FPC - AGM Information 2020 | FinancialReports.eu

FORMOSA PLASTICS CORPORATION

2020ANNUAL 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 10, 2020

Meeting Procedure……………..………………………………. page 1 Meeting Agenda……………….……………..………………… page 2 Report Items…………………………………………………… page 3 Ratification Items……………………………………………… page 20 Discussion Items ……..…………………………….………….. page 22 Appendices………………………………………………..…… page 39

Independent Auditor’s Report
Articles of Incorporation of the Company
Rules of Procedure for Shareholders’ Meeting of the Company
Current Shareholdings of Directors of the Company
Information regarding the Proposed Employees and Directors’ Compensation approved 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 2020 Annual Shareholders’ Meeting

FORMOSA PLASTICS CORPORATION

2020 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

Call Meeting to Order
Chairman’s Address
Report Items
Ratification Items
Discussion Items
Extraordinary Motions
Meeting Adjourned

FORMOSA PLASTICS CORPORATION

2020 ANNUAL SHAREHOLDERS’ MEETING AGENDA

Time : 10:00 a.m., Wednesday, June 10, 2020
Venue : 2F, International Ballroom at Sunworld Dynasty Hotel, Taipei (NO. 100, Dun Hua North Road, Taipei, Taiwan)

1. Report Items

(1) 2019 Business Report
(2) Audit Committee’ Review Report on the 2019 Financial Statements
(3) Distribution of 2019 Employees Compensation

2. Ratification Items

(1) Please approve the 2019 Business Report and Financial Statements as required by the Company Act.
(2) Please approve the Proposal for Distribution of 2019 Profits as required by the Company Act.

3. Discussion Items

(1) Amendment to the Articles of Incorporation of the Company. Please discuss and resolve.
(2) Amendment of Rules of Procedure for Shareholders’ Meeting of the Company. Please discuss and resolve.

Report Items

About the Company’s results of operation for fiscal year 2019, please refer to Business Report for further details (on page 4 of the Handbook.) which is hereby reported for record.
The Company’s Audit Committee members reviewed the 2019 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 19 of the Handbook.)
The company has issued the report on compensation distributed to its employees for 2019. The pre-tax profit prior to deducting employees’ compensation distributable for 2019 is NT$41,847,673,766. The company has no accumulated losses. Adopted by the Board Meeting on March 17, 2020, 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$55,553,247, which shall be distributed in cash. The above is hereby reported for record.

Formosa Plastics Corporation 2019 Business Report

1. 2019 Business Report:

The Company (Formosa Plastics Corporation) generated consolidated sales of TWD207.84bn in 2019, reaching 94% of its target of TWD221.88bn and was down 10% from TWD230.37bn generated in 2018. Consolidated pretax profit came in at TWD42.21bn in 2019, reaching 92% of its target of TWD45.93bn and declined by 26% from TWD57.09bn generated in 2018.

Due to the uncertainties brought by US-China trade tension in 2019, global economy has been slowing down and led to the prices decline in ethylene and propylene. The lackluster auto and real estate markets have resulted in a shrinking demand in aluminum, coating, textile and home appliances. The wave of new supply from China and the United States has dragged down the prices of petrochemical products. Except for Ethylene Vinyl Acetate (EVA), product prices have fallen by 6-30% in 2019 from 2018 and spreads have narrowed. Capacity utilization rate of 90% in 2019 was lower than 91% in 2018, impacted by the unplanned shutdown in Linyuan Utility plant on 28 November. Despite the efforts in product differentiation, which sales volume increased by 1% in 2019 and the start of FIC’s new high-density polyethylene (HDPE) plant at the end of August, the lower capacity utilization rate has led to a lower consolidated sales and operating profit of TWD20.19bn dropped by 20% compared to 2018.

In addition, the total cash dividends from investees including Nan Ya Plastics Corp., Formosa Chemicals & Fibre Corp. and Nan Ya Technology Corp. were TWD8.18bn in 2019, although increasing by TWD674.4m on a yearly basis, the equity incomes from investees including Formosa Petrochemical Corp., FPC-USA and Formosa Sumco Technology Corp. were TWD14.73bn in 2019, which was TWD9.34bn significantly lower than 2018. The decrease has led to a 26% decline of the Company’s pre-tax profit in 2019.

Looking back at 2019, the uncertainties from the US-China trade war has weakened investment confidence among corporates. The political

disputes such as Brexit, Japan-South Korea trade tensions, and geopolitical risks have deteriorated the economy growth momentum among developed countries and slowed down the economy expansion in emerging countries, which have dragged down the global economy. Despite the easing of monetary policy from worldwide governments, international agencies have been revising down their global GDP growth forecasts, of which the International Monetary Fund (IMF) tuned down its global GDP growth forecast to 2.9%, the lowest level since the financial crisis in 2009.

As benefiting from order reallocation and investment repatriation that drove domestic demand and consumption, Taiwan GDP has been growing sequentially in 2019, reaching 2.71% of growth in 2019 and returned to the first place within The Four Asian Tigers. Taiwan government’s commitment to attracting overseas Taiwanese enterprises and foreign capitals, and encouraging the investments from local companies has played a positive role in boosting the economic growth momentum in Taiwan. However, the society has been long brimming with the ideology of environmental protection and unreasonable EPA review system, along with the stringent environmental regulations, which has hindered many investment projects. 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 aiming to abandon nuclear power and limit the use of coal, which will lower the diversity of power generation methods, casting out industry concerns over a stable electricity supply going forward and will adversely affect the long-term development of Taiwan’s industry and economy.

Nevertheless, while Taiwan ’s domestic market size is limited, exports is the key driver for Taiwan’s economic growth and accounts for more than 60% of GDP. Facing the rising trend of regional economy and trade integration globally, the preferential tariffs enjoyed by ASEAN 10 plus one, the effective of “Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)”, and the upcoming formation of “Regional Comprehensive Economic Partnership Agreement (RCEP)” in Asia in 2020, of which Taiwan has been excluded in the discussion.

Moreover, owning to an unimproved cross-strait relations, there is concern over an early termination of ECFA (Economic Cooperation Framework Agreement) early-harvest list. As an export-oriented country, if Taiwan is not able to actively seeking for solutions on the breakthrough for the obstacle on trade tariff, Taiwan will be marginalized, and our industries will find it very difficult to survive and develop.

Thus, the Company expects the government to focus and solve the problem of business and development in industries. Aside from grasping the opportunity of industry restructure brought out under US-China trade war, the governments should also roll out a fiscal tax with investment incentives, amend the irrational environmental assessment process and loosen the environmental regulation restrictions. 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. The government should not prohibit the coal-fired approach hastily, while the current technology on pollution prevention of coal-fired boilers can remove visual pollution (prevent from emitting white smoke from chimney), and the air emission quality is not inferior to that of natural gas-fired units. Therefore, the choice of electricity allocation should not reply on the type of fuels. The key is the back-end pollution prevention measures. In addition, the government should actively participate in regional economic and trade integration, such as joining CPTPP, RCEP and the discussion of free trade agreements (FTAs) with key trading partners, in order to resolve the unequal tariff environment suffered by Taiwanese companies. This will enhance the confidence and attract domestic and foreign investors in investing in Taiwan, and to build a friendly and sustainable investment development environment.

In view of the uncertainties brought out by US-China trade tension and the difficulty in an oversupplied market under the supply addition wave, the Company has deepened its artificial intelligence (AI) technology to enhance operational efficiency in five aspects "optimization of

production and sales, quality assurance, intelligent maintenance, digital inspection, and cost reduction". In 2019, 46 out of 100 AI projects have been completed with an estimated annual benefit of TWD180m, while the remaining 54 projects are ongoing.

Aside from this, in an effort to popularize AI concept to all employees, the Company continues to provide the five-stage systematic training courses from the basics, practice, project practice, "Taiwan Artificial Intelligence School" and management, and requires all employees to join the training courses related to their job. By the end of 2019, employees with at least college degrees received basic AI training reached nearly 100%. In the meantime, by interacting and cooperating with other companies, professional institutions, international experts, and establishing an AI exchange platform to hold competitions, the Company is looking forward to enhancing the AI capabilities and stimulating more ideas into application.

Furthermore, the Company continues to promote Industrial 4.0 and the automatic selling system into more application towards other products, and promotes 32 improvement projects to increase the product quality, optimize the operation and formulation and dispatch the power units through instant and historical production data analysis. In 2019, the Company has completed 28 improvement projects, and the implementation of the rest 4 projects are expected to be completed by 2020 with an annual benefit of TWD87m.

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, a 12.3 hectares of part of the land in Renwu Complex has passed by the Ministry of the Interior in July 2019 to change 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. The restoration

and reuse plan was reviewed and approved by the Kaohsiung City Government in December 2019, which is expected to be completed by the end of 2022. After that, the park will be opened to public.

In an attempt to develop circular economy, promote project improvements, reduce the consumption of water, energy, and the utility usage volume per unit, the Company accomplished 1,076 projects in 2019 with an annual benefit of TWD770m. The Company also established an innovation platform to hold seminars from time to time to boost up the innovation atmosphere. There have been 202 ideas proposed on an accumulated basis so far with an estimated annual benefit of TWD430m. By the means mentioned above, the Company is able to gradually pursue the rationalization, strengthen the business essence, and overcome the operating difficulties during industry downcycle.

The Company and its China Ningbo and United States subsidiaries mainly produce plastics and chemical fiber raw materials. In 2019, sales volume of PVC increased 2% to 1,690K tons mainly due to the continued market diversification, the strict implement of environmental protection in China, which has increased the cost of coal-based PVC producers and drove up the market price, and the cessation of anti-dumping duties on imported PVCs since 29th September 2019 also improved the domestics demand in China. Sales volume of caustic soda was 1,506K tons in 2019, grew by 5% than 2018 owning to the incremental caustic soda sales in Southeast Asia and spot selling of Australia aluminum customers.

As the Company has been actively expanding into Southeast Asia, South Asia and Africa, and increased the selling of the differentiated products such as bottle blowing grade, pipe grade and blow molding grade HDPE, along with the start of the new HDPE plant by the Company’s US subsidiary since the end of August 2019, the Company’s sales volume in HDPE was 512K tons in 2019, grew by 5% than 2018. The Company’s EVA sales volume was 284K tons in 2019, up 3% from 2018 as there was no new capacity from peers along with an steadily growth in demand for solar packaging driven by China's green energy policy. The Company’s LLDPE sales volume was 211K tons in 2019, up 30% from 2018 given the

aggressive expansion into Bangladesh market, and promotion of the injection grade and rotation molding grade differentiated products, coupling with the conversion of LLDPE from the US subsidiary’s HDPE plant.

As impacted by the US-China trade tension, industry downcycle in auto and housing markets in China, the strict investigation of the environmental inspection, massive capacity expansion by peers, the downstream demand for tapes, coatings and resins has been weakened and market has been oversupplied with higher competition, the Company’s AE sales volume of 499k tons in 2019 has declined by 7% from 2018. The Company’s carbon fiber sales volume was 5.7K tons in 2019, up 4% from 2018 due to the stable incremental demand for wind power and the recovery demand from customers due to an easing competition from Japanese peers. The Company’s sales volume of NBA, which is mainly for captive use by AE plants and bonded customers in China, decreased 4% from 2018 to 223K tons in 2019 due to US-China trade tension and falling demand from downstream for butyl acrylate and butyl acetate due to the price decline in upstream raw materials. Sales volume of SAP lowered by 7% from 2018 to 170K tons in 2019 due to decreasing price in an oversupplied market resulted from the massive capacity expansion from China peers and the shrinking number of newborns by about 2 million in 2019 comparing with 2018.

Sales volume of PP declined 3% from 2018 to 927K tons in 2019 given the unplanned shutdown in Linyuan Utility plant coupled with the annual maintenance shutdown of Linyuan PP plant and the renewal of the granulator. Sales volume in AN of 278K tons in 2019 was similar to 2018. While the downstream demand was not strong, overall market condition was still better than expected given the unexpected plants shutdown of the world’s largest AN producer Ineos in US, Germany and UK which had declared force majeure. Sales volume of MMA of 82K tons in 2019 was down by 1% from 2018 due to a weak demand of downstream end product, an unimproved oversupplied market, and the intensifying market competition. Sales volume of ECH of 95K tons in 2019 increased by 6%

from 2018, which was benefited from the booming development of the wind energy and 5G industry and the stronger demand from downstream epoxy product.

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 PVC plant in Linyuan, which will raise its PVC capacities by 37K tons to 1,302K tons per annum and is expected to be completed and start production by 2Q20. And in Ningbo, the PP plant debottleneck project has increased its PP capacity by 30K tons to 522K tons after the project was completed in 3Q19; the AA plant debottleneck project, which increased AA capacity by 20K tons to 340K tons, was completed in 1Q20. And the SAP plant debottleneck project, will increase its SAP capacity by 10K tons to 100K tons after construction completed in 3Q20. The project of the new PDH plant will have 600K tons propylene capacity and is expected to complete and start production in 3Q21. The new HDPE plant in Texas, US has completed construction and started production since 3Q19.

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 2Q21.

In terms of equity investments, FPC-USA (22.66% owned by the Company) generated pretax profit of USD750m in 2019, down 26% from 2018, mainly due to the slowdown of economic growth in major economies such as the United States and the European Union, as well as a number of new capacity in olefins and polyethylene capacities in North America, resulting in an oversupply market and the sequentially falling product prices. In 2020, while the US economy is expected to remain stable, business should decline comparing to 2019 given (1) the continued oversupplied market condition that leads to lower profitability, (2) a

significant decline in China ’s economic growth hampered by COVID-19 could post risk to a further downside to its economic growth. However, following the completion of No.3 olefin plant (OL-3), the new PE packaging plant, and the pipelines for ethane and ethylene since 2H19, under a relatively low raw material cost advantages of ethane, propane and electricity, the FPC-USA’s petrochemical products are still competitive. Moreover, other than the profit contribution from the new LDPE plant after its completion in 1Q20, the PE product line will be more complete and can fully meet downstream customers’ needs with different products.

In addition, profit loss of Fujian Fuxin Special Steel Co., Ltd. (29.16% owned by the Company) in 2019 has further expanded from 2018 given (1) the rising tariff barriers due to US-China trade tension in 2019, (2) the slowdown in economic growth in China with shrinking demand and

(3) market oversupplied due to pricing competition from Indonesia peers that led to poor ASPs in finished goods. Fujian Fuxin expects the global steel market demand should continue to decline as a result of the impact from COVID-19. However, Fujian Fuxin is expected to decrease profit loss as Fujian Fuxin will expand the sales in super ferritic stainless steel differentiated products, increase the hot rolling OEM for Formosa Ha Tinh Steel Corporation and sells under full production. 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 end of 2020.

In response to global plastic restriction policies and rising environmental protection trends, the demand for biodegradable plastics continues to increase, but only a few manufacturers are producing upstream raw materials globally. In order to achieve social responsibility on a sustainable development, the Company has invested in a Taiwan leading manufacturer Minima Technology Co. Ltd. in 2019 with a 19.15% of shareholding. Minima Technology Co. Ltd. produces 4K tons of decomposable compound rubber particles annually. It mainly produces disposable consumer products such as tableware, paper cups, straws and other decomposable plastic products which are exported to Europe and the

United States. It is expected to turn profitable as benefited from the rising trend of plastics restriction globally and the increase of its capacity to 20K tons after its Huwei plant in Central Taiwan Science Park commences production in 2Q20.

In terms of research and development, the Company spent TWD2.2bn on R&D in 2019, 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. Meanwhile, the Company conducted R&D on industrial production technique and to commercialize specialty products including PVC emulsion for medical gloves, Urinary system sensor test kit, HDPE cap & closure grade and for floating solar platform application, odorless SAP and applied to ultra-thin diapers with low pulp content, carbon fiber manufactured by dry-jet wet spinning technique, low-dissolution PP material for medical applications and impact copolymer grade for film grade. In 2019, the Company launched 48 R&D projects with an annual benefit of TWD150m.

Moreover, the Company further enhanced the development of key technology and applied for both domestic and international patent. In 2019, the Company has received approval on 16 patents, and as of the end of 2019, the Company has a total of 162 effective patents. Meanwhile, the Company will continue to work with both domestic and international industry experts, government, and academic area, to strengthen academic fundamentals, R&D, virtual laboratory and talent development on production stimulation, as well as to improve the capability of molecular material design and production stimulation, and introduce the R&D digital management system. Moreover, the Company continues to enhance R&D team; focus on talent selection and sending abroad for training; deepen the cultivation of leading lecturers; accelerate the development of differentiated products and environmentally friendly green materials; and develop the techniques of the capture and reuse of carbon dioxide and water. Among them, the "Capture and Reuse of Flue Gas ", which was a

joint project with academic research institutions, was qualified to receive the subsidy from “the A+ Industrial Innovative R&D Program” by Ministry of Economic Affairs in January 2019. The automatic production line of dye-sensitized battery in Shalun, Tainan, has successfully conducted a steady trial run in January 2020, and the Company will continue to promote the product application going forward.

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 2019, the accumulated investments on operational safety, environmental protection, and firefighting has reached TWD24.2bn, which was mainly spent on controlling pollution, saving energy, reducing waste and greenhouse gases, and improving operational safety and firefighting. The Company’s pollution treatment and emissions are better than national regulatory standards.

In 2019, there were 6 business units praised by competent authority. Among them, Mailiao VCM plant, LLDPE plant, AN plant were all praised by Yunlin County and Ministry of Labor for strong performance on occupational safety and health. Mailiao Branch 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 by Ministry of Economic Affairs for strong performance on energy conservation. Also, Renwu plant was 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 2019, the Company accomplished 638 improvement projects. Total water saved amounted to 3,926 tons/day, while greenhouse gas emissions reduction reached 1,194K tons/year. Other ongoing 517 improvement projects would further conserve water by 5,214 tons/day and reduce greenhouse gas emissions by 147K tons/year.

Besides, in order to enhance operational safety, other than applying AI into the development of image recognition system to manage the safety

of on-site construction, the Company also establish the GPS system for employee safety, and develop smart wearable devices to assist inspection and maintenance. Moreover, the Company continues to promote “Production Safety Management (PSM)” operations, equipment diagnosis, and continue to promote the “Execution Implementation SOP – Full Participation”, “Advanced Simulation”, “Night Emergency Drills” and “Production Hazard Analysis (PHA)” to reduce abnormal operation and to secure the operation. In addition, in order to strengthen the fire response capability, each plant has added "fire turret" and "advance smoke detection system". Moreover, in view of increasing environmental regulations, the Company has established short, mid, and long-term improvement plans to strengthen the control on volatile organic compounds (VOCs) leakage, and set up FTIR to monitor air quality instantly, conducted the improvement project on the elimination of white smoke for Renwu and Linyuan Utility plant, promoted zero-wastewater emission and kept PVC compound off the ground.

2. Business Performance:

The consolidated revenue in 2019 was TWD207.84bn, a decrease of TWD22.52bn over the previous year of TWD230.371bn. Operating profit was TWD20.19bn with an 10% of operating margin after deducting COGS of TWD175.73bn and operating expenses of TWD11.91bn. Plus non-operating income of TWD22.02bn (included equity investment income of TWD17.73bn), the pretax profit was TWD42.21bn in 2019, decrease 26% from 2018.

3. 2020 Business Performance Target and Outlook:

Looking into 2020, the continued slowdown of economic growth in China and the uncertainty brought by US-China trade tension will weaken global manufacture industry and investment confidence and hamper the global economic recovery. As the first phase trade agreement signed by China and the United States on 15th January 2020, the trade tensions between the two sides has been easing, as well as the worldwide major countries launched the continued monetary easing, the roll-out of fiscal

policies and expansion of infrastructure investments to stimulate economy growth. However, the COVID-19 in China has led to a rapid shrinking domestic demand on the lockdown of cities. Besides, production could not be fully resumed due to the shortage of raw materials, logistics disruption, and the lack of labor force. These could all result in global supply chain disruption and the downside on economic growth. As COVID-19 has been spreading to the world, it is difficult to estimate the impact of the "butterfly effect", and the risk of future economic prospects is still high. Thus, global agencies have revised down their 2020 GDP growth forecasts for World and China which is worse than 2019 GDP growth.

Under the demand and supply situation, IHS forecasts that the global ethylene capacity will increase around 13.2 million tons in 2020, and the new capacity from the US and China will increase by 9.67 million tons (73% of total new capacity) to be among the fastest growing countries in terms of new capacity of ethylene. In terms of demand, based on the global ethylene demand growth of 1.3x of GDP growth, incremental demand should be 7million tons in 2020, and global ethylene market will be oversupplied. The ethylene production rate will be down to 87.5% from the upcycle peak of 90.3%.

Under the supply addition wave of shale gas investment, there are a total of 11 new ethylene plant projects with an annual capacity of 12.43 million tons. The peak of production start was during 2018-2019, and there were a total of 7 projects with annual ethylene capacity of 7.63 million tons (including the Company’s 33%-owned investment company, Formosa Olefins, L.L.C., in the US with an annual ethylene capacity of 1.2 million tons) have completed construction and came on stream. While the remaining 4 projects with an annual capacity of 4.8 million tons will be completed and start operation in the next three years. As the key downstream products for these new ethylene plants are PE, it is estimated that the new capacity additions in these 5 years will reach 8.2 million tons. 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 2020.

As for China market, while its ethylene capacity will increase by 5.9 million tons in 2020, it is estimated that China needs to imports 20 million tons of ethylene to meet the growing demand, if imported ethylene and its derivatives are used to calculate the consumption of ethylene. However, in the 13th Five-Year Petrochemical Industry Planning, the refining and chemical investment projects led by private enterprises has accelerated its development towards "go large” and “go scalable”. This will lead to an explosive growth in ethylene capacity in the next 3 years with additions up to 16 million tons and could result in a rising self-sufficiency rate for downstream petrochemical products with a narrowing gap between supply and demand in China.

In term of the market conditions of the Company's key product, PVC, as China has been raising their requirements towards environmental protection, controlling stringently over the expansion for coal-based PVC producer (with coal-based production accounting over 80% of total production), and phasing out the coal-based production that use high mercury as catalysts, the cost for coal-base PVC has been growing and even higher than that of ethylene-based PVC. If the price of ethylene falls in the future, the competitive advantage of ethylene-based PVC will further increase. As for PE market, due to the low self-sufficiency rate in China with a more than 40% of external dependence rate, and as impacted by the substantial incremental in ethylene capacity, it is estimated that the new PE capacity will reach 10.8 million tons in the next 3 years, accounting for 46% of the global new capacity addition of 23.5 million tons. Asia will become the Red Sea market going forward given the declining demand on the slowdown of GDP growth and the significant export volume of low-cost PE from North America. Furthermore, as impacted by the massive expansion of propane dehydrogenation (PDH) and naphtha crackers in China, it is estimated that the new capacity will be up to 9.8 million tons in the next 3 years, accounting for 57% of the global new capacity addition of 17 million tons. Although China’s self-sufficient rate has increased year by year and has exceeded 80%, its downstream

products are mainly the fiber grade and General purpose PP, which will not affect the sales of the Company's high-end differentiated products. Nevertheless, the rapid increase in supply addition will still pressure PP price and narrow the product spreads.

In terms of export, while China market accounts for 40% of the Company’s exporting volume, it is not favorable for the sales of petrochemical products given the weakening exports and the production shift outside of China for downstream processing companies due to US-China trade tension and the spreading of COVID-19, as well as the slowdown in economic growth due to the serious problem of debt default. However, in order to alleviate the impact on the economy, China government continues to roll out policies such as tax cuts, monetary easing, and the promotion of infrastructure investments to achieve the goal of "expanding domestic demand and stabilizing investments." Therefore, the demand for petrochemical products in China should not diminish significantly.

Besides, the upcycle of petrochemical industry normally lasts for only 2-3 years in a 10-year industry cycle, which is evidenced by the booming periods during 1993-1995 and 2003-2005. The upcycle this time was driven by the economic and demand growth in China since 2015, which has lasted for 4 years and marked the longest period within the upcycle period. However, as the wave of supply additions globally in the next 3 years will be greater than demand growth, the outlook for the petrochemical industry in 2020 is not so positive.

In the new year, facing the gloomy global economic growth and the massive wave of new supply additions, the Company has prepared for the long resistance war to overcome the incoming challenges. In addition to deepening AI applications, the Company will continue to develop the R&D of forward-looking and high value-added products, aiming to become the No.1 player in the world. In the meantime, to strengthen long-term competitiveness, the Company has combined the foundations in the past on automation and digitalization and applied new technologies such as AI, 5G, quantum computers and block chain to promote the digital

transformation of optimization in selling and production, the innovation of management, and improve the service quality.

Aside from this, there will be more days of maintenance shutdown for ethylene capacity in Taiwan in 2020 than that in 2019. 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 response to COVID-19, and to match the demand for customer that has shift its production outside of China, the Company will implement flexible sales strategies, diversify market into emerging markets such as South Asia, Southeast Asia, Africa, New Zealand and Australia, set up overseas warehouses in Bangladesh and the Netherlands to strengthen the function of overseas technical service offices, and at the same time expand differentiated products market to improve business performance.

In addition, as taking the sustainable development of industry and environment into account, the Company will continue to promote circular economy, energy saving and carbon reduction, and develop the key upstream raw materials for green plastic materials, in order to fulfill corporate social responsibilities. In addition, the Company will aggressively promote the transformation program of Renwu Complex, other capacity expansion and debottleneck projects. Through the efforts above, the Company expects to strengthen its business, reverse the business downturn and to make the breakthrough of the challenges in 2020 and maintain a steady performance.

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

Formosa Plastics Corporation

Audit Committee’ Review Report

The Board of Directors has prepared the Company’s 2019 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 17, 20120

Ratification Items Proposal 1

Proposal: For approval of the 2019 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 2019 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 17, 2020, 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 4 through page 18 of the Meeting Handbook. As for the Financial Statements, please refer to page 30 through page 37 of the Handbook. Please approve the Business Report and the Financial Statements.

Resolution:

Ratification Items Proposal 2

Proposal: For Approval of the Proposal for Distribution of 2019 Profits as required by the Company Act.

Proposed by the Board of Directors

Attachment:

Please refer to page 38 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 17, 2020.

Resolution:

Discussion Items Proposal 1

Proposal: To amend the Articles of Incorporation of the Company, the corresponding comparison table for the current and amended articles is attached. Please discuss and resolve.

	Proposed by theBoard of Directors	Proposed by theBoard of Directors	Proposed by theBoard of Directors
Article	Current Article	Amended Article	Reason for Amendment
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. (Omitted)	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 includeat leastthree 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. (Omitted)	To conform to the needs of commercial practice, the company proposes to adjust the number of independent directors to increase flexibility.

Article	Current Article	Amended Article	Reason for Amendment
42	(Omitted)	Add “sixty-third amendment on June 10, 2020” to the existing Article.	To amend directors related articles, the Company encloses the date of the 63rd amendment.

Resolution:

Discussion Items Proposal 2

Proposal: Amendment to the Rules of Procedure for Shareholders’ Meetings of the Company. Please discuss and resolve.

Proposed by the Board of Directors Explanation: To refer to the sample template announced in the order Tai-Cheng-Chih-Li-Zi No. 1080024221 dated January 2, 2020 by the Taiwan Stock Exchange Corporation, certain articles of the Rules of Procedure for Shareholders’ Meetings 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	Article before Amendment	Article after Amendment	Reason for Amendment
Article 3	(above 4 paragraph omitted) Election or dismissal of directors, 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 Actor 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 notice of thecauses to convenethe shareholders’ meeting. None of the above	(above 4 paragraph omitted) Election or dismissal of directors, amendments to the Articles of Incorporation,capital reduction, application to be delisted from public offering, lifting of non-competition restriction of directors, capital increase by retained earnings, capital increase by capital reserve, dissolution, merger, or demerger of the corporation, or any matter under Paragraph 1 of Article 185 of the Company Act shall be set out in the notice of the reasons for conveningthe shareholders’ meeting. None of the above	Amended in line with Directive Letter No. 1080024221 announced by the Taiwan Stock Exchange Corporation (TWSE) on January 2, 2020.

	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 awritten 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	matters may be raised by an extraordinary motion. The content of such matters shall be uploaded
		to a website designated by the competent authority or the Company, and the website shall be specified
		on the meeting notice. Where the meeting agenda has specified general re-elections of the directors and the terms of the directors’ office, the terms of office
		of the directors shall not be altered by raising an extraordinary motion or any other method upon the completion of the general elections at the shareholders’meeting. A shareholder holding 1 percent or more of the total number of issued shares may submit to the Company a 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. However, when a shareholder’s proposal contains suggestions or recommendations for the

	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. (below omitted)	Company to enhance the public interest or facilitate the Company to
		fulfill its corporate social
		responsibility, the Board of Directors may include such proposal into the 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,the method of receiving such proposals (whether written or in electronic form),and the location and time period for their submission; the period for submission of shareholder proposals may not be less than 10 days. (below omitted)
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	If a shareholders’ meeting is convened by the Board of Director, the meeting agenda shall be set by the Board of Directors. The relevant	Amended in line with Directive Letter No. 1080024221 announced

	shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders’ meeting. (paragraph 2~3 omitted) 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 callfor a vote.	proposals (including extraordinary motions and amendment to original proposals) shall be decided by voting on a	by the Taiwan Stock Exchange Corporation (TWSE) on January 2, 2020.
		case-by-case basis.The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the shareholders’ meeting. (paragraph 2~3 omitted) 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 shall also arrange ample time for a vote.
Article 13	(paragraph 1 omitted) 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	(paragraph 1 omitted) When the Company convenes a shareholders’ meeting,shareholders shall exercise their voting	Amended in line with Directive Letter No. 1080024221 announced by the Taiwan Stock Exchange
		rights by electronic means and may exercise their voting rights in writing.When voting rights are exercised in

	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. (below omitted)	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. (paragraph 3~6 omitted) In addition to the proposals on the meeting agenda, when a shareholder wishes to propose an extraordinary motion, the shareholder’s	Corporation (TWSE) on January 2, 2020. Qualification for proposing an extraordinary motion has been specified pursuant to the Company's actual processing needs.
		voting rights shall represent at least 1% or more of the Company’s total issued shares. (below omitted)
Article 15	(paragraph 1~2 omitted) 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	(paragraph 1~2 omitted) 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	Amended in line with Directive Letter No. 1080024221 announced by the Taiwan Stock

	deliberations and their results, and shall be retained for the duration of the existence of the Company.	deliberations and their results(including the weight of the votes), and the number of weighted votes each candidate received in case of a Directors'elections, and shall be retained for the duration of the existence of the Company.	Exchange Corporation (TWSE) on January 2, 2020.

Resolution:

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

4000 Operating revenue (Notes 6(r) and 7) 5000 Operating costs (Notes 6(e)(g)(h)(n)(s) and 7) Gross profit Operating expenses (Notes 6(c)(g)(h)(n)(s) and 7): 6100 Selling expenses 6200 Administrative expenses 6300 Research and development expenses 6450 Expected credit loss (gain) Total operating expenses Operating income Non-operating income and expenses (Notes 6(f)(g)(m)(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 Profit from continuing operations before tax 9300 Less: Income tax expenses(Note 6(o)) Profit 8300 Other comprehensive income (loss): (Note 6(o)(p)(q)) 8310 Components of other comprehensive income (loss) that will not be reclassified to profit or loss 8311 Losses on remeasurements of defined benefit plans 8316 Unrealized gains (losses) 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 8360 Components of other comprehensive income (loss) that will be reclassified to profit or loss 8361 Exchange differences on translation of foreign financial statements 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 Components of other comprehensive income that will be reclassified to profit or loss 8300 Other comprehensive income (loss) 8500 Total comprehensive income (loss) Basic earnings per share (Note 6(q))	2019	2019	% 100 85 15 3 2 - - 5 10 4 - (1) 7 10 20 2 18 - - (1) - (1) (2) - - (2) (3) 15 fter 5.86	2018 Amount % 230,370,027 100 193,061,959 84 37,308,068 16 6,114,350 3 4,713,287 2 1,138,174 - 945 - 11,966,756 5 25,341,312 11 8,344,017 4 807,515 - (1,480,040) (1) 24,079,572 10 31,751,064 13 57,092,376 24 7,542,836 3 49,549,540 21 (285,593) - (12,003,865) (5) (4,615,730) (2) (169,178) - (16,736,010) (7) 1,770,369 1 392,426 - 522,685 - 1,640,110 1 (15,095,900) (6) 34,453,640 15 Before After 8.97 7.78
	Amount $207,848,572 175,734,622 32,113,950 6,071,615 4,601,134 1,246,402 (1,567) 11,917,584 20,196,366 8,967,238 (319,456) (1,359,114) 14,734,118 22,022,786 42,219,152 4,894,990 37,324,162 (329,854) (1,074,161) (1,728,457) (65,971) (3,066,501) (3,418,914) (473,462) (190,273) (3,702,103) (6,768,604) $ 30,555,558 Before A $ 6.63

See accompanying notes to consolidated financial statements.

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

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

4000
Operating revenue (Notes 6(r) and 7)
5000
Operating costs (Notes 6(e)(g)(h)(n)(s) and 7)
Gross profit
5920
Add: Realized profit (loss) on from sales
Gross profit from operations
Operating expenses (Notes 6(c)(g)(h)(n)(s) and 7):
6100
Selling expenses
6200
Administrative expenses
6300
Research and development expenses
6450
Expected credit loss (gain)
Total operating expenses
Operating income
Non-operating income and expenses (Notes 6(f)(n)(t) and 7):
7010
Other income
7020
Other gains and losses
7050
Finance costs
7070
Share of profit of associates and joint ventures accounted for using equity
method, net
Total non-operating income and expenses
Profit from continuing operations before tax
6400
Less: Income tax expenses (Note 6(o))
Profit
8300
Other comprehensive income (loss) (Note (n)(o)(p)):
8310
Components of other comprehensive income (loss) that will not be
reclassified to profit or loss
8311
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
Components of other comprehensive income (loss) that will be reclassified
to profit or loss
8361
Exchange differences on translation of foreign financial statements
8380
Share of other comprehensive income of subsidiaries, 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
Components of other comprehensive income that will be reclassified to
profit or loss
8300
Other comprehensive income (loss)
Total comprehensive income (loss)
9710
Basic earnings per share -before income tax (Note 6(q))

2019

9710 Basic earnings per share -before income tax (Note 6(q))

See accompanying notes to financial statements.

					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
					December 31, 2019	Amount %		20,255,096 4	14,991,544 3	4,215,436 1	6,847,390 1	1,956,466 -	23,634,300 5	32,878 -	- -	4,666,096 1	12,684,172 3	89,283,378 18		32,564,312 7	1,944,444 -	17,028,048 4	19,319 -	6,910,706 1	184,432 -	58,651,261 12	147,934,639 30		63,657,408 13	11,724,498 2		62,058,769 12	63,968,902 13	72,320,189 15	198,347,860 40	75,423,554 15	349,153,320 70	497,087,959 100
								$																														$
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES	Consolidated Balance Sheets	December 31, 2019 and 2018	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2019 December 31, 2018	Amount % Amount % Liabilities and Equity	Current liabilities:	18,165,952 4 23,310,772 5 2100 Short-term borrowings (Notes 6(i))	4,044,356 1 4,017,249 1 2110 Short-term notes and bills payable (Note 6(j))	2170 Accounts payable	102,342,079 20 98,426,404 20 2180 Accounts payable－related parties (Note 7)	2,584,690 - 2,432,446 - 2200 Other payables	7,392,229 1 9,422,032 2 2220 Other payables－related parties (Note 7)	3,562,016 1 4,295,591 1 2280 Current lease liabilities (Note 6(m))	997,608 - 1,381,590 - 2321 Current portion of bonds payable (Note 6(l))	14,791,036 3 16,692,844 3 2322 Current portion of long-term debts (Notes 6(k) and 8)	18,269,476 4 20,756,740 4 2399 Other current liabilities (Note 7)	3,467,418 1 3,526,561 1 Total current liabilities	175,616,860 35 184,262,229 37 Non-Current liabilities:	21,408,559 4 26,542,369 5 2530 Bonds payable (Note 6(l))	202,446,613 41 203,967,598 42 2540 Long-term debts (Note 6(k) and 8)	85,635,983 17 76,618,563 15 2570 Deferred tax liabilities (Note 6(o))	1,055,171 - - - 2580 Non-current lease liabilities (Note 6(m))	423,488 - 430,613 - 2640 Net defined benefit liabilities (Note 6(n))	2,871,940 1 2,455,815 - 2670 Other non-current liabilities	7,629,345 2 7,236,080 1 Total non-current liabilities	321,471,099 65 317,251,038 63 Total liabilities	Equity (Note 6(p)):	3110 Common stock	3200 Capital surplus	Retained earnings:	3310 Legal reserve	3320 Special reserve	3350 Unappropriated retained earnings	Total retained earnings	3400 Other components of equity	Total equity	497,087,959 100 501,513,267 100 Total liabilities and equity
								$																														$
						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))	Notes receivable (Notes 6(c)(r))	Accounts receivable, net (Notes 6(c)(r))	Accounts receivable－related parties (Notes 6(c)(r) and 7)	Other receivables (Note 6(d))	Other receivables－related parties (Notes 6(d) and 7)	Inventories (Note 6(e))	Other current assets	Total current assets	Financial assets at fair value through other comprehensive income-non-current (Note 6(b))	Investments accounted for using equity method (Note 6(f) and 8)	Property, plant and equipment (Note 6(g), 7 and 8)	Right-of-use assets (Note 6(h))	Intangible assets	Deferred tax assets (Note 6(o))	Other non-current assets (Note 8) Total non-current assets												Total assets
								1100	1110	1120		1150	1170	1180	1200	1210	130X	1470		1517	1550	1600	1755	1780	1840	1900

					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
					December 31, 2019	Amount %		$ 16,170,175 4	14,991,544 3	2,775,256 1	6,743,427 1	1,772,799 -	1,099,004 -	32,878 -	- -	3,488,889 1	9,681,968 2	56,755,940 12		32,564,312 7	1,944,444 -	17,028,048 4	19,319 -	6,910,706 2	69,481 -	58,536,310 13	115,292,250 25		63,657,408 14	11,724,498 2		62,058,769 13	63,968,902 14	72,320,189 16	198,347,860 43	75,423,554 16	349,153,320 75	$ 464,445,570 100
(English Translation of Financial Statements and Report Originally Issued in Chinese)	FORMOSA PLASTICS CORPORATION	Balance Sheets	December 31, 2019 and 2018	(Expressed in Thousands of New Taiwan Dollars)	December 31, 2019 December 31, 2018	Amount % Amount % Liabilities and Equity	Current liabilities:	$ 12,301,257 3 18,941,635 4 2100 Short-term borrowings (Notes 6(i))	4,044,356 1 4,017,249 1 2110 Short-term notes and bills payable (Note 6(j))	102,342,079 22 98,426,404 21 2170 Accounts payable	2180 Accounts payable－related parties (Note 7)	4,931,809 1 6,977,979 2 2200 Other payables	5,294,496 1 5,809,131 1 2220 Other payables－related parties (Note 7)	970,934 - 1,376,297 - 2280 Current lease liabilities (Note 6(m))	15,903,748 3 18,227,744 4 2321 Current portion of bonds payable (Note 6(l))	10,682,599 2 14,196,795 3 2322 Current portion of long-term debts (Notes 6(k) and 8)	2,344,034 1 1,943,604 - 2399 Other current liabilities	158,815,312 34 169,916,838 36 Total current liabilities	Non-Current liabilities:	9,924,415 2 10,038,913 2 2530 Bonds payable (Note 6(l))	249,152,130 54 252,285,317 53 2540 Long-term debts (Note 6(k))	39,280,562 9 38,227,497 8 2570 Deferred tax liabilities (Note 6(o))	51,805 - - - 2580 Non-current lease liabilities (Notes 6(m))	124,762 - 124,762 - 2640 Net defined benefit liabilities (Note 6(n))	1,861,535 - 1,928,942 - 2670 Other non-current liabilities	5,235,049 1 4,862,307 1 Total non-current liabilities	305,630,258 66 307,467,738 64 Total liabilities	Equity (Notes 6(p)):	3110 Common stock	3200 Capital surplus	Retained earnings:	3310 Legal reserve	3320 Special reserve	3350 Unappropriated retained earnings	Total retained earnings	3400 Other components of equity	Total equity	$ 464,445,570 100 477,384,576 100 Total liabilities and equity
						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))	Notes and accounts receivable, net (Notes 6(c))	Accounts receivable－related parties (Note 6(c) and 7)	Other receivables (Notes 6(d))	Other receivables－related parties (Note 6(d) and 7)	Inventories (note 6(e))	Other current assets	Total current assets	Non-current assets:	Financial assets at fair value through other comprehensive income-non- current (Note 6(b))	Investments accounted for using equity method (Note 6(f) and 7)	Property, plant and equipment (Notes 6(g), 7 and 8)	Right-of-use assets (Notes 6(h))	Intangible assets	Deferred tax assets (Note 6(o))	Other non-current assets (Notes 8) Total non-current assets												Total assets
								1100	1110	1120		1170	1180	1200	1210	130X	1470			1510	1550	1600	1755	1780	1840	1900

															Total equity	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	355,568,001	37,324,162		(6,768,604)	30,555,558		-	-	(36,921,297)		(59,598)			4,003	6,653	349,153,320
													Gains (losses)	on hedging	instruments	-	9,551	9,551	-		(28,314)	(28,314)		-	-	-		-			-	-	(18,763)	-		19,542	19,542		-	-	-		-			-	-	779
(English Translation of Consolidated Financial Statements Originally Issued in Chinese)	FORMOSA PLASTICS CORPORATION AND SUBSIDIARIES	Consolidated Statements of Changes in Equity	For the years ended December 31, 2019 and 2018	(Expressed in Thousands of New Taiwan Dollars)	Equity attributable to owners of parent	Total other equity interest	Retained earnings Unrealized	gains	on financial	Exchange assets Unrealized	differences on measured at gains (losses) Gains (losses)	translation of fair value on available- on effective	Unappropriate foreign through other for-sale portion of	Capital Legal Special d retained financial comprehensive financial cash flow	surplus reserve reserve earnings statements income assets hedges	11,649,929 52,165,530 51,285,206 78,699,082 (3,225,029) - 90,768,489 9,551	- - - 3,181,817 - 99,924,374 (90,768,489) (9,551)	11,649,929 52,165,530 51,285,206 81,880,899 (3,225,029) 99,924,374 - -	- - - 49,549,540 - - - -		- - - (201,564) 1,668,424 (16,534,446) - -	- - - 49,347,976 1,668,424 (16,534,446) - -		- 4,938,285 - (4,938,285) - - - -	- - 7,493,327 (7,493,327) - - - -	- - - (36,284,722) - - - -		- - - (12,698) - - - -			(27,612) - - - - - - -	91,525 - - - - - - -	11,713,842 57,103,815 58,778,533 82,499,843 (1,556,605) 83,389,928 - -	- - - 37,324,162 - - - -		- - - (377,598) (3,721,645) (2,688,903) - -	- - - 36,946,564 (3,721,645) (2,688,903) - -		- 4,954,954 - (4,954,954) - - - -	- - 5,190,369 (5,190,369) - - - -	- - - (36,921,297) - - - -		- - - (59,598) - - - -			4,003 - - - - - - -	6,653 - - - - - - -	11,724,498 62,058,769 63,968,902 72,320,189 (5,278,250) 80,701,025 - -
							Share capital							Ordinary	shares	63,657,408	-	63,657,408	-		-	-		-	-	-		-			-	-	63,657,408	-		-	-		-	-	-		-			-	-	63,657,408
																$																																$
																Balance at January 1, 2018	Effects of retrospective application	Equity at beginning of period after adjustments	Net Income for the period	Other comprehensive income (loss) for the period, net of income	tax	Total comprehensive income (loss) for the period	Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary share	Changes in equity of associates and joint ventures accounted for	using equity method	Other changes in capital surplus:	Changes in equity of associates and joint ventures accounted for	using equity method	Other changes in capital surplus	Balance at December 31, 2018	Net Income for the period	Other comprehensive income (loss) for the period, net of income	tax	Total comprehensive income (loss) for the period	Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary share	Changes in equity of associates and joint ventures accounted for	using equity method	Other changes in capital surplus:	Changes in equity of associates and joint ventures accounted for	using equity method	Other changes in capital surplus	Balance at December 31, 2019

													Total equity	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	355,568,001	37,324,162	(6,768,604)	30,555,558		-	-	(36,921,297)	(59,598)		4,003	6,653	349,153,320
											Gains (losses)	on hedging	instruments	-	9,551	9,551	-	(28,314)	(28,314)		-	-	-	-		-		-	(18,763)	-	19,542	19,542		-	-	-	-		-	-	779
FORMOSA PLASTICS CORPORATION	Statements of Changes in Equity	For the years ended December 31, 2019 and 2018	(Expressed in Thousands of New Taiwan Dollars)	Total other equity interest	Share capital Retained earnings Unrealized	gains	on financial	Exchange assets	differences on measured at Unrealized	translation of fair value gains (losses) Gains (losses)	Unappropriated foreign through other on available- on effective	Ordinary retained financial comprehensive for-sale portion of cash	shares Capital surplus Legal reserve Special reserve earnings statements income financial assets flow hedges	63,657,408 11,649,929 52,165,530 51,285,206 78,699,082 (3,225,029) - 90,768,489 9,551	- - - - 3,181,817 - 99,924,374 (90,768,489) (9,551)	63,657,408 11,649,929 52,165,530 51,285,206 81,880,899 (3,225,029) 99,924,374 - -	- - - - 49,549,540 - - - -	- - - - (201,564) 1,668,424 (16,534,446) - -	- - - - 49,347,976 1,668,424 (16,534,446) - -		- - 4,938,285 - (4,938,285) - - - -	- - - 7,493,327 (7,493,327) - - - -	- - - - (36,284,722) - - - -	- - - - (12,698) - - - -		- (27,612) - - - - - - -		- 91,525 - - - - - - -	63,657,408 11,713,842 57,103,815 58,778,533 82,499,843 (1,556,605) 83,389,928 - -	- - - - 37,324,162 - - - -	- - - - (377,598) (3,721,645) (2,688,903) - -	- - - - 36,946,564 (3,721,645) (2,688,903) - -		- - 4,954,954 - (4,954,954) - - - -	- - - 5,190,369 (5,190,369) - - - -	- - - - (36,921,297) - - - -	- - - - (59,598) - - - -		- 4,003 - - - - - - -	- 6,653 - - - - - - -	63,657,408 11,724,498 62,058,769 63,968,902 72,320,189 (5,278,250) 80,701,025 - -
														$																											$
														Balance at January 1, 2018	Effects of retrospective application	Equity at beginning of period after adjustments	Net Income for the period	Other comprehensive income (loss) for the period	Total comprehensive income (loss) for the period	Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary share	Changes in equity of associates and joint ventures accounted	Other changes in capital surplus:	Changes in equity of associates and joint ventures accounted for	using equity method	Other changes in capital surplus	Balance at December 31, 2018	Net Income for the period	Other comprehensive income (loss) for the period	Total comprehensive income (loss) for the period	Appropriation and distribution of retained earnings:	Legal reserve appropriated	Special reserve appropriated	Cash dividends of ordinary share	Changes in equity of associates and joint ventures accounted	Other changes in capital surplus:	Capital surplus used to offset accumulated deficits	Other changes in capital surplus	Balance at December 31, 2019

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(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 credit loss 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 right-of-use assets 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: Notes receivable Accounts receivable Accounts receivable due from related parties Other receivable Other receivable due from related parties Inventories Other current assets Total changes in operating assets Changes in operating liabilities: Accounts payable Accounts payable to related parties Other payable Other payable to related parties Other current liabilities 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: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets at fair value through profit or loss 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 Decrease(increase) in other receivables due from related parties Acquisition of right-of-use assets Proceeds from disposal of right-of-use assets Increase in other non-current assets Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase 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) Payment of lease liabilities Decrease in other non-current liabilities Cash dividends paid Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		2019 2018 $ 42,219,152 57,092,376 6,909,994 6,936,928 481,013 514,967 (1,567) 945 (27,107) (215,889) 1,359,114 1,480,040 (623,668) (660,660) (8,186,145) (7,511,680) (14,734,118) (24,079,572) (31,109) (119,338) (12,834) - - 911,512 1,755,009 14,651 (13,111,418) (22,728,096) (152,244) 619,432 1,938,516 (1,461,514) 733,575 615,879 371,720 (62,057) (391,997) (378,511) 2,444,492 (3,204,370) 127,399 416,317 5,071,461 (3,454,824) (91,835) 225,031 (1,165,761) (586,149) (560,817) 155,487 806,845 164,647 (608,817) 230,485 (542,266) (139,425) (2,162,651) 50,076 2,908,810 (3,404,748) (10,202,608) (26,132,844) 32,016,544 30,959,532 635,930 644,092 22,475,201 25,574,093 (1,363,206) (1,488,457) (7,184,041) (5,181,983) 46,580,428 50,507,277 (229,555) (1,676,070) - 772,908 (1,951,323) (4,461,444) - 1,127,075 (17,293,279) (15,672,540) 44,773 222,276 (52,559) (55,830) 2,293,804 (647,826) (684,825) - 13,630 - (2,657,326) (100,860) (20,516,660) (20,492,311) 341,549,459 396,653,692 (341,928,883) (391,181,044) 3,000,000 2,500,000 - 9,300,000 (4,600,000) (5,700,000) 2,300,000 - (6,491,026) (5,813,964) 11,663,632 5,801,540 (32,421) - (78,446) (20,421) (36,927,613) (36,293,430) (31,545,298) (24,753,627) 336,710 (115,712) (5,144,820) 5,145,627 23,310,772 18,165,145 $ 18,165,952 23,310,772

See accompanying notes to consolidated financial statements.

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

Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(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 credit loss Interest expense Net gain arising from financial assets at fair value through profit 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 Realized (profit) loss on from sales Unrealized foreign exchange gain Total adjustments to reconcile profit Changes in operating assets and liabilities: Changes in operating assets: Notes and accounts receivable Accounts receivable due from related parties Other receivable Other receivable due from related parties Inventories Other current assets Total changes in operating assets Changes in operating liabilities: Accounts payable Accounts payable to related parties Other payable Other payable to related parties Other current liabilities 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: Acquisition of financial assets at fair value through other comprehensive income Proceeds from disposal of financial assets designated at fair value through profit or loss 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 Decrease (increase) in other receivables due from related parties (Increase) decrease in other non-current assets Net cash flows used in investing activities Cash flows from (used in) financing activities: Increase in short-term borrowings Decrease in short-term borrowings Increase in short-term notes and bills payable Proceeds from issuing bonds Repayments of bonds Proceeds from long-term debt Repayments of long-term debt Decrease in lease payable Decrease in other non-current liabilities Cash dividends paid Net cash flows used in financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period		2019 2018 $ 41,792,121 57,046,158 3,909,081 4,195,963 133,555 157,087 (1,567) 945 931,962 968,554 (27,107) (215,889) (519,376) (599,064) (8,186,145) (7,511,680) (16,390,959) (24,320,374) (31,614) (66,465) (42,800) 16,848 (281,878) (80,495) (20,506,848) (27,454,570) 2,140,592 (1,104,424) 514,635 486,098 393,102 (59,193) 180,510 (877,575) 3,471,424 (2,291,351) (320,824) (326,457) 6,379,439 (4,172,902) (96,315) (1,825) (1,204,191) (551,543) (398,575) (1,228,996) (68,099) 59,252 (1,201,193) (390,875) (542,266) (139,425) (3,510,639) (2,253,412) 2,868,800 (6,426,314) (17,638,048) (33,880,884) 24,154,073 23,165,274 536,374 583,027 22,475,202 25,574,092 (952,564) (968,427) (6,253,106) (5,007,157) 39,959,979 43,346,809 (229,555) - - 772,908 (5,044,323) (6,137,514) - 1,127,075 (4,899,716) (8,682,664) 44,769 70,439 2,150,603 (616,504) (487,361) 93,963 (8,465,583) (13,372,297) 333,165,116 375,117,873 (331,348,845) (367,434,810) 3,000,000 2,500,000 - 9,300,000 (4,600,000) (5,700,000) 2,300,000 - (3,788,889) (2,988,889) (32,421) - (89,518) (97,609) (36,927,613) (36,293,430) (38,322,170) (25,596,865) 187,396 64,654 (6,640,378) 4,442,301 18,941,635 14,499,334 $ 12,301,257 18,941,635

See accompanying notes to financial statements.

Formosa Plastics Corporation Statement of Profits Distribution For the year of 2019

Unit ： NT$

		Unit：NT$
Items		Amount
Available for Distribution: 1.Unappropriated retained earnings of previous years 2.Effect on long-term equity investment not recognized by shareholding percentage 3.Other comprehensive income transferred to unappropriated retained earnings of current year 4.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 ( $4.4 per share) 4.Unappropriated retained earnings carried forward to next year Total		35,433,602,677 -59,599,260 -377,597,612 37,324,162,012
		72,320,567,817
		3,732,416,201 4,910,773,792 28,009,259,436 35,668,118,388
		72,320,567,817

Explanation	1.The Company plans to distribute dividends of $4.4 per share for current year (among which, $2.21 per share will be distributed as dividends and $2.19 per share will be distributed as bonus); all of which are cash dividends. 2. The Company distributes dividends and bonus for a total of $28,009,259,436; all of which are from net profit after tax of 2019. 3. Effect of Changes on long-term equity investment is changes in equities of long-term investments due to the reinvested company launching a stock repurchase. 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.

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, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, 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, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years ended 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” ), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits of the consolidated financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the consolidated financial statements as of and for the year ended December 31, 2018 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. Based on our audits and the report of other auditors, we believe that the audit evidence we have obtained is 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.

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(o) and 6(r) to the consolidated financial statements.

4-1

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(e) 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 and the relevant information on the reinvestment business in Note 13 of the consolidated financial report has not been checked by this accountant, but is checked by other accountants. The Group's investments in the aforementioned investee companies constituted 32.04% and 31.81% of the consolidated total assets as of December 31, 2019 and 2018, respectively; and the recognized shares of profit of associates accounted for using equity method of these investee companies constituted 35.26% and 39.98% of the consolidated income before tax for the years ended December 31, 2019 and 2018, 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, 2019 and 2018, and have expressed an unmodified 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 endorsed and issued into effect 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.

4-2

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:

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.
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.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
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 auditors’ 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 auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
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.
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.

4-3

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 17, 2020

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and 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’ audit 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’ audit report and consolidated financial statements, the Chinese version shall prevail.

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 balance sheets as of December 31, 2019 and 2018, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, 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, 2019 and 2018, and its financial performance and its cash flows for the years ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuer.

Basis for Opinion

We conducted our audits of the financial statements as of and for the year ended December 31, 2019 in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants, Rule No. 1090360805 issued by the Financial Supervisory Commission, and the auditing standards generally accepted in the Republic of China. Furthermore, we conducted our audit of the financial statements as of and for the year ended December 31, 2018 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. Based on our audits and the report of other auditors, we believe that the audit evidence we have obtained is 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(o) and 6(r) to the consolidated financial statements.

3-1

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(e) to the consolidated financial statements.

Other Matter

We did not audit the financial statements of certain investee companies under equity method and the relevant information on the reinvestment business in Note 13 of the financial report has not been checked by this accountant, but is checked by other accountants. The Company's investments in the aforementioned investee companies constituted 34.29% and 33.42% of the total assets as of December 31, 2019 and 2018, respectively; and the recognized shares of profit of associates accounted for using equity method of these investee companies constituted 35.62% and 40.01% of the income before tax for the years ended December 31, 2019 and 2018, 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.

3-2

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

3-3

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 17, 2020

Notes to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance and 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 parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying parent company only 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’ audit report and parent company only financial statements, the Chinese version shall prevail.

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

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

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

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

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

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

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

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

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.

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

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 at the Company and 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, 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 notice of the causes 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.

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

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

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

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.

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

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

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

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

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.

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	1,696,541
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 12, 2020, the actual shareholdings of the Company’s Directors are 950,267,383 shares.

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$55,553,247
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 2020 Annual Shareholders’ Meeting:

Not applicable since the Company does not propose the stock dividend distribution at the 2020 Annual Shareholders’ Meeting and does not required to prepare financial forecast information.

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FPC — AGM Information 2020

51762_rns_2020-08-19_39ed3d8d-2632-46c0-bc00-546fcfc1dd0b.pdf

FORMOSA PLASTICS CORPORATION

2020ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK

Table of Contents

FORMOSA PLASTICS CORPORATION

2020 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

FORMOSA PLASTICS CORPORATION

2020 ANNUAL SHAREHOLDERS’ MEETING AGENDA

1. Report Items

2. Ratification Items

3. Discussion Items

Report Items

Formosa Plastics Corporation 2019 Business Report

1. 2019 Business Report:

2. Business Performance:

3. 2020 Business Performance Target and Outlook:

Formosa Plastics Corporation

Audit Committee’ Review Report

Ratification Items Proposal 1

Explanation:

Resolution:

Ratification Items Proposal 2

Attachment:

Resolution:

Discussion Items Proposal 1

Resolution:

Discussion Items Proposal 2

Resolution:

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018

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

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2019 and 2018

(Expressed in Thousands of New Taiwan Dollars)

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

Statements of Cash Flows

For the years ended December 31, 2019 and 2018

Formosa Plastics Corporation Statement of Profits Distribution For the year of 2019

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

2. Valuation of Inventories

Other Matter

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

KPMG

Notes to Readers

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

1. Revenue recognition

Other Matter

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

Auditors’ Responsibilities for the Audit of the Financial Statements

KPMG

Notes to Readers

Articles of Association of

Formosa Plastics Corporation

Chapter I General Provisions

Classified

Chapter II Shares

Chapter III Shareholders Meeting

Chapter IV Directors

Chapter V (Omitted)

Chapter VI Manager

Chapter VII Accounting

Chapter VIII Miscellaneous

Rules of Procedure for Shareholders’ Meetings of Formosa Plastics Corporation

Formosa Plastics Corporation Current Shareholdings of Directors

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

FPC AGM Information 2020