions from time to time, and periodically supervise and evaluate the derivatives transactions to check whether they are conducted in accordance with the related procedures formulated by the Company hereof and whether the attendant risk of these transactions is within the capability of the Company. The foresaid evaluation reports shall be given to a high-level manager(s) authorized by the Board of Directors for review. If there is any abnormal situation highlighted in the market evaluation reports (e.g. the holding position has reached the maximum loss limit), the Company shall immediately take necessary measures to deal with the situation and report to the Board of Directors. There shall be independent directors attending the Board of Directors meeting and expressing their opinions.

Article 3:

Forward contracts referred to herein do not include insurance contracts, performance contracts, after-sales service contracts, long-term lease contracts, and long-term purchase (sales) contracts.

Article 14:

The derivatives trading positions of the Company shall be evaluated at least once a week by the in-charge department, but the hedging transactions made for business purposes shall be evaluated at least twice a month. The manager of the in-charge department shall pay attention to the risk control and monitoring of derivatives transactions from time to time, and periodically supervise and evaluate the derivatives transactions to check whether they are conducted in accordance with the related procedures formulated by the Company hereof and whether the attendant risk of these transactions is within the capability of the Company. The foresaid evaluation reports shall be given to a high-level manager(s) authorized by the Board of Directors. If there is any abnormal situation highlighted in the market evaluation reports (e.g. the holding position has reached the maximum loss limit), the Company shall immediately take necessary measures to deal with the situation and report to the Board of Directors. There shall be independent directors attending the Board of Directors meeting and expressing their opinions.

Resolution:

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Discussion Items Proposal 3

Proposal: Amendment to the Procedures for Loaning Funds to other Parties of the Company submitted for discussion.

Proposed by the Board of Directors Explanation: To comply with the requirements provided in the order Jin-Guan-Zheng-Shen-Zi No. 1080304826 dated March 7, 2019 by the Financial Supervisory Commission, certain articles of the Procedures for Loaning Funds to other Parties of the Company have been amended. The comparison table for articles before and after amendment is hereby attached. Please determine whether the amendments are reasonable.

Article before Amendment

Article after Amendment

Article 6: Article 6: The tenor of the loan shall not be longer than The tenor of the loan shall not be longer than one year in the case the borrower does not have one year. The interest rates of the loans shall business relationship with the Company but has not be lower than the then current lowest a short-term necessary financing facility. The lending interest rates announced by the general interest rates of the loans shall not be lower than financial institutions. the then current lowest lending interest rates announced by the general financial institutions. Article 8: (Article deleted) A loan to the borrower may be extended for a certain period, provided the extension of the loan has been approved by the Board of Directors. The total duration of the loan after the above-mentioned extension shall meet the requirement of Article 6. If the extension of the loan is not approved by the Board of Directors, the borrower shall repay the principal and the accrued interests in full on the due date. If the borrower fails to perform, the Company shall claim the overdue amount via legal proceedings. Article 9: Article 8: The Company shall prepare a memorandum The Company shall prepare a memorandum

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book for its fund-loaning activities and truthfully record the following information: borrower, amount, date of approval by the Board of Directors, lending/borrowing date, and matters to be carefully evaluated.

Article 10:

The Company's internal auditors shall audit the Procedures for Loaning Funds to other Parties and the implementation thereof no less frequently than quarterly and prepare written records accordingly. During the auditing, the internal auditor shall immediately correct violation(s) upon finding any violation. If any material violation is found, in addition to notifying the Audit Committee promptly in writing, the personnel who violate the Procedures shall be penalized in accordance with the related rules of the Company. Article 11:

book for its fund-loaning activities and truthfully record the following information: borrower, amount, date of approval by the Board of Directors, lending/borrowing date, and matters to be carefully evaluated.

Article 9:

The Company's internal auditors shall audit the Procedures for Loaning Funds to other Parties and the implementation thereof no less frequently than quarterly and prepare written records accordingly. During the auditing, the internal auditor shall immediately correct violation(s) upon finding any violation. If any material violation is found, in addition to notifying the Audit Committee promptly in writing, the personnel who violate the Procedures shall be penalized in accordance with the related rules of the Company.

Article 10:

If, as a result of a change in circumstances, an If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is entity for which an endorsement/guarantee is made does not meet the requirements of the made does not meet the requirements of the Procedures or the loan balance exceeds the Procedures or the loan balance exceeds the limit, the Company shall adopt rectification limit, the Company shall adopt rectification plans and submit the rectification plans to the plans and submit the rectification plans to the Audit Committee for its approval and then to Audit Committee for its approval and then to the Board of Directors for a resolution, and shall the Board of Directors for a resolution, and complete the rectification according to the shall complete the rectification according to the timeframe set out in the plan. timeframe set out in the plan. Article 12: Article 11: Procedures for controlling and managing loans Procedures for controlling and managing loans of funds to others by subsidiaries of the of funds to others by subsidiaries of the Company are as follows: Company are as follows: 1. Where a subsidiary of the Company intends 1. Where a subsidiary of the Company intends to make loans to others, the Company shall to make loans to others, the Company shall instruct it to formulate its own Procedures for instruct it to formulate its own Procedures

53

	Loaning Funds to other Parties in compliance with Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, and it shall comply with the Procedures when loaning funds. 2. The subsidiaries shall compile and submit the schedule, including the details and status of fund-lending as of the end of the previous month to the Company for review by the fifth day of the current month. 3. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall promptly notify the Company in writing of any material violation found. The Company shall know how the subsidiary deals with the violation(s), admonish the subsidiary to improve and keep itself informed of the improvementprocess.	for Loaning Funds to other Parties in compliance with Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, and it shall comply with the Procedures when loaning funds. 2. The subsidiaries shall compile and submit the schedule, including the details and status of fund-lending as of the end of the previous month to the Company for review by the fifth day of the current month. 3. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall promptly notify the Company in writing of any material violation found. The Company shall know how the subsidiary deals with the violation(s), admonish the subsidiary to improve and keep itself informed of the improvementprocess.
	Article13: The Company shall announce and report the related information of fund-lending to others in compliance with the following requirements: 1. The Company shall enter the previous month's loan balances of its head officeand subsidiariesto the information reporting website designated by the securities competent authority by the 10th day of each month. 2. The company whose loans of funds reach one of the following levels shall announce and report such event on the information reporting website designated by the securities competent authority within two days commencing immediately from the date of occurrence:	Article12: The Company shall announce and report the related information of fund-lending to others in compliance with the following requirements: 1. The Company and subsidiariesshall publicly announce and report the information of fund-lending in accordance with the relevant laws, rules and regulations. 2. The Company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report. The percentage of the aggregate balance of loans to others over net worth of the subsidiary shall be calculated as the subsidiary’s balance of loans to others to the Company’s net worth.

54

(1) The aggregate balance of loans to others 3. The Company shall evaluate the status of its by the Company and its subsidiaries fund-lending and reserve sufficient reaches 20 percent or more of the allowance for bad debts, and shall Company's net worth as stated in its latest adequately disclose relevant information in financial statement. its financial reports and provide certified (2) The balance of loans by the Company and public accountants with relevant information its subsidiaries to a single enterprise for implementation of necessary audit reaches 10 percent or more of the procedures.

(2) The balance of loans by the Company and its subsidiaries to a single enterprise reaches 10 percent or more of the Company's net worth as stated in its latest financial statement.

(3) The amount of new loans of funds by the Company or its subsidiaries reaches NT$10 million or more, and reaches 2 percent or more of the Company's net worth as stated in its latest financial statement.

1. The Company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to subparagraphs of the preceding paragraph. The percentage of the aggregate balance of loans to others over net worth of the above-mentioned subsidiary shall be calculated as the subsidiary’s balance of loans to others to the Company’s net worth.

2. The Company shall evaluate the status of its fund-lending and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary audit procedures. Article 14: Article 13: After the Procedures are approved by the Board After the Procedures are approved by the Board

55

	of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedures. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.	of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedures. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

Resolution:

56

Discussion Items Proposal 4

Proposal: Amendment to the Procedures for Providing Endorsements and Guarantees to other Parties of the Company submitted for discussion.

Proposed by the Board of Directors Explanation: To comply with the requirements provided in the order Jin-Guan-Zheng-Shen-Zi No. 1080304826 dated March 7, 2019 by the Financial Supervisory Commission, certain articles of the Procedures for Providing Endorsements and Guarantees to other Parties of the Company have been amended. The comparison table for articles before and after amendment is hereby attached. Please determine whether the amendments are reasonable.

reasonable.
Article before Amendment	Article after Amendment
Article 4: The ceiling on the total outstanding amount of making endorsements or guarantees of the Company or the Company and its subsidiaries: 1. The aggregate amount of making endorsements or guarantees shall not exceed 1.3 times of the net value of the Company. 2. For any one endorsee or guarantee, the amount shall not exceed 50% of the aggregate amount above. 3. The total outstanding amount of endorsement to each of the companies, which has a business relationship with the Company, shall not exceed the total transaction amount between the two parties. The foresaid “total transaction amount” shall be the total purchasing or selling amount or contract price, whichever is highest, provided that the highest amount shall in no event exceed the amount set forth in theprecedingitem.	Article 4: The ceiling on the total outstanding amount of making endorsements or guarantees of the Company or the Company and its subsidiaries: 1. The aggregate amount of making endorsements or guarantees shall not exceed 1.3 times of the net value of the Company. 2. For any one endorsee or guarantee, the amount shall not exceed 50% of the aggregate amount above. 3. The total outstanding amount of endorsement to each of the companies, which has a business relationship with the Company, shall not exceed the total transaction amount between the two parties. The foresaid “total transaction amount” shall be the total purchasing or selling amount or contract price, whichever is highest, provided that the highest amount shall in no event exceed the amount set forth in theprecedingitem.

57

Where the Company needs to exceed the limits set out in the Procedures to satisfy its business needs, it shall obtain approval from the Board of Directors and half or more of the directors shall act as joint guarantors for any loss that may be caused to the Company by the excess endorsement or guarantee. It shall also amend the Procedures accordingly and submit the same to the Shareholders Meeting for ratification. If the shareholders meeting does not give consent, the Company shall adopt a plan to discharge the amount in excess within a given time limit.

Where as a result of changes of condition the entity for which an endorsement/guarantee is made no longer meets the requirements of the Procedures, or the amount of endorsement/guarantee exceeds the limit, the Company shall adopt rectification plans and submit the rectification plans to the Audit Committee and to the Board of Directors for a resolution, and shall complete the rectification according to the timeframe set out in the plan. Article 10:

The Company shall enter the previous month's balance of endorsements/guarantees of itself and its subsidiaries to the information reporting website designated by the securities competent authority by the 10th day of each month. Article 11: In addition to announcing and reporting the monthly balance of endorsements/guarantees in compliance with Article 10, in the event that the amount of the Company's endorsements/guarantees reaches one of the following levels, the Company shall announce

Where the Company needs to exceed the limits set out in the Procedures to satisfy its business needs, it shall obtain approval from the Board of Directors and half or more of the directors shall act as joint guarantors for any loss that may be caused to the Company by the excess endorsement or guarantee. It shall also amend the Procedures accordingly and submit the same to the Shareholders Meeting for ratification. If the shareholders meeting does not give consent, the Company shall adopt a plan to discharge the amount in excess within a given time limit.

Where as a result of changes of condition the entity for which an endorsement/guarantee is made no longer meets the requirements of the Procedures, or the amount of endorsement/guarantee exceeds the limit, the Company shall adopt rectification plans and submit the rectification plans to the Audit Committee and to the Board of Directors for a resolution, and shall complete the rectification according to the timeframe set out in the plan.

Article 10: The Company and its subsidiaries shall publicly announce and report the information of endorsements/guarantees in accordance with the relevant laws, rules and regulations.

(Article deleted)

58

and report such event on the information reporting website designated by the securities competent authority within two days commencing immediately from the date of occurrence: 1. The aggregate amount of endorsements/guarantees by the Company and its subsidiaries reaches 50 percent or more of the Company's net worth as stated in its latest financial statement. 2. The amount of endorsements/guarantees by the Company and its subsidiaries for any single enterprise reaches 20 percent or more of the Company's net worth as stated in its latest financial statement. 3. The amount of endorsements/guarantees by the Company and its subsidiaries for any single enterprise reaches NT$10 million or more and the aggregate amount of all endorsements/guarantees, long-term investment, and loans to that enterprise reaches 30 percent or more of the Company's net worth as stated in its latest financial statement. 4. The amount of new endorsements/guarantees made by the Company or its subsidiaries reaches NT$30 million or more, and reaches 5 percent or more of the Company's net worth as stated in its latest financial statement.

Article 12:

The Company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to the

Article 11:

The Company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report. The percentage of the

59

	subparagraphs of Article 11. The percentage of the balance of endorsements/guarantees over the net worth of the Companyunder the preceding paragraphshall be calculated by the ratio of the subsidiary's balance of endorsements/guarantees to the Company's net worth.	balance of endorsements/guarantees over the net worth of the Company shall be calculated by the ratio of the subsidiary's balance of endorsements/guarantees to the Company's net worth.
	Article13: The Company shall evaluate or record the contingent loss for endorsements/guarantees, and shall adequately disclose information on endorsements/guarantees in its financial reports and provide its certified public accountants with relevant information for implementation of necessary auditing procedures to issue proper audit reports.	Article12: The Company shall evaluate or record the contingent loss for endorsements/guarantees, and shall adequately disclose information on endorsements/guarantees in its financial reports and provide its certified public accountants with relevant information for implementation of necessary auditing procedures to issue proper audit reports.
	Article14: After the Procedures are approved by the Board of Directors, the same shall be submitted for approval by the shareholders meeting before its implementation. Any amendment is subject to the same procedures. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of	Article13: After the Procedures are approved by the Board of Directors, the same shall be submitted for approval by the shareholders meeting before its implementation. Any amendment is subject to the same procedures. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of

60

the Board of Directors meeting.

the Board of Directors meeting.

Resolution:

61

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4000 Operating revenue (Notes 6(q)(r) and 7) 5000 Operating costs (Notes 6(f)(h)(m)(s) and 7) Gross profit Operating expenses (Notes 6(d)(h)(m)(s) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses Total operating expenses Operating income Non-operating income and expenses (Notes 6(d)(g)(h)(t) and 7): 7010 Other income 7020 Other gains and losses 7050 Finance costs 7060 Recognized share of profit of associates and joint ventures accounted for using equity method, net Total non-operating income and expenses Income before income tax 7950 Less: income tax expense (Note 6(n)) Net income 8300 Other comprehensive income(Notes 6(m)(n)(o)): 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains from investments in equity instruments measured at fair value through other comprehensive income 8320 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss Total amount of items that could not be reclassified subsequently to profit or loss 8360 Components of other comprehensive income that will be reclassified subsequently to profit or loss 8361 Exchange differences on translation 8362 Unrealized gains on valuation of available-for-sale financial assets 8370 Share of other comprehensive income of associates and joint ventures accounted for using equity method, components of other comprehensive income that will be reclassified to profit or loss 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Total amount of components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income, net 8500 Total comprehensive income Basic earnings per share (Note 6(p)) -before/after income tax	2018	2018	% 100 84	% 100 84	2017	% 100 84
	Amount $ 230,370,027 193,061,959				Amount 206,709,755 173,240,579
	37,308,068		16		33,469,176	16
	6,115,295 4,713,287 1,138,174		3 2 -		5,778,400 4,784,185 968,395	3 2 -
	11,966,756		5		11,530,980	5
	25,341,312		11		21,938,196	11
	8,344,017 807,515 (1,480,040) 24,079,572		4 - (1) 10		6,241,452 (1,642,268) (1,527,802) 29,894,765	3 (1) (1) 14
	31,751,064		13		32,966,147	15
	57,092,376 7,542,836		24 3		54,904,343 5,521,490	26 3
	49,549,540		21		49,382,853	23
	(285,593) (12,003,865) (4,615,730) 169,178		- (5) (2) -		(577,649) - (121,817) 98,200	- - - -
	(16,736,010)		(7)		(601,266)	-
	1,770,369 - 392,426 (522,685)		1 - - -		(6,363,713) 14,838,705 2,508,328 1,236,221	(3) 7 1 1
	1,640,110		1		12,219,541	6
	(15,095,900)		(6)		11,618,275	6
	$ 34,453,640		15		61,001,128	29
	Before	After			Before
	$ 8.97 7.78

62

(English Translation of Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

Statements of Comprehensive Income

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

4000 Net sales revenue (Notes 6(q)(r) and 7) 5000 Operating costs (Notes 6(f)(h)(m)(s) and 7) Gross profit 5920 Add: Realized profit (loss) on from sales Gross profit from operations Operating expenses (Notes 6(d)(h)(m)(s) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses Total operating expenses Operating income Non-operating income and expenses (Notes 6(d)(g)(h)(t) and 7): 7010 Other income 7020 Other gains and losses 7050 Finance costs 7070 Share of profit (loss) of associates and joint ventures accounted for using equity method, net Total non-operating income and expenses Income before income tax 7950 Less: income tax expense (Note 6(n)) Profit (loss) 8300 Other comprehensive income: (Note 6(m)(n)(o)) 8310 Components of other comprehensive income that will not be reclassified to profit or loss 8311 Gains (losses) on remeasurements of defined benefit plans 8316 Unrealized gains (losses) from investments in equity instruments measured at fair value through other comprehensive income 8330 Share of other comprehensive income of subsidiaries, associates and joint ventures accounted for using equity method, components of other comprehensive income that will not be reclassified to profit or loss 8349 Income tax related to components of other comprehensive income that will not be reclassified to profit or loss 8360 Other components of other comprehensive income that will not be reclassified to profit or loss 8361 Exchange differences on translation 8362 Unrealized gains (losses) on valuation of available-for-sale financial assets 8368 Gains (losses) on hedging instrument 8399 Income tax related to components of other comprehensive income that will be reclassified to profit or loss Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income, net Total comprehensive income 9710 Basic earnings per share -before income tax (Note 6(p))	2018	%		2017	% 100 83
	Amount $ 189,246,407 155,626,259			Amount 170,273,933 140,753,716
	33,620,148 (16,848)	18 -		29,520,217 13,195	17 -
	33,603,300	18		29,533,412	17
	5,028,586 4,437,166 1,138,174	3 2 1		4,750,260 4,524,232 968,395	3 3 -
	10,603,926	6		10,242,887	6
	22,999,374	12		19,290,525	11
	8,282,421 2,412,543 (968,554) 24,320,374	4 1 - 13		6,182,632 (2,270,887) (964,044) 32,631,087	4 (1) (1) 19
	34,046,784	18		35,578,788	21
	57,046,158 7,496,618	30 4		54,869,313 5,486,460	32 3
	49,549,540	26		49,382,853	29
	(285,593) (10,491,380) (6,128,215) 169,178	- (6) (3) -		(577,649) - (121,817) 98,200	- - - -
	(16,736,010)	(9)		(601,266)	-
	1,770,369 - 392,426 (522,685)	1 - - -		(6,363,713) 14,838,705 2,508,328 1,236,221	(4) 9 1 1
	1,640,110	1		12,219,541	7
	(15,095,900)	(8)		11,618,275	7
	$ 34,453,640	18		61,001,128	36
	$ 8.96	7.78		8.62	7.76

63

		December 31, 2017	Amount %			14,921,759 3	9,495,509 2	4,052,981 1	8,452,435 2	3,480,988 1	5,424,029 1	5,696,600 1	6,737,722 1	13,012,233 3	13,012,233 3	71,274,256 15	71,274,256 15				27,861,638 6	9,893,975 2	14,464,611 3	7,262,543 2	303,847 -	303,847 -	59,786,614 13	59,786,614 13	131,060,870 28	131,060,870 28			63,657,408 13	63,657,408 13	11,649,929 2	11,649,929 2		52,165,530 11	51,285,206 11	78,699,082 17	78,699,082 17	182,149,818 39	182,149,818 39	87,553,011 18 345,010,166 72	87,553,011 18 345,010,166 72	87,553,011 18 345,010,166 72	87,553,011 18 345,010,166 72	87,553,011 18 345,010,166 72	476,071,036 100	476,071,036 100
		December 31, 2018	Amount %			20,398,302 4	11,995,636 3	4,278,011 1	7,866,286 2	4,739,699 1	11,390,216 2	4,598,557 1	4,541,715 1	13,242,719 3		83,051,141 18					32,556,004 6	6,281,339 1	16,670,784 4	7,123,118 1	262,880 -		62,894,125 12		145,945,266 30				63,657,408 13		11,713,842 2			57,103,815 11	58,778,533 12	82,499,843 16		198,382,191 39		81,814,560 16 355,568,001 70					501,513,267 100
						$																																											$
			Liabilities and Equity		Current liabilities:	Short-term borrowings (Notes 6(i))	Short-term notes and bills payable (Note 6(j))	Accounts payable	Accounts payable－related parties (Note 7)	Other payables	Other payables－related parties (Note 7)	Current portion of bonds payable (Note 6(l))	Current portion of long-term debts (Notes 6(k) and 8)	Other current liabilities (Note 7)		Total current liabilities			Non-Current liabilities:		Bonds payable (Note 6(l))	Long-term debts (Notes 6(k) and 8)	Deferred tax liabilities(Note 6(n))	Net defined benefit liabilities(Note 6(m))	Other liabilities (Note 6(g))		Total non-current liabilities		Total liabilities		Equity (Note 6(o)):		Common stock		Capital surplus		Retained earnings:	Legal reserve	Special reserve	Unappropriated retained earnings		Total retained earnings		Other components of equity Total equity					Total liabilities and equity
						2100	2110	2170	2180	2200	2220	2321	2322	2399							2530	2540	2570	2640	2670								3110		3200			3310	3320	3350				3400
December 31, 2017	Amount %		18,165,145 4			- -	- -	111,581,327 23	3,051,878 1	7,971,516 2	4,911,470 1	1,304,199 -	15,665,975 3	17,617,600 4		3,943,126 1			184,212,236 39			- -	18,538,315 4	194,029,840 41	69,094,450 14		431,315 -		2,156,300 -		7,608,580 2		291,858,800 61													476,071,036 100
December 31, 2018	Amount %		23,310,772 5			4,017,249 1	98,426,404 20	- -	2,432,446 -	9,422,032 2	4,295,591 1	1,381,590 -	16,692,844 3	20,756,740 4		3,526,561 1			184,262,229 37			26,542,369 5	- -	203,967,598 42	76,618,563 15		430,613 -		2,455,815 -		7,236,080 1		317,251,038 63													501,513,267 100
			$																																											$
	Assets	Current assets:	Cash and cash equivalents (Note 6(a))			Current financial assets at fair value through profit or loss (Note 6(b)) Current financial assets at fair value through other comprehensive income (Note 6(b))		Available-for-sale financial assets－current (Note 6(c))	Notes receivable (Notes 6(d)(q))	Accounts receivable, net (Notes 6(d)(q))	Accounts receivable－related parties (Notes 6(d)(q) and 7)	Other receivables (Note 6(e))	Other receivables－related parties (Notes 6(e) and 7)	Inventories (Note 6(f))		Other current assets			Total current assets		Financial assets at fair value through other comprehensive income-non-current(Note	6(b))	Financial assets carried at cost－non-current	Investments accounted for using equity method (Notes 6(g) and 8)	Property, plant and equipment (Notes 6(h), 7 and 8)		Intangible assets		Deferred tax assets		Other assets (Notes 7 and 8)		Total non-current assets													Total assets
			1100			1110 1120		1125	1150	1170	1180	1200	1210	130X		1470					1517		1543	1550	1600		1780		1840		1900

64

December 31, 2017	Amount %			8,347,337 2	9,495,509 2		2,873,396 1		8,522,863 2	3,387,704 1	1,107,851 -	5,696,600 1	4,084,327 1	11,266,843 2	11,266,843 2	54,782,430 12	54,782,430 12			27,861,638 6	27,861,638 6	5,813,038 1	14,464,611 3	14,464,611 3	7,262,543 2	277,154 -	277,154 -	55,678,984 12	55,678,984 12	110,461,414 24	110,461,414 24		63,657,408 14 11,649,929 3	63,657,408 14 11,649,929 3	63,657,408 14 11,649,929 3	63,657,408 14 11,649,929 3		52,165,530 12	51,285,206 11	78,699,082 17	78,699,082 17	182,149,818 40	182,149,818 40	87,553,011 19	87,553,011 19	345,010,166 76	345,010,166 76	455,471,580 100	455,471,580 100
December 31, 2018	Amount %			$ 14,343,680 3	11,995,636 3		2,871,571 1		7,947,619 2	4,570,797 1	1,167,103 -	4,598,557 1	2,284,327 -	10,899,670 2		60,678,960 13				32,556,004 7		4,628,711 1	16,670,784 3		7,123,118 2	158,998 -		61,137,615 13		121,816,575 26			63,657,408 13 11,713,842 3					57,103,815 12	58,778,533 12	82,499,843 17		198,382,191 41		81,814,560 17		355,568,001 74		$ 477,384,576 100
	Liabilities and Equity		Current liabilities:	Short-term borrowings (Notes 6(i))	Short-term notes and bills payable (Note 6(j))		Accounts payable		Accounts payable－related parties (Note 7)	Other payables	Other payables－related parties (Note 7)	Current portion of bonds payable (Note 6(l))	Current portion of long-term debts (Notes 6(k) and 8)	Other current liabilities		Total current liabilities		Non-Current liabilities:		Bonds payable (Note 6(l) and 8)		Long-term debts (Notes 6(k) and 8)	Deferred tax liabilities (Note 6(n))		Net defined benefit liabilities (Note 6(m))	Other non-current liabilities (Note 6(g)) Total non-current liabilities				Total liabilities		Equity (Notes 6(o)): Common stock			Capital surplus		Retained earnings:	Legal reserve	Special reserve	Unappropriated retained earnings		Total retained earnings		Other components of equity		Total equity		Total liabilities and equity
				2100	2110		2170		2180	2200	2220	2321	2322	2399						2530		2540	2570		2640	2670							3110		3200			3310	3320	3350				3400
December 31, 2017	Amount %		14,499,334 3	- -	- -				111,581,327 25	95,454 -	5,794,785 1	6,295,229 1	1,301,658 -	16,733,665 4		11,970,674 3		1,617,147 -		169,889,273 37		- -		2,462,768 1		242,200,819 53		33,679,540 7		124,762 -		2,016,425 1	5,097,993 1		285,582,307 63													455,471,580 100
December 31, 2018	Amount %		$ 18,941,635 4	4,017,249 1	98,426,404 21				- -	79,150 -	6,898,829 2	5,809,131 1	1,376,297 -	18,227,744 4		14,196,795 3		1,943,604 -		169,916,838 36		10,038,913 2		- -		252,285,317 53		38,227,497 8		124,762 -		1,928,942 -	4,862,307 1		307,467,738 64													$ 477,384,576 100
	Assets		Cash and cash equivalents (Note 6(a))	Current financial assets at fair value through profit or loss (note 6(b))	Current financial assets at fair value through other comprehensive income		(Note 6(b))		Available-for-sale financial assets－current (Note 6(c))	Notes receivable (Note 6(d))	Accounts receivable, net (Notes 6(d))	Accounts receivable－related parties (Note 6(d) and 7)	Other receivables (Notes 6(e))	Other receivables－related parties (Note 6(e) and 7)		Inventories (note 6(f))		Other current assets		Total current assets		Non-current financial assets at fair value through other comprehensive income (not 6(b))		Financial assets carried at cost－non-current		Investments accounted for using equity method (Notes 6(g) and 8)		Property, plant and equipment (Notes 6(h), 7 and 8)		Intangible assets		Deferred tax assets (Note 6(n))	Other non-current assets (Notes 6(h) and 8)		Total non-current assets													Total assets
			1100	1110	1120				1125	1150	1170	1180	1200	1210		130X		1470				1510		1543		1550		1600		1780		1840	1900

65

															Total equity	313,070,487	313,070,487	49,382,853	11,618,275	11,618,275		61,001,128	61,001,128		-	-	(29,282,408)		917		220,042	220,042	345,010,166	12,337,702	357,347,868	49,549,540	(15,095,900)		34,453,640		-	-	(36,284,722)	(12,698)		(27,612)		91,525	91,525	355,568,001
													Gains (losses)	on hedging	instruments	-		-	-			-			-	-	-		-		-		-	9,551	9,551	-	(28,314)		(28,314)		-	-	-	-		-		-		**(18,763) **
(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese)	FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES	Consolidated Statements of Changes in Equity	For the years ended December 31, 2018 and 2017	**(Expressed in Thousands of New Taiwan Dollars) **	Equity attributable to owners of parent	Total other equity interest	Share capital Retained earnings Unrealized	gains	on financial	Exchange assets Unrealized	differences on measured at gains (losses)	translation of fair value on Gains (losses)	Unappropriated foreign through other available-for-sa on effective	Ordinary retained financial comprehensive le financial portion of cash	shares Capital surplus Legal reserve Special reserve earnings statements income assets flow hedges	Balance at January 1, 2017 $ 63,657,408 11,428,970 48,226,276 46,721,324 67,703,039 2,794,229 - 72,488,184 51,057		Net Income for the period - - - - 49,382,853 - - - -	Other comprehensive income (loss) for the period, net of - - - - (601,266) (6,019,258) - 18,280,305 (41,506)		income tax	Total comprehensive income (loss) for the period - - - - 48,781,587 (6,019,258) - 18,280,305 (41,506)		Appropriation and distribution of retained earnings:	Legal reserve appropriated - - 3,939,254 - (3,939,254) - - - -	Special reserve appropriated - - - 4,563,882 (4,563,882) - - - -	Cash dividends of ordinary share - - - - (29,282,408) - - - -	Other changes in capital surplus:	Changes in equity of associates and joint ventures accounted - 917 - - - - - - -	for using equity method	Other changes in capital surplus - 220,042 - - - - - - -		Balance at December 31, 2017 63,657,408 11,649,929 52,165,530 51,285,206 78,699,082 (3,225,029) - 90,768,489 9,551	Effects of retrospective application - - - - 3,181,817 - 99,924,374 (90,768,489) (9,551)	Balance at January 1, 2018 after adjustments 63,657,408 11,649,929 52,165,530 51,285,206 81,880,899 (3,225,029) 99,924,374 - -	Net Income for the period - - - - 49,549,540 - - - -	Other comprehensive income (loss) for the period, net of - - - - (201,564) 1,668,424 (16,534,446) - -	income tax	Total comprehensive income (loss) for the period - - - - 49,347,976 1,668,424 (16,534,446) - -	Appropriation and distribution of retained earnings:	Legal reserve appropriated - - 4,938,285 - (4,938,285) - - - -	Special reserve appropriated - - - 7,493,327 (7,493,327) - - - -	Cash dividends of ordinary share - - - - (36,284,722) - - - -	Cash dividends of preference share - - - - (12,698) - - - -	Other changes in capital surplus:	Changes in equity of associates and joint ventures accounted - (27,612) - - - - - - -	for using equity method	Other changes in capital surplus - 91,525 - - - - - - -		Balance at December 31, 2018 $ 63,657,408 11,713,842 57,103,815 58,778,533 82,499,843 (1,556,605) 83,389,928 - -

66

														Total equity	313,070,487	313,070,487	49,382,853	11,618,275	11,618,275		61,001,128	61,001,128		-	-	(29,282,408)		917		220,042	220,042	345,010,166	12,337,702	357,347,868	49,549,540	(15,095,900)		34,453,640		-	-	(36,284,722)	(12,698)		(27,612)		91,525	91,525	355,568,001
												Gains (losses)	on hedging	instruments	-		-	-			-			-	-	-		-		-		-	9,551	9,551	-	(28,314)		(28,314)		-	-	-	-		-		-		**(18,763) **
(English Translation of Parent Company Only Financial Statements and Report Originally Issued in Chinese)	FORMOSA PLASTICS CORPORATION	Statements of Changes in Equity	For the years ended December 31, 2018 and 2017	**(Expressed in Thousands of New Taiwan Dollars) **	Total other equity interest	Share capital Retained earnings Unrealized	gains	on financial	Exchange assets Unrealized	differences on measured at gains (losses)	translation of fair value on Gains (losses)	Unappropriated foreign through other available-for-sa on effective	Ordinary retained financial comprehensive le financial portion of cash	shares Capital surplus Legal reserve Special reserve earnings statements income assets flow hedges	Balance at January 1, 2017 $ 63,657,408 11,428,970 48,226,276 46,721,324 67,703,039 2,794,229 - 72,488,184 51,057		Net Income for the period - - - - 49,382,853 - - - -	Other comprehensive income (loss) for the period, net of - - - - (601,266) (6,019,258) - 18,280,305 (41,506)		income tax	Total comprehensive income (loss) for the period - - - - 48,781,587 (6,019,258) - 18,280,305 (41,506)		Appropriation and distribution of retained earnings:	Legal reserve appropriated - - 3,939,254 - (3,939,254) - - - -	Special reserve appropriated - - - 4,563,882 (4,563,882) - - - -	Cash dividends of ordinary share - - - - (29,282,408) - - - -	Other changes in capital surplus:	Changes in equity of associates and joint ventures accounted - 917 - - - - - - -	for using equity method	Other changes in capital surplus - 220,042 - - - - - - -		Balance at December 31, 2017 63,657,408 11,649,929 52,165,530 51,285,206 78,699,082 (3,225,029) - 90,768,489 9,551	Effects of retrospective application - - - - 3,181,817 - 99,924,374 (90,768,489) (9,551)	Balance at January 1, 2018 after adjustments 63,657,408 11,649,929 52,165,530 51,285,206 81,880,899 (3,225,029) 99,924,374 - -	Net Income for the period - - - - 49,549,540 - - - -	Other comprehensive income (loss) for the period, net of - - - - (201,564) 1,668,424 (16,534,446) - -	income tax	Total comprehensive income (loss) for the period - - - - 49,347,976 1,668,424 (16,534,446) - -	Appropriation and distribution of retained earnings:	Legal reserve appropriated - - 4,938,285 - (4,938,285) - - - -	Special reserve appropriated - - - 7,493,327 (7,493,327) - - - -	Cash dividends of ordinary share - - - - (36,284,722) - - - -	Cash dividends of preference share - - - - (12,698) - - - -	Other changes in capital surplus:	Changes in equity of associates and joint ventures accounted - (27,612) - - - - - - -	for using equity method	Other changes in capital surplus - 91,525 - - - - - - -		Balance at December 31, 2018 $ 63,657,408 11,713,842 57,103,815 58,778,533 82,499,843 (1,556,605) 83,389,928 - -

67

(English Translation of Consolidated Financial Statements and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss / Provision for bad debt expense Net gain on financial assets or liabilities at fair value through profit Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Gain on disposal of investments Impairment loss on non-financial assets Unrealized foreign exchange loss Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Decrease (increase) in notes receivable Increase in accounts receivable Decrease (increase) in accounts receivable due from related parties (Increase) decrease in other receivable (Increase) decrease in other receivable due from related parties (Increase) decrease in inventories (Increase) decrease in other current assets Total changes in operating assets Changes in operating liabilities: Decrease in accounts payable Increase (decrease) in accounts payable to related parties Increase (decrease) in other payable Increase in other payable to related parties Increase in other current liabilities Decrease in net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows (used in) from investing activities: Proceeds from disposal of financial assets designated at fair value through profit or loss Proceeds from disposal of available-for-sale financial assets Acquisition of financial assets at cost Acquisition of derivative financial assets for hedging Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of intangible assets (Increase) decrease in other receivables due from related parties Increase in other non-current assets Net cash flows (used in) from investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase (decrease) in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Proceeds from long-term debt Repayments of long-term debt Increase in due to related parties (recognized as other payables－related parties) Increase (decrease) in other non-current liabilities Cash dividends paid Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2018 $ 57,092,376 6,936,928 514,967 945 (215,889) 1,480,040 (660,660) (7,511,680) (24,079,572) (119,338) - 911,512 14,651	2017 54,904,343 7,904,294 545,805 (1,678) - 1,527,802 (483,538) (5,606,734) (29,894,765) (9,851) (1,762,716) 2,347,867 110,414
	(22,728,096)	(25,323,100)
	619,432 (1,461,514) 615,879 (62,057) (378,511) (3,204,370) 416,317	(1,203,340) (68,277) (983,188) (214,914) (63,700) (570,634) 207,550
	(3,454,824)	(2,896,503)
	225,031 (586,149) 155,487 164,647 230,485 (139,425)	(767,294) 760,581 (824,589) 145,079 398,591 (382,226)
	50,076	(669,858)
	(3,404,748)	(3,566,361)
	(26,132,844)	(28,889,461)
	30,959,532 644,092 25,574,093 (1,488,457) (5,181,983)	26,014,882 475,019 22,771,652 (1,471,320) (1,720,079)
	50,507,277	46,070,154
	772,908 - (1,676,070) - (4,461,444) 1,127,075 (15,672,540) 222,276 (55,830) (647,826) (100,860)	- 2,560,664 - (1,737,518) (1,989,918) - (6,710,685) 18,903 - 4,238,401 (475,640)
	(20,492,311)	(4,095,793)
	396,653,692 (391,181,044) 2,500,000 9,300,000 (5,700,000) - (5,813,964) 5,801,540 (20,421) (36,293,430)	338,088,287 (347,987,424) (504,057) 7,000,000 (10,750,000) 3,049,851 (6,817,635) 3,780,972 (39,234) (29,224,705)
	(24,753,627)	(43,403,945)
	(115,712)	(282,760)
	5,145,627 18,165,145	(1,712,344) 19,877,489
	$ 23,310,772	18,165,145

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(English Translation of and Report Originally Issued in Chinese) FORMOSA PLASTICS CORPORATION

Statements of Cash Flows

For the years ended December 31, 2018 and 2017

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from operating activities: Income before income tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit loss / Provision for bad debt expense Interest expense Net (loss) gain arising from financial assets at fair value through other comprehensive income Interest income Dividend income Share of profit of associates and joint ventures accounted for using equity method Gain on disposal of property, plant and equipment Gain on disposal of investments Impairment loss on non-financial assets Realized loss (profit) on from sales Unrealized foreign exchange loss Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Decrease in notes receivable (Increase) decrease in accounts receivable Decrease (increase) in accounts receivable due from related parties (Increase) in other receivable (Increase) decrease in other receivable due from related parties (Increase) in inventories (Increase) in other current assets Total changes in operating assets Changes in operating liabilities: Decrease in accounts payable Increase (decrease) in accounts payable to related parties Increase (decrease) in other payable Increase in other payable to related parties Increase in other current liabilities Decrease in net defined benefit liability Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash flows from operating activities Cash flows (used in) from investing activities: Proceeds from disposal of financial assets designated at fair value through profit or loss Proceeds from disposal of available-for-sale financial assets Acquisition of investments accounted for using equity method Proceeds from capital reduction of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Increase (decrease) in other receivables due from related parties (Increase) decrease in other non-current assets Net cash flows (used in) from investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase (decrease) in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Proceeds from long-term debt Repayments of long-term debt Increase (decrease) in other non-current liabilities Cash dividends paid Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2018 $ 57,046,158 4,195,963 157,087 945 968,554 (215,889) (599,064) (7,511,680) (24,320,374) (66,465) - - 16,848 (80,495)	2017 54,869,313 5,238,826 197,548 (1,678) 964,044 - (424,718) (5,606,734) (32,631,087) (10,925) (1,762,716) 2,347,867 (13,195) 115,764
	(27,454,570)	(31,587,004)
	16,304 (1,120,728) 486,098 (59,193) (877,575) (2,291,351) (326,457)	230,880 304,747 (1,013,030) (260,310) 364,463 (638,783) (1,054)
	(4,172,902)	(1,013,087)
	(1,825) (551,543) (1,228,996) 59,252 (390,875) (139,425)	(767,294) 729,231 (842,978) 82,955 128,379 (382,226)
	(2,253,412)	(1,051,933)
	(6,426,314)	(2,065,020)
	(33,880,884)	(33,652,024)
	23,165,274 583,027 25,574,092 (976,971) (5,007,157)	21,217,289 411,427 22,771,652 (1,000,893) (1,512,821)
	43,338,265	41,886,654
	772,908 - (6,137,514) 1,127,075 (8,674,120) 70,439 (616,504) 93,963	- 2,560,664 (3,421,878) - (2,239,369) 18,773 4,466,799 (264,716)
	(13,363,753)	1,120,273
	375,117,873 (367,434,810) 2,500,000 9,300,000 (5,700,000) - (2,988,889) (97,609) (36,293,430)	317,537,132 (325,322,516) (504,057) 7,000,000 (10,750,000) 700,000 (3,403,175) 62,667 (29,224,705)
	(25,596,865)	(43,904,654)
	64,654	(68,455)
	4,442,301 14,499,334	(966,182) 15,465,516
	$ 18,941,635	14,499,334

69

Formosa Plastics Corporation Statement of Profits Distribution For the year of 2018

Unit ： NT$

Items	Items	Amount
Available for Distribution: 1.Unappropriated retained earnings of previous years 2.Unappropriated retained earnings at the beginning of period adjustment by first-time application of IFRS 9 3.Effect on long-term equity investment not recognized by shareholding percentage 4.Other comprehensive income transferred to unappropriated retained earnings of current year 5.Net profit after tax of current year Total Distribution Items: 1.Appropriation of legal reserve (10% of the after-tax profit ) 2.Appropriation of special reserve 3.Distribution of dividends and bonus in cash ( $5.8 per share) 4.Unappropriated retained earnings carried forward to next year Total		29,983,126,882 3,181,818,122 -12,698,275 -201,564,047 49,549,539,564
		82,500,222,246
		4,954,953,956 5,190,369,083 36,921,296,530 35,433,602,677
		82,500,222,246
Explanation	1.The Company plans to distribute dividends of $5.8 per share for current year (among which, $3.02 per share will be distributed as dividends and $2.78 per share will be distributed as bonus); all of which are cash dividends. 2. The Company distributes dividends and bonus for a total of $36,921,296,530; all of which are from net profit after tax of 2018. 3. Effect of Changes on long-term equity investment is changes in equities of long-term investments due to joint ventures not recognizing by shareholding percentage. 4. Other comprehensive income transferred to unappropriated earnings of current year is due to a re-measurement of the actuarial pension adjustment 5. While the distribution of cash dividends to each individual shareholder is less than 1 dollar, the distribution will be rounded to the nearest dollar.

70

Independent Auditors ’ Report

To the Board of Directors of Formosa Plastics Corporation:

Opinion

We have audited the consolidated financial statements of Formosa Plastics Corporation (the "Company") and its subsidiaries (together referred to as the "Group"), which comprise the consolidated statements of financial position as of December 31, 2018 and 2017, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2018 and 2017, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2018 and 2017, and its consolidated financial performance and its consolidated cash flows for the years ended December 31, 2018 and 2017 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the “Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants” and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors ’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained during our audits and the reports of the other auditors are sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

1. Revenue Recognition

As the control of products transfers at different points in time, it exposes the risk wherein revenue may not be recognized within the proper period. For this reason, revenue recognition is considered to be one of our key audit matters. The accounting policies and the related information for the revenue recognition were discussed in Notes 4(q) and 6(o) to the consolidated financial statements.

71

The principal audit procedures we have performed to address the aforementioned key audit matter included assessing the rationality of accounting treatment for revenue recognition; vouching the original sales documents according to the transactions with the customers during a selected period of time before and after the balance sheet date to evaluate whether the revenue is recorded appropriately.

2. Valuation of Inventories

The Group measured the cost and net realizable value of inventory and recognized the loss on the balance sheet date according to IAS 2 (including loss on obsolescence of inventories); However, to determine whether or not the loss of inventories should be recognized depends on the subjective judgment of the management. For this reason, the valuation of inventories is considered to be one of the key audit matters. The accounting policies and the related information for the valuation of inventories were discussed in Notes 4(h), 5 and 6(f) to the consolidated financial statements.

The principal audit procedures we have performed to address the aforementioned key audit matter included assessing the appropriateness of the policy on inventory valuation and slack loss recognition; ensuring whether the process of inventory valuation is in conformity with the accounting policies, confirming the sales price adopted by the management and the changes in the market price of inventory in the period after the balance sheet date; and sampling procedures to assess the reasonableness of the net realizable value of inventory.

Other Matter

We did not audit the financial statements of certain investee companies under the equity method. The Group's investments in the aforementioned investee companies constituted 31.81% and 32.31% of the consolidated total assets as of December 31, 2018 and 2017, respectively; and the recognized shares of profit of associates accounted for using equity method of these investee companies constituted 39.98% and 53.15% of the consolidated income before tax for the years ended December 31, 2018 and 2017, respectively. The consolidated financial statements of the aforementioned investee companies were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these investee companies, is based solely on the reports of other auditors.

We have also audited the parent company only financial statements of the Company as of and for the years ended December 31, 2018 and 2017 and have expressed an unqualified opinion thereon.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards, International Accounting Standards, IFRIC interpretations and SIC interpretations as endorsed by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

’ Those charged with governance (including the audit committee) are responsible for overseeing the Group s financial reporting process.

72

Auditors ’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Hui-chih Kou and Chi-Lung Yu.

KPMG

Taipei, Taiwan (Republic of China) March 25, 2019

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated statement of financial position, financial performance and its cash flows in accordance with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

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Independent Auditors ’ Report

To the Board of Directors of Formosa Plastics Corporation:

Opinion

We have audited the financial statements of Formosa Plastics Corporation (the “Company”) which comprise the statements of financial position as of December 31, 2018 and 2017, and the statements of comprehensive income, changes in equity and cash flows for the years ended December 31, 2018 and 2017, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and its financial performance and its cash flows for the years ended December 31, 2018 and 2017 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuer.

Basis for Opinion

We conducted our audit in accordance with the “Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants” and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors ’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained during our audits and the report of the other auditors are sufficient and appropriate to provide a basis of our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matters for the Company's financial statements are stated as follows:

1. Revenue recognition

As the control of products transfers at different points in time, it exposes the risk wherein revenue may not be recognized within the proper period. For this reason, revenue recognition is considered to be one of our key audit matters. The accounting policies and the related information for revenue recognition were discussed in Notes 4(q) and 6(o) to the consolidated financial statements.

The principal audit procedures we have performed to address the aforementioned key audit matter included assessing the rationality of accounting treatment for revenue recognition; vouching the original sales documents according to the transactions with the customers during a selected period of time before and after the balance sheet date to evaluate whether the revenue is recorded appropriately.

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1. Valuation of Inventories

The Group measured the cost and net realizable value of inventory and recognized a loss on the balance sheet date according to IAS 2 (including loss on obsolescence of inventories); however, to determine whether or not the loss of inventories should be recognized depends on the subjective judgment of the management. For this reason, the valuation of inventories is considered to be one of the key audit matters. The accounting policies and the related information for the valuation of inventories were discussed in Notes 4(g), 5 and 6(f) to the consolidated financial statements.

The principal audit procedures we have performed to address the aforementioned key audit matter included assessing the appropriateness of the policy on inventory valuation and slack loss recognition; ensuring whether the process of inventory valuation is in conformity with the accounting policies, confirming the sales price adopted by the management and the changes in the market price of inventory in the period after the balance sheet date; and sampling procedures to assess the reasonableness of the net realizable value of inventory.

Other Matter

We did not audit the financial statements of certain investee companies under equity method. The Company's investments in the aforementioned investee companies constituted 33.42% and 33.77% of the total assets as of December 31, 2018 and 2017, respectively; and the recognized shares of profit of associates accounted for using equity method of these investee companies constituted 40.01% and 53.19% of the income before tax for the years ended December 31, 2018 and 2017, respectively. The financial statements of the aforementioned investee companies were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for these investee companies, is based solely on the reports of other auditors.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

’ Those charged with governance (including the audit committee) are responsible for overseeing the Company s financial reporting process.

Auditors ’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

1. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

2. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

3. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

4. Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

5. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

6. Obtain sufficient appropriate audit evidence regarding the financial information of the investment in other entities accounted for using the equity method to express an opinion on this financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

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From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Hui-chih Kou and Chi-Lung Yu.

KPMG

Taipei, Taiwan (Republic of China) March 25, 2019

Notes to Readers

The accompanying parent company only financial statementsfinancial statements are intended only to present the parent company only financial statementsfinancial position, results of operations and cash flows in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuer and not those of any other jurisdictions. The standards, procedures and practices to audit such parent company only financial statementsfinancial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ report and the accompanying parent company only financial statementsfinancial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of, the English and Chinese language independent auditors’ report and parent company only financial statementsfinancial statements, the Chinese version shall prevail.

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Articles of Association of

Formosa Plastics Corporation

Amended and reinstated by General Shareholders Meeting on June, 20 2018

Chapter I General Provisions

• Article 1: The Company is incorporated under the name of Fu-mao Plastics Corporation, a private company limited by shares, in accordance with Company Act. On January 14, 1957, the Company’s extraordinary shareholders meeting passed a resolution to change its name to Formosa Plastics Corporation, which has been given the effect by the approval of competent authority as of March 18, 1957.

• Article 2: Scope of Business:

• (1)B202010: Nonmetallic Mining

• (2)C199990: Other Food Manufacturing Not Elsewhere Classified

• (3)C801010: Basic Industrial Chemical Manufacturing

• (4)C801020: Petrochemical Manufacturing

• (5)C801100: Synthetic Resin & Plastic Manufacturing

• (6)C801120: Manmade Fiber Manufacturing

• (7)C801990: Other Chemical Materials Manufacturing

• (8)C802120: Industrial Catalyst Manufacturing

• (9)C802170: Poisonous Chemical Material Manufacturing

• (10)C805020: Plastic Sheets & Bags Manufacturing

• (11)C901070: Stone Products Manufacturing

• (12)CB01010: Machinery and Equipment Manufacturing

• (13)CC01080: Electronic Parts and Components Manufacturing

• (14)D101050: Steam and Electricity Paragenesis

• (15)D301010: Water Supply

• (16)D401010: Heat Energy Supplying

• (17)E603050: Cybernation Equipments Construction

• (18)H701010: Residence and Buildings Lease Construction and Development

• (19)H701040: Specialized Field Construction and Development

• (20)ID01010: Metrological Instruments Identify

• (21)IZ99990: Other Industry and Commerce Services Not Elsewhere

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Classified

• (22)J101050: Sanitary and Pollution Controlling Services

• (23)ZZ99999: All business items that are not prohibited or restricted by law, except those that are subject to special approval

• Article 3: The Company is headquartered in Kaohsiung City, ROC and may set up factories or branch offices in the country or at overseas locations when necessary. Such establishments, modifications and abolishment will be subject to the resolutions of the Meeting of Directors.

• Article 4: The Company may provide endorsement for the related business. The total investment made by the Company may exceed forty percent (40%) of its paid-up capital.

• Article 5: Notice of the Company will be published in a manner prescribed in Article 28 of Company Act.

Chapter II Shares

• Article 6: The registered capital of the Company is sixty-three billion six hundred fifty-seven million four hundred seven thousand eight hundred ten New Taiwan dollars, divided into six billion three hundred sixty-five million seven hundred forty thousand seven hundred eighty-one full capital shares having a par value of ten New Taiwan dollars.

• Article 7: The Company may exempt from printing share certificates but shall register with Central Securities Depository for each share issued.

• Article 8: A shareholder shall provide his address and personal seal to receive or transfer any share.

• Article 9: (Omitted)

• Article 10: (Omitted)

• Article 11: (Omitted)

• Article 12: The registration of share transfer will be halted within sixty days prior to a general meeting, thirty days prior to an extraordinary meeting or five days prior to the closing date regarding a distribution of dividends and bonus or other interests.

Chapter III Shareholders Meeting

• Article 13: A shareholders meeting can be a general meeting or an extraordinary meeting. The Company’s Board of Directors shall convene the annual

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general meeting once every year within six month after the end of each fiscal year. The Board of Directors may convene an extraordinary meeting whenever necessary unless the Company Act suggests otherwise.

• Article 14: The meeting notice shall be published and given to all shareholders at least thirty days prior to a general meeting and fifteen days prior to an extraordinary meeting. The notice shall specify the purpose of such meeting and may be made by electronic communication pursuant to the receiving party’s consent.

• Article 15: The Chairman of the Board of Directors will preside the shareholders meeting. Where the Chairman is on leave or not able to perform his duty for any reason, the Vice Chairman shall act on his behalf. Where the Vice Chairman is also on leave or not able to perform his duty for any reason, the Chairman shall appoint one executive director to act on his behalf. If the Chairman has made no appointment, the executive directors shall elect among themselves one person to act as the deputy.

• Article 16: Each share is entitled to cast one vote, unless otherwise deprived in accordance with Article 179 paragraph 2 of Company Act.

• Article 17: A shareholder may appoint a proxy to attend a shareholders meeting by delivering the proxy form prepared by the Company five days prior to the shareholders meeting. The proxy vote shares held by one proxy representing two or more principals may not exceed three percent (3%) of the total shares issued by the company. Any votes exceeding such limit will not be counted.

• Article 18: Unless otherwise stipulated in Company Act, any resolution of a shareholder meeting shall be decided by more than one-half the shareholders presenting at the shareholders meeting consisting of more than one-half the total voting shares.

• Article 19: The meeting minutes shall be prepared for each shareholders meeting, recording any resolutions being made, the meeting dates, times, venue, the chairperson’s name, the voting procedures, the summary and the result of the process, and signed by the chairperson or stamped. Such meeting minutes shall be archived throughout the existence of the Company. The attendance books and proxies shall be retained for at least one year. The copies of the meeting minutes may be distributed in an

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electronic manner.

The distribution of the foregoing meeting minutes may be made by posting a public announcement onto the Market Observation Post System.

Chapter IV Directors

• Article 20: The Board shall consist of eleven to fifteen directors. The election of directors will be made by nomination. Shareholders may elect the directors from the candidates list. The total registered shares held by the directors shall not be less than a certain quorum of the company’s total shares. The calculation of quorum shall conform to the method instructed by the competent authority.

• The foregoing numbers of directors shall include three independent directors, whose nominations and elections shall be processed in accordance with the Company Act and as required by the competent authority of securities and exchange.

• The Company established the Audit Committee pursuant to Article 14-4 of the Securities and Exchange Act, where its members consist of all independent directors. The operation of the Audit Committee as well as the responsibilities and rights of the members shall be determined in accordance with the Securities and Exchange Act and other applicable laws.

• Article 21: The directors shall elect at least three from among themselves but not more than one third of all the directors to serve as the executive directors, including one independent director. The five executive directors shall elect one of them to become the Chairman of the Board and another person to be the Vice Chairman. The Chairman represents the Company externally and is responsible for general business. When the Chairman is on leave or not able to perform his duty for any reason, the Vice Chairman shall act as the deputy. When the Vice Chairman is also on leave or not able to perform his duty, the Chairman shall appoint one executive director to act on his behalf.

• Article 22: The Board will determine the Company’s operation strategies and other significant issues. The Board Meeting shall be convened and presided by the Chairman or by his deputy according to the preceding paragraph if

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the Chairman is in absence.

The significant issues of the forgoing paragraph shall include the acquisition and disposal of the Company’s major assets and properties. The Board may empower the Chairman to act on behalf of the Board during the adjournment period. Unless otherwise required by laws or these articles, any issue concerning the major interest of the company or related party transaction shall not be decided without a Board resolution. The powers authorized include:

• I. To approve any major contracts;

• II. To approve any mortgage of property and loan proposal;

• III. To approve the acquisition and disposal of the company’s general asset and property;

• IV. To approve the appointment of directors and supervisors of a subsidiary;

To approve the closing date of capital increase/decrease and the distribution of cash dividends.

• Article 23: Any resolution of the Board shall be determined by one-half of the directors presenting at the meeting consisting of one-half of the total directors.

• Article 24: A director shall hold the office for a term of three years and may be reelected. If the election does not complete in time upon the expiration of any term of office, the director may continue to serve until his successor is elected.

• Article 25: Any vacancy on the Board may be filled by immediate election, which may be postponed when the vacant directorship is less than one third of the total directors. The elected director in the place of a vacant directorship will serve for the remaining period of the previous director’s term of office.

• Article 26: Any resolution made by the Board meeting shall be documented in the meeting minutes, which shall be signed by the chairperson or stamped and archived in the Company.

• Article 27: The Directors shall present at the Board Meeting in person. If the Directors may not be present at the meeting for any reason, unless the Directors resides in oversea location as prescribed by the Company Act, he/she may submit a proxy form, enumerating the purpose of convening

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such meeting, the scope of authorization, to appoint another director to attend the meeting. A proxy director may not act on behalf of more than one person.

If the Board Meeting is conducted by teleconference, directors who attend the meeting through video conference shall be deemed attending in person.

The Board shall specify the purposes of a Board Meeting and notify each director seven days in advance. Notwithstanding, the Board may convene a meeting where there is an urgency. The notice of Board Meeting may be served in writing, by email or facsimile.

• Article 28: The Board shall have the power to determine the remuneration of directors based on how a director participates and contributes in the Company’s operation and with reference to the standards implemented by the other companies in the same industry.

The Company shall be held liable for any conduct by a director within his scope of duty during his terms of office and shall maintain valid director liability insurance to the extent required by the laws.

Chapter V (Omitted)

• Article 29: (Omitted)

• Article 30: (Omitted)

• Article 31: (Omitted)

• Article 32: (Omitted)

• Article 33: (Omitted)

• Article 34: (Omitted)

• Article 35: (Omitted)

Chapter VI Manager

• Article 36: The Company may have managers. The appointment, removal and compensation of a manager shall be determined in accordance with Article 29 of the Company Act.

• Article 37: The manager may not serve the equivalent position of another company at the same time and shall refrain from any activities identical to the Company’s business whether by self-employment or for the benefit of

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others unless otherwise permitted by the Board to the extent permitted by the laws.

Chapter VII Accounting

• Article 38: The Company’s fiscal year starts from January 1 and ends on December 31 of each calendar year. The Board shall prepare the following reports for the ratification by the general shareholders meeting after the final settlement:

• (I) Business Operation Report,

• (II) Financial Statements, and

• (III) Measures on profit distribution or deficit compensation.

• Article 39: If the Company gains any profits in any year, the Company shall retain 0.05% to 0.5% of the pre-tax profit as employee compensation before deducting the employee compensation of such year; provided, however, that the Company shall reserve the amount for compensating the deficit, if any.

• The determination of employee compensation shall be made in accordance with Article 235-1 of the Company Act.

• Article 40: If there are any earnings after final account settlement, the Company shall pay off the applicable taxes, compensate the accrued deficit and retain 10% as legal reserve and an additional amount as special reserve before distributing dividends. If there are any remaining earnings of such year, the Board may, combining the undistributed earnings of previous years, propose a shareholder bonus plan and submit for the approval in a general shareholders meeting.

The special reserve as described in the preceding paragraph includes

• (1) any amount reserved for any particular purpose,

• (2) investment profit and unused deductions for taxable income pursuant to equity methods,

• (3) and other special reserve prescribed by applicable laws and regulations.

The Company is in a business of a mature industry and earns its annual profits on a stable basis. The Company adopts a dividend policy that allows the distribution to be made in either way of or a combination of cash dividends, earnings capitalization and capitalization of capital

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reserve. At least fifty percent (50%) of the annual distributable earning remained after deducting the legal reserve and special reserve will be distributed, preferably in cash. The total percentage of the capitalization of retained earnings and capital reserve shall not be more than fifty percent (50%) of the total dividends distributed of such year.

Chapter VIII Miscellaneous

• Article 41: The Company Act and other applicable laws rules shall govern any matter not prescribed herein.

• Article 42: These articles of association are stipulated on July 20, 1954, and reinstated by first amendment on January 8, 1955, second amendment on January 14, 1957, third amendment on August 20, 1957, fourth amendment on July 10, 1958, fifth amendment on March 31, 1960, sixth amendment on September 7, 1960, seventh amendment on July 3, 1961, eighth amendment on December 31, 1963, ninth amendment on February 25, 1965, tenth amendment on March 25, 1965, eleventh amendment on August 20, 1966, twelfth amendment on March 25, 1967, thirteenth amendment on March 25, 1968, fourteenth amendment on April 21, 1969, fifteenth amendment on April 30, 1970, sixteenth amendment on April 20, 1971, seventeenth amendment on March 21, 1972, eighteenth amendment on March 20, 1973, nineteenth amendment on March 26, 1974, twentieth amendment on April 10, 1975, twenty-first amendment on April 15, 1976, twenty-second amendment on August 21, 1976, twenty-third amendment on April 15, 1977, twenty-fourth amendment on April 18, 1978, twenty-fifth amendment on April 16, 1979, twenty-sixth amendment on April 2, 1980, twenty-seventh amendment on April 2, 1981, twenty-eighth amendment on April 9, 1982, twenty-ninth amendment on April 18, 1983, thirtieth amendment on April 27, 1984, thirty-first amendment on April 29, 1985, thirty-second amendment on April 24, 1986, thirty-third amendment on April 15, 1977, thirty-fourth amendment on April 29, 1988, thirty-fifth amendment on April 28, 1989, thirty-sixth amendment on April 13, 1990, thirty-seventh amendment on April 16, 1991, thirty-eighth amendment on April 16, 1992, thirty-ninth amendment on April 16, 1993, forties amendment on April 26 1994, forty-first amendment on

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April 14, 1995, forty-second amendment on April 19, 1996, forty-third amendment on May 6, 1997, forty-fourth amendment on May 8, 1998, forty-fifth amendment on May 20, 1999, forty-sixth amendment on May 17, 2000, forty-seventh amendment on May 17, 2001, forty-eighth amendment on May 24, 2002, forty-ninth amendment on May 23, 2003, fiftieth amendment on May 14, 2004, fifty-first amendment on May 23, 2005, fifty-second amendment on June 5, 2006, fifty-third amendment on June 14, 2007, fifty-fourth amendment on June 19, 2008, fifty-fifth amendment on June 5, 2009, fifty-sixth amendment on June 25, 2010, fifty-seventh amendment on June 20, 2011, fifty-eighth amendment on June 19, 2012, fifty-ninth amendment on June 14, 2013, sixtieth amendment on June 13, 2014 where the articles regarding the establishment of Audit Committee and the omission of articles regarding supervisors shall become effective at the time the terms of office of the supervisors elected by the general shareholder meeting on June 19, 2012 has expired and the sixty-first amendment on June 17, 2016, sixty-second amendment on June 20, 2018.

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Rules of Procedure for Shareholders’ Meetings of Formosa Plastics Corporation

Amended by the Annual Shareholders’ Meeting on June 17, 2016

• Article 1: To establish a strong governance system and sound supervisory capabilities for the Company's shareholders’ meetings, and to strengthen management capabilities, these Rules are adopted pursuant to the Corporate Governance Best Practice Principles for Taiwan Stock Exchange Corp (“TWSE”)/ Taipei Exchange (“TPEx”) Listed Companies.

• Article 2: The rules of procedures for the Company's shareholders’ meetings, except as otherwise provided by law, regulation, or the Articles of Incorporation, shall be as provided in these Rules.

• Article 3: Unless otherwise provided by law or regulation, the Company's Shareholders’ Meetings shall be convened by the Board of Directors. A notice to convene an annual shareholders’ meeting shall be given to each shareholder no later than 30 days prior to the scheduled meeting date; while a notice may be given to registered shareholders who own less than 1,000 shares of nominal stocks no later than 30 days prior to the scheduled meeting date in the form of a public announcement on the Market Observation Post System (MOPS) of the TWSE. A notice to convene a special shareholders’ meeting shall be given to each shareholders no later than 15 days prior to the scheduled meeting date. A public notice may be given to registered shareholders who own less than 1,000 shares of nominal stocks no later than 15 days prior to the scheduled meeting date in the form of a public announcement on the MOPS of the TWSE.

• To convene a shareholders’ meeting, the Company shall prepare a meeting handbook. The Company shall prepare electronic versions of a shareholders’ meeting notice and proxy forms, and causes of and explanatory materials relating to all proposals, including proposals for ratification, matters for deliberation, or the election or dismissal of directors, and upload them to the MOPS no later than 30 days prior to the scheduled Annual Shareholders’ Meeting date or no later than 15 days prior to the scheduled Special Shareholders’ Meeting date. The

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Company shall prepare electronic versions of a shareholders’ meeting handbook and supplemental meeting materials and upload them to the MOPS no later than 21 days prior to the scheduled Annual Shareholders’ Meeting date or no later than 15 days prior to the scheduled Special Shareholders’ Meeting date. In addition, the Company shall also have prepared a shareholders’ meeting handbook and supplemental meeting materials and made them available for review by shareholders at any time no later than 15 days prior to the scheduled Shareholders’ Meeting date. The Meeting Agenda and supplemental materials shall also be displayed the Company and at the professional shareholder services agent engaged by the Company as well as being distributed on-site at the meeting place.

The reasons for convening a shareholders’ meeting shall be specified in the meeting notice and public announcement. With the consent of the addressee, the meeting notice may be given in electronic form.

Election or dismissal of directors or supervisors, amendments to the Articles of Incorporation, the dissolution, merger, or demerger of the corporation, or any matter under paragraph 1 of Article 185 of the Company Act or Articles 26-1 and 43-6 of the Securities and Exchange Act, Articles 56-1 and 60-2 of Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be set out in the causes in the notice to convene the shareholders’ meeting. None of the above matters may be raised by an extraordinary motion.

A shareholder holding 1 percent or more of the total number of issued shares may submit to the Company a written proposal for discussion at an annual shareholders’ meeting. Such proposals, however, are limited to one item only, and no proposal containing more than one item will be included in the Meeting Agenda. In addition, when the circumstances of any subparagraph of paragraph 4 of Article 172-1 of the Company Act apply to a proposal put forward by a shareholder, the Board of Directors may exclude it from the Agenda.

Prior to the book closure date before an annual shareholders’ meeting is

held, the Company shall publicly announce that it will receive shareholder proposals, and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days.

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Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the Annual Shareholders’ Meeting and take part in discussion of the proposal.

• Prior to the date for issuance of notice of a shareholders’ meeting, the Company shall inform the shareholders who submitted proposals of the proposal screening results, and shall list in the meeting notice the proposals that conform to the provisions of this article. At the Shareholders’ Meeting the Board of Directors shall explain the reasons for exclusion of any shareholder proposals not included in the agenda.

• Article 4: For each shareholders’ meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by the Company and stating the scope of the power authorized to the proxy.

• A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders’ meeting, and shall deliver the proxy form to the Company no later than 5 days prior to the Shareholders’ Meeting date. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to revoke the previous proxy appointment.

• After a proxy form has been delivered to the Company, if the shareholder intends to attend the meeting in person or to exercise voting rights in writing or by way of electronic transmission, a written notice of proxy rescission shall be submitted to the Company no later than 2 days prior to the meeting date. If the rescission notice is submitted after that time, votes cast at the meeting by the proxy shall prevail.

• Article 5: The venue for a shareholders’ meeting shall be the premises of the Company, or a place easily accessible to shareholders and suitable for a shareholders’ meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.

• Article 6: The Company shall specify in its shareholders’ meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention.

• The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30

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minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of suitable personnel assigned to handle the registrations.

The Company shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors, pre-printed ballots shall also be furnished.

Shareholders and their proxies (collectively, "shareholders") shall attend shareholders’ meetings based on attendance cards, sign-in cards, or other certificates of attendance. The Company shall not impose arbitrary requirements on shareholders to provide additional evidentiary documents beyond those showing eligibility to attend. Solicitors soliciting proxy forms shall also bring identification documents for verification.

When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders’ meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting.

Article 7: If a shareholders’ meeting is convened by the Board of Directors, the meeting shall be chaired by the Chairman. When the Chairman is on leave or for any reason unable to exercise the powers of the Chairman, the Vice Chairman shall act in place of the Chairman; if there is no Vice Chairman or the Vice Chairman also is on leave or for any reason unable to exercise the powers of the Vice Chairman, the Chairman shall appoint one of the Managing Directors to act as chair, or, if there are no Managing Directors, one of the Directors shall be appointed to act as chair. Where the Chairman does not make such a designation, the Managing Directors or the Directors shall select from among themselves one person to serve as chair.

When a Managing Director or a Director serves as chair, as referred to in the preceding paragraph, the Managing Director or Director shall be one who has held that position for 6 months or more and who understands the financial and business conditions of the Company. The same shall be true for a representative of a juristic person director that

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serves as chair.

It is advisable that shareholders’ meetings convened by the Board of Directors be chaired by the Chairman, that a majority of the Directors attend in person, and that at least one member of each functional committee attend as representative. Attendance details should be recorded in the Shareholders Meeting minutes. If a shareholders’ meeting is convened by a party having the convening right but other than the Board of Directors, the convening party shall chair the meeting. When there are two or more such convening parties, they shall mutually select a chair from among themselves.

The Company may appoint its attorneys, certified public accountants, or related persons retained by it to attend a shareholders’ meeting in a non-voting capacity.

• Article 8: The Company, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders’ meeting, and the voting and vote counting procedures. The recorded materials of the preceding paragraph shall be retained for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the recording shall be retained until the conclusion of the litigation.

• Article 9: Quorum at shareholders’ meetings shall be calculated based on numbers of shares. The quorum shall be calculated according to the shares indicated by the sign-in cards handed in plus the number of shares whose voting rights are exercised in writing or by way of electronic transmission.

• The Chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the Chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than 1 hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, the Chair shall declare the meeting adjourned.

If the quorum is not met after two postponements as referred to in the

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preceding paragraph, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to paragraph 1 of Article 175 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders’ meeting shall be convened within 1 month.

When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the Chair may resubmit the tentative resolution for a vote by the shareholders’ meeting pursuant to Article 174 of the Company Act.

• Article 10: If a shareholders’ meeting is convened by the Board of Directors, the meeting agenda shall be set by the Board of Directors. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders’ meeting.

The provisions of the preceding paragraph apply mutatis mutandis to a shareholders’ meeting convened by a party having the convening right that is not the Board of Directors.

• The Chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders’ meeting. If the Chair declares the meeting adjourned in violation of the rules of procedure, the other members of the Board of Directors shall promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, by a majority of the votes represented by the attending shareholders, and then continue the meeting.

• The Chair shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the Chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the Chair may announce the discussion closed and call for a vote.

• Article 11: Before speaking, an attending shareholder must specify on a speaker's slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the Chair.

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A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail.

Except with the consent of the Chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes. If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the Chair may terminate the speech.

When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the Chair and the shareholder that has the floor; the Chair shall stop any violation.

When a juristic person shareholder appoints two or more representatives to attend a shareholders’ meeting, only one of the representatives so appointed may speak on the same proposal.

After an attending shareholder has spoken, the Chair may respond in person or direct relevant personnel to respond.

• Article 12: Voting at a shareholders’ meeting shall be calculated based on the number of shares.

With respect to resolutions of shareholders’ meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.

When a shareholder is an interested party in relation to an agenda item, and there is the likelihood that such a relationship would prejudice the interests of the Company, that shareholder may not vote on that item, and may not exercise voting rights as proxy for any other shareholder.

In case a director of the Company has created a pledge on the Company’s shares more than half of the Company’s shares being held by him/her/it at the time he/she/it is elected, the voting power of the excessive portion of shares shall not be exercised.

The number of shares for which voting rights may not be exercised under the preceding two paragraphs shall not be calculated as part of the voting rights represented by attending shareholders.

With the exception of a trust enterprise or a stock agency approved by the competent securities authority, when one person is concurrently

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appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented by the total number of voting shares, otherwise, the portion of excessive voting rights shall not be counted.

• Article 13: A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under paragraph 2 of Article 179 of the Company Act.

When the Company holds a shareholders’ meeting, it may allow the shareholders to exercise voting rights in writing or by way of electronic transmission. When voting rights are exercised in writing or by way of electronic transmission, the method for exercising the voting rights shall be specified in the shareholders’ meeting notice. A shareholder exercising voting rights in writing or by way of electronic transmission will be deemed to have attended the meeting in person, but to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting.

A shareholder intending to exercise voting rights in writing or by way of electronic transmission under the preceding paragraph shall deliver a written declaration of intent to the Company no later than 2 days prior to the scheduled shareholders’ meeting date. When duplicate declarations of intent are delivered, the one received earliest by the Company shall prevail, except when a declaration is made to revoke the earlier declaration of intention.

After a shareholder has exercised voting rights in writing or by way of electronic transmission, in the event the shareholder intends to attend the shareholders’ meeting in person, a written declaration of intent to rescind the voting rights already exercised under the preceding paragraph shall be made known to the Company, by the same means by which the voting rights were exercised, no later than 2 days prior to the scheduled shareholders’ meeting date. If the notice of rescission is submitted after that time, the voting rights already exercised in writing or by way of electronic transmission shall prevail. When a shareholder has exercised voting rights both in writing or by way of electronic transmission and by appointing a proxy to attend a shareholders’ meeting, the voting rights exercised by the proxy in the meeting shall

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prevail.

Except as otherwise provided in the Company Act and in the Company's Articles of Incorporation, the adoption of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. At the time of a vote, for each proposal, the Chair or a person designated by the Chair shall announce the total number of voting rights represented by the attending shareholders, followed by a poll of the shareholders. After the conclusion of the meeting, on the same day it is held, the results for each proposal, based on the numbers of votes for and against and the number of abstentions, shall be entered into the MOPS.

When there is an amendment or an alternative to a proposal, the Chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.

Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the Chair, provided that all monitoring personnel shall be shareholders of the Company. Vote counting for shareholders’ meeting proposals or elections shall be conducted in public at the place of the shareholders’ meeting. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.

• Article 14: The election of directors at a shareholders’ meeting shall be held in accordance with the applicable election and appointment rules adopted by the Company, and the voting results shall be announced on-site immediately, including the names of those elected as directors and the numbers of votes with which they were elected.

• The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Act, the ballots shall be retained until the conclusion of the litigation.

• Article 15: Matters relating to the resolutions of a shareholders’ meeting shall be

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recorded in the meeting minutes. The meeting minutes shall be signed or sealed by the Chair of the meeting and a copy distributed to each shareholder within 20 days after the conclusion of the meeting. The meeting minutes may be produced and distributed in electronic form.

The Company may distribute the meeting minutes of the preceding paragraph by means of a public announcement made through the MOPS. The meeting minutes shall accurately record the year, month, day, and place of the meeting, the Chair's full name, the methods by which resolutions were adopted, and a summary of the deliberations and their results, and shall be retained for the duration of the existence of the Company.

• Article 16: On the day of a shareholders’ meeting, the Company shall compile in the prescribed format a statistical statement of the number of shares obtained by solicitors through solicitation and the number of shares represented by proxies, and shall make an express disclosure of the same at the place of the shareholders’ meeting.

• If matters put to a resolution at a shareholders’ meeting constitute material information under applicable laws or regulations or under TWSE regulations, the Company shall upload the content of such resolution to the MOPS within the prescribed time period.

• Article 17: Staff handling administrative affairs of a shareholders’ meeting shall wear identification cards or arm bands.

• The Chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor."

• At the place of a shareholders’ meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by the Company, the Chair may prevent the shareholder from so doing. When a shareholder violates the rules of procedure and defies the Chair's correction, obstructing the proceedings and refusing to heed calls to stop, the Chair may direct the proctors or security personnel to escort the shareholder from the meeting.

• Article 18: When a meeting is in progress, the Chair may announce a break based on time considerations. If a force majeure event occurs, the Chair may

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rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders’ meeting may adopt a resolution to resume the meeting at another venue.

A resolution may be adopted at a shareholders’ meeting to postpone or resume the meeting within 5 days in accordance with Article 182 of the Company Act.

• Article 19: These Rules, and any amendments hereto, shall be implemented after adoption by shareholders’ meetings.

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Procedures for Acquisition or Disposal of Assets of Formosa Plastics Corporation

Amended by the Annual Shareholders’ Meeting on June 17, 2016

Chapter 1 General Principles

• Article 1: When acquiring or disposing of the following assets, Formosa Plastics Corporation (hereinafter referred to as the “Company”) and its subsidiaries shall follow the Procedures for Acquisition or Disposal of Assets (hereinafter referred to as the “Procedures”):

• Investments in stocks, government bonds, corporate bonds, bank debentures, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, asset-backed securities, etc.

• Real property (including land, houses and buildings, investment property, and land use rights) and equipment.

• Memberships.

• Patents, copyrights, trademarks, franchise rights, and other intangible assets.

• Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables).

• Derivatives.

• Assets acquired or disposed through mergers, demergers, acquisitions, or assignment of shares in accordance with law.

• Other major assets.

• Article 2: The limit amount of investments for non-operating real property or securities (the original investment), by the Company and each subsidiary, shall not exceed 60% of the book value of total assets; for an individual securities investment, the limit amount shall not exceed 50% of the foresaid limit amount, i.e. 30% of the book value of total assets.

Article 3: Terms used in these Procedures are defined as follows:

1. Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, swap contracts, and compound contracts

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combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term "forward contracts" does not include insurance contracts, performance contracts, post-sale service contracts, long-term lease contract, and long-term procurement (sales) agreements.

1. Assets acquired or disposed through mergers, demergers, acquisitions, or assignment of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institutions Merger Act and other acts, or to shares acquired from another company through issuance of new shares of its own as the consideration therefor (hereinafter "acquisition of shares") under paragraph 8 of Article 156 of the Company Act.

2. Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

3. Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.

4. Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of Board of Directors resolutions, or other date that can confirm the counterpart and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.

Mainland China area investment: Refers to investments in the Mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.

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• Article 4: Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Company with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions in relation to the assets acquired or disposed, shall not be a related party of any party to the transaction.

• Article 5: The procedures for the assessment, determination of transaction terms and conditions, and price of acquiring or disposing of assets by the Company shall be in accordance with the following requirements:

• Transactions relating to short-term securities investments and derivatives, which are mentioned in Article 1, should be evaluated and executed by the financial department; long-term securities investment should be assessed by the Company’s President Office (“President Office”) and executed by the financial department after the approval; except for the foresaid assets, the other asset transactions should be assessed by the Company’s President Office and executed by the related departments after the approval.

• The price of transactions described in the preceding paragraph, except which are traded in the stock exchange or securities brokerage firms, shall be determined via public bidding, price bidding, or price negotiation based on reference to the market conditions.

• Article 6: Where an acquisition or disposition of assets of the Company shall be approved by the Board of Directors according to the Procedures or other relevant laws, the independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

• A major asset transaction or a derivatives transaction shall be approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If approval of more than half of all audit committee members is not obtained, the procedures may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be

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recorded in the minutes of the Board of Directors meeting.

Chapter 2 Acquisition or Disposal of Assets

• Article 7: In acquiring or disposing of real property or equipment where the transaction amount reaches 20 percent of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government institution, engaging others to build on its own land, engaging others to build on rented land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions:

• Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be proposed for approval in advance by the Board of Directors, and the same procedure shall be followed for any future changes to the terms and conditions of the transaction.

• Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.

• Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation of Republic of China (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:

  • (1) The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.

  • (2) The discrepancy between the appraisal results of two or more

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professional appraisers is 10 percent or more of the transaction amount.

1. No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

2. Article 8: The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the Company's paid-in capital or NT$300 million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the securities competent authority.

3. Article In acquiring or disposing of membership cards or intangible assets 8-1: where the transaction amount reaches 20 percent or more of the company's paid-in capital or NT$300 million or more, the Company, unless transacting with a government institution, shall obtain a CPA’s opinion on the reasonableness of the transaction price prior to the date of occurrence of the event. The CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the Accounting Research and Development Foundation.

4. Article The calculation of the transaction amounts referred to in the preceding

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• 8-2: three articles shall be done in accordance with paragraph 2 of Article 26, herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

• Article 9: Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.

• Article 10: Where the Company acquires or disposes of assets shall be conducted by the authorization to the Chairman by the Board of Directors in accordance with the authorization limits of the Company.

Chapter 3 Related Party Transactions

• Article 11: When the Company engages in any acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised in compliance with the provisions of the Chapter 2 and this Chapter, if the transaction amount reaches 10 percent or more of the Company's total assets, the Company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of Chapter 2.

• The calculation of the transaction amount referred to in the preceding paragraph shall be made in accordance with Article 8-1.

• Article 12: When the Company intends to acquire or dispose of real property from or to a related party, or when it intends to acquire or dispose of assets other than real property from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the Company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of money market funds issued by domestic securities investment trust enterprises, the Company may not proceed to enter into a transaction contract or make

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a payment until the following matters have been approved by the Board of Director:

1. The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.

2. The reason for choosing the related party as a trading counterparty.

3. With respect to the acquisition of real property from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 13 through 15.

4. The date and price at which the related party originally acquired the real property, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party.

5. Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.

6. An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article.

7. Restrictive covenants and other important stipulations associated with the transaction.

The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with paragraph 2 of Article 26 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the Board of Directors need not be counted toward the transaction amount.

With respect to the acquisition or disposal of business-use equipment between the Company and its parent or subsidiaries, the Company's Board of Directors may pursuant to Article 10 delegate the Chairman to decide such matters when the transaction is within a certain amount and have the decisions subsequently proposed to and ratified by the next Board of Directors meeting.

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When a matter is proposed for discussion by the Board of Directors pursuant to paragraph 1 of this Article, the independent Directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

• Article 13: The Company shall evaluate the reasonableness of the transaction costs by the following means if it intends to acquire real property from a related party:

• Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.

• Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.

Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the

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land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.

When acquiring real property from a related party, the Company shall evaluate the cost of the real property in accordance with paragraph 1 and paragraph 2 and shall also engage a CPA to review the evaluation and render a specific opinion.

• Article 14: Where the Company acquires real property from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with Article 12, and Article 13 does not apply:

• The related party acquired the real property through inheritance or as a gift.

• More than 5 years have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction.

The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the company's own land or on rented land.

Article 15: When the results of the Company's appraisal conducted in accordance with paragraph 1 and paragraph 2 of Article 13 are uniformly lower than the transaction price, the matter shall be handled in compliance with Article 16. However, where the following circumstances exist, and objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA, Article 16 shall not apply:

1. Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions:

2. (1) Where undeveloped land is appraised in accordance with the means in the preceding two articles, and structures according to the related party's construction cost plus reasonable construction

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profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.

• (2) Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices.

• (3) Completed leasing transactions by unrelated parties for other floors of the same property from within the preceding year, where the transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance with standard property leasing market practices.

• Where the Company acquiring real property from a related party provides evidence that the terms of the transaction are similar to the terms of transactions completed for the acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year.

Completed transactions for neighboring or closely valued parcels of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transaction for similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real property.

Article 16: Where the Company acquires real property from a related party and

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the results of appraisals conducted in accordance with Article 13 through 15 are uniformly lower than the transaction price, the following steps shall be taken:

1. A special earnings reserve shall be set aside in accordance with paragraph 1 of Article 41 of the Securities and Exchange Act against the difference between the real property transaction price and the appraised cost, and such difference may not be distributed or used for capital increase by issuance of new shares. Where the Company uses the equity method to account for its investment in another company, then the special earnings reserve called for under paragraph 1 of Article 41 of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company.

2. Audit Committee shall supervise the Company’s execution of the aforesaid matter.

3. Actions taken pursuant to subparagraph 1 and subparagraph 2 shall be reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus.

The Company having set aside a special earnings reserve under the preceding paragraph may not utilize the special earnings reserve until it has recognized a loss on decline in market value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the securities competent authority has given its consent.

When the Company obtains real property from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arm’s length transaction.

Chapter 4 Engaging in Derivatives Trading

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• Article 17: Any derivatives trading of the Company shall be conducted in accordance with the “Procedures for Engaging in Derivatives Transactions” of the Company, and when doing so, the Company shall pay attention to issues of risk management and auditing to fulfill the Internal Control System of the Company.

Chapter 5 Mergers and Consolidations, Splits, Acquisitions,

and Assignment of Shares

• Article 18: The Company that conducts a merger, demerger, acquisition, or assignment of shares shall, prior to convening the Board of Directors to resolve on the matter, engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and propose the opinion to the Board of Directors for deliberation and approval. However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by the company of a subsidiary in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the Company directly or indirectly holds 100 percent of the respective subsidiaries’ issued shares or authorized capital.

• Article 19: The Company participating in a merger, demerger, or acquisition shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting, together with the expert opinion referred to in Article 18 when sending notice of the shareholders meeting, for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply. Where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or

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pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the Company shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

Article 20: When the Company participates in a merger, demerger, or acquisition, it shall convene a board of directors meeting and shareholders meeting on the same date on which the other companies participating in the merger, demerger, or acquisition convene their board of directors and shareholders meeting to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the securities competent authority is notified in advance of extraordinary circumstances and grants consent. The Company and other companies participating in an assignment of shares shall call their respective board of directors meeting on the same day, unless another act provides otherwise or the securities competent authority is notified in advance of extraordinary circumstances and grants consent.

When the Company participates in a merger, demerger, acquisition, or assignment of shares, it shall prepare a full written record of the following information and retain the record for 5 years for reference. In addition, the information set out in the subparagraphs 1 and 2 of the following paragraph shall be reported in the prescribed format and via the Internet-based information system to the securities competent authority for recordation within two days commencing immediately from the date of passage of a resolution by the Board of Directors.

1. Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, demerger, acquisition, or assignment of shares prior to disclosure of the information.

2. Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the engagement of a

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financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting.

1. Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings.

Where the Company participating in a merger, demerger, acquisition, or assignment of shares is neither listed on an exchange nor has its shares traded on an OTC market, the Company shall enter into an agreement with such party and shall comply with the preceding paragraph of this Article.

• Article 21: Every person participating in or privy to the plan for merger, demerger, acquisition, or assignment of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or under the name of another person, in any stock or other equity security of any company related to the plan for merger, demerger, acquisition, or assignment of shares.

• Article 22: When participating in a merger, demerger, acquisition, or assignment of shares, the Company shall not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or assignment of shares:

• Capital increase by cash injection, issuance of convertible corporate bonds, or the issuance of stock dividend, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.

• An action, such as a disposal of major assets that affects the company's financial operations.

• An event, such as a major disaster or major change in technology that affects shareholder equity or share price.

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1. An adjustment where any of the companies participating in the merger, demerger, acquisition, or assignment of shares buys back treasury stock.

2. An increase or decrease in the number of entities or companies participating in the merger, demerger, acquisition, or assignment of shares.

3. Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.

4. Article 23: The contract for participation by the Company in a merger, demerger, acquisition, or assignment of shares shall record the rights and obligations of the companies participating in the merger, demerger, acquisition, or assignment of shares, and shall also record the following:

5. Handling of breach of contract.

6. Principles for the handling of equity-type securities previously issued or treasury stock previously bought back by any company that is extinguished in a merger or that is demerged.

7. The amount of treasury stock participating companies are permitted under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.

8. The manner of handling changes in the number of participating entities or companies.

9. Preliminary progress schedule for plan execution, and anticipated completion date.

10. Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.

11. Article 24: After public disclosure of the information, if the Company participating in the merger, demerger, acquisition, or assignment of shares intends further to carry out a merger, demerger, acquisition, or assignment of shares with another company, all of the participating companies shall carry out anew the procedures or legal actions that

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had originally been completed toward the merger, demerger, acquisition, or assignment of share ; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the Board of Directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

• Article 25: Where any of the companies participating in a merger, demerger, acquisition, or assignment of shares is not a public company, the Company shall sign an agreement with the non-public company in accordance with the provisions of Article 20, Article 21, and Article 24.

Chapter 6 Public Disclosure of Information

• Article 26: Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the securities competent authority's designated website in the appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event:

• Acquisition or disposal

  • of real property from or to a related party, or acquisition or disposal of assets other than real property from or to a related party where the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the Company's total assets, or NT$300 million or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of money market funds issued by domestic securities investment trust enterprises.

• Merger, demerger

acquisition, or assignment of shares.

1. Losses from derivatives

trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the

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Company.

1. Where the type of asset acquired or disposed is equipment/machinery for business use, the trading counterparty is not a related party, and the transaction amount is more than NT$1 billion.

2. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the Company expects to invest in the transaction is more than NT$500 million.

3. An asset transaction

other than any of those referred to in the preceding five subparagraphs, a disposal of receivables by a financial institution, or an investment in the mainland China area where the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, provided this shall not apply to the following circumstances:

• (1) Trading of

government bonds.

• (2) Trading of bonds

under repurchase/resale agreements or the subscription or repurchase of money market funds issued by domestic securities investment trust enterprises.

The amount of transactions above shall be calculated as follows:

1. The amount of any individual transaction.

2. The cumulative transaction amount of acquisitions and disposals of the same type of underlying asset with the same trading counterparty within the preceding year.

3. The cumulative transaction amount of real property acquisitions and disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year.

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1. The cumulative transaction amount of acquisitions and disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.

2. "Within the preceding year" as used in the paragraph 2 refers to the year preceding the date of occurrence of the current transaction. Items duly announced in accordance with these Procedures need not be counted toward the transaction amount.

3. Article 27: When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days from the date when is the Company becomes aware of the error or omission.

4. Article 28: The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the company headquarters, where they shall be retained for 5 years except where another act provides otherwise.

5. Article 29: Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the Article 26 through 28, a public report of relevant information shall be made on the information reporting website designated by the securities competent authority within 2 days commencing immediately from the date of occurrence of the event:

6. Change, termination, or rescission of a contract signed in regard to the original transaction.

7. The merger, demerger, acquisition, or assignment of shares is not completed by the scheduled date set forth in the contract.

8. Change to the originally publicly announced and reported information.

Chapter 7 Additional Provisions

Article 30: Information required to be publicly announced and reported in

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accordance with the provisions of Chapter 6 on acquisitions and disposals of assets by a subsidiary of the Company that is not a public company in Taiwan shall be reported by the Company.

The paid-in capital or total assets of the Company shall be the standard for determining whether or not a subsidiary referred to in the preceding paragraph is subject to subparagraph 5 of paragraph 1 of Article 26requiring a public announcement and regulatory filing in the event the type of transaction specified therein reaches 20 percent of paid-in capital or 10 percent of the total assets.

• Article 31: The Company’s controlling and monitoring procedures towards the acquisition or disposal of assets by its subsidiaries are as follows:

• The Company shall urge its subsidiaries to establish and execute their own “Procedures for Acquisition of Disposal of Assets”.

• If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall deliver a written notice to the Company of this kind of violation. The Company shall know the condition of dealing with the violation(s) and of the resulting improvements.

• Article 32: Should there be any violation of the procedures when the persons-in-charge of the Company deal with acquisition or disposal of assets, subsequent penalization is subject to the relevant HR policies of the Company.

• Article 33: (Deleted)

• Article 34: For the calculation of 10 percent of total assets under this Procedures, the total assets stated in the most recent parent company only financial report or individual financial report prepared under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.

• Article 35: After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure. The independent directors' opinions specifically

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expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the procedures may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

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Procedures for Engaging in Derivatives Transactions of Formosa Plastics Corporation

Amended by the Annual Shareholders’ Meeting on June 20, 2018

Chapter 1 General Principles

• Article 1: The “Procedures for Engaging in Derivatives Transactions” (hereinafter referred to as the “Procedures”) of Formosa Plastics Corporation (hereinafter referred to as the “Company”) was established in accordance with Article 17 of the “Procedures for Acquisition or Disposal of Assets” of the Company.

• Article 2: Derivatives referred to herein are defined as forward contracts, options contracts, futures contracts, leverage contracts, swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests.

• Article 3: Forward contracts referred to herein do not include insurance contracts, performance contracts, after-sales service contracts, long-term lease contracts, and long-term purchase (sales) contracts.

• Article 4: The principle of the Company’s derivatives transactions is to manage volatility resulting from fluctuation in the financial markets such as movements in foreign exchange rates, interest rates, and asset price.

Chapter 2 Operation Procedures

• Article 5: The total contract amount of derivatives transactions of the Company shall not exceed 50% of the Company’s net worth, and the maximum loss limit is 10% of the contract amount for all contracts in aggregate or for any individual contract. The content of individual derivatives contract shall be approved by high-level manager(s), who is authorized by the Board of Directors based on the scope of the approval level of the Company.

• Article 6: Major derivatives transactions of the Company requires approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of

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all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

Article 7:

• The transaction personnel of the Department, which is in charge of derivatives transactions, shall follows the trading strategy in accordance with the approved deal terms and conditions of derivatives transactions. Also, the transaction personnel shall execute trades directly with counterparties. After the foresaid trades are done, the transaction personnel shall deliver the relevant transaction receipts to the settlement personnel to conduct the settlement procedures. The settlement personnel shall proceed contracts signing, bank accounts opening, settlement, accounts closing, etc. with counterparties in accordance with the trading conditions.

Chapter 3 Information Disclosure Procedures

• Article 8: The Company shall compile monthly report on the status of derivatives transactions engaged in up to the end of the previous month by itself and enter the information in the regulated form into the information reporting website designated by the competent securities authority before the tenth day of each month. If derivatives transactions of which maximum loss for all or individual contract exceeds 10% of contract amount respectively, or any amendment, termination or cancellation of the original contract occurs, the Company shall report and make public announcements accordingly on the information reporting website designated by the competent securities authority within two days from the date of occurrence of the event.

• Article 9: When the Company’s subsidiaries are not domestic public companies and are participating in derivatives transactions, the Company shall follow the requirements of Article 8 hereof to report and make public announcements on behalf of its subsidiaries.

• Article 10: When the Company makes an error or omission in an item required by the Procedures to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety.

• Article 11: The Company shall upload the auditing report regarding the

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derivatives transactions and the implementation status of annual auditing plans of internal audits in the regulated form to the information reporting website designated by the competent securities authority before the end of February of every year.

• Article 12: The Company shall upload the improvement situation for any abnormal affairs regarding the Procedures to the information reporting website designated by the competent securities authority before the end of May of every year.

Chapter 4 Internal Control and Internal Audit

• Article 13: The Company engaging in derivatives transactions shall adopt appropriate risk management practices with regards to credit risk, market risk, liquidity risk, cash flow risk, operation risk and legal risk. The personnel who is responsible for the derivatives transactions may not serve concurrently in other operations such as confirmation and settlement. Regarding the appropriateness assessment towards the risk measurement, monitoring and control, and risk management procedures, the President Office of the Company should periodically report to the high-level manager(s), who is authorized by the Board of Directors.

• Article 14: The derivatives trading positions of the Company shall be evaluated at least once a week by the in-charge department, but the hedging transactions made for business purposes shall be evaluated at least twice a month. The manager of the in-charge department shall pay attention to the risk control and monitoring of derivatives transactions from time to time, and periodically supervise and evaluate the derivatives transactions to check whether they are conducted in accordance with the related procedures formulated by the Company hereof and whether the attendant risk of these transactions is within the capability of the Company. The foresaid evaluation reports shall be given to a high-level manager(s) authorized by the Board of Directors for review. If there is any abnormal situation highlighted in the market evaluation reports (e.g. the holding position has reached the maximum loss limit), the Company shall immediately take necessary measures to deal with the situation and report to the Board of Directors. There shall be

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independent directors attending the Board of Directors meeting and expressing their opinions.

Article 15: The Company shall establish a log book to record all its derivatives transaction information, including types and amounts of derivatives transactions, and matters to be evaluated cautiously in accordance with Article 14 hereof. The Company's internal audit personnel shall be in charge of periodically assessing the appropriateness of the internal control regarding the derivatives transactions, shall conduct monthly audit to evaluate whether the trading department conform to the Procedures, and shall prepare the monthly auditing report accordingly. If any material violation is discovered, the Audit Committee shall be notified in writing and the Company should, depending on the status of such material violation, penalize the relevant personnel in accordance with the Human Resources Management Policies.

• Article 16: The Company’s control and monitoring procedures towards the derivatives transactions by the Company’s subsidiaries are as follows:

• If the Company’s subsidiaries intend to conduct derivatives transactions, the Company shall ensure that its subsidiaries establish their own “Procedures for Engaging in Derivatives Transactions”.

• The Company’s subsidiaries shall submit the reference content of the derivatives transactions of the previous month to the Company for review by the fifth date of every month.

• If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall submit a written notice to the Company of such violations. The Company shall closely monitor the violations and the resulting improvements.

Chapter 5 Additional Provision

• Article 17: After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure.

The independent directors' opinions specifically expressing dissent

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or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

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Procedures for Loaning Funds to other Parties of Formosa Plastics Corporation

Amended by the Annual Shareholders’ Meeting on June 17, 2016

Article 1: Formosa Plastics Corporation (hereinafter referred to as the “Company”) shall comply with the “Procedures for Loaning Funds to other Parties” (hereinafter referred to as the“ Procedures”) when making loans to others.

• Article 2: The borrower to which the Company may loan funds shall be limited to where an inter-company or inter-firm business transaction calls for a loan arrangement; or where an inter-company or inter-firm has no business transaction but has a short-term necessary financing facility.

• Article 3: When making loans to the company/firm having business relationship with the Company, the Company shall comply with subparagraph 2 of Article 4 hereof. As to loaning funds to a company/firm, which has no business relationship with the Company, for short term financing needs, the borrower shall be:

• Affiliates of the Company which a short-term financing facility is necessary to meet their business needs.

• Companies/firms other than affiliates of the Company which need short term financing for materials purchase, working capital, or general business needs.

• Article 4: Limitation on the aggregate amount of loans and the maximum amount to a single borrower:

• The aggregate amount of loans to all borrowers shall not exceed 50% of the net worth of the Company. Moreover, the aggregate amount of loans to companies/firms which do not have business relationship with the Company but are in need of short term financing shall not exceed 40% of the Company’s net worth.

• The aggregate amount of loans to each company/firm, which has a business relationship with the Company, shall not exceed the total transaction amount between the two parties. The foresaid

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“total transaction amount” shall be the total purchasing or selling amount over the latest year, whichever is higher and shall not exceed 25% of the Company’s net worth.

1. The aggregate amount of loans to each company/ firm in need of short term financing, which is an affiliate of the Company, shall not exceed 25% of the Company’s net worth; as to the other borrowers, the aggregate amount of loans to each of them shall not exceed 20% of the Company’s net worth.

2. Whenever making advances in accordance with Article 7 hereof, the authorized maximum limit of loans to one borrower shall not exceed 10% of the Company’s net worth.

3. Article 5: Before the Company makes loans to a funds borrower, the Company shall do an investigation and assessment of the following aspects: the purposes of the borrowing, the terms of the security for the borrowing, and the impact on the Company’s operational risks, financial conditions and shareholders’ rights and interests. The limit or maximum amount of lending, tenor and interest calculation terms shall be determined based on these findings, and then submitted to the Board of Directors for approval.

The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

When the Company making major loans to others, it requires approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

Article 6:

The tenor of the loan shall not be longer than one year in the case the borrower does not have business relationship with the Company but has a short-term necessary financing facility. The interest rates of the loans shall not be lower than the then current lowest lending interest rates announced by the general financial institutions.

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Article 7: Loans of funds between the Company and its parent company or subsidiaries, or between its subsidiaries, shall be submitted for a resolution by the Board of Directors pursuant to Article 5, and the Chairman may be authorized, for a specific borrowing counterparty, within a certain monetary limit resolved by the Board of Directors, and within a period not to exceed one year, to give loans in installments or to make a revolving credit line available for the counterparty to draw down.

Article 8: A loan to the borrower may be extended for a certain period, provided the extension of the loan has been approved by the Board of Directors. The total duration of the loan after the above-mentioned extension shall meet the requirement of Article 6. If the extension of the loan is not approved by the Board of Directors, the borrower shall repay the principal and the accrued interests in full on the due date. If the borrower fails to perform, the Company shall claim the overdue amount via legal proceedings.

Article 9: The Company shall prepare a memorandum book for its fund-loaning activities and truthfully record the following information: borrower, amount, date of approval by the Board of Directors, lending/borrowing date, and matters to be carefully evaluated.

Article 10: The Company's internal auditors shall audit the Procedures for Loaning Funds to other Parties and the implementation thereof no less frequently than quarterly and prepare written records accordingly. During the auditing, the internal auditor shall immediately correct violation(s) upon finding any violation. If any material violation is found, in addition to notifying the Audit Committee promptly in writing, the personnel who violate the Procedures shall be penalized in accordance with the related rules of the Company.

Article 11: If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is made does not meet the requirements of the Procedures or the loan balance exceeds the limit, the Company shall adopt rectification plans and submit the rectification plans to the Audit Committee for its approval and then to the Board of Directors for a resolution, and shall complete the rectification

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according to the timeframe set out in the plan.

Article 12: Procedures for controlling and managing loans of funds to others by subsidiaries of the Company are as follows:

1. Where a subsidiary of the Company intends to make loans to others, the Company shall instruct it to formulate its own Procedures for Loaning Funds to other Parties in compliance with Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies, and it shall comply with the Procedures when loaning funds.

2. The subsidiaries shall compile and submit the schedule, including the details and status of fund-lending as of the end of the previous month to the Company for review by the fifth day of the current month.

3. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall promptly notify the Company in writing of any material violation found. The Company shall know how the subsidiary deals with the violation(s), admonish the subsidiary to improve and keep itself informed of the improvement process.

4. Article 13: The Company shall announce and report the related information of fund-lending to others in compliance with the following requirements:

5. The Company shall enter the previous month's loan balances of its head office and subsidiaries to the information reporting website designated by the securities competent authority by the 10th day of each month.

   • (1) The company whose loans of funds reach one of the following levels shall announce and report such event on the information reporting website designated by the securities competent authority within two days commencing immediately from the date of occurrence:

   • (2) The aggregate balance of loans to others by the Company and its subsidiaries reaches 20 percent or more of the

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Company's net worth as stated in its latest financial statement.

  - (3) The balance of loans by the Company and its subsidiaries to a single enterprise reaches 10 percent or more of the Company's net worth as stated in its latest financial statement.

  - (4) The amount of new loans of funds by the Company or its subsidiaries reaches NT$10 million or more, and reaches 2 percent or more of the Company's net worth as stated in its latest financial statement.

1. The Company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to subparagraphs of the preceding paragraph. The percentage of the aggregate balance of loans to others over net worth of the above-mentioned subsidiary shall be calculated as the subsidiary’s balance of loans to others to the Company’s net worth.

2. The Company shall evaluate the status of its fund-lending and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary audit procedures

3. Article 14: After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedures. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid

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matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

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Procedures for Providing Endorsements and Guarantees to other Parties of Formosa Plastics Corporation

Amended by the Annual Shareholders’ Meeting on June 17, 2016

Chapter 1 General Principles

• Article 1: Formosa Plastics Corporation (hereinafter referred to as the “Company”) shall comply with the “Procedures for Providing Endorsements and Guarantees to other Parties” (hereinafter referred to as the “Procedures”) when making endorsements or guarantees for others.

• Article 2: The term "endorsements/guarantees" as used in the Procedures refers to the following:

• Financing endorsements/guarantees, including:

  • (1) Bill discount financing.

  • (2) Endorsement or guarantee made to meet the financing needs of another company, including any creation of a pledge or mortgage on the Company’s chattel or real property as security for the loans of another company.

  • (3) Issuance of a separate negotiable instrument to a non-financial enterprise as security to meet the financing needs of the company itself.

• Customs duty endorsement/guarantee, meaning an endorsement or guarantee for the Company itself or another company with respect to customs duty matters.

• Other endorsements/guarantees, meaning endorsements or guarantees beyond the scope of the above two subparagraphs.

Article 3: The Company may make endorsements/guarantees for the following companies ：

1. A company with which it does business.

2. A company in which the Company directly and indirectly holds more than 50 percent of the voting shares.

3. A company that directly and indirectly holds more than 50 percent of the voting shares in the Company.

4. Where the Company fulfills its contractual obligations by

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providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.

1. Where all capital contributing shareholders make endorsements/ guarantees for their jointly invested company in proportion to their shareholding percentages. Capital contribution referred to in the paragraph shall mean capital contribution directly by the Company, or through a subsidiary in which the Company holds 100% of the voting shares.

Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares may make endorsements/guarantees for each other, and the amount of endorsements/guarantees may not exceed 10% of the net worth of the Company, provided that this restriction shall not apply to endorsements/guarantees made between companies in which the Company holds, directly or indirectly, 100% of the voting shares.

Chapter 2 Formulation of Operation Procedures

• Article 4: The ceiling on the total outstanding amount of making endorsements or guarantees of the Company or the Company and its subsidiaries:

• The aggregate amount of making endorsements or guarantees shall not exceed 1.3 times of the net value of the Company.

• For any one endorsee or guarantee, the amount shall not exceed 50% of the aggregate amount above.

• The total outstanding amount of endorsement to each of the companies, which has a business relationship with the Company, shall not exceed the total transaction amount between the two parties. The foresaid “total transaction amount” shall be the total purchasing or selling amount or contract price, whichever is highest, provided that the highest amount shall in no event exceed the amount set forth in the preceding item.

• Where the Company needs to exceed the limits set out in the Procedures to satisfy its business needs, it shall obtain approval

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from the Board of Directors and half or more of the directors shall act as joint guarantors for any loss that may be caused to the Company by the excess endorsement or guarantee. It shall also amend the Procedures accordingly and submit the same to the Shareholders Meeting for ratification. If the shareholders meeting does not give consent, the Company shall adopt a plan to discharge the amount in excess within a given time limit.

Where as a result of changes of condition the entity for which an endorsement/guarantee is made no longer meets the requirements of the Procedures, or the amount of endorsement/guarantee exceeds the limit, the Company shall adopt rectification plans and submit the rectification plans to the Audit Committee and to the Board of Directors for a resolution, and shall complete the rectification according to the timeframe set out in the plan.

Article 5:

Any endorsement/guarantee provided by the Company shall be approved in advance by the Board of Directors, provided that the Board of Directors can authorize the chairman to approve, in advance, any endorsement or guarantee within a certain amount without the approval of the Board of Directors. After that, the chairman needs to submit the results for ratification by the Board of Directors.

The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

Major endorsement/guarantee provided by the Company requires approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

Before making any endorsement/guarantee pursuant to Article 3, paragraph 2, a subsidiary in which the Company holds, directly or indirectly, 90% or more of the voting shares shall submit the proposed endorsement/guarantee to the Company’s Board of

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Directors for a resolution, provided that this restriction shall not apply to endorsements/guarantees made between companies in which the Company holds, directly or indirectly, one hundred percent (100%) of their total outstanding shares with voting rights.

Article 6:

Before providing endorsement/guarantee to a company, the in-charge department of the Company shall conduct the assessment on the necessity, reasonableness, risk, the financial condition of the Company and the impact on the Company’s shareholders’ rights and interests of providing endorsement/guarantee to that company, and the assessment shall be placed on record. If it is deemed necessary, the Company shall require collateral for the endorsement/guarantee from the endorsed/guaranteed company. The assessment report of providing the endorsement/guarantee to that company, containing the counterparty, kind of endorsement/guarantee, reasons for providing endorsement/guarantee and amount, shall be submitted to the Board of Directors of the Company for approval. Each month, the finance department shall key in data of each new endorsement/guarantee or the cancellation of each endorsement/guarantee into the ERP system for controlling and shall print out the detailed list hereof in lieu of the reference book.

Any endorsement/guarantee provided by the Company to one of the Company’s subsidiaries with a net worth of less than 50% of the subsidiary’s paid-in capital shall be reviewed by the in-charge department of the Company on a quarterly basis.

Article 7:

The Company shall use the corporate chop registered with the Ministry of Economic Affairs as the dedicated chop for endorsements/guarantees. The chop shall be kept in the custody of a designated person approved by the Board of Directors, and the change of a designated person is subject to the same procedures. The designated person may use the chop to seal or issue negotiable instruments only when the same is in line with the operational procedure prescribed by the Company. When making a guarantee for a foreign company, the Company shall have the Guarantee Agreement signed by the chairman or general manager authorized by the Board of Directors.

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• Article 8: The Company's internal auditors shall audit the execution of the endorsement/guarantee operation thereof no less frequently than quarterly and prepare written records accordingly. The internal auditor, during the auditing, shall immediately correct violation(s) upon finding of any violation. If any material violation is found, in addition to notifying the Audit Committee promptly in writing, the personnel who violate the Procedures shall be penalized in accordance with the employee management rules of the Company.

• Article 9: The procedures regarding the Company’s control of providing endorsement/guarantee to other companies by the subsidiaries of the Company are as follows.

• When the subsidiaries intend to provide endorsements/guarantees to other companies, the Company shall require its subsidiaries to establish relevant procedures for providing endorsement/guarantee to other companies in accordance with the requirements of “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” and to comply with such procedures.

• The subsidiaries shall compile and submit the schedule which includes the details of endorsement/guarantee made in the previous month to the Company for review by the fifth day of each month.

• If any material violation is found by the internal auditors of the subsidiaries, the internal auditors shall deliver a written notice to the Company of this kind of violation. The Company shall know how the subsidiary deals with the violations(s), admonish the subsidiary to improve and keep itself informed of the improvement results.

Chapter 3 Information Disclosure

• Article 10: The Company shall enter the previous month's balance of endorsements/guarantees of itself and its subsidiaries to the information reporting website designated by the securities competent authority by the 10th day of each month.

Article 11:

In addition to announcing and reporting the monthly balance of

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endorsements/guarantees in compliance with Article 10, in the event that the amount of the Company's endorsements/guarantees reaches one of the following levels, the Company shall announce and report such event on the information reporting website designated by the securities competent authority within two days commencing immediately from the date of occurrence:

1. The aggregate amount of endorsements/guarantees by the Company and its subsidiaries reaches 50 percent or more of the Company's net worth as stated in its latest financial statement.

2. The amount of endorsements/guarantees by the Company and its subsidiaries for any single enterprise reaches 20 percent or more of the Company's net worth as stated in its latest financial statement.

3. The amount of endorsements/guarantees by the Company and its subsidiaries for any single enterprise reaches NT$10 million or more and the aggregate amount of all endorsements/guarantees, long-term investment, and loans to that enterprise reaches 30 percent or more of the Company's net worth as stated in its latest financial statement.

4. The amount of new endorsements/guarantees made by the Company or its subsidiaries reaches NT$30 million or more, and reaches 5 percent or more of the Company's net worth as stated in its latest financial statement.

Article 12: The Company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to the subparagraphs of Article 11. The percentage of the balance of endorsements/guarantees over the net worth of the Company under the preceding paragraph shall be calculated by the ratio of the subsidiary's balance of endorsements/guarantees to the Company's net worth.

Article 13:

The Company shall evaluate or record the contingent loss for endorsements/guarantees, and shall adequately disclose information on endorsements/guarantees in its financial reports and provide its

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certified public accountants with relevant information for implementation of necessary auditing procedures to issue proper audit reports.

Chapter 4 Additional Provisions

• Article 14: After the Procedures are approved by the Board of Directors, the same shall be submitted for approval by the shareholders meeting before its implementation. Any amendment is subject to the same procedures.

The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

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Formosa Plastics Corporation Current Shareholdings of Directors

Title	Name	Shareholding (share)
Chairman	Jason Lin	0
Managing Director	William Wong Representative of Formosa Chemicals & Fibre Corporation	486,978,692
Managing Director	Susan Wang Representative of Nan Ya Plastics Corporation	294,793,105
Managing Director	Wilfred Wang Representative of Formosa Petrochemical Corporation	131,460,365
Managing Director (Independent Director)	C. L. Wei	0
Independent Director	C. J. Wu	0
Independent Director	Yen-ShiangShih	0
Director	C. T. Lee	632,541
Director	Cher Wang	7,369,380
Director	K. H. Wu	134,537
Director	Ralph Ho	27,824,363
Director	K. L. Huang	10,400
Director	Cheng-ChungCheng	0
Director	JerryLin	0
Director	Ching-Lian Huang	0

Note: According to Article 26 of Securities and Exchange Act, the minimum of the Directors are shareholdings Company’s 101,851,853 shares. As of April 13, 2019, the actual shareholdings of the Company’s Directors are 949,203,383 shares.

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Information regarding the Proposed Employees and Directors’ Compensation to Adopted by the Board of Directors of the Com n pa y:

Company:	Company:
1. Amounts of employees’ cash compensation, stock compensation, and Directors’ compensation:
Employees Cash Compensation	NT$74,166,956
Employees Stock Compensation	NT$0
Directors Cash Compensation	NT$0
2. Share amount of the employees’ stock compensation and the percentage of the share amount to that of all stock dividends capitalization:
Share amount of employees’ stock compensation	0 share
Percentage of the share amount to that of all stock dividends capitalization	0%

The above-listed amount of employees’ cash compensation is consistent with the proposed amount adopted by the Board of Directors of the Company.

Effect upon Business Performance and Earnings Per Share of the Company by the Stock Dividend Distribution Proposed at the 2019 Annual Shareholders’ Meeting:

Not applicable since the Company does not propose the stock dividend distribution at the 2019 Annual Shareholders’ Meeting and does not required to prepare financial forecast information.

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