FRG — AGM Information 2023

Sep 1, 2023

Ticker symbol: 2107

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Formosan Rubber Group Inc.

2023 Shareholders Regular Meeting

Agenda Handbook

Date: June 9, 2023

Location: No. 1, Chaofeng Road, Sanhe Village, Longtan District, Taoyuan City (3rd Floor, the Company’s Office Building)

This English version is only a translation of the Chinese version. If there is any inconsistency or discrepancy between the Chinese and English versions, the Chinese version shall prevail for intents and purposes.

Table of Contents

One. Meeting Procedure ........................................................................................................................................... 1

Two. Meeting Agenda .............................................................................................................................................. 2 I. Report Items .............................................................................................................................................. 3 II. Recognitions ............................................................................................................................................ 6 III. Discussions ........................................................................................................................................... 7 IV. Extraordinary Motions ........................................................................................................................... 9

Three. Appendices

Attachment 1. 202 2 Business Report .......................................................................................................... 10 Attachment 2. Audit Committee’s Review Report ..................................................................................... 16 Attachment 3. Standalone Financial Report & CPA’s Audit Report .......................................................... 17 Attachment 4. Consolidated Financial Report & CPA’s Audit Report ...................................................... 27 Attachment 5. Earnings Distribution .......................................................................................................... 38 Attachment 6. Description of Capital Refunded from Cash Capital Decrease ........................................... 39 Attachment 7. Comparison table of amendments to the “Operational Procedures for “Acquisition or Disposal of Assets” ........................................................................................................................................................ 40 Four. Appendices Appendix 1. Procedures for the Acquisition and Disposal of Assets (before amendments) ..................... 43 Appendix 2. Articles of Incorporation (Article of Incorporation) .............................................................. 56 Appendix 3. Rules of Procedure for Shareholder Meetings ....................................................................... 61 Appendix 4. Numbers of Shares Held by All Shareholders and the Minimum Number of shares that should be Held ............................................................................................................................................ 67 Appendix 5. Other Matters ......................................................................................................................... 67

Meeting Procedure

I. Call the Meeting to Order

II. Chairperson Remarks

III. Report Items

IV. Recognitions

• V. Discussions

• VI. Extraordinary Motions

VII. Adjournment

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Meeting Agenda

Time: 9:30a.m, June 9, 2023 (Friday)

Location: No. 1, Chaofeng Road, Sanhe Village, Longtan District, Taoyuan City (3rd Floor, the Company’s Office Building in Taoyuan Plant)

Form of Shareholders’ Meeting: Physical

I. Call the Meeting to Order (Report the number of shares attending)

II. Chairperson Remarks

III. Report Items

• (I) The Company’s 2022 Business Report.

• (II) The Company’s 2022 Audit Committee’s Review Report.

• (III) Report of 2022 Remuneration Report for the Company’s Employees and Directors.

• (IV) Report on the 2022 Cash Dividends Paid from Earning Distribution.

• (V) Implementation of the Company’s Treasury Shares.

• (VI) The Company’s Land Development

IV. Recognitions

• (I) Proposal of the Company’s 2022 Business Report and Financial Statements. (II) Proposal of the Company’s 2022 Earnings Distribution

V. Discussions

• (I) Proposal of cash capital decrease.

• (II) Proposal of amendments of part of the Company’s “Operational Procedures for Acquisition or Disposal of Assets.”

VI. Extraordinary Motions

VII. Adjournment

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Report Items

I. The Company’s 2022 Business Report. Please review.

• Description: For the 2022 Business Report, please see details in Attachment 1 (please refer to the Agenda Handbook Pages 10 - 15).

• II. The Company’s 2022 Audit Committee’s Review Report. Please review. Description: For Review Report of the Audit Committee, please see details in Attachment 2 (please refer to the Agenda Handbook Page 16).

• III. 2022 Remuneration Report for the Company’s Employees and Directors. Please review. Description:

  • (I) According to Article 29 of the Company’s Article of Incorporation: “If there is a profit within the Company in the year, no less than 1% of the profit shall be set aside for employees’ remuneration and no higher than 2% of the profit shall be set as remuneration for directors. Where there is an accumulated loss, the profit shall be reserved to make up for the loss.”

  • (II) The profit before tax and remunerations of employees and directors is NT$845,589,288 for 2022. It is resolved by the board of directors to distribute employees' remuneration for NT$8,456,000 (≒ 1%), and directors' remuneration for NT$8,456,000 (≒1%), both in cash.

• IV. Report on the 2022 Cash Dividends Paid from Earning Distribution. Please review.

• Description:

  • (I) The current cash dividend is calculated according to the distribution ratio and rounded up to a dollar. The total amount of the odd share less than NT$1.2 is adjusted, from the higher to lower decimal point and from top down of the account number sequentially, till it is equal to the total cash dividend distributed.

  • (II) The cash dividend distribution proposal has been approved upon the Board’s resolution; the Chairman is authorized to determine the base date of dividend distribution and payment date, among other matters.

  • (III) After that, if the shares outstanding are affected due to the Company’s capital decrease with treasury shares or other reasons which result in a change in shareholder’s dividend rate, it is to authorize the Chairperson to fully handle the matter.

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V. The implementation of the Company’s treasury shares, please review. Description:

Repurchase of Shares

	April 2023
Repurchase period	25th
Repurchase purpose	To maintain the Company’s credit and the right and interest of our shareholders
Buyback period:	July 4, 2022 to September 2, 2022
Repurchase range price	NT$15~24
Class and number of shares already repurchased	Common shares 5,000,000 shares
Amount of repurchased shares	NT$105,815,500
Number of shares cancelled or transferred	5,000,000 shares
Accumulated number of shares held by the Company	0
Ratio of the accumulated number of shares held by the Company to the total number of issued shares(%)	0
Date of the cancellation completion and document number	November 17, 2022 Jin-Shou-Shang-Zhi No.11101205470

VI. The Company’s Land Development

Description: Description: With the successful projects including “World Garden - Qiao-Feng” and “Qian-Yue”. After being resolved by our board of directors, we have been proactively acquiring on potential development projects. In 2012, we have acquired the prime land of the Xinyi Planning District and also teamed up with DSG Technology Ltd. (now KINGLAND Property Corporation Ltd.) in introducing the project of “Legend River” located in Xindian at the end of the same year. At the end of 2013, we began letting at Qiao-Feng Business Plaza and in 2014, the land for Taichung Phase 7 was acquired. In 2016, we cooperated with the mainland China construction company and introduced the projects of “55Timeless” in Taipei Xinyi Planning District, and “La Bella Vita” in Taichung Phase 7. In 2017, we participated in the investment and construction of the residential and hotel developments in San Francisco; in 2022, we purchased part of the Ambassador Hotel in Kaohsiung and participated in the reconstruction and development. The cases in progress of the Company are as follows:

• (I) Completed projects

• There were only a few reserved units apartments remaining at “Qiao-Feng” and “Qian-Yue”. By judging the real estate market, we entrusted the sales of the residential apartments and took steps gradually, allowing steady sales, and we have now sold out all the residential apartments. For “Legend River”, with the opening of the MRT Circular Line soon and the development of the Yangbei Replanning Area, the market has gradually recovered and the selling rate has stabilized. For “55Timeless,” with the building of high specifications and the public facilities of an art gallery, it has become one of the international-grade landmarks for luxury residential apartments. Its exceptional construction quality has been widely favored and designated by our high-end customers. Under the impact of the US-China trade war, we have seen a situation where funds have gradually returned to Taiwan. With the Company’s flexible use of strategies, the apartments continued selling.

The real estate market in the 7th Phase, Taichung City is very active, and thus the selling prices

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are stabilized. The major selling point of “La Bella Vita” is planned to be the real model house designed for “La Bella Vita” specifically by the architecture Antonio Citterio and renowned cabinet brand, to increase the sales synergy with cross-industry alliance. San Francisco and Hotel Development Project

Our subsidiary (FRG US Corp.) established in the US in 2017 participates in the construction investments; The subsidiary’s investment in the project is approximately 11.23% The project, with 242 high-end residences, 10 retail stores, and a 236-room fashion hotel. Subject to the impact of elevated mortgage interest rates on residential sales in the US, the hotel was opened in the fourth quarter of 2022.

(III) FRG Bridge Upto Zenith Business Plaza

FRG Qiao Feng Business Plaza is located on the first and second floors of No. 168-180, Section 1, Zhongshan Road, Banqiao, covering an area of 1,882 pings (6221 square meters). The first floor of the business plaza has been leased to E.SUN Commercial Bank; the second floor has been leased to Nan Shan Life Insurance Co., Ltd. and SinoPac Securities Corporation; the second floor of the business plaza at building B has been leased to the infant care center, Bell’s HOUSE. The occupancy rate is 100%. FRG Qiao Feng Business Plaza has become an exquisite business center of Banqiao.

(IV) Ambassador Project in Kaohsiung

The reconstruction plan for the unsafe and old building has been completed for the Kaohsiung Ambassador Hotel. The land transfer was completed in December 2022, and it is in progress of architectural design.

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Recognitions

Motion 1 (proposed by the board of directors) Motion: The Company’s 2022 business report and financial statements.

Description: The Company’s 2022 financial statements (standalone financial report and consolidated financial submitted by the board of directors have been audited by CPAs Zhou Yin-Lai and Lai Yung Ji of Baker Tilly. The business report has also been reviewed by the Audit Committee and the review report has been submitted. Please Attachment 1 and Attachment 3 to Attachment 4 refer to the Agenda Handbook. (Pages 10 - 15 and 17 - 37)

Resolution:

Proposal 2 (proposed by the board of directors) Proposal: The Company’s 2022 earnings distribution, please ratify.

Description:

• (I) The 2022 Statement of Earnings Distribution has been approved upon the Board’s resolution, and reviewed by the Audit Committee.

• (II) Statement of Earnings Distribution has been attached, please see Attachment 5 for more details (please lease refer to the Agenda Handbook Page 38).

Resolution:

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Discussions

Motion 1 (proposed by the board of directors) Proposal: Proposal of cash capital decrease. Please discuss. Description:

• (I) To enhance shareholders' equity and earnings per share, the Company intends to decrease capital in cash and fund the share payment to shareholders.

• (II) The total registered capital of the Company is NT$6,800,000,000, and the paid-in capital is NT$3,373,260,000, with the par value of NT$10 per share, and the issued shares are 337,326,000 shares.

• (III) The amount of this cash capital decrease is planned to be NT$337,326,000, and the number of shares to be cancelled is 33,732,600 shares, with the capital decrease ratio of 10% (of which, the taxable ratio is about 15.09%). After the decrease, the paid-in capital is NT$3,035,934,000, divided as 303,593,400 shares, with the par value of NT$10 per share.

• (IV) Based on the shares held by each shareholder recorded in the shareholder roster on the base date of the capital decrease for share exchange, every thousand shares will be exchanged to 900 new shares (i.e. 100 shares will be decreased for every thousand shares); the payment of the decreased shares will be refunded to the shareholders at the par value of NT$10 per share. For fractional shares less than one share after the capital decrease, the shareholders may register with the Company's shareholder service agency from five days prior to the book-closure date to one day prior to the book-closure date, to consolidated the factional shares into complete shares. These share not consolidated, or unable to be a complete shares after consolidation, will be translated into cash (to pay for the transfer charge by the centralized custodian or the registration fee for virtual shares), and the calculation is up to NT$1 (cents are rounded off); the Chairman is authorized to contact specific persons to subscribe at the par value. The shares after the capital decrease will be issued virtually.

• (V) After the proposal is approved by the shareholders' meeting and submitted to the competent authority for approval, the Chairman is authorized to determine the base date for capital decrease, the base date for capital decrease and share exchange, and the plan for capital decrease and share exchange. For any subsequent change in the share capital of the Company and thus the number of outstanding shares is affected resulting in the adjustment to the aforementioned capital decreased ratio, it is proposed to the shareholders' meeting to authorize the Chairman to handle such with full authority.

• (VI) Where the proposal needs to be changed or modified due to the amendment to the law or required by the competent authority, it is proposed to the shareholders' meeting to authorize the Chairman to handle such with full authority.

• (VII)The rights and obligations of the new shares exchanged from this capital decrease are the same as before the exchange.

• (VIII)Please refer to Attachment 6 for the Description of Capital Refunded from Cash Capital Decrease, pursuant to the Letter Jin-Guan-Zheng-Fa Zhi No.1110381515 dated April 8, 2022, by Financial Supervisory Commission (please lease refer to the Agenda Handbook Page 39).

Resolution:

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Proposal 2 (proposed by the board of directors) Motion: Motion of amendments of part of the Company’s “Operational Procedures for Acquisition or Disposal of Assets,” please discuss.

Description:

• (I) Pursuant to Paragraph 2, Article 8 of the Operational Procedures for Acquisition or Disposal of Assets, regarding the trading of securities, for these transaction with amount under NT$ten million (inclusive) , they shall be approved by the chairman and submitted to the next meeting of the board of directors as reference, while providing an analysis report on the unrealized benefits or losses of financial assets; if the amount exceeds NT$ten million, the transaction must be submitted to the board of directors for approval before conducting.

• (II) To comply with the Company's operating procedures for investing in securities and increase investment flexibility, it is proposed to increase the approval authority of the Chairman with the amount increased to NT$one hundred million.

• (III) For the comparison table of the Company’s “Operational Procedures for Acquisition or Disposal of Assets” before and after the amendments, please refer to Attachment 7 (please lease refer to the Agenda Handbook Pages 40 - 42).

Resolution:

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Extraordinary Motions

Adjournment

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Attachment 1

Formosan Rubber Group Inc. The 2022 Business Report

Dear Shareholders,

In 2022, the international economy was impacted by the Russia-Ukraine War, which led to a continuous surge in prices of global energies and raw materials. Taiwan's export growth slowed down, and companies become conservative in investment. China's pandemic lockdown measures have hit the global supply chain again. The housing market has been impacted by multiple negative factors such as the US Federal Reserve's rapid interest rate hikes to curb inflation, the government’s actions to suppress the housing market, and the slump of stock market. All these negative impacts caused the shocks to the financial and real estate markets. Thanks to the diversified operations, the revenue, margin, and pre-tax incomes of the Company remained stable in 2022. To cope with the relocation of the industrial chain led by the investments of major domestic and foreign companies in Taiwan to build plants, and the manufacturers' warehouses have been shifted to Taiwan and Southeast Asian countries. The Company’s construction project of logistics plant planned in Longtan Smart Park, Taoyuan is expected to have a positive impact on operating revenue.

Looking 2023, various countries have turned to the reopening policy, commercial activities have gradually resumed, and private consumption has steadily recovered; the cross-border tourism is expected to add momentum to consumption. With the variables such as whether the Russia-Ukraine War further expands and the U.S.-China technology war resumes, coupled with the Company continuously improve in the expansion of logistics service projects and product performance in 2023, the Company holds a prudent and stable view on the business prospects in 2023.

Meanwhile, the Company will continue to enforce expanding business scopes as follows: I. Rubber manufacturing: through the investment and upgrade of equipment to improve the functions of products, while continuously developing new products and innovating the new market applications; II. Warehousing: proactively developing the policy of “business expansion and professional services” by constantly seeking new customers in order to bring different types of businesses into the Park, increasing operating performance; III. Construction and development: flexibly operating various strategies to sell the completed construction project steadily, and suitable individual projects and land with potential profits will be sought out for development actively.

The overall 2022 operating revenue and gross operating profit declined year-on-year, mainly due to the fact that the Company did not have completed project to be recognized in 2022, and the government policies resulted in a decrease in construction revenue, while pre-tax income increased from the previous year. It is to report the consolidated business results of FRG in 2022 and the summary of the business plan for 2023 to all shareholders as follows:

One.2022 Consolidated business performances

I. Performance of business plan implementation

(I) Consolidated operating income, gross profit and pre-tax income:

			Unit: thousand	Unit: thousand
Item	2022	2021	Increase and decrease amount	Increase and decrease %
Operatingincome	1,937,243	2,794,884	(857,641)	(30.69)%
Operatingmargin	625,209	883,664	(258,455)	(29.25)%
Pre-Tax Income	830,297	823,351	6,946	0.84%

(II) The sales of the reserved apartments for “World Garden - Bridge Upto Zenith”, and “Modesty Home” For the reserved apartments units at “Qiao-Feng” and “Qian-Yue,” by judging the real estate market, we entrusted the sales of the residential apartments and took steps gradually, allowing steady sales, and we have now sold out all the residential apartments.

(III) Xindian “Legend River”

The MRT Circular Line commenced the operation, and the development of the Yangbei Replanning Area, the market has gradually recovered and the selling rate has stabilized.

(IV) “55Timeless” Project in Taipei City

With the building of high specifications and the public facilities of an art gallery, it has become one of the international-grade landmarks for luxury residential apartments. Sales of units of large size and higher prices are soaring due to the following factors: preference of high end customers attracted by good construction quality and word of mouth; funds back to Taiwan to get away from Sino-US conflicts are prominent. With the Company’s flexible use of strategies, the apartments continued selling.

(V) “La Bella Vita” Project in Taichung City

The real estate market of the 7th Phase, Taichung City is very active, and thus the selling prices are stabilized. The major selling point of “La Bella Vita” is planned to be the real model house designed for “La Bella Vita” specifically by the architecture Antonio Citterio and renowned cabinet brand, to increase the sales synergy with cross-industry alliance.

• (VI) FRG Bridge Upto Zenith Business Plaza

FRG Qiao Feng Business Plaza is located on the first and second floors of No. 168-180, Section 1, Zhongshan Road, Banqiao, covering an area of 1,882 pings (6221 square meters). The first floor of

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the business plaza has been leased to E.SUN Commercial Bank; the second floor has been leased to Nan Shan Life Insurance Co., Ltd. and SinoPac Securities Corporation; the second floor of the business plaza at building B has been leased to the infant care center, Bell’s HOUSE. The occupancy rate is 100%. FRG Qiao Feng Business Plaza has become an exquisite business center of Banqiao.

(VII) San Francisco and Hotel Development Project

Our subsidiary (FRG US Corp.) established in the US in 2017 participates in the construction investments; The subsidiary’s investment in the project is approximately 11.23% The overall plan includes 242 high-end residences, ten retail stores, and a trendy hotel with 236 rooms. Due to the impact of rising US mortgage interest rates on residential sales, the hotel was opened in the fourth quarter of 2022.

• II. Budget implement: no financial projection for year 2023 by FRG is required according to the “Regulations Governing the Publication of Financial Forecasts of Public Companies”.

III. Analysis of Consolidated financial Income and Expenditure, and Profitability

Consolidated financial income and expenditure

Consolidated financial income and expenditure	Consolidated financial income and expenditure
		Unit: NT$thousand
Year Item	2022	2021
Net cash inflow (outflow) from operating activities	(21,411)	1,725,484
Net cash inflow(outflow)from investments	(394,776)	(781,636)
Net cash inflow (outflow) from financing activities	187,130	(302,551)

Analysis Table of Consolidated Profitability

Year Item		2021
	2022
Return on Asset(%)	5.35	6.16
Return on Equity (%)	5.98	6.73
Pre-Tax Income to Paid-In Capital(%)	24.61	24.05
Profit Margin(%)	36.74	27.84
EPS after tax	NT$2.09	NT$2.27

IV. Research & Development (R&D)

1. FRG has been investing in R&D and pursuing innovation based on the vision of “Beauty in Creation” committed 71 years ago. What we have achieved in 2022 are:

2. (1) Four patents acquired in 2022:

[1]	Cushion pad and its making
[2]	Composite structure for high frequency processing and the manufacturing method thereof
[3]	Wear-resistant woven fabric and the manufacturing method thereof
[4]	Sound insulation material and the manufacturing and use method thereof

• (2) There are another seven patent applications pending.

• Due to the emergence of the at-home economy resulted from the pandemic, the operation model of major e-commerce companies also includes "intellectualized warehouse and logistics." The Company will continue to improve the logistic system, and introduce some automation facilities, to reduce the repetitive tasks and elevate the performance of logistics and warehousing via the optimization of the working process and intellectualized management.

Two: Summary of 2023 Business Plan

I. 2023 Business Guideline:

1. The 3 management policies for manufacturing industry are: “Innovation”, “international” and “service”.

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Innovation: Make the best of raw materials, integrate existing equipment and process technology, and develop market application specific products to create substantial profits.

Globalization: Present in international trade show to improve product image and brand the Company; build up dealership in major economic regions to expand business scale. Service: Meet customer demands in fast pace and improve FRG’s reputation and economic benefits with high-quality services rendered by our technical team.

1. Warehouse space rented by the Nankan leasing unit has reached the upper limit in the park. The unit will keep on working with our customers there to render more services. In the next two years, FRG will do the best develop the Longtan Smart Park, build customized logistics plants, plan technologically intelligent warehouses and apply for the license of the third warehouse of the logistics center to service technology manufacturers in South Taoyuan; continuously upgrade and optimize services to attract international customers by word of mouth; push Nankan Logistics Park and Longtan Smart Park into the leader of professional leasing and integrated logistics services.

2. Real estate development and individual projects:

3. (1) The account for “Modesty Home” has been included when the project completed in 2014; we have an ‘elite’ apartment for sale.

4. (2) The reserved apartments of “Bridge Upto Zenith A[+” ] are entrusted to gradually sell according to the market reaction in order to stabilize the selling rate with reasonal price.

5. (3) The development of Xindian “Legend River” is located near the MRT Circular Line and the Yangbei Replanning Area have made the market together, and with the market gradually recovered, the sales have been stable.

6. (4) The "55Timeless" project in Taipei City will catch eye balls of premium customers based on superior architectural quality and technology as well as by unique model house built by well-known international architect. Seeking target customers with flexible operation of sales strategies.

7. (5) For the sales of “La Bella Vita” in Taichung City, the project is featured with the marketing campaign this year, is the real model apartment designed by Antonio Citterio and a renowned cabinet brank.

8. (6) The San Francisco residential and hotel development project has completed in the Q4, 2021. Subject to the impact of elevated mortgage interest rates on residential sales in the US, the hotel was opened in the fourth quarter of 2022.

9. (7) The reconstruction plan for the unsafe and old building has been completed for the Kaohsiung Ambassador Hotel. The land transfer was completed in December 2022, and it is in progress of architectural design.

II. Expected Sales and Their Basis

1. Years of statistics in Germany suggest that the total global demand for rubber and plastics remain growing slowing; the segments of life-saving, medication, and environment protection are outperforming the remaining ones; FRG is leading in the first two with better technology. 2022, it had been expected to welcome a golden age for the global economy against the backdrop of re-opening borders by various countries in the post-Covid-19 era, slow recovery of industrial production, and the mitigation of the global supply chain issues. However, due to the Russia-Ukraine War and China’s enhanced pandemic lockdown measures, high inflation, the hawkish rate hikes of the US Fed, and wrestling between the United States and China, the global supply chain is exposed to crisis again, and the global economy was hit by multiple and complicated factors. Looking at the world, the governments of various countries are facing severe challenges. They must support people's livelihood while prices are rising sharply, particularly food and fuel, which are deeply affected by the Russia-Ukraine War ; International Monetary Fund (IMF) believed that in many developed and developing economies, accounting control is expected to reduce both inflation and debt. It is expected that the global economic growth in 2023 will be low but still positive. In spite of all these unfavorable forces, FRG is targeting to outsell the 11,925 thousand yards of rubber, plastic and synthetic leather (2022) in 2023.

2. Nankan warehouse logistics and property management: Established more than two decades ago, the FRGILC has built up a logistic park covering some 1.3 million square meter and 6 buildings for the business of warehouse leasing business and logistic center; the tenants of the Park include electronic distributors,boutique, apparel and e-commerce, and most of them are famous brands . Thanks to FRG’s focus on good interactions with them, more than 70% of our clients have stayed here 5 year or longer and 90% of available warehouse spaces are occupied on average. In the future, the integration of logistics leasing business and logistics services will be extended to increase operational performance, while strengthening the technological smart monitoring and smart property management, to improve the performance of the logistics park. In the future, we will continue to improve the strategies of customized services and the expansion of the types of sector formats of tenants, seeking to enable FRG to become a benchmark in the logistics leasing industry. Income of warehouse leasing and logistic service is expected to up by 1%-2% in 2023 than 2022.

3. Pending units: sell those of projects "55Timeless" and "La Bella Vita" held by share-of-rights owners.

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5. Pending units of projects World Garden, Modesty Home, Legend River: keep on marketing them.

6. FRG Bridge Upto Zenith Business Plaza: The first and second floors (1,882 Ping combined) were 100% leased; FRG will keep on improving customer service and mall management to build up the image of leading commercial center in Xinban Special Economic Zone.

III. Important Production and Sales Policy:

1. The 3 management policies for manufacturing industry are: “Innovation”, “international” and “service”. Innovation: Make the best of raw materials, integrate existing equipment and process technology, and develop market application specific products to create substantial profits.

Globalization: Present in international trade show to improve product image and brand the Company; build up dealership in major economic regions to expand business scale.

Service: Meet customer demands in fast pace and improve FRG’s reputation and economic benefits with high-quality services rendered by our technical team.

1. To cope with the geopolitics and US-China war of trading and technologies, which results some companies shift their warehouses in Hong Kong to Taiwan and Southeast Asian Countries. For the direction of merchant recruitment of the year along with the trend, FRG will shift its focus two the project of Taoyuan Longtan Smart Park these two years as the Nankan Logistics Center has touched its upper limit now; build up new logistic specific warehouses, the intellectualized smart warehouses are planned, and apply for the permit of the third warehouse in the logistic center, to service customers in South Taoyuan; continuously upgrade and optimize services to recruit leading global brands, accepted by customers as premier service provider, and leading the park industry.

2. Based on lands in Xinyi District acquired in 2012, FRG is joint venture with CDC for the 55Timeless project in 2016; KPC for the Legend River project in Xindian with KPC in 2012; acquire lands of the La Bella Vita project in Taichung in 2015 and sell its units in 2016; in December 2022, FRG acquired a share of the base land of the Kaohsiung Ambassador Hotel and now it is in progress of architectural design. Efforts invested in land development will improve FRG’s earnings and images significantly.

Three. The Company’s Future Development Strategy

I. Secondary Processing Industries:

• A. By signing annual sales contracts with major customers - ensuring stable performance of 60% or more.

• B. By improving quality - continue to establish OEM/ODM partnership with international major manufactures to ensure turnover.

• C. By making good use of equipment - develop multi-colored and multi-specification productions, ensuring customers’ brand loyalty.

• D. By the continual technical partnership with European, American and Japanese plants - create new products and introduce them to new markets applications

• E. By developing compound products and adding new production lines, with one stop shop service, fulfilling customers’ needs.

• F. By investing with precision - principles of full production, order delivery and gradually adjust the inventory.

II. Nankan Warehouse Logistics and Rental and Leasing Business:

The leasing service industry in Nankan continues to actively develop new customers. Customers’ needs in service have evolved from leasing relationships to providing construction of professional software and hardware to customers, enabling sustainable long-term partnership with customers. In the future, technology will be adopted to manage integration processes and integration services pattern, allowing customers to experience improved efficiency. This year, through the connection between the logistics system and equipment to improve the operation pattern, optimize the work process, and secure the future talents. As the upstream and downstream manufacturers of semiconductor manufacturers successively locate their factories in Longtan Science Park, FRG Longtan Park will be the next key growth driver of FRG. The construction of warehouses will be started this year, and it will be applied for a logistics center upon the completion next year, to serve manufacturers around South Taoyuan. This year, the merchant recruitment business will be extended to Longtan Park, to provide customers with more choices of different locations, and make FRG the representative of the best professional leasing and logistics integration services.

III. Real Estate Development

In a bid to continue the real estate development experience and creating the long-term stable profit for the Company, not only do we have our own real estate assets, we also focus on other suitable land or individual projects. In addition to resident buildings, development of commercial spaces of considerable size are also planned. Not only can commercial real estate developments acquire long-term stable rent income, they also covers fields of business plaza operation, real estate management and property management. Due to the

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need of long-term development, other than the existing development projects, the Company will actively look for projects meeting the Company's conditions.

Four. Effects by External Competitive, Regulatory and Overall Operating Environments I. Secondary Processing Industries:

In 2022, the post-Covid-19 pandemic disrupted the labor market and supply chains, the Russia-Ukraine War pushed up bulk commodity prices, and government stimulus measures supported the increase in spending in the consumer market. Prices in some industrial economies soared, resulting in soaring inflation in countries around the world. To combat the soaring inflation, the US Federal Reserve (Fed) became the first one raising interest rates, and the central banks of various countries followed suit, effectively announcing the end of the era of cheap funds.

The sharp rise in living costs and soaring interest rates around the world become pressures on household spending, and the economic recovery momentums of various countries have weakened after the pandemic. The Institute of International Finance (IFF) and the Organization for Economic Cooperation and Development (OECD) both agree that the economic outlook is difficult, the world economy growth is expected to weaken sharply, but short from a recession. The International Monetary Fund (IMF) predicts that global economic growth will remain slow for a period of time. In addition, uncertain factors such as threats of regional conflicts and trade disputes, and EU’s carbon border tariffs and related policies will be officially launched in 2023, making an unstoppable trend to address environmental issues through economic policies. How are the increased costs on the supply side reflected in the consumer market and what are the implications, are also the topic that cannot be ignored. The global economy is dynamic and constantly evolving. Only by continuing to monitoring the political and economic situation in the world, and making timely adjustments based the stage of the business cycle, it is possible to seize the opportunities when the economy recovers. Therefore, by continuously developing new products, improving quality and strictly controlling costs based on the market orientation, the sustainable development of the Company may be ensured

II. Nankan Warehouse Logistics and Rental and Leasing Business:

Geopolitical pressure is elevating, the United States' control over China continues only is increasing, and the trend of "new globalization" has taken shape. Technology manufacturers have launched globalization positioning around the world to expand their global presence accommodate customer needs. Since some heavyweight foreign companies decided to set up logistics centers in Taiwan after evaluation, other companies will inevitably be driven to relocate their warehouses to Taiwan. It is also expected that Taiwan's logistics industry to develop towards automation to align with the future trends. FRG will continue to develop towards workflow automation in the future to improve overall efficiency, and reate value with manufacturers.

III. Land Developments

The Company's construction products are all located in good locations, and the sales targets are mostly loyal customers who hold real estate for a long time. There are not many remaining reserved units, so the sales conditions and prices are very stable.

The wave foreign funds’ flocking to buy properties have appeared in the recent years, plus the domestic and foreign inflationary pressure and soaring construction costs, result in the stubborn prices of the domestic real estates. However, it seems the national policy is to suppress the real estate markets with laws and regulation as well as the housing policy, imposing more uncertainty and difficulty on land development project. The Company will continue to insist the strategy of finding land with high potential of value raising and reasonable profits in high-quality urban areas, and make investment cautiously to ensure the Company's profits.

This is my great honor to present the business performances 2022 and summary of plan 2023 to all of you; My greatest thanks to each of our shareholders; we will do our best and continue to contribute better business results in the future.

I wish you well and stay healthy

Chairperson: Hsu Zhen-Tsai

President: Hsu Zhen-Ji

• 14 -

Attachment 2

Audit Committee’s Review Report

The board of directors has prepared the business report, financial statements (including parent company only financial report and consolidated financial statements), and profit distribution proposals of year 2022; the financial statements have been audited by CPA Zhou Yin-Lai and Lai Yong-Ji of the Baker Tilly Clock & Co.; the latter issued audit report as well.

The business report, financial statements and the motion for earnings distribution stated above have been reviewed by the Audit Committee and no discrepancy has been found. We have presented you the reports based on the provisions stipulated in Article 14-4 in Securities and Exchange Act and Article 219 in the Company Act.

Annual General Meeting of Shareholders of FRG, 2023

Formosan Rubber Group Inc.

Convener of Audit Committee: Xiao Sheng-Xian

March 15, 2023

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Attachment 3

NO.00111060A

CPAs Audit Report

• 16 -

Attachment 4

• 28 -

Attachment 5

Formosan Rubber Group Inc. Earnings Distribution

Attachment 5 Formosan Rubber Group Inc. Earnings Distribution	Attachment 5 Formosan Rubber Group Inc. Earnings Distribution
2022Unit: NT$
Item	Amount
Undistributed earnings at the beginning of the period	5,058,949,199
Add: Current net income	711,683,890
Add: Reversal of IFRS accounts and special reserve of related unrealized revaluation increments	1,480,001
Add: disposal of equity investment instruments measured at fair value through other comprehensive income	6,157,661
Add: Other comprehensive income (actuarial gains and losses of defined benefitplans)	48,382
Less: Treasury stock write-off due to capital reduction	(49,219,895)
The net profit after tax of the period, plus items other than The net profit after tax of the period, accounted into the undistributed earnings of the year	670,150,039
Undistributed earnings after adjustment	5,729,099,238
Less: 10% provision for legal reserve	(67,015,004)
Subtotal	(67,015,004)
Distributable net profit	5,662,084,234
Distributable items:
1. Shareholder dividends -cash (337,326,000 shares × cash dividends of NT$1.2)	(404,791,200)
Subtotal	(404,791,200)
Accumulated undistributed earnings at the end of the period	5,257,293,034

Note 1: The amount of earnings are distributed with priority of 2022 net profit after tax.

• 39 -

Attachment 6

Formosan Rubber Group Inc.

Description of Capital Refunded from Cash Capital Decrease

• 1.Reasons, necessity and rationality for this cash capital reduction

The Company's net profit for the current period in 2022 was NT$711,684 thousand, and the undistributed earnings as of December 2022 was NT$5,729,100 thousand, with the debt ratio of 13.78%, demonstrating that the Company's overall financial structure is solid; as of December 31, 2022, cash and cash equivalents on the account were NT$1,775,404 thousand. Moreover, the Company has a promising outlook on future operations and continues to develop steadily. Due to the abundance of self-owned funds, the board of directors resolved to decrease the capital by 10% on March 15, 2023, in the way to decrease capital and refund shareholders' share payments in cash, as an adjustment to the capital structure, help to increase the return on shareholders' equity.

1. The source of funds for this cash capital decrease, and the impact of the capital decrease on the Company's finances, normal business operations, and capital structure stability

The amount of cash capital decrease this time is NT$337,326 thousand, and the main source of funds is the Company's own funds. As of December 31, 2022, the Company's cash and equivalents were about NT$1,775,404 thousand, meaning the self-owned funds are sufficient to cover the funds required for the capital decrease. If the expected dividend distribution and cash capital reduction are completed, the cash and equivalents are still as much as NT$1,033,287 thousand (=NT$1,775,404 thousand - NT$404,791 thousand - NT$337,326 thousand); therefore, the cash capital decrease will not affect the Company's future operations and investment plans.

1. Whether the Company has a plan to raise funds or distribute new bonus shares in the year of the shareholders meeting and in the next year of, the necessity and rationality thereof In the year of the shareholders meeting (2023) and the next year (2024), there is currently no plan to raise

funds or issue new bonus shares based pm the Company's business plan.

• 40 -

Attachment 7

Formosan Rubber Group Inc.

Attachment 7	Formosan Rubber Group Inc.	Formosan Rubber Group Inc.	Formosan Rubber Group Inc.
**Comparison table of amendments to **	the “Operational Procedures for “Acquisition or Disposal of Assets”
Current Provision		Amended Provision	Description
Article 8 Paragraph 1 omitted II. Determining procedures for transaction conditions and authorized limits. (I) The trading of securities in the centralized trading market or OTC venue provided by securities firm shall be determined by the responsible unit based on market conditions. For these transaction with amount under NT$ten million (inclusive) , they shall be approved by the chairman and submitted to the next meeting of the board of directors as reference, while providing an analysis report on the unrealized benefits or losses of financial assets; if the amount exceeds NT$ten million, the transaction must be submitted to the board of directors for approval before conducting. (II) For securities transactions that are not in the centralized trading market or OTC venue provided by securities firms, the latest financial statements of the target company that have been certified or reviewed by CPAs shall be taken as a reference for evaluating the transaction price, and the net value per share, profitability, and future potential of the target company shall be taken into consideration. For these transaction with amount under NT$ten million (inclusive) , they shall be approved by the chairman and submitted to the next meeting of the board of directors as reference, while providing an analysis report on the unrealized benefits or losses of financial assets; if the amount exceeds NT$ten million, the transaction must be submitted to the board of directors for approval before conducting. (III) With respect to the Company's acquisition or disposal of assets that is subject to the approval of the board of directors under the company's procedures or other laws or regulations, if a director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to the Audit Committee. When a transaction involving the acquisition or disposal of assets is submitted for discussion by the Board of Directors pursuant to the paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. III. Execution unit When the Companyacquires or disposes of		Article 8 Paragraph 1 omitted II. Determining procedures for transaction conditions and authorized limits. (I) The trading of securities in the centralized trading market or OTC venue provided by securities firm shall be determined by the responsible unit based on market conditions. For these transaction with amount underNT$One hundred million (inclusive) , they shall be approved by the chairman and submitted to the next meeting of the board of directors as reference, while providing an analysis report on the unrealized benefits or losses of financial assets; if the amount exceeds NT$One hundred million ,the transaction must be submitted to the board of directors for approval before conducting. . (II) For securities transactions that are not in the centralized trading market or OTC venue provided by securities firms, the latest financial statements of the target company that have been certified or reviewed by CPAs shall be taken as a reference for evaluating the transaction price, and the net value per share, profitability, and future potential of the target company shall be taken into consideration. For these transaction with amount under NT$ten million (inclusive) , they shall be approved by the chairman and submitted to the next meeting of the board of directors as reference, while providing an analysis report on the unrealized benefits or losses of financial assets; if the amount exceeds NT$ten million, the transaction must be submitted to the board of directors for approval before conducting. (III) With respect to the Company's acquisition or disposal of assets that is subject to theapproval of the board of directors under the company's procedures or other laws or regulations, if a director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to the Audit Committee. When a transaction involving the acquisition or disposal of assets is submitted for discussion by the Board of Directors pursuant to the paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting. III. Execution unit	1. To comply with the Company's operating procedures for investing in securities and increase investment flexibility.

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negotiable securities, the financial and accounting unit shall be responsible for the execution after the approval in accordance with the approval set forth of the preceding paragraph. IV. Obtaining experts’ opinions (I) The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission. (II) Pursuant to the proviso to Article 10 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies, a public company acquiring or disposing of securities may be exempted from the requirement of obtaining the financial statements of the issuing company for the most recent period, audited or reviewed by a certified public accountant (CPA) and the requirement of additionally engaging a CPA to provide an opinion regarding the reasonableness of the transaction price when the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, prior to the date of occurrence of the transaction, if it fulfills any of the conditions listed below: 1. Securities acquired through cash contribution in an incorporation by promotion or by public offering in accordance with the Company Act, with the further requirement that the rights represented by the acquired securities be commensurate with the proportion of capital contributed. 2. Participation in subscription to an issue of securities issued at face value by an issuing company 3. Participation in subscription to securities issued by a 100 percent owned subsidiary that is carrying out a cash capital increase. 4. Securities listed and traded on the Taiwan Stock Exchange or the Taipei Exchange or emerging stocks. 5. Government bonds, or bonds under repurchase or reverse purchase agreements. 6. Onshore or offshore publicly offered funds. 7. TWSE or TPEx listed stocks acquired or disposed of in accordance with the TWSE	When the Company acquires or disposes of negotiable securities, the financial and accounting unit shall be responsible for the execution after the approval in accordance with the approval set forth of the preceding paragraph. IV. Obtaining experts’ opinions (I) The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission. (II) Pursuant to the proviso to Article 10 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies, a public company acquiring or disposing of securities may be exempted from the requirement of obtaining the financial statements of the issuing company for the most recent period, audited or reviewed by a certified public accountant (CPA) and the requirement of additionally engaging a CPA to provide an opinion regarding the reasonableness of the transaction price when the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, prior to the date of occurrence of the transaction, if it fulfills any of the conditions listed below: 1. Securities acquired through cash contribution in an incorporation by promotion or by public offering in accordance with the Company Act, with the further requirement that the rights represented by the acquired securities be commensurate with the proportion of capital contributed. 2. Participation in subscription to an issue of securities issued at face value by an issuing company 3. Participation in subscription to securities issued by a 100 percent owned subsidiary that is carrying out a cash capital increase. 4. Securities listed and traded on the Taiwan Stock Exchange or the Taipei Exchange or emerging stocks. 5. Government bonds, or bonds under repurchase or reverse purchase agreements. 6. Onshore or offshore publicly offered funds. 7. TWSE or TPEx listed stocks acquired or

• 42 -

or TPEx rules governing the purchase of disposed of in accordance with the TWSE listed securities by reverse auction or rules or TPEx rules governing the purchase of governing the auction of listed securities. listed securities by reverse auction or rules 8. Participation in subscription to shares governing the auction of listed securities. issued by a public company for a cash 8. Participation in subscription to shares capital increase or domestic subscription to issued by a public company for a cash corporate bonds (including financial capital increase or domestic subscription to debentures), with the further requirement corporate bonds (including financial that the securities acquired are not privately debentures), with the further requirement placed securities. that the securities acquired are not privately 9. Subscription to a domestic privately placed securities. placed fund before the establishment of the 9. Subscription to a domestic privately fund in accordance with Article 11, placed fund before the establishment of the paragraph 1 of the Securities Investment fund in accordance with Article 11, Trust and Consulting Act, or subscription to paragraph 1 of the Securities Investment or redemption of a domestic privately Trust and Consulting Act, or subscription to placed fund, provided that the trust or redemption of a domestic privately agreement for the fund specifies an placed fund, provided that the trust investment strategy in which, aside from agreement for the fund specifies an securities margin transactions and open investment strategy in which, aside from positions held in securities-related products, securities margin transactions and open the investment scope of the remaining positions held in securities-related products, portion is the same as that of a publicly the investment scope of the remaining offered fund. portion is the same as that of a publicly (III) Where the Company acquires or offered fund. disposes of assets through court auction (III) Where the Company acquires or procedures, the evidentiary documentation disposes of assets through court auction issued by the court may be substituted for procedures, the evidentiary documentation the appraisal report or CPA opinion. issued by the court may be substituted for the appraisal report or CPA opinion.

• 43 -

Appendix 1

Formosan Rubber Group Inc. Operational Procedures for the Acquisition and Disposal of Assets

Amended on June 8, 2022

Appendix	1 Formosan Rubber Group Inc. Operational Procedures for the Acquisition and Disposal of Assets Amended on June 8, 2022	1 Formosan Rubber Group Inc. Operational Procedures for the Acquisition and Disposal of Assets Amended on June 8, 2022
Article 1:	Purpose
	To secure assets and implement the information disclosure, the Procedures are established.
Article 2:	Basis of Laws
	The Procedures are established pursuant to the “Regulations Governing the Acquisition and Disposal of
	Assets by Public Companies,” (the “Regulations”) which are adopted in accordance with the provisions of
	Article 36-1 of the Securities and Exchange Act ("the Act").
Asset 3:	Applicable Assets
	I.	Negotiable securities:Investments in stocks, government bonds, corporate bonds, financial bonds,
		securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest
		securities, and asset-backed securities.
	II.	Real property (including land, houses and buildings, investment property, and construction
		enterprise inventory) and equipment.
	III.	Memberships.
	IV.	Intangible asset:Patents, copyrights, trademarks, franchise rights, and other intangible assets.
	V.	Right-of-use assets.
	VI.	Claims of financial institutions (including receivables, bills purchased and discounted, loans, and
		overdue receivables).
	VII.	Derivatives.
	VIII.	Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of
		shares in accordance with law.
	IX.	Other major assets.
Article 4:	Definition
	I.	Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, or swap
		contracts, whose value is derived from a specified interest rate, financial instrument price,
		commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or
		other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured
		products containing embedded derivatives. The term "forward contracts" does not include insurance
		contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or
		long-term purchase (sales) contracts.
	II.	Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in
		accordance with law: Refers to assets acquired or disposed through mergers, demergers, or
		acquisitions conducted under the Business Mergers and Acquisitions Act and other acts, or to
		transfer of shares from another company through issuance of new shares of its own as the
		consideration therefor (hereinafter "transfer of shares") under Article 156-3 of the Company Act.
	III.	Related party or subsidiary:As defined in the Regulations Governing the Preparation of Financial
		Reports by Securities Issuers.
	IV.	Professional appraiser:Refers to a real property appraiser or other person duly authorized by law to
		engage in the value appraisal of real property or equipment.
	V.	The term of “Date of occurrence” described in these Procedures:refers to the date of contract signing,
		date of payment, date of commissioned transaction concluding, date of transfer, dates of boards of
		directors’ resolutions, or other date that can confirm the counterparty and monetary amount of the
		transaction, whichever date is earlier. However, the investment requiring approvals from competent
		authorities, the earlier date between the aforesaid dates, or the dates receiving approvals from
		competent authorities prevails.
	VI.	Mainland China area investment:Refers to investments in the mainland China area approved by the
		Ministry of Economic Affairs Investment Commission or conducted in accordance with the
		provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the
		Mainland Area.
Article 5:	Total amounts of real property and right-of-use assets thereof or securities acquired by the company and
	each subsidiary for business use, and limits on individual securities, set forth as following:
	(I)	Total amount of the Company’s real properties not for operation, and their right-of-use assets, shall
		not exceed 15% of the net worth. Total amount of each subsidiary of the Company’s real properties
		not for operation, and their right-of-use assets, shall not exceed 15% of the net worth.
	(II)	Total amount of the Company’s investments in negotiable securities, shall not exceed 50% of the net
		worth. Total amount of each subsidiary of the Company’s investments in negotiable securities, shall
		not exceed 150% of the net worth.
	(III)	Total amount of the Company’s investments in single negotiable security, shall not exceed 25% of
		the net worth. Total amount of each subsidiary of the Company’s investments in single negotiable
		security, shall not exceed 100% of the net worth.

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• Article 6: Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide public companies with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall meet the following requirements:

• I. May not have previously received a final and unappealable sentence to imprisonment for 1 year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic of China, the Insurance Act, the Financial Holding Company Act, or the Business Entity Accounting Act, or for fraud, breach of trust, embezzlement, forgery of documents, or occupational crime. However, this provision does not apply if 3 years have already passed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received.

• II. May not be a related party or de facto related party of any party to the transaction.

• III. If the company is required to obtain appraisal reports from two or more professional appraisers, the different professional appraisers or appraisal officers may not be related parties or de facto related parties of each other.

When issuing an appraisal report or opinion, the personnel referred to in the preceding paragraph shall comply with the self-regulatory rules of the industry associations to which they belong and with the following provisions:

• Article 7: Procedures for the acquisition or disposal of real properties, equipment, and their right-of-use assets I. Evaluation and operational procedures

  • For the acquisition or disposal of real properties, equipment, and their right-of-use assets, the Company’s fixed asset circulation procedures under the internal control system shall be complied with.

• II. Determining procedures for transaction conditions and authorized limits.

  • (I) For the acquisition or disposal of real properties, equipment, and their right-of-use assets, the announced current value, appraised value, actual transaction prices of properties in the neighborhood, negotiated transaction conditions and transaction prices shall be referred to, and either price inquiry, price comparison, price negotiation, or tender shall be adopted. For the amount of Three Hundred Million New Taiwan Dollars or under, the approval of the chairperson is required, and shall be submitted to the soonest board meeting for ratification; For over Three Hundred Million New Taiwan Dollars, the approval of the chairperson is required, and shall be submitted to the board of directors for approval before engagement Or, the Board of Directors may first approve a designated area or within a certain amount, authorize the chairman of the board to deal with it at full power, and then report to the Board of Directors for ratification. The above-mentioned certain amount should not exceed 50% of the net worth of the most recent financial statements.

  • (II) With respect to the Company's acquisition or disposal of assets that is subject to the approval of the board of directors under the company's procedures or other laws or regulations, if a director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to the Audit Committee.

    • When proposal transactions of acquiring or disposing assets to the Board of Directors per this Article, the opinions of each independent directors shall be fully considered. When an independent director has a dissenting opinion or qualified opinion, it shall be noted in the minutes of board of directors’ meeting.

    • The Company’s major assets transactions shall be approved by a majority of the Audit Committee members, resolved by the board of directors, and subject to the provisions of Paragraph 4 and 5 of Article 17.

• III. Execution unit When the Company acquires or disposes of real property, equipment or its right-of-use assets, it shall be executed by the department using the asset, and the management department upon the approval in accordance with the preceding paragraph.

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

  • (I) Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors; the same procedure shall also be followed whenever there is any subsequent change to the terms and conditions of the transaction.

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

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  • (III) Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:

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

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

    3. The CPAs providing opinion are not limited to the Company’s certifying CPAs.

  • (IV) The date of the report issued by the professional appraiser and the date of contract establishment shall not exceed three months. However, if the announced current value in the same period is applicable, within six months, the original professional appraiser may issue an opinion.

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

• Article 7-1: For the calculation of 10 percent of total assets under these Regulations, the total assets stated in the most recent parent company only financial report or individual financial report prepared by the Company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers shall be used.

• Article 8: Procedure of Acquiring or Disposing Negotiable Securities

• I. Evaluation and operational procedures

  • For the acquisition or disposal of negotiable securities, the Company’s investment circulation procedures under the internal control system shall be complied with.

• II. Determining procedures for transaction conditions and authorized limits.

  • (I) The trading of securities in the centralized trading market or OTC venue provided by securities firm shall be determined by the responsible unit based on market conditions. For these transaction with amount under NT$ten million (inclusive) , they shall be approved by the chairman and submitted to the next meeting of the board of directors as reference, while providing an analysis report on the unrealized benefits or losses of financial assets; if the amount exceeds NT$ten million, the transaction must be submitted to the board of directors for approval before conducting.

  • (II) For securities transactions that are not in the centralized trading market or OTC venue provided by securities firms, the latest financial statements of the target company that have been certified or reviewed by CPAs shall be taken as a reference for evaluating the transaction price, and the net value per share, profitability, and future potential of the target company shall be taken into consideration. For these transaction with amount under NT$ten million (inclusive) , they shall be approved by the chairman and submitted to the next meeting of the board of directors as reference, while providing an analysis report on the unrealized benefits or losses of financial assets; if the amount exceeds NT$ten million, the transaction must be submitted to the board of directors for approval before conducting.

  • (III) With respect to the Company's acquisition or disposal of assets that is subject to the approval of the board of directors under the company's procedures or other laws or regulations, if a director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to the Audit Committee. When a transaction involving the acquisition or disposal of assets is submitted for discussion by the Board of Directors pursuant to the paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

• III. Execution unit

When the Company acquires or disposes of negotiable securities, the financial and accounting unit shall be responsible for the execution after the approval in accordance with the approval set forth of the preceding paragraph.

• IV. Obtaining experts’ opinions

• (I) The Company acquiring or disposing of securities shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, the company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission.

• 46 -

• (II) Pursuant to the proviso to Article 10 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies, a public company acquiring or disposing of securities may be exempted from the requirement of obtaining the financial statements of the issuing company for the most recent period, audited or reviewed by a certified public accountant (CPA) and the requirement of additionally engaging a CPA to provide an opinion regarding the reasonableness of the transaction price when the dollar amount of the transaction is 20 percent of the company's paid-in capital or NT$300 million or more, prior to the date of occurrence of the transaction, if it fulfills any of the conditions listed below:

• Securities acquired through cash contribution in an incorporation by promotion or by public offering in accordance with the Company Act, with the further requirement that the rights represented by the acquired securities be commensurate with the proportion of capital contributed.

• Participation in subscription to an issue of securities issued at face value by an issuing company.

• Participation in subscription to securities issued by a 100 percent owned subsidiary that is carrying out a cash capital increase.

• Securities listed and traded on the Taiwan Stock Exchange or the Taipei Exchange or emerging stocks.

• Government bonds, or bonds under repurchase or reverse purchase agreements.

• Onshore or offshore publicly offered funds.

• TWSE or TPEx listed stocks acquired or disposed of in accordance with the TWSE or TPEx rules governing the purchase of listed securities by reverse auction or rules governing the auction of listed securities.

• Participation in subscription to shares issued by a public company for a cash capital increase or domestic subscription to corporate bonds (including financial debentures), with the further requirement that the securities acquired are not privately placed securities.

• Subscription to a domestic privately placed fund before the establishment of the fund in accordance with Article 11, paragraph 1 of the Securities Investment Trust and Consulting Act, or subscription to or redemption of a domestic privately placed fund, provided that the trust agreement for the fund specifies an investment strategy in which, aside from securities margin transactions and open positions held in securities-related products, the investment scope of the remaining portion is the same as that of a publicly offered fund.

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

Article 9: Procedures for the acquisition or disposal of membership certificates, intangible assets, and their right-of-use assets

• I. Evaluation and operational procedures

• For the acquisition or disposal of real membership certificates, intangible assets, and their right-of-use assets, the Company’s fixed asset circulation procedures under the internal control system shall be complied with.

• II. Determining procedures for transaction conditions and authorized limits.

• (I) To acquire or dispose of a membership certificate, the fair market price shall be referred to, to determine the transaction conditions and transaction prices, and prepare an analysis report and submit it to the president. If the amount is less than NT$three million, approval from the president is required, and the transaction shall be submitted to the next board meeting for reference; if it exceeds NT$three million, it must be submitted to the board of directors for approval before conducting.

• (II) To acquire or dispose intangible assets or their right-of-use assets, the expert evaluation reports or market fair market prices shall be referred to, to determine transaction conditions and transaction prices, prepare an analysis report and submit it to the chairperson. If the amount of which is less than NT$ then million, the approval of the chairperson is required, and the transaction shall be submitted to the next board meeting for reference; if it exceeds NT$ten million, it must be submitted to the board of directors for approval before conducting.

• (III) Where a public company acquires or disposes of membership certificates, intangible assets or right-of-use assets and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a domestic government agency, the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price;

• III. Execution unit

• When the Company acquires or disposes of membership certificates, intangible assets, and their right-of-use assets, it shall be executed by the department using the asset, and the management department upon the approval in accordance with the preceding paragraph.

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• IV. Appraisal report of experts for membership certificates, intangible assets, and their right-of-use assets (I) If the Company acquires or disposes of a membership certificate with a transaction amount of more than NT$three million or more, an appraisal report by an expert is required.

  • (II) If the Company acquires or disposes of intangible assets or their right-of-sue assets, for the transaction with amount of NT$ten million or more, an appraisal report by an expert is required.

  • (III) Where a public company acquires or disposes of membership certificates, intangible assets or right-of-use assets and the transaction amount reaches 20 percent or more of paid-in capital or NT$300 million or more, except in transactions with a domestic government agency, the company shall engage a certified public accountant prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

• Article 9-1: The calculation of the transaction amounts referred to in Articles 7, 8 and 9 shall be done in accordance with Article 14, paragraph 2 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items for which an appraisal report from a professional appraiser or a CPA's opinion has been obtained need not be counted toward the transaction amount.

• Article 10: Procedures of Handling Transactions with Related Parties

• I. When the Company engages in any acquisition or disposal of assets from or to a related party, other than ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, pursuant to Article 7, the Procedures for the acquisition or disposal of real properties, equipment, and their right-of-use assets, if the transaction amount reaches 10 percent or more of the company's total assets, the company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion in compliance with the provisions of the preceding Section and this Section. The calculation of the transaction amount referred to in the preceding paragraph shall be made in accordance with Article 9-1 herein.

  • When judging whether a transaction counterparty is a related party, in addition to legal formalities, the substance of the relationship shall also be considered.

• II. Evaluation and operational procedures

  • For the acquisition and disposal of property or use-of-right assets with the related party, or the acquisition and disposal of assets other than the property or right-of-right assets for an amount exceeding 20% of the company’s paid-in capital, 10% of the total assets, or NT$300 million, except for the trade of domestic bonds, R/P and R/S bonds, subscription, or R/P of monetary fund issued by domestic securities investment trusts industry, the following information submitted to the Audit Committee for the approval of a majority of the members and the board of directors for approval before having the trade contract signed and payment made.

  • (I) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.

  • (II) The reason for choosing the related party as a transaction counterparty.

  • (III) With respect to the acquisition of real property or right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Item 3, Paragraph (I)and (IV)of this Article.

  • (IV) The date and price at which the related party originally acquired the real property, the original transaction counterparty, and that transaction counterparty's relationship to the company and the related party.

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

  • (VI) An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the first item.

  • (VII) Restrictive covenants and other important stipulations associated with the transaction. With respect to the types of transactions listed below, when to be conducted between the Company and its parent or subsidiaries, or between its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, the Company's board of directors may pursuant to Article 7, paragraph 1, subparagraph 3 delegate the board chairman to decide such matters when the transaction is within Three Hundred Million New Taiwan Dollars and have the decisions subsequently submitted to and ratified by the next board of directors meeting:

  • (I) Acquisition or disposal of equipment or right-of-use assets thereof held for business use.

  • (II) Acquisition or disposal of real property right-of-use assets held for business use. Where the Company or its subsidiary that is not a domestic public company in Taiwan has a transaction in the paragraph and the transaction amount reaches 10% or more of the total assets of the Company, the Company shall submit the information listed in the paragraph to the shareholders’ meeting for approval before signing the transaction contract and making the payment. However, this restriction does not apply to transactions between the public company and

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its parent company or subsidiaries or between its subsidiaries.

The calculation of the transaction amounts referred to in paragraph 2 and the preceding paragraph shall be made in accordance with Article 14, paragraph 2 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the current transaction. Items that have been approved by the shareholders meeting or board of directors need not be counted toward the transaction amount.

• III. Assessment of reasonableness of the transaction costs.

• (I) The Company that acquires real property or right-of-use assets thereof from a related party shall evaluate the reasonableness of the transaction costs by the following means:

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

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

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

• (III) The Company that acquires real property or right-of-use assets thereof from a related party and appraises the cost of the real property or right-of-use assets thereof in accordance with the preceding two paragraphs shall also engage a CPA to check the appraisal and render a specific opinion.

• (IV) When the Company acquires real properties or their right-of-use assets, if the results of the Company's appraisal conducted in accordance with paragraph (1) and paragraph (2), Item 3 of the Article are uniformly lower than the transaction price, the matter shall be handled in compliance with paragraph (5), Item 3 of the Article However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA have been obtained, this restriction shall not apply:

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

  2. (1) Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.

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

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

• (V) When the Company acquires real properties or their right-of-use assets, if the results of the Company's appraisal conducted in accordance with paragraph (1) and paragraph (2), Item 3 of the Article are uniformly lower than the transaction price, the matter shall be handled in compliance with the following:The appropriated special reserve cannot be used until the assets

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purchased or leased at a high price is with the loss in valuation recognized, disposed, or properly compensated or resumed to its original form, or concluded as reasonable with proof, and with the approval of the Financial Supervisory Commission, Executive Yuan.

1. For the difference between the transaction price and assessed cost of the property and its use-of-right assets, a special reserve shall be appropriated in accordance with Paragraph 1 of Article 41 of the Securities and Exchange Act, and it shall not be distributed or capitalized with stock shares distributed. Where the Company uses the equity method to account for its investment in another company, then the special reserve called for under Article 41, paragraph 1 of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company.

2. Independent directors shall comply with Article 218 of the Company Act.

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

4. (VI) Where a public company acquires real property or right-of-use assets thereof from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance with the Paragraph2 of this Article, and the (1), (2), and (3) of Paragraph 3 of this Article do not apply:

5. The related party acquired the real property or right-of-use assets thereof through inheritance or as a gift.

6. More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property or right-of-use assets thereof to the signing date for the current transaction.

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

8. The real property right-of-use assets for business use are acquired by the Company with its parent or subsidiaries, or by its subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.

9. (VII) When a public company obtains real property or right-of-use assets thereof from a related party, it shall also comply with the (5), Paragraph 3 of this Article, if there is other evidence indicating that the acquisition was not an arms length transaction.

Article 11: Procedure of acquiring or disposing claims of financial institutions

In principle, the Company does not engage in the acquisition or disposal of the claims of financial institutions. If it wishes to engage in the acquisition or disposition of the claims of financial institutions in the future, it will be handled in accordance with relevant regulations.

Article 12: Procedure of acquiring or disposing derivatives

• I. Principles and guidelines of transactions

• (I) Transaction types

  1. Derivatives undertaken by the Company: Forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived from a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable; or hybrid contracts combining the above contracts; or hybrid contracts or structured products containing embedded derivatives.

  2. Matters related to bond’s margin trading shall be handled in accordance with the relevant provisions of these Procedures. The transaction of bonds under repurchase agreement may be waived from the Procedures.

• (II) Operation (hedging) strategy

The Company’s trading of derivative financial products should be for the purpose of hedging risks. The trading products should mainly choose to avoid risks arising from the Company’s business operations. The currency held must be consistent with the Company’s actual foreign currency demands for import and export transactions. The Company's overall internal positions (only foreign currency income and expenditures) shall be squared off among them as a principle, to reduce the Company's overall foreign exchange risk and save foreign exchange operating costs. Approval of the Board of Directors is required for other transactions with particular purpose with cautious assessment.

• (III) Authority and duty division

• Finance Department

• (1) Traders

  • A. Responsible for the formulation of the whole Company's financial product trading strategy.

  • B. Traders should regularly calculate positions every two weeks, collect market

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information, conduct trend judgments and risk assessments, and formulate operating strategies, which will be used as the basis for trading after being approved by the one with authority.

• C. Execute transactions in accordance with authorized authority and established strategies.

• D. When there are major changes in the financial market and the traders determine that the established strategy is no longer applicable, an evaluation report shall be submitted at any time, and the strategy shall be re-drawn. After approval by the president, it shall be used as the basis for trading.

• (2) Accounting personnel

• A. Confirm transaction.

• B. Review whether the transaction is conducted in accordance with the authorized authority and the established strategy.

• C. Perform monthly evaluations and submit the evaluation report to the president for his review.

• D. Handle accounting and accounts

• E. Filing and announcement in accordance with the regulations of the Securities and Futures Commission

• (3) Delivery personnel:perform delivery tasks.

• (4) Approval authorities for derivatives

• A. Approval authorities for hedging transactions

Person with	Daily transaction	Net accumulated position
approval	limit	transaction limit
authorities
Head of Accounting and Finance	under US$0.5M	under US$1.5M (inclusive)
President	under US$0.5M-2M (inclusive)	under US$5M (inclusive)
Chairperson	Over US$2M	under US$10M (inclusive)

• B. Approval of the Board of Directors is required for other transactions with particular purpose.

• C. With respect to the Company's acquisition or disposal of assets that is subject to the approval of the board of directors under the company's procedures or other laws or regulations, if a director expresses dissent and it is contained in the minutes or a written statement, the company shall submit the director's dissenting opinion to the Audit Committee. When proposal transactions of acquiring or disposing assets to the Board of Directors per this Article, the opinions of each independent directors shall be fully considered. When an independent director has a dissenting opinion or qualified opinion, it shall be noted in the minutes of board of directors’ meeting.

• D. The Company’s major derivative transactions shall be approved by a majority of the Audit Committee members, resolved by the board of directors, and subject to the provisions of Paragraph 4 and 5 of Article 17.

• Audit Department

Responsible for understanding the adequacy of the internal control of derivative transactions and checking the compliance of the trading department with the operating procedures, analyzing the transaction circulation, preparing an audit report, and reporting to the Board of Directors when there are major deficiencies. The Board of Directors should have independent directors attend and express their opinions .

1. Performance Evaluation

2. (1) Hedging transactions

   • A. The performance evaluation is based on the exchange rate cost on the Company's book and the profit and loss arising from engaging in derivative transactions.

   • B. In order to fully grasp and express the evaluation risk of the transaction, the Company adopts the monthly settlement evaluation method to evaluate the profit and loss.

   • C. The Finance Department should provide the president with the evaluation of foreign exchange positions and foreign exchange market movement, and market analysis as reference for management and instructions.

3. (2) Transactions with particular purpose

The performance evaluation is based on the actual profit and loss, and the accounting personnel must prepare reports on a regular basis to provide management as reference.

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• Establishment of total amount of contract and maximum loss

• (1) Total amount of contract

  • A. Limits for hedging transactions

  • The Finance Department should control the Company's overall position to avoid transaction risks. The amount of hedging transactions should not exceed two-thirds of the Company's overall net position. If it exceeds two-thirds, it should be reported to the president for approval.

  • B. Transactions with particular purpose

Based on the forecast of market changes, the Finance Department may formulate a strategy as needed, and submit it to the president and chairperson for approval before proceeding. The total contract amount of the Company's transactions with particular purpose in the Company's net cumulative position is limited to US$5 million. If the amount exceeds the above amount, the board of directors must approve it and follow the policy instructions.

  - (2) Establishment of maximum loss

     - A. As the hedging transaction is to avoid risks, so there is no need to set a loss limit.

     - B. If it is a transaction contract for a particular purpose, after the position is established, a stop loss point should be set to prevent excess loss. The stop loss point is set at the maximum  not exceeding 10% of the transaction amount. If the loss exceeds 10% of the transaction amount, it must be reported to the president immediately and reported to the board of directors to discuss necessary countermeasures.

     - C. The maximum loss amount of individual contract is the is less one of under  US$ 20,000 or 5% of the transaction contract amount.

     - D. The maximum annual loss limit of the Company's operations for transaction with particular purposes is US$300,000.

• II. Risk management measures

• (I) Credit risk management

  • As the market is subject to changes in various factors, it is easy to cause operational risks of derivatives. Therefore, market risk management is conducted in accordance with the following principles:

Transaction counterparts:Mainly famous domestic and overseas financial institutions. Trading products:Limited to offerings provided by famous domestic and overseas financial institutions.

Transaction amount:The un-offset amount with the same counterpart is limited to maximum as 10% of the total authorized amount, but not for those approved by the president

• (II) Market risk management

• Mainly the public foreign exchange market provided by banks, and the futures market will not be considered for the time being.

• (III) Liquidity risk management

In order to ensure market liquidity, the choice of financial products is based on high liquidity (that is, they can be squared off in the market any time). Financial institutions entrusted with transactions must have sufficient information and the ability to trade in any market at any time.

• (IV) Cash flow risk management

In order to ensure the stability of the Company's working capital turnover, the Company's source of funds for derivative transactions is limited to its own funds, and its operating amount should take into account the capital needs of the cash income and expenditure forecast in the next three months.

• (V) Operational risk management

• The Company's authorized limit, operating procedures and internal audits should be strictly followed to avoid operating risks

• Personnel engaged in derivatives trading may not serve concurrently in other operations such as confirmation and settlement.

• Risk measurement, monitoring, and control personnel shall be assigned to a different department that the personnel in the preceding subparagraph and shall report to the board of directors or senior management personnel with no responsibility for trading or position decision-making.

• Derivatives trading positions held shall be evaluated at least once per week; however, positions for hedge trades required by business shall be evaluated at least twice per month. Evaluation reports shall be submitted to senior management personnel authorized by the board of directors.

• (VI) Product risk management

Internal traders should have complete and correct professional knowledge of financial products, and banks are required to fully disclose risks to avoid the risk of misuse of financial products.

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  • (VII) Legal risk management

    • Documents signed with financial institutions should be reviewed by specialists from foreign exchange and legal affairs or legal advisors before they can be formally signed to avoid legal risks.

• III. Internal audit system.

  • (I) The internal audit personnel shall periodically make a determination of the suitability of internal controls on derivatives and conduct a monthly audit of how faithfully derivatives trading and analyze the transaction circulation by the trading department adheres to the procedures for engaging in derivatives trading, and prepare an audit report. If any material violation is discovered, all supervisors shall be notified in writing.

  • (II) The internal auditors shall report the audit report and the annual internal audit status to the competent authority before the end of February of the following year, and report the improvement of abnormal matters to the competent authority for reference by the end of May of the following year.

• IV. Regular valuation method

  • (I) The Board of Directors should authorize senior executives to regularly supervise and evaluate whether derivative commodity transactions are indeed handled in accordance with the company’s trading procedures, and whether the risks assumed are within the tolerance, and when there are abnormalities in the market price evaluation report (if the held position has exceeded the loss limit), it should be reported to the board of directors immediately, and appropriate measures should be taken.

  • (II) Derivatives trading positions held shall be evaluated at least once per week; however, positions for hedge trades required by business shall be evaluated at least twice per month. Evaluation reports shall be submitted to senior management personnel authorized by the board of directors.

• V. When engaging in derivative transactions, the supervisory and management principles of the board of directors

  • (I) Designate senior management personnel to pay continuous attention to monitoring and controlling derivatives trading risk. The principles of management are as below:

    1. Periodically evaluate the risk management measures currently employed are appropriate and are faithfully conducted in accordance with these Regulations and the procedures for engaging in derivatives trading formulated by the company.

    2. When irregular circumstances are found in the course of supervising trading and profit-loss circumstances, appropriate measures shall be adopted and a report immediately made to the board of directors; independent directors shall be present at the meeting and express an opinion.

  • (II) Periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the company's permitted scope of tolerance.

  • (III) The Company shall report to the soonest meeting of the board of directors after it authorizes the relevant personnel to handle derivates trading in accordance with its Procedures for engaging in derivatives trading.

  • (IV) The Company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, board of directors approval dates, and the matters required to be carefully evaluated under paragraph 4, subparagraph (2), paragraph 5, subparagraph (1) 1. and (2) of this Article shall be recorded in detail in the log book.

• Article 13: Procedures for Mergers and Consolidations, Splits, Acquisitions, and Assignment of Shares

• I. Evaluation and operational procedures

  • (I) The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage.

    • However, the requirement of obtaining an aforesaid opinion on reasonableness issued by an expert may be exempted in the case of a merger by the Company of a subsidiary in which it directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries in which the Company directly or indirectly holds 100 percent of the respective subsidiaries’ issued shares or authorized capital.

  • (II) The Company participating in a merger, demerger, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, demerger, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to in paragraph 1, subparagraph (1) of the preceding Article when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, demerger, or acquisition. Provided, where a provision of another act

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exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply. In addition, where the shareholders meeting of any one of the companies participating in a merger, demerger, or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the companies participating in the merger, demerger or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

• II. Other matters to be paid attention to

• (I) Date of board meeting:A company participating in a merger, demerger, or acquisition shall convene a board of directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the merger, demerger, or acquisition, unless another act provides otherwise or the FSC is notified in advance of extraordinary circumstances and grants consent. A company participating in a transfer of shares shall call a board of directors meeting on the day of the transaction, unless another act provides otherwise or the competent authority is notified in advance of extraordinary circumstances and grants consent. When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall prepare a full written record of the following information and retain it for 5 years for reference:

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

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

  3. Important documents and minutes: Including merger, demerger, acquisition, and share transfer plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of directors meetings. When participating in a merger, demerger, acquisition, or transfer of another company's shares, a company that is listed on an exchange or has its shares traded on an OTC market shall, within 2 days counting inclusively from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out in subparagraphs 1 and 2 of the preceding paragraph to the FSC for recordation. Where any of the companies participating in a merger, demerger, acquisition, or transfer of another company's shares is neither listed on an exchange nor has its shares traded on an OTC market, the company(s) so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions of the preceding two paragraphs.

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

(III) Principles of altering the share exchange ratio or acquisition price:The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the shareholders’ meeting for deliberation and passage. The share exchange ratio or acquisition price shall not be altered as a principle, but if there are terms/conditions that the contract stipulates may be altered and that have been publicly disclosed, this restriction is not applicable. Circumstances where the share exchange ratio or acquisition price may be altered are as following :

1. Cash capital increase, issuance of convertible corporate bonds, or the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity based securities.

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

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

4. An adjustment where any of the companies participating in the merger, demerger, acquisition, or transfer of shares from another company, buys back treasury stock.

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

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

7. 54 -

publicly disclosed.

• (IV) Terms to be specified in contents:for the contracts of merger, demerger, acquisition, or transfer of shares, other than the requirements set forth in Article 317-1 of the Company Act and Article 22 of Business Mergers And Acquisitions Act, the followings shall be specified.

• Handling of breach of contract.

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

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

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

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

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

• (V) When the numbers of companies participating the merger, demerger, acquisition, or share transfer changes : After public disclosure of the information, if any company participating in the merger, demerger, acquisition, or share transfer intends further to carry out a merger, demerger, acquisition, or share transfer with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, demerger, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.

• (VI) Where any of the companies participating in a merger, demerger, acquisition, or transfer of shares is not a public company, the Company shall sign an agreement with the non-public company whereby the latter is required to abide by the provisions of Paragraph 2 (1) date of convening board meeting; (2) Prior NDA, and (5) numbers of companies participating the merger, demerger, acquisition, or share transfer changes for the latter to comply with.

Article 14: Procedure of Information Disclosure

Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in the appropriate format as prescribed by regulations within 2 days counting inclusively from the date of occurrence of the event:

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

• II. Merger, demerger, acquisition, or transfer of shares.

• III. Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the procedures adopted by the company.

• IV. Where equipment or right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria:NTD 500 million or more.

• V. Acquisition or disposal in the construction business of real property or right-of-use assets thereof for construction use, and furthermore the transaction counterparty is not a related party, and the transaction amount reaches NT$500 million

• VI. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the company expects to invest in the transaction reaches NT$500 million.

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

• Trading of domestic government bonds or foreign government bonds with a credit rating not lower than the sovereign rating of our country.

• Trading of bonds under repurchase and resale agreements, or subscription or redemption of money market funds issued by domestic securities investment trust enterprises.

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

• The amount of any individual transaction.

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

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

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

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

The Company shall compile monthly reports on the status of derivatives trading engaged in up to the end of the preceding month by the company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.

When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission.

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

Where any of the following circumstances occurs with respect to a transaction that the Company has already publicly announced and reported in accordance with the preceding article, a public report of relevant information shall be made on the information reporting website designated by the FSC within 2 days counting inclusively from the date of occurrence of the event:

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

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

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

• Article 15: The Company’s Subsidiaries Shall Comply with the Followings:

• I. A subsidiary shall establish its “Operational Procedures for Acquisition or Disposal of Assets” pursuant to these Regulations. After the procedures have been approved by the board of directors, they shall be submitted to a shareholders' meeting for approval; the same applies when the procedures are amended.

• II. When acquiring or disposing assets, subsidiaries shall follow the established procedures.

• III. Information required to be publicly announced and reported in accordance with the provisions of the Regulations on acquisitions and disposals of assets by the Company's subsidiary that is not itself a public company in Taiwan shall be reported by the Company.

• IV. The paid-in capital or total assets of the Company shall be the standard applicable to a subsidiary referred to in the preceding paragraph in determining whether, relative to paid-in capital or total assets, it reaches a threshold requiring public announcement and regulatory filing under Article 14, paragraph 1.

• V. If the subsidiary acquires or disposes of assets, at least the quarterly audit for the acquisition or disposition of assets and its implementation shall be conducted and documented. If a material violation is found, the Company’s audit unit should be notified in writing immediately; the Company’s audit unit should also submit written information to the audit committee.

• VI. When the Company's audit unit conducts an audit on a subsidiary based on the annual audit plan, the implementation of the subsidiary's operating procedures for acquiring or disposing of assets shall be understood altogether. If any deficiency is found, the improvement should be tracked continuously, and a report should be prepared and submitted to the Audit Committee.

Article 16: Penalties

In case the Company’s employees who undertake acquisition and disposal of assets violates these Procedures, shall be regularly assessed pursuant to the Company’s personnel management procedures and employee manuals, and the punishment is based on the severity.

• Article 17: Enforcement and Amendment

The amendments to the “Operational Procedures for Acquisition or Disposal of Assets” shall be approved by a majority of the Audit Committee members, resolved by the board of directors, and approved by the shareholders meeting. If a director expresses an objection with a record or written statement on file, the information of the director’s objection shall be sent to the Audit Committee.

• When the “Operational Procedures for Acquisition or Disposal of Assets” is submitted for discussion by the Board of Directors pursuant to the paragraph, the Board of Directors shall take into full consideration each independent director's opinions. If an independent director objects to or expresses reservations about any matter, it shall be recorded in the minutes of the board of directors meeting.

If the approval of one-half or more of all Audit Committee members as required in the first paragraph is not

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obtained, the Operational Procedures may be implemented if approved by two-thirds or more of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.

Any acquisition or disposal of asset that shall be approved by the Audit Committee pursuant to these Procedures or other legislative requirement, shall be approved by one-half or more of all Audit Committee members If the approval of one-half or more of all Audit Committee members as required is not obtained, the Operational Procedures may be implemented if approved by two-thirds or more of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. The terms "all Audit Committee members" in the Procedures and "all directors" in the preceding paragraph shall be counted as the actual number of persons currently holding those positions. Article 18: By-laws

Anything not mentioned in these Procedures, shall be handled pursuant to the related laws and regulations.

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Appendix 2

Articles of Incorporation of Formosan Rubber Group Inc.

Chapter General Principles

Article 1: The Company adheres to its philosophy of ‘making a contribution to the society’ and the corporate spirit of ‘research makes the difference’, we follow the 7 principles of Formosan Rubber’s and aim to achieve the target of providing the society with supplies and services needed accordingly. The Company has been established in accordance with the requirements stipulated in the Company Act and it has been named as “Formosan Rubber Group Inc.”

Article 2: The Company’s business consists of:

• (1) C801100 Synthetic Resin and Plastic Manufacturing

• (2) C804020 Industrial Rubber Products Manufacturing

• (3) C805010 Manufacture of Plastic Sheets, Pipes and Tubes

• (4) C802120 Industrial and Additive Manufacturing

• (5) C804990 Other Rubber Products Manufacturing

• (6) C805070 Reinforced Plastic Products Manufacturing

• (7) C805990 Other Plastic Products Manufacturing

• (8) CB01010 Mechanical Equipment Manufacturing

• (9) CC01080 Electronics Components Manufacturing

• (10) CD01060 Aircraft and Parts Manufacturing

• (11) CF01011 Medical Devices Manufacturing

• (12) D101050 Combined Heat and Power

• (13) F104110 Wholesale of Cloths, Garments, Shoes, Hats, Umbrellas and Clothing Accessories

• (14) F114030 Wholesale of Motor Vehicle Parts and Motorcycle Parts, Accessories

• (15) F204110 Retail Sale of Cloths, Garments, Shoes, Hats, Umbrellas and Clothing Accessories

• (16) F214030 Retail Sale of Motor Vehicle Parts and Motorcycle Parts, Accessories

• (17) F301010 Department Stores

• (18) F301020 Supermarkets

• (19) F401010 International Trade

• (20) G801010 Warehousing

• (21) H701040 Specific Area Development

• (22) H701060 New Towns, New Community Development

• (23) H703100 Real Estate Leasing

• (24) IZ06010 Tally Packaging

• (25) J701010 Electronic Game Arcades

• (26) J701040 Recreational Activities Venue

• (27) ZZ99999 All business activities that are not prohibited or restricted by law, except those that are subject to special approval.

• Article 2-1: Due to business needs, the Company makes guarantees externally. Article 2-2: Due to business needs, the Company makes investments in other industries, and is not limited to the restrictions in Article 13 of the Company Act.

• Article 3: The Company’s headquarters are located in Taipei City. When necessary, after being resolved by the board of directors, the Company may establish branches or plants domestically or overseas.

• Article 4: The Company’s method for making public announcements is in accordance with the requirements stipulated in Article 28 of the Company Act.

Chapter 2 Shares

• Article 5: The Company’s total capital is amounted to NT$6.8 billion which is divided into NT$680 million shares with a par value of NT$10 per share. Among these, the unissued shares are distributed by the board of directors as needed.

• Article 6: The company issuing stocks may be exempted from printing, but shall register the issued stocks with a centralized securities depositary enterprise and follow the regulations of that enterprise.

• Article 7: (the article has been deleted)

• Article 8: The Company handles stocks in accordance with the “Regulations Governing the Administration of Shareholder Services of Public Companies”, the Company Act and relevant laws and regulations prescribed by the competent authority.

• Article 9: A handling fee will be charged by the Company when shareholders apply for a change or replacement of shares.

• Article 10: The share transfer is suspended within 60 days prior to each shareholders’ meeting, 30 days prior to shareholders special shareholders' meeting or 5 days prior to Company’s decision to distribute shares and dividends, or the base date of other interest or benefit.

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Chapter 3 Shareholders Meeting

		Chapter 3 Shareholders Meeting
Article	11:	The Company’s shareholders meetings are classified as follows:
		I. Regular shareholders meetings shall be convened within six months after the end of the accounting
		year; except for when there is a legitimate reason and a prior approval is gained by the competent
		authority.
		II. Special shareholders meetings: Convened when necessary.
		The convening of shareholders meeting as stated in the preceding paragraph, unless it is otherwise
		prescribed, they shall be called for by the board of directors. A notice to convene a regular meeting
		of shareholders shall be given to each shareholder no later than 30 days prior to the scheduled
		meeting date. A notice to convene a special meeting of shareholders shall be given to each
		shareholder no later than 10 days prior to the scheduled meeting date. The cause or subject of a
		meeting of shareholders to be convened shall be indicated. The notice may be given by means of
		electronic transmission, after obtaining a prior consent from the recipient(s) thereof. The notice of
		the shareholders meeting stated in the preceding paragraph is given by an issuer to shareholders
		who own less than 1,000 shares of nominal stocks may be given in the form of a public
		announcement.
Article	11-1:	The Company may convene a shareholders' meeting by video conference or in other methods as
		announced by the Ministry of Economic Affairs.
Article	12:	A shareholder shall attend a shareholders’ meeting in person. When the chairperson is on leave or unable
		to exercise his/her function for some reason, he/she may appoint a proxy to attend a shareholders’
		meeting in his/her behalf by executing a power of attorney stating therein the scope of power authorized
		to the proxy.
Article	13:	Shareholders’ meetings shall be chaired by the chairperson of the board of directors. When the
		chairperson is on leave or unable to exercise his/her function for some reason, the chairperson shall
		assign a standing director to act on his/her behalf. If the chairperson does not assign a someone to act as
		his/her behalf, they shall choose one person by and from among themselves to chair the meeting.
Article	14:	Each shareholder has one voting right per share, except for those who are restricted or have no voting
		rights according to paragraph 2 of Article 179 stipulated in the Company Act.
Article	15:	When the government or a juristic person is a shareholder, its proxy shall not be limited to one person,
		provided that the voting right that may be exercised shall be calculated on the basis of the total number
		of voting shares it holds.
Article	16:	Resolutions at a shareholders' meeting shall, unless otherwise provided for in the Company Act, be
		adopted by a majority vote of the shareholders present, who represent more than one-half of the total
		number of voting shares.
Article	17:	The resolutions reached in the shareholders’ meeting must be documented in the minutes of meeting, and
		shall be handled in accordance with Article 183 of the Company Act.
		Chapter 4 Directors and Audit Committee
Article	18:	The Company has 5 to 9 directors. The candidates of the by-election are nominated. Shareholders shall
		elect from the candidates.
		Among the number of directors mentioned above, the independent directors may not be less than 3
		people and no less than one fifth of the number of directors.
		Both independent directors and non-independent directors shall be elected at the same time and the
		number of elected dependent directors shall be separated from the number of elected non-independent
		directors for purpose of election.
Article	18-1:	The Company has established the Audit Committee to replace the duties of the supervisor and is
		composed of by all of the independent directors who are responsible for duties such as the execution of
		the Company Act, Securities and Exchange Act and other laws and regulations in relation to supervisors.
		Audit Committee members, exercise of powers and other matters for compliance shall be handled
		according to laws and regulations; it organizational procedures are prescribed by the board of directors.
		According to laws and regulations, the Company is required to establish Remuneration and
		Compensation Committee or other functional committees.
Article	18-2:	When the Company’s board of directors calls for a meeting, the cause or subject of a meeting shall be
		indicated and each director must be notified 7 days prior to the meeting. In the case of emergency, a
		meeting of the board of directors may be convened at any time. When the Company’s board of directors
		calls for a meeting, each director may be notified by ways of written, E-mail or fax.
Article	19:	The term of office of a director is three years; and he/she may be eligible for re-election.
		The aggregate amount of shares held by all directors shall be handled in accordance with the “Rules and
		Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies ”
		prescribed by the competent authority.
Article	20:	When the number of vacancies in the board of directors of a company equals to one third of the total
		number of directors and the independent directors are dismissed, the board of directors shall call, within

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• 60 days, a special meeting of shareholders to elect succeeding directors to fill the vacancies.

• Article 21: When the directors organize a board of directors’ meeting, it shall be attended by two-third of the total number of directors of a company, and with an approval by a majority of directors, they shall select from among themselves one person to serve as the chairperson.

• The chairperson represents the Company externally and executes all affairs relating to the Company by following these Articles and resolutions approved by the shareholders and board of directors. The duties of the board of the board of directors are as follows:

• I. Calling for shareholders’ meetings and executing their resolutions.

• II. Reviewing the Company’s organizational articles and the enforcement rules. III. Proposing to amend the Articles of Incorporation.

• IV. Preparing and reviewing investments of other businesses, establishment of branches and abolitions.

• V. Appointment/dismissal remuneration of managerial officers.

• VI. Approving the Company’s employee establishment, salary standards.

• VII. Reviewing important contracts.

• VIII. Reviewing business plans and supervising their executions.

• IX. Reviewing budgets and settlements.

• X. Proposing for earnings distribution.

• XI. Proposing for capital increase/decrease.

• XII. Reviewing the issuance of special shares.

• XIII. Approving of the Company’s property pledge, rights setting and matters relating to dispositions. XIV. Approving of significant capital expenditure.

• XV. Approving the matters when the Company applies for financing, guarantee, acceptance from a financial institution, or makes advances, loans and debts from the third party.

• XVI. Approving endorsements/guarantees and acceptance in the name of the Company. XVII. Approving of major transactions by the company and related parties.

• XVIII. Appointment of CPAs and legal consultants. /Other relevant business shall be carried out except for matters decided by the shareholders' meeting in accordance with laws and regulations or the company's articles of association.

• XIX. Except for provisions stipulated in laws and regulations or in the Company’s Articles of Incorporation, other related business shall be resolved by the shareholders’ meeting.

• Article 22: The Company’s business policies and other important matters are determined by the board of directors. A board of directors’ meeting is called for by the chairperson and served as the chair. When the chairperson is unable to exercise the power of the chairperson,the chairperson 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 chairperson does not make such a designation, the directors shall select from among themselves one person to serve as chair.

• Article 23: When the chairperson is on leave for some reason, he/she may appoint a proxy to attend a shareholders’ meeting in his/her behalf by executing a power of attorney stating therein the scope of power authorized to the proxy; he/she may only appoint one proxy at a time. Unless otherwise stipulated in the Company Act, the resolutions of the board of directors shall be executed with an approval by a majority of directors. The resolutions reached in the shareholders’ meeting must be documented in the minutes of meeting signed or sealed by the chair and kept permanently.

• Article 24: (Omitted)

• Article 25: Directors receive transportation allowances according to the actual attendance, and the amount shall be determined by the board of directors.

• The remuneration of the directors is authorized to the board of directors to determine based on the degree of involvement and value of contribution in the Company's operations. The Company also takes references from peers.

Chapter 5 Managerial Officer

• Article 26: The Company has several managerial officers, their appointment, dismissal and remuneration are handled in accordance with Article 29 of the Company Act. The Company may set up an executive vice president in accordance with the resolution of the board of directors.

• Article 27: (The article has been deleted)

Chapter 6 Final Earnings Distribution

• Articles 28: The accounting year for the Company is January 1 to December 31 each year. At the close of each fiscal year, the board of directors shall prepare the following statements and records and shall forward the same to a general meeting of shareholders:

• I. Business report

• II. Financial statements

• III. Earnings distribution or loss off-setting proposals.

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• Article 29: If there is a profit within the Company in the year, no less than 1% of the profit shall be set aside for employees’ remuneration and no less than 2% of the profit shall be set as remuneration for directors. Where there is an accumulated loss, the profit shall be reserved to make up for the loss. The employee remuneration may be determined by shares or cash and its receiving parties must include its serving employees in accordance with the requirements established by the Board of Directors. The directors’ remuneration of the preceding paragraph is determined by cash. The preceding 2 paragraphs are enforced after the Board of Directors’ resolution, and the shareholders must be reported to. From the profit earned by the Company as shown through the final account, if any, the sum should first be used to pay taxes and make up for previous loss, the remaining should be distributed as follows:

• (I) 10% should be set aside as legal reserve, except for when the legal reserve has reached the total capital;

• (II) If necessary, it can be set aside according to the laws and regulations or for reversal of special reserve.

• (III) The remaining earnings as well as the accumulated undistributed earnings from the previous year, when the board of directors proposes the motion of earnings distribution, the appropriation of shareholder dividends shall not be less than 5% of the accumulated distributable earnings, and motion shall be submitted to the shareholder meeting for a resolution. The life cycle of the Company is currently classified as the “mature period”. The Company strives to the pursuit of cooperate sustainable operation and corresponds with the future market needs. We take into consideration of the Company’s future capital expenditure budget and the need to maintain dividend distribution, among which, cash dividends may not be less than 10% of the aggregate amount of shareholders’ dividends. Whereas there are capital demands including significant investment, significant operation change, capacity expansion during the year, and other significant capital expenditures, the Board of Directors must propose a motion to change its cash dividends to all shares. The motion may be proceeded after an approval is gained by the shareholders meeting. Where the Company distribute the bonus, or legal reserves or capital reserve, all or in part, if in the form of cash, it is authorized to do so by the approval of the majority of attending directors in a board meeting attended by more than one-third directors, and reported to the shareholders’ meeting.

• Article 30: (The article has been deleted)

Chapter 7 Additional Provisions

Article 31: Any matters not specified in these Articles shall be handled in accordance with the provisions stipulated in the Company Act.

Article 32: The Company’s Organizational Rules and Enforcement Rues are determined by the board of directors. Article 33: These Articles were established on September 15, 1962. The 1st amendment was made on December 20, 1962.

The 2nd amendment was made on August 28, 1964. The 3rd amendment was made on August 20, 1966. The 4th amendment was made on October 15, 1968. The 5th amendment was made on January 12, 1969. The 6th amendment was made on June 25, 1970. The 7th amendment was made on August 7, 1971. The 8th amendment was made on October 15, 1972. The 9th amendment was made on January 12, 1973. The 10th amendment was made on January 1, 1974. The 11th amendment was made on December 17, 1974. The 12th amendment was made on September 28, 1975. The 13th amendment was made on December 19, 1975. The 14th amendment was made on August 4, 1977. The 15th amendment was made on September 16, 1978. The 16th amendment was made on October 9, 1979. The 17th amendment was made on October 1, 1980. The 18th amendment was made on September 8, 1983. The 19th amendment was made on December 19, 1983. The 20th amendment was made on January 30, 1984. The 21th amendment was made on March 9, 1984. The 22th amendment was made on March 5, 1985. The 23th amendment was made on March 11, 1985. The 24th amendment was made on November 20, 1985. The 25th amendment was made on May 23, 1986. The 26th amendment was made on October 3, 1986. The 27th amendment was made on June 26, 1987.

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• The 28th amendment was made on June 3, 1988. The 29th amendment was made on June 12, 1989. The 30th amendment was made on December 14, 1989. The 31th amendment was made on April 11, 1990. The 32th amendment was made on March 9, 1991. The 33th amendment was made on June 3, 1991. The 34th amendment was made on April 30, 1992. The 35th amendment was made on May 25, 1993. The 36th amendment was made on April 29, 1994. The 37th amendment was made on May 4, 1995. The 38th amendment was made on September 19, 1995. The 39th amendment was made on May 29, 1996. The 40th amendment was made on May 28, 1997. The 41th amendment was made on April 28, 1998. The 42th amendment was made on April 30, 1999. The 43th amendment was made on May 18, 2000. The 44th amendment was made on June 20, 2001.

• The 45th amendment was made on June 21, 2002. The 46th amendment was made on June 11, 2004.

• The 47th amendment was made on June 17, 2005. The 48th amendment was made on June 14, 2006. The 49th amendment was made on June 17, 2010. The 50th amendment was made on June 18, 2012.

• The 51th amendment was made on June 12, 2015. The 52th amendment was made on June 7, 2015. The 53th amendment was made on June 5, 2019. The 54th amendment was made on June 12, 2020. The 55th amendment was made on June 8, 2022

Chairperson Hsu Zhen-Tsai

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Appendix 3

Formosan Rubber Group Inc. Rules of Procedure for Shareholders Meetings

Amended on June 8, 2022

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 Article 5 of the Corporate Governance Best Practice Principles for TWSE/TPEx Listed Companies.

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 Article 5 of the Corporate Governance Best Practice Principles for TWSE/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:	The Company’s shareholders meetings shall, unless otherwise provided for in this Act, be convened by the
		Board of Directors.
		The method of convening shareholders’ meetings, if changes, shall be resolved by the board of directors,
		and not later than sending the shareholders’ meeting notice.
		The Company shall prepare electronic versions of the shareholders meeting notice and proxy forms, and the
		origins of and explanatory materials relating to all proposals, including proposals for ratification, matters
		for deliberation, or the election or dismissal of directors or supervisors, and upload them to the Market
		Observation Post System (MOPS) before 30 days before the date of a regular shareholders meeting or
		before 15 days before the date of a special shareholders meeting. The Company shall prepare electronic
		versions of the shareholders meeting agenda and supplemental meeting materials and upload them to the
		MOPS before 21 days before the date of the regular shareholders meeting or before 15 days before the date
		of the special shareholders meeting. If, however, the Company has the paid-in capital of NT$10 billion or
		more as of the last day of the most current fiscal year, or total shareholding of foreign shareholders and
		PRC shareholders reaches 30% or more as recorded in the register of shareholders of the shareholders
		meeting held in the immediately preceding year, transmission of these electronic files shall be made by 30
		days before the regular shareholders meeting. Fifteen days before the Company convenes a shareholders’
		meeting, it shall prepare the shareholders’ meeting agenda handbook and supplementary materials and
		make them available for the shareholders to obtain and review at any time. In addition, the handbook shall
		be displayed at the Company and its professional shareholder service agency.
		The Company shall provide the handbook and supplementary materials mentioned in the preceding
		paragraph to the shareholders on the day of the shareholders' meeting in the following methods:
		I. For physical shareholders meetings, to be distributed on-site at the meeting.
		II. For hybrid shareholders meetings, to be distributed on-site at the meeting and shared on the virtual
		meeting platform.
		III. For virtual-only shareholders meetings, electronic files shall be shared on the virtual meeting platform.
		The cause(s) or subject(s) of a meeting of shareholders to be convened shall be indicated in the individual
		notice and announcement to be given to shareholders; and the notice may, as an alternative, be given by
		means of electronic transmission, after obtaining a prior consent from the recipient(s) thereof.
		Election or dismissal of directors, amendments to the articles of incorporation, reduction of capital,
		application for the approval of ceasing its status as a public company, approval of competing with the
		company by directors, surplus profit distributed in the form of new shares, reserve distributed in the form of
		new shares, the dissolution, merger, or demerger of the corporation, or any matter under Article 185,
		paragraph 1 of the Company Act, Articles 26-1 and 43-6 of the Securities Exchange Act, Articles 56-1 and
		60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuers shall be set
		out and the essential contents explained in the notice of the reasons for convening the shareholders meeting.
		None of the above matters may be raised by an extraordinary motion.
		Where re-election of all directors and supervisors as well as their inauguration date is stated in the notice of
		the reasons for convening the shareholders meeting, after the completion of the re-election in said meeting
		such inauguration date may not be altered by any extraordinary motion or otherwise in the same meeting.
		A shareholder holding one percent or more of the total number of issued shares may submit to this
		Corporation a proposal for discussion at a regular shareholders meeting. The number of items so proposed
		is limited to one only, and no proposal containing more than one item will be included in the meeting
		agenda. When the circumstances of any subparagraph of Article 172-1, paragraph 4 of the Company Act
		apply to a proposal put forward by a shareholder, the board of directors may exclude it from the agenda.
		A shareholder may propose a recommendation for urging the corporation to promote public interests or
		fulfill its social responsibilities, provided procedurally the number of items so proposed is limited only to
		one in accordance with Article 172-1 of the Company Act, and no proposal containing more than one item
		will be included in the meeting agenda.
		Prior to the date on which share transfer registration is suspended before the convention of a regular
		shareholders’ meeting, the company shall give a public notice announcing acceptance of proposal in writing
		or by way of electronic transmission, the place and the period for shareholders to submit proposals to be
		discussed at the meeting; and the period for accepting such proposals shall not be less than ten (10) days.

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Shareholder-submitted proposals are limited to 300 words, and no proposal containing more than 300 words will be included in the meeting agenda. The shareholder making the proposal shall be present in person or by proxy at the regular shareholders meeting and take part in discussion of the proposal. The company shall, prior to preparing and delivering the shareholders’ meeting notice, inform, by a notice, all the proposal submitting shareholders of the proposal screening results, and shall list in the shareholders’ meeting notice the proposals conforming to the requirements set out in this Article. With regard to the proposals submitted by shareholders but not included in the agenda of the meeting, the cause of exclusion of such proposals and explanation shall be made by the board of directors at the shareholders’ meeting to be convened. 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 proxy's authorization. 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 before five days before the date of the shareholders meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to cancel the previous proxy appointment. Once a proxy form is received by the Company, if a shareholder wishes to attend the shareholders’ meeting in person or to exercise their voting rights in writing or by electronic means, a written proxy rescission notice shall be filed with the Company two days prior to the date of the shareholders’ meeting, otherwise, the voting power exercised by the authorized proxy at the meeting shall prevail. Once the proxy form is received by the Company, in the case that the shareholder intends to attend the shareholders’ meeting by video conference, a written proxy rescission notice shall be filed with the Company two days prior to the date of the shareholders’ meeting; otherwise, the voting power exercised by the authorized proxy at the meeting shall prevail. Article 5: The venue for a shareholders meeting shall be the premises of this Corporation, 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. Full consideration shall be given to the opinions of the independent directors with respect to the place and time of the meeting. When the Company convenes a shareholders’ meeting by video conference, it is not subject to the restriction on the venue of the meeting under the preceding paragraph. Article 6: The Company shall state, in the meeting notice, the sign-in time and place for shareholders, solicitors, and proxies (hereinafter referred to as “shareholders”), and other matters that shall be noted. The time at which shareholders’ sign-in begins, as stated in the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The sign-in place shall be clearly marked and staffed with a sufficient number of suitable personnel. When the shareholders' meeting is convened by video conference, the sign-in process shall begin on the video conference platform 30 minutes before the meeting commences. Shareholders who have completed the sign-in shall be deemed to have attended the shareholders' meeting in person. Shareholders shall attend the shareholders’ meetings with their attendance cards, sign-in cards, or other certificates of attendance. The Company may not arbitrarily add requirements for other documents beyond those showing eligibility to attendance presented by shareholders. Solicitors soliciting proxy forms shall also bring identification documents for verification. The Company shall furnish the attending shareholders with an attendance book to sign, or attending shareholders may hand in a sign-in card in lieu of signing in. 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. 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. When a juridical person is appointed to attend as a proxy, it may designate only one person to represent it in the meeting. If the shareholders' meeting is convened by video conference, shareholders who wish to attend by video conference should register with the Company two days prior to the shareholders' meeting. If the shareholders' meeting is convened by video conference, the Company shall upload the meeting agenda handbook, annual report, and other relevant materials to the video conference platform at least 30 minutes prior to the start of the meeting and continue to disclose them until the end of the meeting.

Article 6-1

When the Company convenes the shareholders' meeting by video conference, the information below shall be stated in the meeting notice:

I. Methods of shareholders participating in the video conference and exercising their rights.

II. The handling method when the video conference platform or participation in the manner of video

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conference fails due to force majeure, such as natural disasters or incidents, and the follows shall be at least included:

(I) Time and date for the postponement or re-convention when the aforesaid continual failure that cannot be eliminated and thus a postponement or re-convention is required.

(II) The shareholders have not registered to attend the first shareholders’ meeting must not attend the postponed or re-convened meeting.

		least included: (I) Time and date for the postponement or re-convention when the aforesaid continual failure that cannot be eliminated and thus a postponement or re-convention is required. (II) The shareholders have not registered to attend the first shareholders’ meeting must not attend the postponed or re-convened meeting.
		(III) When a physical shareholders’ meeting is convened, along with a video conference, if the video
		conference cannot continue, after the number of shares in attendance through the video conference is
		deducted, the total number of shares in attendance at the physical shareholders’ meeting reaches the
		number as required by law, the shareholders’ meeting shall continue. For shareholders participating by
		video conference, the number of their shares shall be included in the total number of shares in attendance,
		and they shall be deemed to abstain for all motions resolved at the shareholders' meeting.
		(IV) The handling method in the event that the resolution results of all motions have been announced,
		while extempore motions have not been resolved.
		III. When a shareholders’ meeting is to be convened by video conference, appropriate alternatives to
		shareholders who have difficulty participating in the meeting by video means shall be specified.
Article	7:	If a shareholders meeting is convened by the board of directors, the meeting shall be chaired by the
		chairperson of the board. When the chairperson of the board is on leave or for any reason unable to exercise
		the powers of the chairperson, the vice chairperson shall act in place of the chairperson; if there is no vice
		chairperson or the vice chairperson also is on leave or for any reason unable to exercise the powers of the
		vice chairperson, the chairperson 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 chairperson 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 six 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 chairperson
		of the board in person and attended by a majority of the directors, at least one supervisor in person, and at
		least one member of each functional committee on behalf of the committee. The attendance shall be
		recorded in the meeting minutes.
		If a shareholders meeting is convened by a party with power to convene 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 to attend the
		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 meeting and
		the voting and vote counting procedures.
		The recorded materials 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.
		If a shareholders' meeting is convened by video conference, the Company shall keep records of
		shareholders' registration, sign-in, questions raised, as well as voting and the Company’s vote counting
		results and retain the records, while making an uninterrupted audio and video recording of the entire video
		conference.
		The above-mentioned materials and audio and video recordings shall be properly kept by the Company
		during the period of its existence, and the audio and video recordings shall be provided to those who are
		entrusted to handle the video conference affairs for storage.
		If a shareholders' meeting is convened by video conference, the Company is advised to make an audio and
		video recording of the back-end interface of the video conference platform.
Article	9:	Attendance at shareholders meetings shall be calculated based on numbers of shares. The number of
		shares in attendance shall be counted according to the shares indicated in the sign-in book or the sign-in
		cards handed in and the sign-in record on the video conference platform plus the number of shares whose
		voting rights are exercised in writing or by electronic means.
		The chair shall call the meeting to order at the scheduled meeting time. Also, the information of the shares
		with voting rights and without rights should be announced at the same time.
		However, the chair may have the meeting postponed if the attending shareholders do not represent more
		than half of the total shares issued. The meeting postponement is limited to 2 times for a total of less than 1
		hour. If attending shareholders still represent less than one third of the total number of issued shares after

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two postponements, the chair shall declare the meeting adjourned. If a shareholders' meeting is convened by video conference, the Company shall also declare the meeting adjourned on the video conference platform.

If there are not enough shareholders representing at least one third of issued shares attending the meeting after two postponements, tentative resolutions may be passed in accordance with Article 175, paragraph 1 of the Company Act. Shareholders shall be notified of the tentative resolutions, and another shareholders’ meeting will be convened within one month. If a shareholders’ meeting is convened by video conference, shareholders who wish to attend by video conference shall re-register with the Company in accordance with Article 6.

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 for by the Board of Directors, the meeting agenda is to be set by the Board of Directors. Relevant motions (including extraordinary motions and amendments to original motions) should be decided by voting on each separate proposal, and the meeting shall be held according to the agenda; without a decision made through a shareholders’ meeting, it may not be changed. The provisions of the preceding paragraph apply mutatis mutandis to a shareholders meeting convened by a party with the power to convene 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 agreement of 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, call for a vote, and schedule sufficient time for voting.

• 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.

A shareholder may not speak more than twice on the same proposal, except with the chair's consent, and a single speech may not exceed 5 minutes. However, 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.

If a shareholders’ meeting is convened by video conference, shareholders who participate by video conference may ask questions in text on the video conference platform after the chair calls the meeting to order and before the chair declares the meeting adjourned. The number of questions raised by each shareholder for each motion shall not exceed two, each question shall be limited to 200 words, and the provisions of paragraphs 1 to 5 shall not apply.

If such questions in the preceding paragraph are not in violation of the regulations or not outside the scope of the motions, it is advisable to disclose such questions on the video conference platform.

Article 12: Votes at shareholders meetings shall be calculated based on numbers of shares. The shares held by shareholders having no voting right shall not be counted in the total number of issued shares while adopting a resolution at a meeting of shareholders.

A shareholder who has a personal interest in the matter under discussion at a meeting, which may impair the interest of the Company, shall not vote nor exercise the voting right on behalf of another shareholder. The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights represented by attending shareholders.

Except for trust enterprises or stock agencies approved by the competent authority, when a person who acts as the proxy for two or more shareholders, the number of voting power represented by him/her shall not

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exceed 3% of the total number of voting shares of the company, otherwise, the portion of excessive voting power shall not be counted.

• Article 13: Each shareholder has one voting right per share, except for those who are restricted or have no voting rights according to paragraph 2 of Article 179 stipulated in the Company Act.

Voting rights may be exercised in writing or by using the electronic method when the Company’s shareholders meeting is being held. Instructions for exercising voting rights, whether in writing or using the electronic form, and it must be clearly stated on the shareholders’ meeting advice. A shareholder exercising voting rights in writing or by electronic means will be deemed to have attended the meeting in person. However, to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting; it is therefore advisable that the Company shall avoid the submission of extraordinary motions and amendments to original proposals.

A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to the Company before 2 days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail. Unless an explicit statement to revoke the previous declaration is made in the declaration which comes later. After a shareholder exercises voting rights by correspondence or electronically, if the shareholder intends to attend the meeting via video conference in person, a written notice of proxy cancellation in the same manner of exercising the voting right shall be submitted to the Company before two business days prior to the meeting date. If the cancellation notice is submitted after that time, the voting rights exercised by correspondence or electronically prevail. When a shareholder has exercised voting rights both by correspondence or electronic means 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 this Corporation's articles of incorporation, the passage 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 first 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. When a shareholders’ meeting is convened by video conference, shareholders participating by video conference shall vote on various motions and election(s) on the video conference platform after the chair calls the meeting to order. They shall complete the voting before the chair declares the voting closed, otherwise they shall be deemed to have waived their voting rights.

When a shareholders’ meeting is convened by video conference, after the chair declares the voting closed, the votes shall be counted at one go, and the voting and election results shall be announced. If a shareholders’ meeting is convened, along with a video conference held at the same time, shareholders who have registered to attend the shareholders' meeting by video conference in accordance with Article 6, intend to attend the physical shareholders' meeting in person, shall rescind the registration in the same manner as the registration two days before the shareholders' meeting, otherwise they can only attend the shareholders' meeting by video conference.

Those who exercise their voting rights in writing or by electronic means without retracting their declaration of intention and participate in the shareholders' meeting by video conference shall not exercise their voting rights on the same motions, propose amendment to the same motions, or exercise their voting rights for revised motions, except for extempore motions.

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, and these who are not elected and their votes.

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

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litigation.

Article 15: Resolutions adopted at a shareholders' meeting shall be recorded in the minutes of the meeting, which shall be affixed with the signature or seal of the chairman of the meeting and shall be distributed to all shareholders of the company within twenty (20) days after the close of the meeting. The preparation and distribution of the minutes of shareholders' meeting as required in the preceding Paragraph may be effected by means of electronic transmission. 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 voting results (including the number of voting rights), and disclose the number of voting rights won by each candidate in the event of an election of directors or supervisors. The minutes shall be retained for the duration of the existence of the Company. When a shareholders' meeting is convened by video conference, the minutes of the shareholders' meeting shall contain the start and end time of the shareholders' meeting, the method of convening the meeting, the names of the chair and the meeting taker, as well as the response method and the response situation when any natural disasters, accidents, or other force majeure events have obstructed the video conference platform or the participation in the video conference in addition to the matters that shall be recorded in accordance with the preceding paragraph. When a shareholders' meeting is convened by video conference, the Company shall proceed as per the preceding paragraph and shall specify the alternative measures provided to shareholders who have difficulty participating in the video conference in the minutes of the shareholders' meeting. Article 16: The Company shall, on the day of the shareholders' meeting, compile a statistical statement in the prescribed format and disclose the number of shares solicited by the solicitor, the number of shares represented by the proxies, and the number of shares in attendance in writing or by electronic means clearly on site at the shareholders' meeting. When a shareholders' meeting is convened by video conference, the Company shall upload the aforementioned information to the video conference platform at least 30 minutes before the start of the meeting and continue to disclose it until the end of the meeting. When a shareholders’ meeting is convened by video conference, when the chair calls the meeting to order, the total number of shares in attendance shall be disclosed on the video conference platform. The same shall apply if the total number of shares and voting rights in attendance are counted during the meeting. If matters put to a resolution at a shareholders meeting constitute material information under applicable laws or regulations or under Taiwan Stock Exchange Corporation (or GreTai Securities Market) regulations, this Corporation 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 defer or resume the meeting within five days in accordance with Article 182 of the Company Act. Article 19: When a shareholders' meeting is convened by video conference, the Company shall immediately disclose the voting results and election results of various motions on the video conference platform in accordance with the regulations and shall continue to disclose for at least 15 minutes after the chair declares the meeting adjourned. Article 20: When a shareholders' meeting is convened by video conference, the chair and the minute taker shall be at the same location in Taiwan, and the chair shall disclose the address of the place when calling the meeting to order. Article 21: When a shareholders' meeting is convened by video conference, the Company may allow shareholders to

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perform a simple test of the connection before the meeting commences and provide relevant services immediately before and during the meeting to assist with any technical communication problems. In the event of a virtual shareholders meeting, when declaring the meeting open, the chair shall also declare, unless under a circumstance where a meeting is not required to be postponed to or resumed at another time under Article 44-20, paragraph 4 of the Regulations Governing the Administration of Shareholder Services of Public Companies, if the virtual meeting platform or participation in the virtual meeting is obstructed due to natural disasters, accidents or other force majeure events before the chair has announced the meeting adjourned, and the obstruction continues for more than 30 minutes, the meeting shall be postponed to or resumed on another date within five days, in which case Article 182 of the Company Act shall not apply. In the event of any incident in the preceding paragraph that caused the meeting to be postponed or resumed, shareholders who have not registered to participate in the original shareholders' meeting by video conference shall not participate in the meeting postponed or resumed.

For the meeting to be postponed or resumed under paragraph 2, shareholders who have registered to participate in the original shareholders’ meeting by video conference and have completed the registration but fail to participate in said meeting, the number of shares in attendance and the voting rights and voting rights for elections exercised at the original shareholders’ meeting shall be included in the total number of attending shareholders’ shares, voting rights, and voting rights for elections at the meeting postponed or resumed. When a shareholders’ meeting is postponed or resumed in accordance with paragraph 2, the motions for which the voting and counting of votes have been completed and the voting results or the list of elected directors or supervisors have been announced, do not need to be discussed or resolved again. When the Company convenes a shareholder’s meeting, supplemented by a video conference, if the video conference cannot continue as under paragraph 2, after the number of shares in attendance through the video conference is deducted, the total number of shares in attendance at the physical shareholders’ meeting reaches the number as required by law, the shareholders’ meeting shall continue. There is no need to postpone or resume the meeting in accordance with paragraph 2.

When the meeting shall continue as in the preceding paragraph, for shareholders participating by video conference, the number of their shares shall be included in the total number of shares in attendance; however, they shall be deemed to abstain for all motions resolved at the shareholders' meeting. When postponing or resuming a meeting according to the second paragraph, the Company shall handle the preparatory work based on the date of the original shareholders meeting in accordance with the requirements listed under Article 44-20, paragraph 7 of the Regulations Governing the Administration of Shareholder Services of Public Companies.

For dates or period set forth under Article 12, second half, and Article 13, paragraph 3 of Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies, and Article 44-5, paragraph 2, Article 44-15, and Article 44-17, paragraph 1 of the Regulations Governing the Administration of Shareholder Services of Public Companies, the Company shall handle the matter based on the date of the shareholders meeting that is postponed or resumed under the second paragraph.

• Article 22: When a shareholders’ meeting is to be convened by video conference, appropriate alternatives to shareholders who have difficulty participating in the meeting by video means shall be provided.

• Article 23: The handling matters not disclosed in these Rules, other than the las and regulations stipulated in the Company Act and the Company’s Articles of Incorporation, they are handled under the chair’s instructions.

• Article 24: These Rules, and any amendments hereto, shall be implemented from the date it is adopted by the Shareholders' Meeting.

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Appendix 4

Formosan Rubber Group Inc. Numbers of Shares Held by All Shareholders and the Minimum Number of shares Required to be held

As of the day of the suspension of share transfer (April 11, 2023), the Company’s paid-in capital amounted to NT$3,373,260,000 with issued shares of 337,326,000 shares.

All of the directors held the minimum percentage of stock totaling 13,493,040 shares (must not be less than 5% of the total issued shares)

According to Article 2 stipulated in the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies” - if a public company has elected two or more independent directors, the ratio of all shareholders other than the independent directors and shall be decreased by 80 percent.

Title	Name	Juristic person	Shareholding at the time of suspension of share transfer (April 11, 2023) Shareholding	Shareholding at the time of suspension of share transfer (April 11, 2023) Shareholding
			Shares	%
Chairperson	Hsu Zhen-Tsai		5,212,130 shares	1.55
Director	Hsu Zhen-Ji		3,478,296 shares	1.03
Director	Hsu Zhen-Xin	Quanxinfeng Co., Ltd.	8,943,410 shares	2.65
Director	Hsu Wei-Zhi	Ruifu Construction Co., Ltd.	34,070,754 shares	10.1
Director	Lin Kun-Rong	Hohe Construction Co., Ltd.	15,536,726 shares	4.61
Director	Chu, Lung-Tsung	Ascend Gear International Inc.	17,487,047 shares	5.18
Independent director	Xiao Sheng-Xian		0 shares	0
Independent director	Wu Chun-Lai		0 shares	0
Independent director	Lorraine Yao		5,000 shares	0
Total shareholding of all directors			84,733,363 shares	25.12

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Appendix 5

Other Matters

Description of the acceptance of motions of this shareholders regular meeting: Description:

1. According to the provisions stipulated in Article 172-1 of the Company Act, Shareholder(s) holding one percent (1%) or more of the total number of outstanding shares of a company may propose to the company a proposal for discussion at a regular shareholders’ meeting in writing, provided that only one matter shall be allowed in each single proposal with a maximum of 300 words per proposal. The Company has set the duration of March 31 2023 to April 11, 2023 as the acceptance period for the shareholders proposals.

2. The Company has made public announcements on MOPS.

3. The Company has not received any shareholders’ proposals.

4. 71 -