FST - AGM Information 2018 | FinancialReports.eu

FORMOSA SUMCO TECHNOLOGY CORPORATION

2018 ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK

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

JUNE 21, 2018

Meeting Procedure ………………………………………………. page 1 Meeting Agenda……………………………..…………………… page 2 Report Items……………………………………………………… page 4 Ratification Items………………………………………………… page 11 Discussion Items(Ⅰ) …………………………………………… page 13 Election Items …………………………………………………… page 30 Discussion Items(Ⅱ) …………………………………………… page 33 Appendices……………………………………………………….. page 35

FORMOSA SUMCO TECHNOLOGY CORPORATION

2018 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

Call Meeting to Order
Chairman’s Address
Report Items
Ratification Items
Discussion Items (Ⅰ
Election Items
Discussion Items (Ⅱ
Extraordinary Motions
Meeting Adjourned

FORMOSA SUMCO TECHNOLOGY CORPORATION 2018 ANNUAL SHAREHOLDERS’ MEETING AGENDA

Time: 2:00 p.m., Thursday, June 21, 2018

Venue: 2 Floor, Meeting Room at Formosa Building

(Located at No.201, Dun Hua North Road, Taipei, Taiwan)

1. Report Items

(1)2017Business Report
(2)Supervisors’ Review Report for 2017
(3)Distribution of 2017 Employees Compensation

2. Ratification Items

(1)Please approve the 2017 Business Report and Financial Statements as required by the Company Act.
(2)Please approve the Proposal for Distribution of 2017 Profits as required by the Company Act.
Discussion Items (Ⅰ)
(1)To approve capital reduction
(2)Amendment of the Articles of Incorporation of the Company
(3)Procedures of Fund Lending to Other Parties of the Company
(4)Amendment to the Procedures for Engaging in Derivatives Transactions of the Company

4. Election Items

Elect the Board of Directors to conform to the applicable laws.

5. Discussion Items (II)

Appropriateness of releasing the newly elected Directors and the juristic person shareholder which appointed their authorized representatives to be elected as directors, from non-competition restrictions.

6. Extraordinary Motions

Report Items

1.About the Company’s business operation condition of 2017, please refer to Business Report for further details (on page 5 of the Handbook.)
2.The Company’s Supervisors reviewed the 2017 Business Report and Financial Statements and issued their Review Report according to the applicable laws. Please refer to Supervisors’ Review Report (on page 10 of the Handbook.)
3.The company has issued the report on compensation distributed to its employees for 2017.
The pre-tax profit prior to deducting employees compensation distributable for 2017 is NT$2,607,167,812. The company has no accumulated losses. Adopted by the Board Meeting on March 22, 2018, 0.35% of the profit is allocated as employees’ compensation in accordance with Article 28 of the Articles of Incorporation. The total allocated amount is NT$9,125,087, which shall be distributed in cash. The above is hereby reported for record.

FORMOSA SUMCO TECHNOLOGY CORPORATION 2017 Business Report

I. 2017 Annual Business Report

The consolidated operating revenue of our company in 2017 was NT$12,713,025,000 (an increase of 18% from NT$10,794,340,000 in 2016), achieving 113% of the target revenue NT$11,240,570,000. The consolidated profit before tax of our company in 2017 was NT$2,615,192,000 (an increase of 189% (NT$1,709,865,000) from NT$905,327,000 in 2016), achieving 164% of the target profit NT$1,591,209,000, with an increase of NT$1,023,983,000.

Put in a boarder context, the silicon wafer market continued to show tight supply due to increased demand for end products such as data centers, smart phones, LCD driver ICs, power management ICs, and automotive electronics in 2017. As a result, annual 8-inch silicon wafer sales rose 1% from 2016. And annual 12-inch silicon wafer sales rose 9% from 2016. In addition, under the circumstances of the short supply in the market, we increase the selling price timely to increase the profitability of our company, actively promote various cost improvement measures and reduce the purchase cost of raw materials to effectively reduce production costs and increase product competitiveness.

Furthermore, the company must be constantly vigilant and guard against external threats to ensure a sustainable business operation. By upholding the founding philosophy of diligence and frugality, our company is dedicated to promoting equipment automation, technological advancements, process enhancement, and quality improvement in order to reduce operating costs. As we receive stricter

demands from our customers, we will respond by providing them with the best products with a proactive attitude. We hope to become a supplier that our customers can trust and rely on.

With regard to environmental protection, our company has always put equal emphasis on industrial development and environmental protection. Since our establishment, we have made constant improvements to overall pollution control, such as adopting the best manufacturing process technologies, installing the most advanced pollution control systems, and enacting the most demanding pollution control policies. Despite the fact that all our pollutant treatments are well above the national control standards, environmental standards are quickly developing due to the rising environmental awareness these days. In response to higher environmental standards, our company will continue to further improve our manufacturing processes and environmental protection efforts in order to reach our ultimate goal of “zero pollution”.

The silicon wafer production and marketing status of our company in 2017 is summarized below:

1.Silicon Wafer Production and Marketin Status: g

Product	Production Volume	Sales Volume
Silicon Wafer (thousand)	7,380	7,329

The total sales amount of our company in 2017 was NT$12,713,025,000, with domestic sales accounting for 93% (NT$11,829,690,000) and foreign sales accounting for the remaining 7% (NT$883,335,000) of the entire sales amount.

2.Operating Status: The consolidated operating revenue of our

company in 2017 was NT$12,713,025,000, which NT$1,918,685,000 more than the consolidated operating revenue of our company in 2016, which was NT$10,794,340,000. After deducting the consolidated operating cost of NT$9,318,516,000 and the consolidated management cost of NT$644,699,000 from the consolidated operating revenue, the consolidated operating profit becomes NT$2,749,810,000. By deducting the non-operating expenditure of NT$134,618,000 from the consolidated operating profit, the consolidated pretax profit of our company in 2017 becomes NT$2,615,192,000.

II.2018 Business Plan Overview, Future Corporate Development Strategies, and Impacts Generated from the External Competitive Environment, Legislative Environment, and Overall Business Environment

Looking forward to 2018, with the 5G (5th generation mobile communication system) network from 2017, the 8K, the inter-vehicle communication network, and the AI of smart phones will be further developed. It is expected that the growth rate of semiconductor memory, microprocessor (MPU) will increase, further increasing the demand for wafers. However, in spite of the continuous production of silicon wafers, due to the constant acceleration of customer design, the demand for high quality wafers has become more intense. In order to pursue endless wafer quality, it will become more important to gradually introduce the latest technology and improve the quality to meet the requirements of customers. The company will continue to actively carry out the following activities in order to ensure the company's revenue and profitability in the fast-changing market, and further enhance the company's competitiveness and operating

performance.

Continue to improve the semiconductor manufacturing process and implement TPM (total production maintenance) activities. By jointly carrying out stabilized production, quality control measures, and manufacturing equipment management, production site quality can be further improved so that we can provide our customers with the best products on the premise of “stabilized production” and “best quality”.
Faced with stricter customer demands, we must ensure that future technologies are developed while making constant improvements to our production site.
Continuing to actively adjust the selling price in line with market supply and demand conditions, and face market changes with flexible pricing strategies to further increase company profitability
Continue to ensure and improve customer satisfaction, reach a larger demographic, increase the frequency of visits, assign technicians to provide additional technical services, and participate in the certification of new products of customers; by doing so, we can expand our sales to secure our leading market position in the domestic semiconductor market. In addition to expanding sales in such foreign countries as mainland China, we must seek new client bases to increase foreign sales.
In response to customer demands, we must make improvements with regard to Q(quality), C(costs), (D)delivery, and S(service). We must become the best company that our customers can trust and rely on.
Optimize domestic advantages of streamline production, sales, and technical services to improve corporate competitiveness in areas other than price.
Implement business continuity management (BCM) to prevent the occurrence of potential risks.

8.Combine excellent Japanese SUMCO / SUMCO TECHXIV production technologies with the excellent Formosa Plastics Group management system to optimize business performance.

Looking forward to the coming year, in order to build the most complete company system and build the company’s competitiveness, our 2018 business guidelines are listed below:

1.With 300mm high-quality response and improved productivity to raise 300mm product competitiveness.
2.Strengthen equipment management to stabilize production.
3.With TPM (total production management), thoroughly promote 5S.
‧ ‧
4.Sales Technology Production integration for customer activities.
5.Compliance with laws and regulations and enhanced safety management.(zero disaster, zero accident)
6.The cultivation of key talents each department.

FORMOSA SUMCO TECHNOLOGY CORPORATION Supervisors’ Review Report

The Board of Directors has prepared the Company’s 2017 Business Report, Proposal for Profits Distribution, and Financial Statements audited by the Deloitte. We as the Supervisors of the Company have examined the aforementioned documents and found no unconformities. According to Article 219 of Company Act, we hereby submit this report. Please be advised accordingly.

Submitted to:

The Company’s 2018 Annual Shareholders’ Meeting

Supervisors: Sheng-Guan Lin Fumio Inoue

March 27, 2018

Ratification Items Proposal 1

Proposal: For approval of the 2017 Business Report and Financial Statements as required by the Company Act.

Proposed by the Board of Directors

Explanation:

The preparation of the Company’s 2017 Consolidated and Individual Financial Statements were completed and the same were approved by the Board Meeting on March 22, 2018 ,and audited by independent auditors, Mr. Walter Liu and Mr. Jery Gung, of Deloitte. The aforesaid Financial Statements together with the Business Report were reviewed by the supervisors, which the Supervisors’ Review Report is presented.
For the aforementioned Business Report, please refer to page 5 through page 9 of the Meeting Handbook. As for the Financial Statements, please refer to page 35 through page 40 of the Handbook. Please approve the Business Report and the Financial Statements.

Resolution:

Ratification Items Proposal 2

Proposal: For Approval of the Proposal for Distribution of 2017 Profits as required by the Company Act.

Proposed by the Board of Directors

Attachment:

Please refer to page 41 of the Handbook for the Statement of Profits Distribution, which has been approved by the Board of Directors.

Resolution:

Discussion Items( Ⅰ ) Proposal 1

Proposal: To approve capital reduction.

Proposed by the Board of Directors

Explanation:

(Ⅰ)To reduce share capital and pay it back to shareholders with the aim of improving return on equity and financial ratios.
(Ⅱ)The amount of capital reduction is NT$ 3,878,482,990, and the current common capital is 775,696,599. The capital reduction ratio is estimated to be 50%, cancelled shares 387,848,299, and share capital after the capital reduction is NT$3,878,483,000 (387,848,300 shares).
(Ⅲ)Total shares cancelled would be 387,848,299, which means 500 shares would be cancelled for every one thousand shares. Odd lots of shares can be put together as round lots after the last date to trade. The rest of the odd lots will be purchased at the closing price from the last date to trade by the authorized person.
( Ⅵ )The new shares issued after the capital reduction would be non-physical, but the rights and obligations would be the same as physical ones.
(Ⅴ)After the approval of this capital reduction from the Shareholders' Meeting and the authorities, the Board of Directors will set schedule and timeline for the record date of the capital reduction and that of issuance of new shares.
(Ⅵ) Before the record date, any changes to the capital reduction ratio and the amount returned per share caused by adjustment in regulations or request from the authorities, or in reponse to any other environmental factors, will be brought up at the Shareholders' Meeting and be dealt with by the Chairman of the Board. Please jointly decide.

Resolution:

Discussion Items Proposal 2

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

		Proposed bythe Board of Directors	Proposed bythe Board of Directors
Article	Current Article	Amended Article	Reason for Amendment
Article 5	The authorized capital of the Corporation shall be NT$7,756,965,990 and shall be divided into 775,696,599 shares with par value of NT$10 each, all of which shall befully issuedupon incorporation.	The authorized capital of the Corporation shall be NT$7,756,965,990 and shall be divided into 775,696,599 shares with par value of NT$10 each, all of which shall beissued in installmentsupon incorporation.	For reducing capital.
Article 32	(Omitted)	Add“the 19st Amendment on June 21,	The Company encloses the date of the 19st amendment.
		2018”to the existing Article.

Resolution:

Discussion Items Proposal 3

Proposal: Amendment to the Procedures of Fund Lending to Other Parties of the company submitted for discussion.

Proposed by the Board of Directors Explanation: In order to comply with the rules of Taiwan Stock Exchange Corporation, certain articles of the Procedures of Fund Lending to Other Parties of the Company have been amended. The comparison table for articles before and after amendment is hereby attached. Please determine whether the amendments are reasonable.

Article	Article before Amendment	Article	Article after Amendment
Article 8	The loan shall be approved for		(Article Deleted)
	extension by the board of directors at due date. However, after the extension ,
	total loan period shall still comply with the regulations of
	Article 6. If the extension is not approved by the Board of Directors, the borrower shall immediately repay the principal and interest, otherwise, the company shall recover the loan according to law.
Article 9	The Company shall establish a reference file for Fund Lending. About the party whom the company lends funds, the amount of funds, date passed by the board of directors, date of Fund Lending, and the matters to be carefully assessed in accordance with the regulations are posted for reference.	Article 8	The Company shall establish a reference file for Fund Lending. About the party whom the company lends funds, the amount of funds, date passed by the board of directors, date of Fund Lending, and the matters to be carefully assessed in accordance with the regulations are posted for reference.

Article	Article before Amendment	Article	Article after Amendment
Article 10	The company's internal auditors should at least make quarterly audits of the execution of Procedures of Fund Lending to Other Parties and make written records. If violations are found, they should be corrected. When the violations are serious, they should notify the supervisors in writing and punish the relevant offenders in accordance with the personnel management regulations of the company.	Article 9	The company's internal auditors should at least make quarterly audits of f the execution of Procedures of Fund Lending to Other Parties and make written records. If violations are found, they should be corrected. When the violations are serious, they should notify the supervisors in writing and punish the relevant offenders in accordance with the personnel management regulations of the company.
Article 11	The company change due to the situation, leading to the party whom the company lend funds does not meet the requirements of this standard or the loan balance exceeds the limit, an improvement plan shall be formulated, submitted to the board of directors for resolution, and the relevant improvement plan shall be sent to each supervisor, and improvement shall be accomplished according to the schedule.	Article 10	The company change due to the situation, leading to the party whom the company lend funds does not meet the requirements of this standard or the loan balance exceeds the limit, an improvement plan shall be formulated, submitted to the board of directors for resolution, and the relevant improvement plan shall be sent to each supervisor, and improvement shall be accomplished according to the schedule.
Article 12	The company's control procedures for lending funds to others of the subsidiary : 1. If the subsidiary of the company intends to lend funds to others, the company shall order the subsidiary to set the Procedures of Fund Lending to Other Parties in accordance with the "Regulations Governing	Article 11	The company's control procedures for lending funds to others of the subsidiary : 1. If the subsidiary of the company intends to lend funds to others, the company shall order the subsidiary to set the Procedures of Fund Lending to Other Parties in accordance with the "Regulations Governing

Article	Article before Amendment	Article	Article after Amendment
	Loaning of Funds and Making of Endorsements/Guarantees by Public Companies" and put the procedures into practice. 2. The subsidiary shall make a list of lending funds to others before the fifth day of each month and send the list to the company for review.		Loaning of Funds and Making of Endorsements/Guarantees by Public Companies" and put the procedures into practice. 2. The subsidiary shall make a list of lending funds to others before the fifth day of each month and send the list to the company for review. 3.If the internal auditor of the subsidiary discovers a major violation, he shall notify the company in writing, and the company shall understand its handling and follow-up improvement
	3.If the internal auditor of the
	subsidiary discovers a major
	violation, he shall notify the
	company in writing, and the
	company shall understand
	its handling and follow-up
	improvement
Article 13	The lending of funds to others of the company should be disclosed in accordance with the following regulations: 1. The company shall input the loan balance of the previous month of the company and its subsidiary into the information reporting website designated by the securities regulatory authority on the tenth day of every month. 2. If the company's loan balances up to one of the following criteria, the company must enter the above-mentioned website within two days from the date of the factual occurrence date. (1) The loan balances of the companyand subsidiary	Article 12	The lending of funds to others of the company should be disclosed in accordance with the following regulations: 1. The company shall input the loan balance of the previous month of the company and its subsidiary into the information reporting website designated by the securities regulatory authority on the tenth day of every month. 2. If the company's loan balances up to one of the following criteria, the company must enter the above-mentioned website within two days from the date of the factual occurrence date. (1) The loan balances of the companyand subsidiary

Article Article before Amendment Article Article after Amendment was more than 20% of the was more than 20% of the company's latest financial company's latest financial statement. statement.
(2) The loan balances of the company and its subsidiary to single company reached more than 10% of the company's latest net financial statement.
(3) The company's or its subsidiary's new funds of lending amounted to more than NT$10 million and reached more than 2% of the company's net value in recent financial statement.
(2) The loan balances of the company and its subsidiary to single company reached more than 10% of the company's latest net financial statement.
(3) The company's or its subsidiary's new funds of lending amounted to more than NT$10 million and reached more than 2% of the company's net value in recent financial statement.
If the subsidiary of the 3. If the subsidiary of the company is not a domestic company is not a domestic public offering company, the public offering company, the subsidiary has the matters subsidiary has the matters mentioned in the preceding mentioned in the preceding paragraph that should be paragraph that should be announced and reported, announced and reported, which should be done by the which should be done by the company. The calculation of company. The calculation of the ratio of the loan balances the ratio of the loan balances to net value of the subsidiary to net value of the subsidiary in the preceding paragraph is in the preceding paragraph is based on the ratio of loan based on the ratio of loan balances of the subsidiary to balances of the subsidiary to the company’s net value. the company’s net value. 4. The Company shall assess 4. The Company shall assess the situation of fund lending, the situation of fund lending, provides appropriate provides appropriate allowances for bad debts, allowances for bad debts, and appropriately disclose and appropriately disclose the relevant information in the relevant information in the financial report, and the financial report, and provide relevant information provide relevant information to the visa accountant to to the visa accountant to

Article	Article before Amendment	Article	Article after Amendment
	perform the necessary checking procedures.		perform the necessary checking procedures.
Article 14	This method shall be passed by the board of directors, sent to the supervisors and submitted to the shareholders' meeting for approval before implementation. The amendment will also be the same. If any director disagrees and has a record or written statement, the company should send the objection to the supervisors and submit it to the shareholders for discussion. If the company sets up independent directors, those opinions and reasons of independent directors for consent or objection should be included in the records of the board of directors.	Article 13	This method shall be passed by the board of directors, sent to the supervisors and submitted to the shareholders' meeting for approval before implementation. The amendment will also be the same. If any director disagrees and has a record or written statement, the company should send the objection to the supervisors and submit it to the shareholders for discussion. If the company sets up independent directors, those opinions and reasons of independent directors for consent or objection should be included in the records of the board of directors.

Resolution:

Discussion Items Proposal 4

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

Proposed by the Board of Directors Explanation: In order to conform to the needs of commercial practice, certain articles of the Procedures for Engaging in Derivatives Transactions of the Company have been amended. The comparison table for articles before and after amendment is hereby attached. Please determine whether the amendments are reasonable.

Article			Article before Amendment	Article		Article after Amendment
Article 4		Thenatureof the Company s derivatives transactionscan be classified into hedging purposes and trading purposes , which apply to different exposure limits, stop-loss limits and accounting principles, based on the purposes of the transactions.		Article 4		Theprincipleof the Company s derivatives transactionsis to manage volatility resulting from fluctuation in the financial markets such as movements in foreign exchange rates, interest rates, and asset price.
Article 5		The total contract amount of derivatives transactions of the Company shall not exceed 50% of the Company’s net worth, and the maximum loss limit is 10% of the contract amount for all contracts in aggregate or for any individual contract. The content of individual derivatives contract shall be approved by high-level manager(s), who is authorized by the Board		Article 5		The total contract amount of derivatives transactions of the Company shall not exceed 50% of the Company’s net worth, and the maximum loss limit is 10% of the contract amount for all contracts in aggregate or for any individual contract. The content of individual derivatives contract shall be approved by high-level manager(s), who is authorized by the Board of Directorsbased on the scope of the approval level of the Company.

	of Directors.	of Directors.
Article 6		The transaction personnel of the Department, which is in charge of derivatives transactions, shall follows the trading strategy in accordance with the approved deal terms and conditions of derivatives transactions andexecute trades directlytocounterparties. After the foresaid trades are done, the transaction personnel shall deliver the relevant transaction receipts to the settlement personnel to conduct the settlement procedures. The settlement personnel shall proceed contracts signing, bank accounts opening, settlement, accounts closing, etc. with counterparties in accordance with the trading conditions.	Article 6		The transaction personnel of the Department, which is in charge of derivatives transactions, shall follows the trading strategy in accordance with the approved deal terms and conditions of derivatives transactions.Also, the transaction personnel shall execute trades directlywith counterparties. After the foresaid trades are done, the transaction personnel shall deliver the relevant transaction receipts to the settlement personnel to conduct the settlement procedures. The settlement personnel shall proceed contracts signing, bank accounts opening, settlement, accounts closing, etc. with counterparties in accordance with the trading conditions.
Article 7		For the derivatives transactions of the Company, the Department that is charge of establishing management regulations shall establish a comprehensive management information system towards the balance position of the Company,profit/loss analysis, etc. to control risk properly and to respond to abnormal situations immediately.	Article 7		For the derivatives transactions of the Company, theCompanyshall establish a comprehensive management information system towards the balance position of the transactions,profit/loss analysis, etc. to control risk properly and to respond to abnormal situations immediately.

	Article 8		The Company shall compile monthly report on the status of derivatives transactions (including purposes of hedging and purposes of trading) engaged in up to the end of the previous month by itself and enter the information in the regulated form into the information reporting website designated by the competent securities authority before the tenth day of each month. If derivatives transactions of which maximum loss for all or individual contract exceeds 10% of contract amount respectively, or any amendment, termination or cancellation of the original contract occurs, the Company shall report and make public announcements accordingly on the information reporting website designated by the competent securities authority within two days from the date of occurrence of the event.	Article 8	The Company shall compile monthly report on the status of derivatives transactions engaged in up to the end of the previous month by itself and enter the information in the regulated form into the information reporting website designated by the competent securities authority before the tenth day of each month. If derivatives transactions of which maximum loss for all or individual contract exceeds 10% of contract amount respectively, or any amendment, termination or cancellation of the original contract occurs, the Company shall report and make public announcements accordingly on the information reporting website designated by the competent securities authority within two days from the date of occurrence of the event.
	Chapter 4		Accounting Principles		(Chapter Deleted)
	Article 13		The accounting treatment towards the Company’s derivatives transactions will be conducted in accordance with the requirements of the General Accepted		(Article Deleted)

			Accounting Principles and the relevant Financial Accounting Principle Statement announced by the Accounting Research and Development Foundation.
	Article 14		When the Company prepares periodical financial reports (including annual reports, semi-annual reports, quarterly reports and consolidated reports), the Company shall disclose the general relevant items of derivatives transactions by product purposes in the footnotes of the financial statements in accordance with the regulations of the Statements of Financial Accounting Standards No. 34 ‘Accounting for Financial Instruments’and No. 36 ‘Disclosure and Presentation of Financial Instruments’announced by the Accounting Research and Development Foundation.		(Article Deleted)
	Article 15		Regarding the derivatives products of trading purposes, in addition to the general disclosure items, the Company shall disclose the net income/loss arising from the current trading activities and its item presented in the income		(Article Deleted)

			statement by product types.
	Article 16		Regarding the derivatives products of hedging purposes, in addition to the general disclosure items, the Company shall disclose the following items: 1.Hedging for the exiting assets or liabilities: (1) The hedged assets or the liability amount and the type of derivatives products for the foresaid hedged assets or liability amount. (2) The definite but deferred or realized profit/loss amount due to hedging. 2.Hedging for the anticipated positions (including future positions from definite commitments and contingent commitments)`：` (1) Description of the content of the anticipated transactions. (2) Description of the content of the type of the adopted derivatives products. (3) The definite but deferred profit/loss amount due to hedging.			(Article Deleted)
	Chapter 5		Internal Control and Internal Audit		Chapter 4	Internal Control and Internal Audit

	Article 17	The Company engaging in derivatives transactions shall adopt appropriate risk management practices with regards to credit risk, market risk, liquidity risk, cash flow risk, operation risk and legal risk. The personnel who is responsible for the derivatives transactions may not serve concurrently in other operations such as confirmation and settlement. Regarding the appropriateness assessment towards the risk measurement, monitoring and control, and risk management procedures, the President Office of the Company should periodically report to the high-level manager(s), who is authorized by the Board of Directors.		Article 13	The Company engaging in derivatives transactions shall adopt appropriate risk management practices with regards to credit risk, market risk, liquidity risk, cash flow risk, operation risk and legal risk. The personnel who is responsible for the derivatives transactions may not serve concurrently in other operations such as confirmation and settlement. Regarding the appropriateness assessment towards the risk measurement, monitoring and control, and risk management procedures, the President Office of the Company should periodically report to the high-level manager(s), who is authorized by the Board of Directors.
	Article 18	The derivatives trading positions of the Company shall be evaluated at least once a week by the in-charge department, but the hedging transactions made for business purposes shall be evaluated at least twice a month. The manager of the in-charge department shall pay attention to the risk control and monitoring of derivatives transactions from time to time, and periodically		Article 14	The derivatives trading positions of the Company shall be evaluated at least once a week by the in-charge department, but the hedging transactions made for business purposes shall be evaluated at least twice a month. The manager of the in-charge department shall pay attention to the risk control and monitoring of derivatives transactions from time to time, and periodically supervise and evaluate the derivatives transactions to check whether

		supervise and evaluate the derivatives transactions to check whether they are conducted in accordance with the related procedures formulated by the Company hereof and whether the attendant risk of these transactions is within the capability of the Company. The foresaid evaluation reports shall be given to a high-level manager(s) authorized by the Board of Directors for review. If there is any abnormal situation highlighted in the market evaluation reports (e.g. the holding position has reached the maximum loss limit), the Company shall immediately take necessary measures to deal with the situation and report to the Board of Directors. There shall be independent directors attending the Board of Directors meeting and expressing their opinions.			they are conducted in accordance with the related procedures formulated by the Company hereof and whether the attendant risk of these transactions is within the capability of the Company. The foresaid evaluation reports shall be given to a high-level manager(s) authorized by the Board of Directors for review. If there is any abnormal situation highlighted in the market evaluation reports (e.g. the holding position has reached the maximum loss limit), the Company shall immediately take necessary measures to deal with the situation and report to the Board of Directors. There shall be independent directors attending the Board of Directors meeting and expressing their opinions.
	Article 19	The Company shall establish a log book to record all its derivatives transaction information, including types and amounts of derivatives transactions, and matters to be evaluated cautiously in accordance with Article18hereof. The Company's internal audit		Article 15	The Company shall establish a log book to record all its derivatives transaction information, including types and amounts of derivatives transactions, and matters to be evaluated cautiously in accordance with Article14 hereof. The Company's internal audit personnel shall be in charge of periodically

			personnel shall be in charge of periodically assessing the appropriateness of the internal control regarding the derivatives transactions, andtake the responsibility of auditing the trading department's compliancewith the Procedures,analyzing the transaction cycle, preparing the monthly auditing reportand submitting the auditing report to the high-level management personnel authorized by the Board of Directors.If any material violation is discovered, the Audit Committee shall be notified in writing and the Company should, depending on the status of such material violation, penalize the relevant personnel in accordance with the Human Resources Management Policies.				assessing the appropriateness of the internal control regarding the derivatives transactions,shall conduct monthly audit to evaluate whetherthe trading departmentconform tothe Procedures,and shallprepare the monthly auditing report accordingly.If any material violation is discovered, the Audit Committee shall be notified in writing and the Company should, depending on the status of such material violation, penalize the relevant personnel in accordance with the Human Resources Management Policies.
	Article 20		The Company’s control and monitoring procedures towards the derivatives transactions by the Company’s subsidiaries are as follows: 1. If the Company’s subsidiaries intend to conduct derivatives transactions, the Company shall ensure that its subsidiaries		Article 16		The Company’s control and monitoring procedures towards the derivatives transactions by the Company’s subsidiaries are as follows: 1. If the Company’s subsidiaries intend to conduct derivatives transactions, the Company shall ensure that its subsidiaries establish their own “Procedures for Engaging in Derivatives

		establish their own “Procedures for Engaging in Derivatives Transactions”. 2. The Company’s subsidiaries shall submit the reference content of the derivatives transactions of the previous month to the Company for review by the fifth date of every month. 3. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall submit a written notice to the Company of such violations. The Company shall closely monitor the violations and the resulting improvements.			Transactions”. 2. The Company’s subsidiaries shall submit the reference content of the derivatives transactions of the previous month to the Company for review by the fifth date of every month. 3. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall submit a written notice to the Company of such violations. The Company shall closely monitor the violations and the resulting improvements.
	Chapter 6	Additional Provision		Chapter 5	Additional Provision
	Article 21	After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.		Article 17	After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting.

Resolution:

Election Items

Proposal: The Company’s Directors have their tenure nearly expired. Please elect the Board of Directors to conform to the applicable laws.

Proposed by the Board of Directors

Explanation:

The Company’s current directors were elected in the Annual Shareholders’ Meeting on June 18, 2015 and have their tenure expired on June 17, 2018. To conform to the applicable Rule, the Company shall elect 10 directors (including 3 independent directors) using the cumulative voting system. The tenure of new session of Directors (including independent directors) shall be three years, starting June 21, 2018 until June 20, 2021.
The election of Directors (including independent directors) shall adopt the candidate nomination system in accordance with Article 192-1 of the Company Act and the Article 20 of the Company's Articles of Incorporation. The Company has examined and approved the qualification of 10 Directors Candidates (including independent directors) in the Board of Directors Meeting on May 10, 2018. The related information of the 10 Director Candidates is shown below:

Name	Education	Major Experience	Shareholding (Share)
William Wong	Master of Industrial Engineering, University of Houston	Chairman of Chinese National Federation of Industries , Chairman of FCFC, Formosa Taffeta Corp., Formosa Advanced	0

		Technology Corp.
Jason Lin Representative of Formosa Plastics Corporation	Master of Science in Environmental Sciences, Wageningen Agricultural University	Chairman of FPC and FST.	225,414,929
Susan Wang	Barnard College, U.S.	Director of Formosa Sumco Technology Corp. Chairman of Formosa Environmental Technology Corp.	0
Michiharu Takii	University of Tokyo,Japan	Vice Chairman of SUMCO Corp..	0
Kazuo Hiramoto Representative of SUMCO TECHXIV Corporation	Osaka University,Japan	Vice President of SUMCO Corp..	364,205,698
Takashi Fukushima	Kagoshima University,Japan	President of FST	0
Mitsuru Ikenoue	University of Miyazaki,Japan	Vice President of FST	0

The related information of the 3 Independent Director Candidates is shown below:

Name	Education	Major Experience	Shareholding (Share)
Chih Kang, Wang	Ph.D. in Business Administration, Texas A&M	Chairman of CTBC Venture Capital Co., Ltd.	0

	University,USA
Norikazu Hatanaka	Tenri University	Chairman of Zehe Management Consulting Corp.	0
Hidemi Sumiya	Kyoto University,Japan	Experiences: Consultant of SUMCO Corp..	0

Resolution:

Discussion Items (II) Proposal 1

Proposal: Appropriateness of releasing the newly elected Directors and the juristic person shareholder which appointed their authorized representatives to be elected as directors, from non-competition restrictions. Please discuss and resolve.

Proposed by the Board of Directors

Explanation:

According to Article 209 of the Company Act, any Director conducting business for himself/herself or on another’s behalf, and the scope of which coincides with the Company’s business scope, shall explain at the Shareholders’ Meeting the essential contents of such conduct and obtain approval from shareholders in the Meeting.
Meanwhile, according to Explanation Letter No.89206938, announced by the Ministry of Economic Affairs dated April 24, 2000, when the juristic person shareholder appoints its authorized representatives to be elected as directors according to Article 27-2 of the Company Act, both the juristic person shareholder and the authorized representatives shall be governed by the non-competition restrictions of Article 209 of the Company Act.
If the newly-elected Directors and the juristic person shareholder which appoints its authorized representatives to be elected as directors in present year Annual Shareholders’ Meeting violate the non-competition restrictions of Article 209 of the Company Act and the interest of the Company is not impaired, it is proposed to release the Directors and juristic shareholders which its authorized

person appoints representatives to be elected as directors after having assumed office from non-competition restrictions for approval.

(Proclaim the information of engaging in competitive businesses conducted by the Directors and the juristic person shareholders)

Resolution:

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Formosa SUMCO Technology Corporation Statement of Profits Distribution

For the year of 2017

				Unit`：`NT$
Items	Amount	Items	Amount	Explanation
Available for Distribution: (1)Unappropriated retained earnings of previous years (2) Net profit after tax of current year (3) Remeasurement of defined benefit plans is recognized immediately in retained earnings	4,661,570,043 2,242,773,506 (38,160,080)	Distribution Items: (1) Appropriation of legal reserve (10% of the after-tax profit ) (2)Distribution of dividends and bonus in cash ( $2.08 per share) (3) Unappropriated retained earnings carried forward to next year	224,277,351 1,613,448,926 5,028,457,192	1. Capital :NT$7,756,965,990 Number of shares:775,696,599 2. The Company plans to distribute dividends of $2.08 per share for current year (among which, $1.006 will be distributed as dividends and $1.074 will be distributed as bonus); all of which are cash dividends. 3. The Company distributes dividends and bonus for a total of $1,613,448,926 all of which are from net profit after tax of 2017. 4. While the distribution of cash dividends to each individual shareholder is less than 1 dollar, the distribution will be rounded to the nearest dollar.
Total	6,866,183,469	Total	6,866,183,469

Formosa SUMCO Technology Corporation Current Shareholdings of Directors/Supervisors

Title	Name	Shareholding (share)
Chairman	Jason Lin Representative of Formosa Plastics Corporation	225,414,929
Vice chairman	Michiharu Takii	0
Director	William Wang	0
Director	Susan Wang	0
Director	Kazuo Hiramoto	0
Director	Takashi Fukushima	0
Director	Mitsuru Ikenoue	0
Independent Director	Chih Kang,Wang	0
Independent Director	Norikazu Hatanaka	0
Supervisor	Sheng Guan, Lin Representative of Asia- Pacific Investment Corporation	69,350,292
Supervisor	Fumio Inoue Representative of SUMCO TECHXIV Corporation	364,205,698

Note: According to Article 26 of Securities and Exchange Act, the minimum

shareholdings of the Company’s Directors/Supervisors are

248,22,292/2,482,230 shares. As of April 23, 2018, the actual shareholdings of the Company’s Directors/Supervisors are 225,414,929/433,555,990 shares.

Information regarding the Proposed Employees and Directors/ Supervisors’ Compensation to Adopted by the Board of Directors of the Company:

the Company:	the Company:

1. Amounts of employees’ cash compensation, stock compensation, and Directors’ compensation:
Employees Cash Compensation	NT$9,125,087
Employees Stock Compensation	NT$0
Directors/ Supervisors Cash Compensation	NT$0
2. Share amount of the employees’ stock compensation and the percentage of the share amount to that of all stock dividend:
Share amount of employees’ stock compensation	0 share
Percentage of the share amount to that of all stock dividend	0%

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

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

Not applicable since the Company does not propose the stock dividend distribution at the 2018 Annual Shareholders’ Meeting and does not required to prepare financial forecast information.

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FST — AGM Information 2018

52338_rns_2018-06-25_ce76dd90-77f7-47f7-8a68-daacdae36c0c.pdf

FORMOSA SUMCO TECHNOLOGY CORPORATION

2018 ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK

Table of Contents

FORMOSA SUMCO TECHNOLOGY CORPORATION

2018 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

FORMOSA SUMCO TECHNOLOGY CORPORATION 2018 ANNUAL SHAREHOLDERS’ MEETING AGENDA

1. Report Items

2. Ratification Items

4. Election Items

5. Discussion Items (II)

6. Extraordinary Motions

Report Items

FORMOSA SUMCO TECHNOLOGY CORPORATION 2017 Business Report

I. 2017 Annual Business Report

1.Silicon Wafer Production and Marketin Status: g

II.2018 Business Plan Overview, Future Corporate Development Strategies, and Impacts Generated from the External Competitive Environment, Legislative Environment, and Overall Business Environment

FORMOSA SUMCO TECHNOLOGY CORPORATION Supervisors’ Review Report

Ratification Items Proposal 1

Explanation:

Resolution:

Ratification Items Proposal 2

Attachment:

Resolution:

Discussion Items( Ⅰ ) Proposal 1

Proposal: To approve capital reduction.

Proposed by the Board of Directors

Explanation:

Resolution:

Discussion Items Proposal 2

Resolution:

Discussion Items Proposal 3

Resolution:

Discussion Items Proposal 4

Resolution:

Election Items

Explanation:

The related information of the 3 Independent Director Candidates is shown below:

Resolution:

Discussion Items (II) Proposal 1

Explanation:

Resolution:

Formosa SUMCO Technology Corporation Statement of Profits Distribution

For the year of 2017

Formosa SUMCO Technology Corporation Current Shareholdings of Directors/Supervisors

Information regarding the Proposed Employees and Directors/ Supervisors’ Compensation to Adopted by the Board of Directors of the Company:

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

More from FST

FST AGM Information 2018