Stock Code: 1312

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2019 Annual Meeting of Shareholders

Meeting Handbook

Date: June 14, 2019

Place: Briefing Room of Kaohsiung Plant of the Company, No. 4, Hsing Kung Rd., Tashe District, Kaohsiung City

`－` Policy of Quality of `－` Grand Pacific

All work together to do as what we say If you are dissatisfied we would not succeed

Page No.

One. Procedures of the Meeting................................................................ 4
Two. Agenda................................................................................................ 6
I. Report Items ..................................................................................... 6
II. Ratification Items ........................................................................... 12
III. Discussion Items ............................................................................ 37
IV. Incidental Motion ........................................................................... 59
V. Adjournment .................................................................................. 59
Three. Annex:............................................................................................ 60
I. “Rules and Procedures for Shareholders’ Meeting” ...................... 60
II. Articles of Incorporation (Post-amendment contents) .................. 63
III. Procedures for Acquisition or Disposal of Assets ......................... 70
IV. Operational Procedures for Loaning Funds to Others ................... 85
V. Operational Procedures for Making Endorsements / Guarantees . 90
VI. The Shareholding Status of the Company's directors
........................................................................................................ 96

One. Procedures of the Meeting

I.	Call to Order to the Meeting
II.	Chairperson Remarks
III.	Report Items
IV.	Ratification Items
V.	Discussion Items
VI.	Incidental Motions
VII.	Adjournment

Grand Pacific Petrochemical Corporation Agenda of 2019 Annual Meeting of Shareholders

I. Time: June 14, 2019 (Friday), 9:00 AM
II. Place: Briefing Room of Kaohsiung Plant of the Company, No. 4, Hsing Kung Rd., Tashe District, Kaohsiung City
III. Call the Meeting to Order
IV. Chairperson Remarks
V. Report Items
2018 Business Report
Audit Committee’s Audit Report on the 2018 Financial Statements
Report on status of 2018 distribution of remunerations to employees and directors
Other Report Items
VI. Ratification Items
2018 Annual Financial Statements
2018 Earnings Distribution Proposal
VII. Discussion Items
The Proposal to Amend the Company’s “Articles of Incorporation”
The Proposal to Amend the Company’s “Procedures for Acquisition or Disposal of Assets”
The Proposal to Amend the Company’s “Operational Procedures for Loaning Funds to Others”
The Proposal to Amend the Company’s “Operational Procedures for Making Endorsements / Guarantees”
The motion to lift directors from prohibition of business strife.
VIII. Incidental Motions
IX. Adjournment
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Two. Agenda

Report Items

I. 2018 Business Report

Grand Pacific Petrochemical Corporation 2018 Business Report

(I) Implementation Results of Operating Plan

Year 2018 represents the year while the Company was most profitable in styrene products. In that year, the world class giants in China postponed their new productivity once and once more, with only those small plants operating with anticipated productivity. In the entire world in the year, there was only limited increase in productivity. In the third quarter, the prices of WTI crude oil maintained at US$60-75 per barrel while the demand for key derivatives remained in continued strong, leaving quite satisfactory profit margin same as the previous term while the Company created new achievements in profitability. Starting from the fourth quarter, nevertheless, the market underwent a gigantic change focusing on the Sino-American trade war. Amidst the uncertainty, the downstream affected both on the market and on the psychological side. The overall demand weakened, the price was significantly revised down, resulting in a decline in styrene profit decline and, as well, affected the profit of the entire year.

In terms of styrene, we conducted scheduled turnaround for out Styrene Plant III only in the 2[nd] quarter, 2018. Thanks to such efforts, our overall outputs decreased by around 15,000 M.T., boosting the overall output up to nearly 345,000 M.T. Our overall shipment volume including the part within the Company’s own use hit 347,000 M.T., decreasing by 11,000 M.T. compared with the preceding year.

In the first half of Year 2018, in continuity of Year 2017, ABS significantly rose both prices and volume in the fourth quarter. In the third quarter, the crude oil price showed a sign of rise. The prices of the upstream raw materials remained resistant to a fall. The Sino-US trade dispute dampened home appliance demand. In turn, ABS prices slumped and compressed the room for profit margins. In the fourth quarter amidst the plummeting oil prices and the serious concern about the Sino-American trade disputes, customers took a wait-and-see attitude toward business need, adhering to low-cost rigid demand in their procurements. As a natural result, the operating revenues slowed down and the profitability was compressed.

The consolidated revenues of Grand Pacific Group for the year of 2018 were NT$24,740 million, an increase of $1,390 million from 2017; consolidated net income before tax was $4,060 million, a decrease of $120 million from 2017; consolidated net income after tax was $3,150 million and consolidated net income after tax attributable to owners of the Company was $2,960 million.

The Parent Company Only revenue of the Company was $20,300 million, representing 82.1% of consolidated revenue. The 2018 Parent Company Only operating status is summarized as follows:

Main products between two years are compared as follows: The Company’s 2018 annual production volumes of SM was 344,540 tons, a decrease of 4.2% from 359,524 tons in 2017; sale volume was 300,435 tons, an decrease of 3.8% from 312,188 tons in 2017; Sale amount of SM was $11,726,280 thousand, an increase of 1.7% from $11,532,514 thousand in 2017. Annual production volume of ABS was 90,718 tons, an increase of 2.9% from 88,162 tons in 2017; sale volume was 91,254 tons, an increase of 4.4% from 87,448 tons in 2017; the sale amount of ABS was $5,337,138 thousand, an increase of 7.8% from $4,952,119 thousand in 2017. Annual production volume of Nylon was 24,725 tons, a decrease of 5.1% from 26,044 tons in 2017; sale volume was 24,675 tons, a decrease of 6.7% from 26,433 tons in 2017; the sale amount of Nylon was $2,682,897 thousand, an increase of 38.4% from $1,939,203 thousand in 2017.

In total, the Company’s net revenue for the year of 2018 was $20,305,094 thousand, an increase of 7.3% from $18,931,639 thousand for the year of 2017; the net operating profit for the year of 2018 was $2,299,040 thousand, an increase of 6.2% from $2,165,523 thousand of net operating profit for the year of 2017; the net gain on investment for the year of 2018 was $1,239,183 thousand, an increase of 25% from $1,651,640 thousand of net gain on investment for the year of 2017. The net income after tax for the year of 2018 was $2,960,106 thousand.

(II) R&D Status

Styrene represents the Company's core niche, with tentacles extending upward. Nylon 66 known as crystal engineering plastic laid downward to optimize the ABS quality. These represent as the very orientations of our efforts in the year.

This year, the Company will continue with the following tasks:

We spared no effort to optimize agglomerated PBL large particle latex to, in turn, upgrade ABS quality with wholehearted effort to develop high temperature nylon engineering plastic toward the three major targets including notably energy saving and waste reduction.
With PBL rubber agglomerated large particle latex, we further upgraded quality and improved such products notably electroplating grade, tube level, flame retardant grade, high heels with fine heels, high punch and high rigidity and such ABS products.
We tried hard to expand nylon industrial yarn market and develop high-temperature nylon, develop engineering plastics such as super tough nylon, high temperature super tough nylon, soft, water transparent grade and PPO blended to create high performance, high quality, high price nylon 66 plastic products.
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(III) The status of the Company’s 2018 production, sale and operating earnings is summarized as follows:

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1. Production volume Unit: tons, kilo M [3] , kilo degrees
Increase
Product 2018 2017 YoY
(decrease) %
SM 344,540 359,524 (14,984) (4.17)
ABS/SAN 90,718 88,162 2,556 2.90
H2 9,595 9,238 357 3.86
Electric power 307,741 319,112 (11,371) (3.56)
Vapor 1,039,714 1,080,276 (40,562) (3.75)
Nylon 24,725 26,044 (1,319) (5.06)
2. Sale volume: Unit: tons, kilo M [3] , kilo degrees
Increase
Product 2018 2017 YoY
(decrease) %
SM 300,435 312,188 (11,753) (3.76)
ABS/SAN 91,254 87,448 3,806 4.35
H2 9,590 9,234 356 3.86
Electric power 144,811 147,374 (2,563) (1.74)
Vapor 163,525 188,194 (24,669) (13.11)
Nylon 24,675 26,433 (1,758) (6.65)
3. Sale amount: Unit: thousand dollars
Increase
Product 2018 2017 YoY
(decrease) %
SM 11,726,280 11,532,514 193,766 1.68
ABS/SAN 5,337,138 4,952,119 385,019 7.77
H2 131,383 115,857 15,526 13.40
Cogeneration 427,396 391,946 35,450 9.04
Nylon 2,682,897 1,939,203 743,694 38.35
Total 20,305,094 18,931,639 1,373,455 7.25
4. Operating earnings Unit: thousand dollars
Increase
Item 2018 2017 YoY
(decrease) %
Profit (loss) before
tax 3,635,357 3,773,326 (137,969) (3.66)
Expected income tax
benefit (expense) (675,251) (484,684) (190,567) 39.32
Net income (loss)
after tax 2,960,106 3,288,642 (328,536) (9.99)
Responsible person: Manager: Chief accountant:
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II. Audit Committees’ Audit Report on the 2018 Financial Statements

Grand Pacific Petrochemical Corporation Audit Committee’s Audit Report

The 2018 parent company only financial statement and consolidated financial statements prepared by the Board of Directors of the Company have been audited by CPAs Hsiao Ying-Chia and Wang Wu-Chang of Crowe Horwath (TW) CPAs. The financial statements, business report and earnings distribution proposal have been audited by us as the audit committee of the Company. We deem these documents in comply with such relevant regulatory requirements as those of the Company Act etc. Therefore, this review report is presented in accordance with Article 14-4 of the Securities and Exchange Act and Article 219 of the Company Act. Please review.

To:

The 2019 Annual Meeting of Shareholders of Grand Pacific Petrochemical Corporation

Convener of Audit Committee of Grand Pacific Petrochemical Corporation

April 25, 2019

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III. Report on Status of 2018 Distribution of compensations/remunerations to Employees and Directors

Explanations:

It is provided for in Article 29 of Articles of Incorporation of the Company: “The Company shall distribute 1% of the earnings of the year and not less than 2% of the earnings of the year as compensations to employees and remunerations to directors, respectively; provided, however, if the Company has accumulated deficits, the amount to cover the deficits shall be appropriated…”.
Pursuant to the Company’s Articles of Incorporation and as resolved by the Board meeting, from $3,747,790,524 of net income before tax after deducting compensations distributable to employees and directors for the year of 2018, 1% amounting to $37,477,905 shall be distributed as compensations to employees and 2% amounting to $74,955,811 shall be distributed as remunerations to directors, by cash in either case.
IV. Other Report Items: None
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Ratification Items

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Proposed by the Board

Proposal 1

Subject: 2018 financial statements are submitted for ratification.

Explanations:

The 2018 Parent Company Only financial statements and consolidated financial statements of the Company have been audited by CPAs Hsiao Ying-Chia and Wang Wu-Chang of Crowe Horwath (TW) CPAs. Such financial statements and business report have been submitted to and then have been audited by the audit committee and approved by resolution of the Board of Directors.
Business report (refer to pages 4-6) and financial statements (refer to pages 11-30) are attached.

Resolution:

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Grand Pacific Petrochemical Corporation CPA Audit Report

Audit Opinions

We, as the CPAs, have completed the audit of the individual balance sheets dated December 31 of 2018 and 2017 and the individual comprehensive income statement, individual statement of changes in equity, individual statement of cash flows, and individual financial statement from January 1 to December 31 of 2018 and 2017, including summaries of major accounting policies of Grand Pacific Petrochemical Corporation.

As CPAs, according to the audit results from us and those from other CPAs (please refer to the paragraph about other matters), the above-mentioned individual financial statement, in all major respects, was prepared in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and hence are sufficient to show the individual financial standing of Grand Pacific Petrochemical Corporation as of December 31, 2018 and 2017 and the individual financial performance and individual cash flows between January 1 and December 31, 2018 and 2017.

Bases for the Audit Opinions

We followed the Rules Governing the Audit of Financial Statements by Certified Public Accountants and generally accepted auditing rules while performing the audit. The responsibilities of the CPAs under the said standards will be explained further in the section about responsibilities in auditing the individual financial statement. Independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have remained independent of Grand Pacific Petrochemical Corporation and fulfilled other responsibilities under the said regulations. Based on the audit results from us and those from other CPAs, we believe that sufficient and adequate evidence has been obtained for the audit to serve as the basis for expressing the audit opinions.

Key Matters Being Audited

Key matters being audited refer to the most important matters based on the professional judgment of the CPAs to be included in the audit of the 2018 individual financial statement of Grand Pacific Petrochemical Corporation. Such matters were addressed throughout the audit of the individual financial statement and during the formation of audit opinions. The CPAs do not express separate opinions regarding these matters.

Key matters being audited of the 2018 individual financial statement of Grand Pacific Petrochemical Corporation are specified as follows:

Recognition of Income

Income is the basic operational activities for the sustainable management of an enterprise and concerns its operational performance and the management generally is faced with the pressure of fulfilling the expected financial or business performance goals. Therefore, it is pre-established that income recognition is associated with significant risk and we consider that the recognition of timing of the transfer of control over sales of products and income from sales as part of the key matters being audited.

For the accounting policy on the recognition of income, please refer to Note 4 (29) of the individual financial statement. For information on accounting items for income, please refer to the disclosure in Note 6 (36) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the abovementioned matters are as follows:

Test the validity of sales and the internal control for the payment collection cycle in terms of its design and implementation and evaluate by random sampling if the recognition of income is adequate.
Understand the type of product and the distribution specifications with Top 10 distribution customers and evaluate the legitimacy of the distribution income and the number of days involved in the turnover of accounts receivable and analyze if there is any abnormal variation among the customers.
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Select samples from distribution transactions within a certain period of time before and after the shipping deadline and verify them against related certificates in order to evaluate the accuracy of transfer timing of risks and rewards of goods produced and distributed and the control right and the timing when income is recognized.

Impairment evaluation of real estate, plants and equipment

As of December 31, 2018, the book value of real estate, plants, and equipment owned by Grand Pacific Petrochemical Corporation totaled $ 6,600,827 thousand, accounting for around 26% of the total asset value and the value is significant for the individual financial statement. In addition, the overall economic trends, market competition, and technical development can all affect the future operations of the company and accordingly affect the expected economic benefits and the recoverable amount that may be generated in the future by the cash generating units for the assets estimated and determined by the management in order to evaluate if impairment exists. Therefore, the evaluation of impairment of real estate, plants, and equipment is listed by the CPAs as part of the key matters being audited.

For the accounting policy on the impairment of real estate, plants and equipment and non-financial assets, please refer to Note 4(18) and (20) of the individual financial statement. For information on accounting items involving real estate, plants and equipment, please refer to the disclosure in Note 6 (11) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Obtain the asset impairment assessment form for respective cash generating units that have been evaluated spontaneously by the Company.
Evaluate the legitimacy of impairment signs identified by the management and the assumption and sensitivity adopted, including whether the differentiation of cash-generating units, forecast of cash flows, and discount rate are appropriate or not.
Ask the management and review audit evidence obtained from the subsequent audit procedure for verification of absence of any matter related to impairment testing after the reporting date.

Valuation of investment balance adopting the equity method

The investment balance of Grand Pacific Petrochemical Corporation as of December 31, 2018 adopting the equity method totaled $ 13,745,161 thousand, accounting for around 53% of the total asset value. The net worth of comprehensive income (including the portions of profits and losses from subsidiaries, affiliates, and joint ventures recognized using the equity method and the portions of other comprehensive income from subsidiaries, affiliates, and joint ventures recognized using the equity method) totaled $ 914,278 thousand, accounting for around 35% of the total comprehensive income. The impacted value is significant to the individual financial statement. Therefore, the CPAs include valuation of investment balance adopting the equity method as part of the key matters being audited.

For the accounting policy on investments adopting the equity method, please refer to Note 4 (17) of the individual financial statement. For information on accounting items for investments adopting the equity method, please refer to the disclosure in Note 6 (10) of the individual financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate the accuracy of calculation during valuation adopting the equity method and the adopted accounting policy.
Check the accuracy in the calculation of unrealized profits or losses generated from transactions with companies invested in using the equity method; they have been reasonably written off and evaluate the adopted accounting policy; the adopted accounting policy has been adjusted as needed to be consistent with the policies adopted by the Company.
Evaluate the legitimacy of impairment signs of investments adopting the equity method as identified by the management and the assumption and sensitivity adopted, including whether or not the forecast of profitability of companies invested in it in the future or the discount rate is appropriate.

－ Other Matters Mentioning Audits by other CPAs

As is stated in Note 6 (10) of the individual financial statement, among the investments by Grand Pacific Petrochemical Corporation adopting the equity method, the financial statements of the re-investment company

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－ adopting the equity method through KK Enterprise K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn. Bhd. and the reinvestment company Zhenjiang Chimei Chemical Company Limited adopting the equity method through British Virgin Islands Land & Sea Capital Corp. were audited by other CPAs, not us. Therefore, among the opinions expressed by us on the above-mentioned individual financial statement, the amount listed in the above-mentioned financial statement of the Company and the above-mentioned information about the Company in Note 13 of the individual financial statement are completely based on audit reports from other CPAs. The balance of the above-mentioned investments adopting the equity method in the companies by Grand Pacific Petrochemical Corporation as of December 31, 2018 and 2017, was $5,530,087 thousand and $5,518,792 thousand, accounting for 21.35% and 22.87% of the total value, respectively. The portions of profits and losses indirectly recognized adopting the equity method from January 1 to December 31, 2018 and 2017, was $991,644 thousand and $1,549,942 thousand, accounting for 37.65% and 46.81% of the total comprehensive income, respectively.

Responsibilities of Management and Governance Unit to Individual Financial Reports

The management is responsible for preparing adequately expressed individual financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and maintaining necessary internal control relevant to the compilation of the individual financial statements in order to ensure that no significant untruthful expressions caused by frauds or errors exist in the individual financial statements.

While preparing the individual financial statement, the management is responsible for also evaluating the ability of Grand Pacific Petrochemical Corporation to continue with the operation and disclosing related matters and adopting the accounting basis for continued operation, among others. Unless the management intends to liquidate Grand Pacific Petrochemical Corporation or discontinue operation or there are no other actually feasible solutions than liquidation or discontinued operation.

The governance unit (including the Audit Committee) of Grand Pacific Petrochemical Corporation is responsible for supervising the financial reporting process.

Responsibilities of CPAs in Inspecting Individual Financial Statement

We audit the individual financial statement in order to be reasonably convinced as to whether the individual financial statement as a whole contains major untruthful expressions due to frauds or errors and to issue the audit report. Reasonably convinced is highly convinced. There is no guarantee, however, that existence of significant untruthful expressions in the individual financial statement will be detected according to generally accepted auditing standards. Untruthful expressions might have been caused by frauds or errors. If individual values or an overview of untruthful expressions can be reasonably expected to affect economic decisions made by users of the individual financial statement, they are considered significant.

We apply our professional judgment and keep our professional doubts while performing the audit according to generally accepted auditing standards. The CPAs also perform the following tasks:

Identify and evaluate the risk of significant untruthful expressions in the individual financial statement due to frauds or errors, design and enforce appropriate responsive policies for determined risks; and collect sufficient and adequate evidence from the audit in order to render audit opinions. Due to the fact that frauds might involve collusion, forging, intentional omission, untruthful statement, or non-compliance with internal control, the risk associated with undetected significant untruthful expressions caused by frauds is higher than that caused by errors.
Obtain a necessary understanding of internal control concerning the audit in order to design appropriate audit procedures reflective of then-current situation. The purpose, however, is not to effectively express opinions on the internal control of Grand Pacific Petrochemical Corporation.
Evaluate the adequacy of accounting policies adopted by the management and the legitimacy of accounting estimates and related disclosures made.
Reach a conclusion with regard to the adequacy of the accounting basis adopted to continue with operation by the management and whether significant uncertainties of events or conditions that might result in significant concerns about the ability of Grand Pacific Petrochemical Corporation to continue with operation exist or not according to the evidence obtained from the audit. In the event that it is determined that significant uncertainties
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exist with such events or conditions, on the other hand, the CPAs must remind users of the individual financial statement in their audit report that they should pay attention to related disclosures included in the statement or modify their audit opinions if such disclosures are inappropriate. Conclusions made by the CPAs are based on the evidence from the audit obtained as of the date of the audit report. Future events or conditions, however, are likely to result in Grand Pacific Petrochemical Corporation no longer capable of continuing with operation. 5. Evaluate the overall expression, structure, and contents of the individual financial statement (including related notes) and whether or not the individual financial statement has fairly expressed related transactions and events.

Obtain sufficient and adequate evidence from the audit regarding the financial information of entities comprising Grand Pacific Petrochemical Corporation and express opinions about the individual financial statement. The CPAs are responsible for providing guidance on, supervising, and implementing audits and for coming up with audit opinions for the individual financial statement.

Communications made by the CPAs with governance units include the planned scope and timing of the audit and significant audit findings (including significant deficiencies found with internal control during the audit). The CPAs have also provided the governance units with the declaration on independence that independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have communicated with the governance units all relationships and other matters considered to be likely undermining the independence of CPAs (including related safeguard measures).

The CPAs, from the matters communicated with the governance units, decided key matters to be included in the 2018 individual financial statement audit of Grand Pacific Petrochemical Corporation. The CPAs specify such matters in the audit report unless it is disallowed by law to disclose to the public specific matters or under rare circumstances, the CPAs decide not to communicate specific matters in the audit report as it can be reasonably expected that negative impacts from such communication would be greater than the public interest that will be enhanced.

Crowe Horwath International

CPA

Approval document number: FSC Review No. 10200032833 March 21, 2019

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Grand Pacific Petrochemical Corporation Individual Balance Sheet December 31, 2018 and 2017

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Unit: NTD 1,000
December 31, 2018 December 31, 2017
Code Assets Value ％ Value ％
11xx Current Assets $ 5,227,246 20 $ 5,108,128 21
1100 Cash and Cash Equivalents (Note 6(1)) 1,567,675 6 1,134,630 5
1150 Net Worth of Notes Receivable (Note 6(2)) 14,419 - 15,313 -
1170 Net Worth of Accounts Receivable (Note 6(3)) 1,918,484 8 2,144,159 9
1180 Accounts Receivable - Related Party (Note 6(3) and 7) 735 - 77,812 -
1200 Other Receivables (Note 6(4)) 42,181 - 30,136 -
1310 Net Worth of Inventory (Note 6(5)) 1,604,466 6 1,631,346 7
1410 Advance Payment (Note 6(6)) 79,286 - 74,732 -
15xx Non-current Assets 20,671,256 80 19,027,975 79
1517 Financial Assets at Fair Value through Other Comprehensive 295,533 1 - -
Income - Non-current
(Note 6(7))
1523 Financial Assets Available for Sale - Non-current (Note 6(8)) - - 216,169 1
1543 Financial Assets Carried at Cost - Non-current (Note 6(9)) - - 46,884 -
1550 (Investments Accounted for Using the Equity Method (Note 6(10)) 13,745,161 53 11,830,088 49
1600 Property, Plant, and Equipment (Notes 6(11) and 8) 6,600,827 26 6,909,116 29
1840 Deferred Income Tax Assets (Note 6(31)) 28,659 - 24,554 -
1920 Refundable Deposits (Note 6(12)) 889 - 885 -
1932 Long-term Receivables 187 - 279 -
1xxx Total of Assets $ 25,898,502 100 $ 24,136,103 100
Code Liabilities and Equities
21xx Current Liabilities $ 2,115,208 8 $ 2,363,192 10
2130 Contract Liabilities - Current (Note 6(26)) 20,881 - - -
2170 Accounts Payable 1,091,667 4 1,515,676 6
2200 Other Payables (Note 6(13)) 482,508 2 442,990 2
2220 Other Payables - Related Party (Note 7) 6,415 - - -
2230 Current Income Tax Liabilities (Note 6(31)) 498,854 2 350,123 1
2250 Liability Reserve - Current (Note 6(14)) 12,004 - 12,071 -
2310 Advance Receipts (Note 6(15)) 128 - 39,696 1
2399 Other Current Liabilities - Others (Note 6(16)) 2,751 - 2,636 -
25xx Non-current Liabilities 1,044,304 4 1,054,764 4
2550 Liability Reserve - Non-current (Note 6(17)) 8,153 - 6,755 -
2570 Deferred Income Tax Liabilities (Note 6(31)) 980,012 4 980,086 4
2640 Defined Benefit Liability - Non-current (Note 6(18)) 29,872 - 45,198 -
2645 Guarantee Deposits (Note 6(19)) 4,075 - 533 -
2670 Other Non-current Liabilities - Others (Note 6(20)) 22,192 - 22,192 -
2xxx Total of Liabilities 3,159,512 12 3,417,956 14
31xx Equities
3100 Share Capital (Note 6(21)) 9,266,203 36 9,266,203 38
3110 Common Stocks 9,066,203 35 9,066,203 37
3120 Preferred Stocks 200,000 1 200,000 1
3200 Additional Paid-in Capital (Note 6(22)) 180,533 1 147,446 1
3300 Retained Earnings (Note 6(23)) 12,608,192 48 10,538,796 44
3310 Legal Reserve 1,494,452 6 1,165,588 5
3320 Special Reserve 1,640,828 6 1,658,208 7
3350 Undistributed Earnings 9,472,912 36 7,715,000 32
3400 Other Equities (Note 6(24)) 739,639 3 887,872 4
3410 Exchange Differences on Translation of Foreign Financial ( 206,080) ( 1) ( 119,538) -
Statements
3420 Unrealized Income from Financial Assets at Fair Value through Other 945,719 4 - -
Comprehensive Income
3425 Unrealized Income from Financial Assets Available for Sale - - 1,007,410 4
3400 Treasury Stocks (Note 6(25)) ( 55,577) - ( 122,170) ( 1)
3xxx Total of Equities 22,738,990 88 20,718,147 86
3x2x Total of Liabilities and Equities $ 25,898,502 100 $ 24,136,103 100
(Please refer to the notes to the Individual Financial Statement.)
Chairman: YANG,PIN-CHENG Manager: TSENG,CHIA-HSIUNG Accounting Supervisor: CHEN,LING-CHU
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Grand Pacific Petrochemical Corporation Individual Comprehensive Income Statement January 1 through December 31, 2018 and 2017

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Unit: NTD 1,000
January 1 through December 31, January 1 through December 31,
2018 2017
Code Item Value ％ Value ％
4000 Operating Revenue (Note 6(26)) $ 20,305,094 100 $ 18,931,639 100
5000 Operating Cost (Notes 6(5) and (30)) ( 17,525,024) ( 86) ( 16,315,485) ( 86)
5900 Gross Operating Margin 2,780,070 14 2,616,154 14
5910 Unrealized Gain from Sale (Note 6(10)) ( 4,744) - ( 13,318) -
5920 Realized Gain from Sale (Note 6(10)) 13,318 - 26,926 -
5950 Net Operating Margin 2,788,644 14 2,629,762 14
6000 Operating Expenses (Note 6(30)) ( 489,604) ( 2) ( 464,239) ( 3)
6100 Selling Expense ( 164,972) ( 1) ( 148,284) ( 1)
6200 Management Expense ( 294,335) ( 1) ( 282,505) ( 2)
6300 Research and Development Expense ( 30,297) - ( 33,450) -
6900 Net Operating Profit 2,299,040 12 2,165,523 11
Non-operating Income and Expenditure
7010 Other Income (Note 6(27)) 62,232 - 53,402 -
7020 Other Interest and Loss (Note 6(28)) 63,145 - ( 60,038) -
7050 Financial Cost (Note 6(29)) ( 419) - ( 447) -
7070 Share of Profit of Subsidiaries, Associates and Joint 1,211,359 6 1,614,886 9
Ventures Accounted for Using the Equity Method
(Note 6(10))
7000 Total of Non-operating Income and Expenditure 1,336,317 6 1,607,803 9
7900 Income from Continuing Operation before Tax 3,635,357 18 3,773,326 20
7950 Income Tax Expense (Note 6(31)) ( 675,251) ( 3) ( 484,684) ( 3)
8200 Net Profits of Current Term 2,960,106 15 3,288,642 17
Other Comprehensive Income
Items Not Re-categorized to Income
8316 Investment in Equity Instruments at Fair Value ( 72,367) - - -
through Other Comprehensive Income Unrealized
Valuation Income (Note 6(7))
8311 Re-measurement of Defined Benefit Plans (Note 7,164 - ( 6,762) -
6(18))
8330 Share of Other Comprehensive Income of ( 175,549) ( 1) 2,331 -
Subsidiaries, Associates, and Joint Ventures
Accounted for Using the Equity Method - Items
Not Re-categorized to Income (Note 6(10))
8349 Income Tax Associated with Items Not Re- 758 - 1,149 -
categorized (Note 6(31))
8310 Total of Items Not Re-categorized to Income ( 239,994) ( 1) ( 3,282) -
Items Possibly Re-categorized to Income Later
8362 Unrealized Valuation Gains of Financial Assets - - 44,511 -
Available for Sale (Note 6(8))
8380 Share of Other Comprehensive Income of ( 121,532) ( 1) 18,071 -
Subsidiaries, Associates, and Joint Ventures
Accounted for Using the Equity Method - Items
Possibly Re-categorized to Income (Note 6(10))
8399 Income Tax Associated with Possibly Re- 34,990 - ( 36,975) -
categorized Items (Note 6(31))
8360 Items Possibly Re-categorized to Income Later ( 86,542) ( 1) 25,607 -
8300 Other Comprehensive Income of Current Term (Net ( 326,536) ( 2) 22,325 -
Worth After Tax)
8500 Total of Comprehensive Income of Current Term $ 2,633,570 13 $ 3,310,967 17
Earnings per Share of Common Stock: (NT$) (Note
6(33)
9750 Fundamental Earnings per Share $ 3.26 $ 3.64
9850 Diluted Earnings per Share $ 3.25 $ 3.63
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(Please refer to the notes to the Individual Financial Statement.)

Chairman: YANG,PIN-CHENG Manager: TSENG,CHIA-HSIUNG Accounting Supervisor: CHEN,LING-CHU

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Grand Pacific Petrochemical Corporation Individual Statement of Changes in Equity January 1 through December 31, 2018 and 2017

Code	Item	Share Capital	Share Capital	Additional Paid-in Capital	RetainedEarnings	RetainedEarnings	RetainedEarnings		Other Equities		Treasury Stock	Unit: NTD 1,000 Total of Equities
		Common Stocks	Preferred Stocks		Legal Reserve	Special Reserve	Undistributed Earnings	Exchange Differences on Translation of Foreign Financial Statements	Unrealized Income from Financial Assets at Fair Value through Other Comprehensive Income	Available for Sale Financial Assets Unrealized Income
A1 B1 B17 B5 B7 C3 L7 M1 M7 D1 D3 Z1 A1	Balance as of January 1, 2017 Appointment and Distribution of Earnings 2016: (Note) Appropriation of Legal Reserve Turnover of Special Reserve Common Stock Cash Dividends Preferred Stock Cash Dividends and Stock Dividends Other Changes in Additional Paid- in Capital: As a result of accepting gifts Disposal of parent company shares by subsidiaries is considered as a transaction of treasury stocks Adjustment of Additional Paid-in Capital Due to Issuance of Dividends to Subsidiaries Changes in Ownership Equity in Subsidiaries Net Profits from January 1 to December 31, 2017 Other Comprehensive Income After Tax from January 1 to December 31, 2017 Balance as of December 31, 2017 Balance as of January 1, 2018	$ 9,066,203 - - - - - - - - - -	$ 200,000 - - - - - - - - - -	$ 123,604 - - - - 1,061 13,455 9,320 6 - -	$ 925,519 240,069 - - - - - - - - -	$ 1,700,322 - ( 42,114) - - - - - - - -	$ 5,566,215 ( 240,069) 42,114 ( 906,620) ( 32,000) - - - - 3,288,642 ( 3,282)	$ 27,250 - - - - - - - - - ( 146,788)	$ - - - - - - - - - - -	$ 835,015 - - - - - - - - - 172,395	($ 199,604) - - - - - 77,434 - - - -	$ 18,244,524 - - ( 906,620) ( 32,000) 1,061 90,889 9,320 6 3,288,642 22,325
		$ 9,066,203	$ 200,000	$ 147,446	$ 1,165,588	$ 1,658,208	$ 7,715,000	($ 119,538)	$ -	$ 1,007,410	($ 122,170)	$ 20,718,147
		$ 9,066,203	$ 200,000	$ 147,446	$ 1,165,588	$ 1,658,208	$ 7,715,000	($ 119,538)	$ -	$ 1,007,410	($ 122,170)	$ 20,718,147

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A3 Effect of Retrospective Application and Retrospective Restatement (Note 3(1)) Appointment and Distribution of Earnings 2017: (Note) B1 Appropriation of Legal Reserve B17 Turnover of Special Reserve B5 Common Stock Cash Dividends B7 Preferred Stock Cash Dividends and Stock Dividends C3 Other Changes in Additional Paid- in Capital: As a result of accepting gifts L7 Disposal of parent company shares by subsidiaries is considered as a transaction of treasury stocks M1 Adjustment of Additional Paid-in Capital Due to Issuance of Dividends to Subsidiaries M7 Changes in Ownership Equity in Subsidiaries D1 Net Profits from January 1 to December 31, 2018 D3 Other Comprehensive Income After Tax from January 1 to December 31, 2018 Z1 Balance as of December 31, 2018	- - - - - - - - - - -	- - - - - - - - - - -	- - - - - 1,725 28,266 3,089 7 - -	- 328,864 - - - - - - - - -	- - ( 17,380) - - - - - - - -	42,398 ( 328,864) 17,380 ( 906,620) ( 32,000) - - - - 2,960,106 5,512	- - - - - - - - - - ( 86,542)	1,191,225 - - - - - - - - - ( 245,506)	( 1,007,410) - - - - - - - - - -	- - - - - - 66,593 - - - -	226,213 - - ( 906,620) ( 32,000) 1,725 94,859 3,089 7 2,960,106 ( 326,536)
	$ 9,066,203	$ 200,000	$ 180,533	$ 1,494,452	$ 1,640,828	$ 9,472,912	($ 206,080)	$ 945,719	$ -	($ 55,577)	$ 22,738,990

(Please refer to the notes to the Individual Financial Statement.)

Note: Remunerations for employees and those for directors have been deducted from the Individual Comprehensive Income Statement. Please refer to Note 6(30). Chairman: YANG,PIN-CHENG Manager: TSENG,CHIA-HSIUNG Accounting Supervisor: CHEN,LING-CHU

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Grand Pacific Petrochemical Corporation Individual Statement of Cash Flows January 1 through December 31, 2018 and 2017

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Unit: NTD 1,000
January 1 through January 1 through
Code Item
December 31, 2018 December 31, 2017
AAAA Cash Flows from Operating Activities:
A00010 Income from Continuing Operation before Tax $ 3,635,357 $ 3,773,326
A20000 Adjusted Items:
A20010 Income Charges (Credits) not Affecting Cash
A20100 Depreciation Cost 701,155 714,041
A20900 Interest Expense 419 447
A21200 Interest Income ( 16,629) ( 4,008)
A21300 Dividend Income ( 27,824) ( 36,754)
Share of Profit of Subsidiaries, Associates and Joint Ventures ( 1,211,359) ( 1,614,886)
A22400
Accounted for Using the Equity Method
Net Loss from Disposal and Scrapping of Property, Plant, and 180 4,447
A22500
Equipment
A22600 Transfer Fees of Property, Plant, and Equipment 46,031 21,726
A23900 Unrealized Gain on Sale 4,744 13,318
A24000 Realized Gain on Sale ( 13,318) ( 26,926)
A20010 Total of Income Charges (Credits) not Affecting Cash ( 516,601) ( 928,595)
A30000 Variation in Assets/Liabilities Related to Operating Activities
A31130 (Increase) Decrease in Notes Receivable 894 ( 5,273)
A31150 (Increase) Decrease in Accounts Receivable 225,675 ( 275,117)
A31160 Decrease in Accounts Receivable - Related Party 77,077 63,746
A31180 Increase in Other Receivables ( 11,143) ( 29,744)
A31200 (Increase) Decrease in Inventory 26,880 ( 377,680)
A31230 Increase in Advance Payment ( 4,554) ( 8,439)
A32125 Decrease in Contract Liability ( 18,687) -
A32150 Increase (Decrease) in Accounts Payable ( 424,009) 200,699
A32180 Increase in Other Payables 41,010 79,074
A32190 Increase in Other Accounts Payable - Related Party 6,415 -
A32200 Increase in Liability Reserve 1,331 2,118
A32210 Increase in Advance Receipts - 34,125
A32230 Increase in Other Current Liabilities – Others 115 87
A32240 Decrease in Defined Benefit Liability ( 8,162) ( 17,359)
Total of Variation in Assets/Liabilities Related to Operating ( 87,158) ( 333,763)
A30000
Activities
A33000 Case In-flows from Business Operation 3,031,598 2,510,968
A33100 Collected Interest 15,727 3,776
A33200 Collected Dividends 75,429 112,975
A33300 Paid Interest ( 419) ( 447)
A33500 Paid Income Tax ( 529,941) ( 365,395)
AAAA Net Cash In-flows from Operating Activities 2,592,394 2,261,877
BBBB Cash Flows from Investment Activities:
B01800 Acquisition of Investments with the Equity Method ( 785,515) -
B02700 Cancellation of Property, Plant, and Equipment ( 440,569) ( 358,774)
B03700 (Increase) Decrease in Refundable Deposits ( 4) 817
B06700 Decrease in Other Non-current Assets - Others 92 135
BBBB Net Cash Out-flows from Investment Activities ( 1,225,996) ( 357,822)
CCCC Cash Flows from Fundraising Activities: (Note 6(32))
C03000 Increase in Guarantee Deposits 3,542 -
C04500 Issuance of Cash Dividend ( 938,620) ( 938,620)
Additional Paid-in Capital Due to Return and Transfer of 1,725 1,061
C09900
Dividend Unclaimed Past Deadline
CCCC Net Cash Out-flows from Fundraising Activities ( 933,353) ( 937,559)
EEEE Increase in Cash and Cash Equivalents of Current Term 433,045 966,496
E00100 Balance of Cash and Cash Equivalents in Beginning of Term 1,134,630 168,134
E00200 Balance of Cash and Cash Equivalents at End of Term $ 1,567,675 $ 1,134,630
E00210 Cash and Cash Equivalents Listed in Individual Balance Sheet $ 1,567,675 $ 1,134,630
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(Please refer to the notes to the Individual Financial Statement.)

Chairman: YANG, PIN-CHENG Manager: TSENG, CHIA-HSIUNG Accounting Supervisor: CHEN, LING-CHU

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Grand Pacific Petrochemical Corporation and Its Subsidiaries CPA Audit Report

Audit Opinions

We, as the CPAs, have completed the audit of the consolidated balance sheets dated December 31 of 2018 and 2017 and the consolidated comprehensive income statement, consolidated statement of changes in equity, consolidated statement of cash flows, and consolidated financial statement from January 1 to December 31 of 2018 and 2017, including summaries of major accounting policies of Grand Pacific Petrochemical Corporation and its subsidiaries.

As CPAs, according to the audit results from us and those from other CPAs (please refer to the paragraph about other matters), the above-mentioned consolidated financial statement, in all major respects, was prepared in compliance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and international financial reporting standards, international accounting standards, interpretations, and interpretation announcements approved and released to take effect by the Financial Supervisory Commission and hence are sufficient to show the consolidated financial standing of Grand Pacific Petrochemical Corporation and its subsidiaries as of December 31, 2018 and 2017 and the consolidated financial performance and consolidated cash flows between January 1 and December 31, 2018 and 2017.

Bases for the Audit Opinions

We followed the Rules Governing the Audit of Financial Statements by Certified Public Accountants and generally accepted auditing rules while performing the audit. The responsibilities of the CPAs under the said standards will be explained further in the section about responsibilities in auditing the consolidated financial statement. Independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have remained independent of the Grand Pacific Petrochemical Corporation and its subsidiaries and fulfilled other responsibilities under the said regulations. Based on the audit results from us and those from other CPAs, we believe that sufficient and adequate evidence has been obtained for the audit to serve as the basis for expressing the audit opinions.

Key Matters Being Audited

Key matters being audited refer to the most important matters based on the professional judgment of the CPAs to be included in the audit of the 2018 consolidated financial statement of Grand Pacific Petrochemical Corporation and its subsidiaries. Such matters were addressed throughout the audit of the consolidated financial statement and during the formation of audit opinions. The CPAs do not express separate opinions regarding these matters.

Key matters being audited of the 2018 consolidated financial statement of Grand Pacific Petrochemical Corporation and its subsidiaries are specified as follows:

Recognition of Income

Income is the basic operational activities for the sustainable management of an enterprise and concerns its operational performance and the management generally is faced with the pressure of fulfilling the expected financial or business performance goals. Therefore, it is pre-established that income recognition is associated with significant risk and we consider that the recognition of income from various types of transactions as one of the key matters being audited.

For the accounting policy on the recognition of income, please refer to Note 4 (34) of the consolidated financial statement. For information on accounting items for income, please refer to the disclosure in Note 6 (36) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the abovementioned matters are as follows:

Test the validity of income from various types of transactions and the internal control for the payment collection cycle in terms of its design and implementation and evaluate by random sampling if the recognition of income is adequate.
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Understand the type of sale and items involved in the sale with Top 10 customers in respective transaction patterns and evaluate the legitimacy of the income and the number of days involved in the turnover of accounts receivable and analyze if there is any abnormal variation among the customers.
Select samples from transactions in the respective patterns that take place before and after the balance sheet date and verify them against related certificates in order to evaluate the accuracy of the timing when income is recognized.

Cash and cash equivalents

As of December 31, 2018, the book value of cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away (under other financial assets - current in the statement) held by Grand Pacific Petrochemical Corporation and its subsidiaries totaled $5,417,028 thousand, accounting for around 18% of the consolidated total asset value. The value is significant for the overall consolidated financial statement. Due to the fact that congenital risk exists for cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away, we list them as part of the key matters being audited.

For the accounting policy on cash and cash equivalents, please refer to Note 4 (6) of the consolidated financial statement. For information on the accounting items for cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away, please refer to the disclosure in Note 6(1) and (8) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate and test the validity of the internal control system for cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away in terms of its design and implementation.
Randomly inspect and verify related transaction certificates for major income and payments in cash and review the adequacy of the approval power.
Obtain the statement of the balance of cash and cash equivalents and time deposits and callable bonds with the original expiration date more than three months away and verify against the bank reconciliation statement and related transaction certificates in order to confirm the presence. In addition, for external confirmations from current financial institutions, verify the value included in the confirmations and check if there are restrictions and they are adequately disclosed.
Impairment evaluation of real estate, plants, and equipment, investment oriented property and intangible assets (including good will)

As of December 31, 2018, the book value of real estate, plants, and equipment, investment-oriented property and intangible assets owned by Grand Pacific Petrochemical Corporation and Its subsidiaries totaled $ 8,181,386 thousand, accounting for around 28% of the total consolidated asset value and the value is significant for the overall consolidated financial statement. In addition, the overall economic trends, market competition, and technical development can all affect the future operations of the company and accordingly affect the expected economic benefits and the recoverable amount that may be generated in the future by the cash generating units for the assets estimated and determined by the management in order to evaluate if impairment exists. Therefore, the evaluation of impairment of real estate, plants, and equipment, investment-oriented property and intangible assets is listed by the CPAs as part of the key matters being audited.

For the accounting policy on the impairment of real estate, plants, and equipment, investment-oriented property and intangible assets, refer to Notes 4 (19), (21), (22), and (24). For information on accounting items for real estate, plants, and equipment, investment-oriented property and intangible assets, please refer to the disclosure in Note 6 (14), (15), and (16) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Obtain the asset impairment assessment form for respective cash generating units that have been evaluated spontaneously by the Company.
Evaluate the legitimacy of impairment signs identified by the management and the assumption and sensitivity adopted, including whether the differentiation of cash-generating units, forecast of cash flows, and discount rate are appropriate or not.
24 -
Ask the management and review audit evidence obtained from the subsequent audit procedure for verification of absence of any matter related to impairment testing after the reporting date.

Valuation of investment balance adopting the equity method

The investment balance of Grand Pacific Petrochemical Corporation and its subsidiaries as of December 31, 2018 adopting the equity method totaled $ 6,227,702 thousand, accounted for around 21% of the total consolidated asset value. The net comprehensive income recognized with the equity method came to $ 639,422 thousand, accounting for around 23% of the total consolidated income. The impacted value is significant to the overall consolidated financial statement. Therefore, the CPAs include valuation of investment balance adopting the equity method as part of the key matters being audited.

For the accounting policy on investments adopting the equity method, please refer to Note 4 (18) of the consolidated financial statement. For information on accounting items for investments adopting the equity method, please refer to the disclosure in Note 6 (13) of the consolidated financial statement. Major audit procedures that are already carried out by the CPAs for the above-mentioned matters are as follows:

Evaluate the accuracy of calculation during valuation adopting the equity method and the adopted accounting policy.
Read the financial statements of underlying entities and audit reports from other CPAs and review important findings and issues identified during audit to facilitate communication and understanding and accordingly evaluate the audit task performed by and audit results from other CPAs of underlying entities.
Evaluate the legitimacy of impairment signs of investments adopting the equity method as identified by the management and the assumption and sensitivity adopted, including whether or not the forecast of profitability of companies invested in it in the future or the discount rate is appropriate.

`－` Other Matters Mentioning Audits by other CPAs

As is stated in Note 4 (3)-2 and Note 6 (13) of the consolidated financial statement, some subsidiaries in the consolidated financial statement of the Grand Pacific Petrochemical Corporation and its subsidiaries are included - K.K. Chemical Company Limited and KK Enterprise (Malaysia) Sdn. Bhd. and investments adopting the equity － method We did not audit the financial statements of the Zhenjiang Chimei Chemical Company Limited; they were audited by other CPAs. Among the opinions we expressed on the above-mentioned consolidated financial statement, the amount listed in the above-mentioned financial statement of the Company and the above-mentioned information about the Company in Note 13 of the consolidated financial statement are completed based on audit reports from other CPAs. The total asset values of the said subsidiaries mentioned above as of December 31, 2018 and 2017, were $153,815 thousand and $150,937 thousand, accounting for .52% and .54% of the total consolidated asset value, respectively. The net worth of operating income from January 1 to December 31, 2018 and 2017, was $172,584 thousand and $164,778 thousand, accounting for .70% and .71% of the net worth of operating income, respectively. In addition, the related investment balance of invested companies adopting the equity method as mentioned above as of December 31, 2018 and 2017, was $5,509,893 thousand and $5,500,309 thousand, accounting for 18.45% and 19.64% of the total consolidated asset value, respectively. The net worth of comprehensive income from January 1 to December 31, 2018 and 2017, was $638,514 thousand and $1,917,430 thousand, accounting for 22.94% and 54.28% of the total consolidated comprehensive income, respectively.

Other Matters - Individual Financial Statement

Individual financial statements of 2018 and 2017 have been prepared by Grand Pacific Petrochemical Corporation and have been documented in the Audit Report without reservation in the opinions expressed issued by the CPAs; they are submitted for your reference.

Responsibilities of Management and Governance Unit for Consolidated Financial Statement

The management is responsible for preparing an adequately expressed consolidated financial statement in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and international financial reporting standards, international accounting standards, interpretations, and interpretation

25 -

announcements approved and released to take effect by the Financial Supervisory Commission and maintaining necessary internal control relevant to the compilation of the consolidated financial statement in order to ensure that no significant untruthful expressions caused by frauds or errors exist in the consolidated financial statement.

While preparing the consolidated financial statement, the management is responsible for also evaluating the ability of Grand Pacific Petrochemical Corporation and its subsidiaries to continue with the operation and disclosing related matters and adopting the accounting basis for continued operation, among others. Unless the management intends to liquidate Grand Pacific Petrochemical Corporation and its subsidiaries or discontinue operation or there are no other actually feasible solutions than liquidation or discontinued operation.

The governance unit (including the Audit Committee) of Grand Pacific Petrochemical Corporation and its subsidiaries is responsible for supervising the financial reporting process.

Responsibilities of CPAs in Inspecting Consolidated Financial Statement

We audit the consolidated financial statement in order to be reasonably convinced as to whether the consolidated financial statement as a whole contains major untruthful expressions due to frauds or errors and to issue the audit report. Reasonably convinced is highly convinced. There is no guarantee, however, that the existence of significant untruthful expressions in the consolidated financial statement will be detected according to generally accepted auditing standards. Untruthful expressions might have been caused by frauds or errors. If individual values or an overview of untruthful expressions can be reasonably expected to affect economic decisions made by users of the consolidated financial statement, they are considered significant.

We apply our professional judgment and keep our professional doubts while performing the audit according to generally accepted auditing standards. The CPAs also perform the following tasks:

Identify and evaluate the risk of significant untruthful expressions in the consolidated financial statement due to frauds or errors, design and enforce appropriate responsive policies for determined risks; and collect sufficient and adequate evidence from the audit in order to render audit opinions. Due to the fact that frauds might involve collusion, forgery, intentional omission, untruthful statement, or non-compliance with internal control, the risk associated with undetected significant untruthful expressions caused by frauds is higher than that caused by errors.
Obtain a necessary understanding of internal control concerning the audit in order to design appropriate audit procedures reflective of then-current situation. The purpose, however, is not to effectively express opinions on the internal control of Grand Pacific Petrochemical Corporation.
Evaluate the adequacy of accounting policies adopted by the management and the legitimacy of accounting estimates and related disclosures made.
Reach a conclusion with regard to the adequacy of the accounting basis adopted to continue with operation by the management and whether significant uncertainties of events or conditions that might result in significant concerns about the ability of Grand Pacific Petrochemical Corporation and its subsidiaries to continue with operation exist or not according to the evidence obtained from the audit. In the event that it is determined that significant uncertainties exist with such events or conditions, on the other hand, the CPAs must remind users of the consolidated financial statement in their audit report that they should pay attention to related disclosures included in the statement or modify their audit opinions if such disclosures are inappropriate. Conclusions made by the CPAs are based on the evidence from the audit obtained as of the date of the audit report. Future events or conditions, however, are likely to result in Grand Pacific Petrochemical Corporation and its subsidiaries no longer capable of continuing with operation.
Evaluate the overall expression, structure, and contents of the consolidated financial statement (including related notes) and whether or not the consolidated financial statement has fairly expressed related transactions and events.
Obtain sufficient and adequate evidence from the audit regarding the financial information of entities comprising Grand Pacific Petrochemical Corporation and its subsidiaries and express opinions about the consolidated financial statement. The CPAs are responsible for providing guidance on, supervising and implementing audits and for coming up with audit opinions for the Group.
Communications made by the CPAs with governance units include the planned scope and timing of the audit and significant audit findings (including significant deficiencies found with internal control during the audit).
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The CPAs have also provided the governance units with the declaration on independence that independently governed staff in the accounting firm that the CPAs belong to have followed moral regulations in honor of the profession of CPA and have communicated with the governance units all relationships and other matters considered to be likely undermining the independence of CPAs (including related safeguard measures).

The CPAs, from the matters communicated with the governance units, decided key matters to be included in the 2018 consolidated financial statement audit of Grand Pacific Petrochemical Corporation and its subsidiaries. The CPAs specify such matters in the audit report unless it is disallowed by law to disclose to the public specific matters or under rare circumstances, the CPAs decide not to communicate specific matters in the audit report as it can be reasonably expected that negative impacts from such communication would be greater than the public interest that will be enhanced.

Crowe Horwath International

CPA

Approval document number: FSC Review No. 10200032833 March 21, 2019

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Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Balance Sheet December 31, 2018 and 2017

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Unit: NTD 1,000
December 31, 2018 December 31, 2017
Code Assets Value % Value %
11xx Current Assets $ 10,852,015 36 $ 9,474,318 34
1100 Cash and Cash Equivalents (Note 6(1)) 2,729,454 9 2,122,753 8
1110 Financial Assets at Fair Value through Income 39,020 - - -
– Current (Note 6(2))
1140 Contract Assets - Current (Note 6(36)) 60,364 - - -
1150 Net Worth of Notes Receivables (Note 6(3)) 394,217 1 392,248 2
1170 Net Worth of Accounts Receivables (Note 2,606,345 9 2,859,659 10
6(4))
1180 Accounts Receivable - Related Party (Notes 735 - - -
6(4) and 7)
1200 Other Receivables (Note 6(5)) 81,641 - 53,425 -
1220 Income Tax Assets of Current Term (Note 310 - 55 -
6(41))
1310 Net Worth of Inventory (Note 6(6)) 1,980,783 7 2,023,166 7
1410 Advance Payment (Note 6(7)) 93,541 - 87,698 -
1476 Other Financial Assets - Current (Notes 6(8) 2,698,945 9 1,676,020 6
and 8)
1479 Other Current Assets - Others (Note 6(9)) 166,660 1 259,294 1
15xx Non-current Assets 19,007,886 64 18,525,597 66
1517 Financial Assets at Fair Value through Other 4,220,226 14 - -
Comprehensive Income - Non-current
(Note 6(10))
1523 Financial Assets Available for Sale - Non- - - 3,570,483 13
current (Note 6(11))
1543 Financial Assets Carried at Cost - Non-current - - 459,269 2
(Note 6(12))
1550 Investment with the Equity Method (Note 6,227,702 21 5,500,309 19
6(13))
1600 Property, Plant, and Equipment (Notes 6(14) 7,427,473 25 7,778,233 28
and 8)
1760 Net Worth of Investment-oriented Property 79,843 - 80,866 -
(Note 6(15))
1780 Intangible Assets (Note 6(16)) 674,070 3 674,070 3
1840 Deferred Income Tax Assets (Note 6(41)) 49,358 - 44,905 -
1920 Refundable Deposits (Note 6(17)) 16,664 - 17,089 -
1985 Long-term Pre-paid Rent (Note 6(18)) 9,130 - 9,602 -
1990 Other Non-current Assets - Others (Note 303,420 1 390,771 1
6(19))
1xxx Total of Assets $ 29,859,901 100 $ 27,999,915 100
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Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Balance Sheet December 31, 2018 and 2017

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Unit: NTD 1,000
December 31, 2018 December 31, 2017
Code Liabilities and Equities Value ％ Value ％
21xx Current Liabilities $ 2,877,053 9 $ 3,131,118 11
2100 Short-term Borrowing (Note 6(20)) 2,833 - 37,581 -
2130 Contract Assets - Current (Note 6(36)) 43,819 - - -
2150 Notes Payable 78,620 - 74,861 -
2170 Accounts Payable 1,470,375 5 1,869,657 7
2200 Other Payables (Note 6(21)) 669,260 2 636,223 2
2230 Income Tax Liabilities of Current Term (Note 586,361 2 402,037 2
6(41))
2250 Liability Reserve - Current (Note 6(22)) 17,015 - 17,072 -
2310 Advance Receipts (Note 6(23) 152 - 44,054 -
2355 Payable Lease - Current (Note 6(26)) 1,944 - 1,822 -
2399 Other Current Liabilities - Others (Note 6(24)) 6,674 - 47,811 -
25xx Non-current Liabilities 1,361,874 5 1,384,733 5
2550 Liability Reserve - Non-current (Note 6(25)) 8,486 - 6,944 -
2570 Deferred Income Tax Liabilities (Note 6(41)) 1,249,285 5 1,264,223 5
2613 Payable Lease - Non-current (Note 6(26)) 991 - - -
2640 Defined Benefit Liability - Non-current (Note 74,157 - 87,803 -
6(27))
2645 Guarantee Deposits (Note 6(28)) 4,962 - 1,420 -
2670 Other Non-current Liabilities - Others (Note 23,993 - 24,343 -
6(29))
2xxx Total of Liabilities 4,238,927 14 4,515,851 16
31xx Equities That Belong to Clients of Parent
Company
3100 Share Capital (Note 6(30)) 9,266,203 31 9,266,203 33
3110 Common Stocks 9,066,203 30 9,066,203 32
3120 Preferred Stocks 200,000 1 200,000 1
3200 Additional Paid-in Capital (Note 6(31)) 180,533 1 147,446 -
3300 Retained Earnings (Note 6(32)) 12,608,192 42 10,538,796 38
3310 Legal Reserve 1,494,452 5 1,165,588 4
3320 Special Reserve 1,640,828 5 1,658,208 6
3350 Undistributed Earnings 9,472,912 32 7,715,000 28
3400 Other Equities (Note 6(33)) 739,639 2 887,872 3
3410 Exchange Differences on Translation of ( 206,080) ( 1) ( 119,538) -
Foreign Financial Statements
3420 Financial Assets at Fair Value through Other 945,719 3 - -
Comprehensive Income
Unrealized Income
3425 Unrealized Income from Financial Assets - - 1,007,410 3
Available for Sale
3400 Treasury Stock (Note 6(34)) ( 55,577) - ( 122,170) -
31xx Total of Equities That Belong to Clients of 22,738,990 76 20,718,147 74
Parent Company
36xx Uncontrolled Equities (Note 6(35)) 2,881,984 10 2,765,917 10
3xxx Total of Equities 25,620,974 86 23,484,064 84
3x2x Total of Liabilities and Equities $ 29,859,901 100 $ 27,999,915 100
(Please refer to the notes to the Consolidated Financial Statement.)
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Chairman: YANG,PIN-CHENG Manager: TSENG,CHIA-HSIUNG Accounting Supervisor: CHEN,LING-CHU

Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Comprehensive Income Statement

29 -

January 1 through December 31, 2018 and 2017

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Unit: NTD 1,000
January 1 through December 31, January 1 through December 31,
2018 2017
Code Item Value ％ Value ％
4000 Operating Revenue (Note 6(36)) $ 24,741,138 100 $ 23,350,965 100
5000 Operating Cost (Notes 6(6) and (40)) ( 20,685,790) ( 84) ( 19,556,980) ( 84)
5900 Gross Operating Margin 4,055,348 16 3,793,985 16
6000 Operating Expenses (Note 6(40)) ( 1,316,510) ( 5) ( 1,310,168) ( 5)
6100 Selling Expense ( 302,890) ( 1) ( 283,842) ( 1)
6200 Management Expense ( 979,786) ( 4) ( 984,074) ( 4)
6300 Research and Development Expense ( 38,935) - ( 42,252) -
6450 Reversal Amount of Expected Credit Impairment
- - -
Loss (Note 6(4)) 5,101
6900 Net Operating Profit 2,738,838 11 2,483,817 11
Non-operating Income and Expenditure
7010 Other Income (Note 6(37)) 268,869 1 225,014 1
7020 Other Interest and Loss (Note 6(38)) 62,661 - ( 71,995) -
7050 Financial Cost (Note 6(39)) ( 1,835) - ( 1,438) -
7060 Share of Profit of Associates and Joint Ventures
Accounted for Using the Equity Method 988,415 4 1,547,677 6
(Note 6(13))
7000 Total of Non-operating Income and Expenditure 1,318,110 5 1,699,258 7
7900 Income from Continuing Operation before Tax 4,056,948 16 4,183,075 18
7950 Income Tax Expense (Note 6(41)) ( 906,207) ( 4) ( 735,425) ( 3)
8200 Net Profits of Current Term 3,150,741 12 3,447,650 15
Other Comprehensive Income
Items Not Re-categorized to Income
8316 Investment in Equity Instruments at Fair Value
- -
through Other Comprehensive Income ( 280,712) ( 1)
Unrealized Valuation Income (Note 6(10))
8311 Re-measurement of Defined Benefit Plans
- -
(Note 6(27)) 1,822 ( 1,765)
8349 Income Tax Associated with Items Not Re-
categorized (Note 6(41)) 2,158 - 425 -
8310 Total of Items Not Re-categorized to Income ( 276,732) ( 1) ( 1,340) -
Items Possibly Re-categorized to Income Later
8361 Exchange Differences on Translation of
Foreign Financial Statements 223,298 1 ( 481,153) ( 2)
8362 Unrealized Valuation Gains of Financial Assets
Available for Sale (Note 6(11)) - - 234,492 1
8370 Share of Other Comprehensive Income of
Associates and Joint Ventures Accounted for
Using the Equity Method ( 348,993) ( 1) 369,753 1
- Items Possibly Re-categorized to Income
(Note 6(13))
8399 Income Tax Associated with Items Possibly Re-
- -
categorized to Income (Note 6(41)) 34,990 ( 36,975)
8360 Items Possibly Re-categorized to Income Later ( 90,705) - 86,117 -
8300 Other Comprehensive Income of Current Term (Net
-
Worth After Tax) ( 367,437) ( 1) 84,777
8500 Total of Comprehensive Income of Current Term $ 2,783,304 11 $ 3,532,427 15
8600 Net Profits Belong to:
8610 Clients of Parent Company $ 2,960,106 12 $ 3,288,642 14
8620 Uncontrolled Equities (Note 6(35)) 190,635 - 159,008 1
$ 3,150,741 12 $ 3,447,650 15
8700 Comprehensive Income Total Belongs to:
8710 Clients of Parent Company $ 2,633,570 11 $ 3,310,967 14
8720 Uncontrolled Equities (Note 6(35)) 149,734 - 221,460 1
$ 2,783,304 11 $ 3,532,427 15
Earnings per Share of Common Stock: (NT$) (Note
6(43)
9750 Fundamental Earnings per Share $ 3.26 $ 3.64
9850 Diluted Earnings per Share $ 3.25 $ 3.63
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(Please refer to the notes to the Consolidated Financial Statement.)

Chairman: YANG,PIN-CHENG Manager: TSENG,CHIA-HSIUNG Accounting Supervisor: CHEN,LING-CHU

30 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Statement of Changes in Equity January 1 through December 31, 2018 and 2017

Code	Share Capital	Share Capital	Additional Paid-in Capital	Retained Earnings	Retained Earnings	Retained Earnings		Other Equities		Treasury Stock	Equities That Belong to Clients of Parent Company	Unit: NTD 1,000 Uncontrolled Equity Total of Equities $ 2,602,695 $ 20,847,219 - - - - ( 40,616) ( 947,236) - ( 32,000) 4 1,071 - 90,889 - 9,320 159,008 3,447,650 62,452 84,777 ( 17,626) ( 17,626) $ 2,765,917 $ 23,484,064 $ 2,765,917 $ 23,484,064 12,745 238,958	Unit: NTD 1,000 Uncontrolled Equity Total of Equities $ 2,602,695 $ 20,847,219 - - - - ( 40,616) ( 947,236) - ( 32,000) 4 1,071 - 90,889 - 9,320 159,008 3,447,650 62,452 84,777 ( 17,626) ( 17,626) $ 2,765,917 $ 23,484,064 $ 2,765,917 $ 23,484,064 12,745 238,958
	Common Stocks	Preferred Stocks		Legal Reserve	Special Reserve	Undistributed Earnings	Exchange Differences on Translation of Foreign Financial Statements	Unrealized Income from Financial Assets at Fair Value through Other Comprehensive Income	Available for Sale Financial Assets Unrealized Income
A1 B1 B17 B5 B7 C3 L7 M1 D1 D3 O1 Z1 A1 A3		$ 200,000 - - - - - - - - - -	$ 123,604 - - - - 1,067 13,455 9,320 - - -	$ 925,519 240,069 - - - - - - - - -	$ 1,700,322 - ( 42,114) - - - - - - - -	$ 5,566,215 ( 240,069) 42,114 ( 906,620) ( 32,000) - - - 3,288,642 ( 3,282) -	$ 27,250 - - - - - - - - ( 146,788) -	$ - - - - - - - - - - -	$ 835,015 - - - - - - - - 172,395 -	($ 199,604) - - - - - 77,434 - - - -	$ 18,244,524 - - ( 906,620) ( 32,000) 1,067 90,889 9,320 3,288,642 22,325 -	$ 2,602,695 - - ( 40,616) - 4 - - 159,008 62,452 ( 17,626)	$ 20,847,219 - - ( 947,236) ( 32,000) 1,071 90,889 9,320 3,447,650 84,777 ( 17,626)
	$ 9,066,203	$ 200,000	$ 147,446	$ 1,165,588	$ 1,658,208	$ 7,715,000	($ 119,538)	$ -	$ 1,007,410	($ 122,170)	$ 20,718,147	$ 2,765,917	$ 23,484,064
	$ 9,066,203 -	$ 200,000 -	$ 147,446 -	$ 1,165,588 -	$ 1,658,208 -	$ 7,715,000 42,398	($ 119,538) -	$ - 1,191,225	$ 1,007,410 ( 1,007,410)	($ 122,170) -	$ 20,718,147 226,213	$ 2,765,917 12,745	$ 23,484,064 238,958

31 -

B1 Appropriation of Legal Reserve - B17 Turnover of Special Reserve - B5 Common Stock Cash Dividends - B7 Preferred Stock Cash Dividends and Stock Dividends - C3 Other Changes in Additional Paid-in Capital: As a result of accepting gifts - L7 Disposal of parent company shares by subsidiaries is considered as a transaction of treasury stocks - M1 Adjustment of Additional Paid-in Capital Due to Issuance of Dividends to Subsidiaries - D1 Net Profits from January 1 to December 31, 2018 - D3 Other Comprehensive Income After Tax from January 1 to December 31, 2018 - Z1 Balance as of December 31, 2018 $ 9,066,203	B1 Appropriation of Legal Reserve - B17 Turnover of Special Reserve - B5 Common Stock Cash Dividends - B7 Preferred Stock Cash Dividends and Stock Dividends - C3 Other Changes in Additional Paid-in Capital: As a result of accepting gifts - L7 Disposal of parent company shares by subsidiaries is considered as a transaction of treasury stocks - M1 Adjustment of Additional Paid-in Capital Due to Issuance of Dividends to Subsidiaries - D1 Net Profits from January 1 to December 31, 2018 - D3 Other Comprehensive Income After Tax from January 1 to December 31, 2018 - Z1 Balance as of December 31, 2018 $ 9,066,203	- - - - - - - - -	- - - - 1,732 28,266 3,089 - -	328,864 - - - - - - - -	- ( 17,380) - - - - - - -	( 328,864) 17,380 ( 906,620) ( 32,000) - - - 2,960,106 5,512	- - - - - - - - ( 86,542)	- - - - - - - - ( 245,506)	- - - - - - - - -	- - - - - 66,593 - - -	- - ( 906,620) ( 32,000) 1,732 94,859 3,089 2,960,106 ( 326,536)	- - - - ( 46,416) ( 953,036) - ( 32,000) 4 1,736 - 94,859 - 3,089 190,635 3,150,741 ( 40,901) ( 367,437)
	$ 9,066,203	$ 200,000	$ 180,533	$ 1,494,452	$ 1,640,828	$ 9,472,912	($ 206,080)	$ 945,719	$ -	($ 55,577)	$ 22,738,990	$ 2,881,984 $ 25,620,974

(Please refer to the notes to the Consolidated Financial Statement.)

Chairman: YANG,PIN-CHENG Manager: TSENG,CHIA-HSIUNG Accounting Supervisor: CHEN,LING-CHU

32 -

Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Statement of Cash Flows January 1 through December 31, 2018 and 2017

Code	Item	January 1 through December 31, 2018	Unit: NTD 1,000 January 1 through December 31, 2017
AAAA A00010 A20000 A20010 A20100 A20200 A20400 A20900 A21200 A21300 A22300 A22500 A22600 A23100 A23500 A23700 A20010 A30000 A31110 A31115 A31125 A31130 A31150 A31160 A31180 A31200 A31230 A31240 A32125 A32130 A32150 A32180 A32200 A32210 A32230 A32240 A30000 A33000 A33100 A33200 A33300 A33500 AAAA BBBB B00010 B00030 B01200 B01400 B01800 B02700 B02800 B03800 B06500	Cash Flows from Operating Activities: Income from Continuing Operation before Tax Adjusted Items: Income Charges (Credits) not Affecting Cash Depreciation Cost (including depreciation listed for investment-oriented properties) Amortized Expenses Net (Profit) Loss of Financial Assets at Fair Value through Income Interest Expense Interest Income Dividend Income Share of Profit of Associates and Joint Ventures Accounted for Using the Equity Method Net Loss from Disposing and Scrapping of Property and Equipment Transfer Fees of Property, Plant, and Equipment Profits from Disposing Investments Impairment Loss of Financial Assets Impairment Loss of Non-Financial Assets Total of Income Charges (Credits) not Affecting Cash Variation in Assets/Liabilities Related to Operating Activities Net Decrease in Financial Assets Available for Transaction Net Increase in Financial Assets Measured Compulsorily at Fair Value through Income Increase in Contract Assets (Increase) Decrease in Notes Receivable (Increase) Decrease in Accounts Receivable Increase in Accounts Receivable - Related Party Increase in Other Receivables (Increase) Decrease in Inventory Increase in Advance Payment Decrease in Other Current Assets - Others Decrease in Contract Liability Increase (Decrease) in Notes Payable Increase (Decrease) in Accounts Payable Increase in Other Payables Increase in Liability Reserve Increase in Advance Receipts Increase (Decrease) in Other Current Liabilities - Others Decrease in Defined Benefit Liability Total of Variation in Assets/Liabilities Related to Operating Activities Case In-flows from Business Operation Collected Interest Collected Dividends Paid Interest Paid Income Tax Net Cash In-flows from Operating Activities Cash Flows from Investment Activities: Acquisition of Financial Assets at Fair Value through Other Comprehensive Income Capital Allocation for Financial Assets at Fair Value through Other Comprehensive Income Acquisition of Financial Assets Carried at Cost Capital Allocation of Financial Assets Carried at Cost Acquisition of Investments with the Equity Method Cancellation of Property, Plant, and Equipment Disposal of Property, Plant, and Equipment (Increase) Decrease in Refundable Deposits Increase in Other Financial Assets	$ 4,056,948	$ 4,183,075
		856,561 741,235 ( 20) 1,835 ( 67,249) ( 156,062) ( 988,415) 943 46,031 ( 94) - 10,007	879,591 922,026 24 1,438 ( 34,992) ( 154,091) ( 1,547,677) 5,779 21,726 ( 57) 540 22,366
		444,772	116,673
		- ( 38,906) ( 60,364) ( 1,969) 253,314 ( 735) ( 13,447) 42,383 ( 5,843) 66 ( 111) 3,759 ( 399,282) 36,627 1,485 28 ( 41,137) ( 11,824)	130,060 - - 43,604 ( 262,541) - ( 21,521) ( 372,659) ( 1,234) 538 - ( 15,558) 99,722 71,227 3,233 31,067 34,583 ( 48,189)
		( 235,956)	( 307,668)
		4,265,764 52,480 964,327 ( 1,835) ( 704,381)	3,992,080 28,327 495,948 ( 1,438) ( 504,128)
		4,576,355	4,010,789
		( 236,237) 9,585 - - ( 716,901) ( 535,792) 241 425 ( 1,022,925)	- - ( 73,122) 8,833 ( 52,080) ( 442,202) 182 ( 395) ( 137,114)

33 -

B07100 Increase in Advance Payment for Equipment B06700 Increase in Other Non-current Assets BBBB Net Cash Out-flows from Investment Activities CCCC Cash Flows from Fundraising Activities: (Note 6(42)) C00200 Decrease in Short-term Borrowing C03000 Increase in Guarantee Deposits C04000 Decrease in Lease Payable C04500 Issuance of Cash Dividend C05000 Disposal of Treasury Stock C09900 Additional Paid-in Capital Due to Return and Transfer of Dividend Unclaimed Past Deadline C09900 Acquisition of Cash Dividend by Subsidiary from Parent Company C09900 Subsidiary Issuance of Cash Dividend to Uncontrolled Equity C09900 Subsidiary Paying Cash Capital Decrease Value to Uncontrolled Equity CCCC Net Cash Out-flows from Fundraising Activities DDDD Impacts of Fluctuating Exchange Rate on Cash and Cash Equivalents EEEE Increase in Cash and Cash Equivalents of Current Term E00100 Balance of Cash and Cash Equivalents in Beginning of Term E00200 Balance of Cash and Cash Equivalents at End of Term E00210 Cash and Cash Equivalents Listed in Consolidated Balance Sheet	- ( 570,697)	( 7,391) ( 1,194,465)
	( 3,072,301)	( 1,897,754)
	( 34,748) 3,542 ( 2,776) ( 938,620) 94,859 1,736 3,089 ( 46,416) ( 17,626)	( 57,725) 298 ( 3,688) ( 938,620) 90,889 1,071 9,320 ( 40,616) ( 22,666)
	( 936,960)	( 961,737)
	39,607	( 94,508)
	606,701 2,122,753	1,056,790 1,065,963
	$ 2,729,454 $ 2,729,454	$ 2,122,753 $ 2,122,753

(Please refer to the notes to the Consolidated Financial Statement.) Chairman: YANG, PIN-CHENG Manager: TSENG, CHIA-HSIUNG Accounting Supervisor: CHEN, LING-CHU

34 -

Proposed by the Board of Directors

Proposal 2

Subject: The 2018 earnings distribution proposal is submitted for ratification.

Explanations:

The Company’s net income after tax for the year of 2018 was $2,960,106,175; after deducting the provision of legal reserve amounted to $296,010,618, and the distributable earnings for the year was $2,664,095,557; with additive adjustment for Year 2018 with retrospective application of IFRS9 and reclassification, the effect came to $42,398,436. After the defined welfare plan at $5,512,004, the unappropriated retained earnings at the beginning of the term came to $6,512,806,041 and the allocable unappropriated retained earnings in accumulation came to $9,176,901,598.
Pursuant to Article 29 of the Articles of Incorporation, after preferred dividends for the year of 2018 amounted to $12,000,000 were distributed first, the distributable earnings are $9,164,901,598; for common shares, it is proposed that no cash dividend be allocated. After the allocation, balance of the retained earnings came to $9,164,901,598.

Resolution:

35 -

Grand Pacific Petrochemical Corporation The 2018 Earnings Distribution Table

	Expressed in New Taiwan Dollars	Expressed in New Taiwan Dollars
Beginning undistributed earnings (TIFRS)		$6,464,895,601
Add: Retrospective IFRS9 application and retrospective reclassification
effect (Year 2018)		42,398,436
Post-adjustment beginning unappropriated retained earnings (TIFRS)		6,507,294,037
Add: Other comprehensive income (Remeasurements of defined benefit
plans) (Year of 2018)		5,512,004
Subtotal	(A)	6,512,806,041
Net income after tax for the year	(B)	2,960,106,175
Less: Provision of legal reserve 10%	(B)x10%	(296,010,618)
Add: Reversal of special reserve for difference of the market price lower
than carrying value of stocks of parent company held by subsidiaries		0
Distributable earnings for the year	(C)	2,664,095,557
Accumulated distributable earnings	(A)+(C)	9,176,901,598
Less: Dividends to preferred shares for the year (Year of 2018)		(12,000,000)
Total distributable earnings		9,164,901,598
Distribution items: Nil

Ending undistributed earnings		$9,164,901,598

Note: In the 2018 earnings distribution proposal, the distribution shall be made first from earnings for the year.

Responsible person:

Manager:

Chief Accountant:

36 -

Discussion Items

37 -

Proposal 1

Proposed by the Board of Directors

Subject: It is proposed that the Company’s “Articles of Incorporation” be duly amended. Please reserve a decision as appropriate.

Descriptions: 1. In response to the substantial need of future operating plans and pursuant to Paragraph 5, Article 240 of the Company Act amended under Decree Hua-Zong-I-Jing-Zi 10700083291 dated August 1, 2018 as well as letter of Ministry of Economic Affairs, the Company may authorize the Board of Directors with plenipotentiary power in accordance with the Articles of Incorporation to allocate dividend and bonus either in whole or in part in cash and report the same to the shareholders’ meeting.
Comparative Table of Pre-Amendment and Post-Amendment Contents below:

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Current contents Post-amendment contents Descriptions
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Current contents Post-amendment contents Descriptions	Current contents Post-amendment contents Descriptions	Current contents Post-amendment contents Descriptions	Current contents Post-amendment contents Descriptions	Current contents Post-amendment contents Descriptions
	Article 5 The Company's authorized capital amounts to Twelve Billion New Taiwan Dollars, divided intoOne Billion, Two Hundred Millionshares (including 20,000,000 preferred shares)at NT$10 par value. For the unissued shares, the Board of Directors is authorized with plenipotentiary power to issue in partial installments as the actual situations may justify. The preferred shares bear the rights & obligations as enumerated below: 1. Allocation of dividend in the terms as set forth under Article 29 of these Articles of Incorporation. 2. Preferential allocation of the Company's residual properties. 3 Other rights equivalent to those borne by common shares.		Article 5 The Company's authorized capital amounts to Twenty BillionNew Taiwan Dollars, divided intotwo billionshares at NT$10 par value. For the unissued shares, the Board of Directors is authorized with plenipotentiary power to issue in partial installments as the actual situations may justifyand to issue preferred shares for a part of the unissued shares. The Company may issue employee stock option certificates to employees of the Company and its subsidiaries at home and abroad. Amidst the aggregate total of shares mentioned in the preceding Paragraph, 50 million shares may be reserved to issue employee stock option certificates which may be issued in partial installments as resolved by the Board of Directors. Where the Company falls in a need to repurchase itself, the Board of Directors is authorized with plenipotentiary power to duly act as appropriate. Where the price of subscription to the employee stock option certificates issued by the Company is below the closing price of the Company's common shares on the date of issuance, or where the price of treasury stocks transferred to employees is below the average price of the shares repurchased by the Company, it shall be subject to consent in the shareholders’meeting through one half majority vote cast by participating shareholders who represent two-thirds of the total of voting powers. The preferred shares issued by the Company in 1984 (listed through Taiwan Stock Exchange Corporation (TWSC) in Stock Code 1312A, (hereinafter referred to as Year 1984 Grand Pacific Preferred Shares) bear the rights &	In response to the future need in business planning, taking into account the flexibility for maximum possible capital raising and issuance of employee stock option certificates.

38 -

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obligations as enumerated below:
1. Allocation of dividend in the terms as set
forth under Article 29 of these Articles of
Incorporation.
2. Preferential allocation of the Company's
residual properties.
3 Other rights equivalent to those borne by
common shares.
Article 5-1 (Added) This Article is
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obligations as enumerated below: 1. Allocation of dividend in the terms as set forth under Article 29 of these Articles of Incorporation. 2. Preferential allocation of the Company's residual properties. 3 Other rights equivalent to those borne by commonshares.	obligations as enumerated below: 1. Allocation of dividend in the terms as set forth under Article 29 of these Articles of Incorporation. 2. Preferential allocation of the Company's residual properties. 3 Other rights equivalent to those borne by commonshares.	obligations as enumerated below: 1. Allocation of dividend in the terms as set forth under Article 29 of these Articles of Incorporation. 2. Preferential allocation of the Company's residual properties. 3 Other rights equivalent to those borne by commonshares.
Article 5-1 (Added)		This Article is
	The Company's preferred shares bear the rights & obligations and other significant terms for issuance as enumerated below except Year 1984 Grand Pacific Preferred Shares which shall be duly handled in accordance with Article 5 & Article 29 and not subject to provisions set forth under this Article: 1. Preferred shares bear dividend within the maximum limit of 8% per annum, to be counted based on the issuance price per share. The dividend is payable in cash once per annum. The dividend of the preceding year shall be paid on the base day resolved and fixed by the Board of Directors. The amount of dividend in the year of issuance and the year of recovery shall be counted based on the numbers of days of issuances in that year(s). The day of issuance is defined as the base day on which the preferred shares are issued. 2. Toward allocation of preferred share dividend, the Company has a discretionary power and may not allocate to preferred share dividend as resolved in the Board of Directors. In a year while the Company shows no earning in the final account or while the Board of Directors resolves not to allocate preferred share dividend, the preferred share dividend not allocated shall not be accumulated to the subsequent year(s) for deferred payment. 3. The preferred share shareholders supersede common shareholders in allocation of dividend but are next to the shareholders of Year 1984 Grand Pacific Preferred Shares. Except receipt of the dividend mentioned under Subparagraph II of this Paragraph, the preferred share shareholders shall not participate in the distribution of earnings of common shares and an event where the capital reserve is allocated for cash dividend or for expansion of capital. 4. The preferred share shareholders supersede common shareholders in allocation of the Company's residual properties but are next to the shareholders of Year 1984 Grand Pacific Preferred Shares. Except Year 1984 Grand Pacific Preferred Shares, the holders of all sorts of	newly increased
	1.
	2.
	3.
	4.

39 -

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preferred shares are entitled to the same
priority orders in receipt of payments and
shall not exceed the amount of issuance.
5. The preferred share shareholders are not
entitled to voting power and election
power in a shareholders’ meeting but are
entitled to be elected to be directors; and
are entitled to voting powers in the
preferred shareholders’ meeting and a
shareholders’ meeting linked up with the
rights & obligations of preferred
shareholders’ meeting.
6. A preferred share shall not be converted
into a common share.
7. The preferred shares shall not be fixed
with an expiring date. In case of the
period of issuance, such period of issuance
shall not be shorter than seven (7) years.
A preferred shareholder shall not request
the Company to retrieve the preferred
shares held by him or her. The Company
may, nevertheless, fix the retrieving date
and the retrieving date so fixed shall not
-
be earlier than the expiring date of a five
year period. After the expiring date or
starting from the date of retrieval fixed by
the Company, the Company may retrieve
the issued preferred shares either in whole
or in part at issue price and relevant
issuance rules in cash or other method
where permitted by law. In the event that
where the time is due, the Company is
unable to retrieve the preferred shares
either in whole or in part as a result of
objective factor or force majeure, the
rights of the preferred shares not retrieved
shall be extended based on the conditions
of issuance until the time point when the
Company retrieves in full. In the event
that the Company resolves to grant
dividend in that year, the dividend payable
as of the date of retrieval shall be counted
based on the number of days of issuance
in that year.
For the title of the preferred shares, date of
issue and the concrete conditions, the Board of
Directors is authorized with plenipotentiary
power to handle based on the facts of the capital
markets, the investors' intent to subscribe to,
the Company's Articles of Incorporation and
laws and ordinances concerned at the moment
of actual issuance.
Article 29 Article 29 Amendment
The Company shall set aside 1% of the profit The Company shall set aside 1% of the profit as appropriate
earned by the Company in a year as earned by the Company in a year as in
remuneration to employees and a sum within remuneration to employees and a sum within coordination
2% maximum of the profit earned by the 2% maximum of the profit earned by the with the need
Company in a year as remuneration to directors Company in a year as remuneration to directors under
based on the profit status of the year. ……… based on the profit status of the year. ……… Paragraph 5,
From the earnings of the Company in a year as From the earnings of the Company in a year as Article 240 of
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40 -

shown through the annual account settlement, after the sum to pay tax and make up previous loss, if any, is set aside, a sum 10% out of the balance shall be set aside as legal reserve. The balance of the Company's earnings after annual final account settlement, after payment of tax, making up loss, setting aside 10% legal reserve, setting aside or reversal of special reserve shall be allocable earnings which, along with the unappropriated retained earnings of the preceding year, shall be the accumulated unappropriated retained earnings wherewith, dividend for Preferred Shares at 6% per annum shall be set aside. In the event that the annual dividend of Preferred Shares is not allocated in full, the shortage shall be made with the allocable earnings of the ensuing year preferentially. With the balance of the unappropriated retained earnings, the Board of Directors shall propose the allocation based on laws and ordinances concerned, dividend policies and status of working capital and shall call for consent from the shareholders’ meeting beforehand.

……

The Company currently lies amidst the highly changeable industrial environment is changeable. ……. the Company shall allocate annual cash dividends are not less than 10% of the total cash and stock dividends of the current year (excluding dividend of Preferred Shares at 6% per annum).

shown through the annual account settlement, after the sum to pay tax and make up previous loss, if any, is set aside, a sum 10% out of the balance shall be set aside as legal reserve. The balance of the Company's earnings after annual final account settlement, after payment of tax, making up loss, setting aside 10% legal reserve, setting aside or reversal of special reserve shall be allocable earnings which, along with the unappropriated retained earnings of the preceding year, shall be the accumulated unappropriated retained earnings wherewith, dividend for Year 1984 Grand Pacific Preferred Shares at 6% per annum shall be set aside. In the event that the annual dividend is not allocated in full, the shortage shall be made with the allocable earnings of the ensuing year preferentially. With the balance of the unappropriated retained earnings, the Board of Directors shall propose the percentages of allocation based on laws and ordinances concerned, dividend policies and status of working capital. Where the dividend is allocated by means of issuance of new shares, it shall call for consent from the shareholders’ meeting beforehand. When the dividend is allocated in cash, it calls for approval under a decision to be resolved in the Board of Directors.

In accordance with Paragraph 5, Article 240 of the Company Act, the Board of Directors is authorized with plenipotentiary power to resolve a decision through one half majority vote cast by participating directors who constitute two-thirds or more of the total directorship seat to allocate the dividend, bonus or part of legal reserve and capital reserve either in whole or in part under Paragraph 1, Article 241 of the Company Act in cash and to ’ report to the shareholders meeting. …… The Company currently lies amidst the highly changeable industrial environment is changeable. ……. the Company shall allocate annual cash dividends are not less than 10% of the total cash and stock dividends of the current year (excluding dividend of Year 1984 Grand Pacific Preferred Shares at 6% per annum).

the Company Act.

Resolution:

41 -

Proposal 2

Proposed by the Board of Directors

Subject: It is proposed that the Company’s “Procedures for Acquisition or Disposal of Assets” be duly amended. Please reserve a decision as appropriate.

Descriptions: 1. Handling as appropriate exactly in accordance with “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” promulgated by Financial Supervisory Commission, Executive Yuan with its Letter Jin-Guan-Zheng-Fa-Zi 10703410725.
Comparative Table of Pre-Amendment and Post-Amendment Contents below:

Current contents		Post-amendment contents	Descriptions
4.1 The term “assets” as set forth in these Operational Procedures includes: 4.1.5 Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables) 4.1.6 Derivatives 4.1.7 Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law 4.1.8 Other major assets	4.1 4.1.5	The term “assets” as set forth in these Operational Procedures includes: Right-of-use assets Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables) Derivatives Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law Other major assets	In coordination with application of International Financial Reporting Standards (IFRS) No.16, Subparagraph V is added to expand the scope for right- of-use assets to relocate current Subparagraph 2 for land right-of-use to Subparagraph 5.
	4.1.6 4.1.7 4.1.8 4.1.9
4.5 Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long- term leasing contracts, or long-term purchase (sales) agreements.	4.5	Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, or swap contracts, whose value is derived froma 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 compound contracts combining the above contracts; or compound 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.	In coordination with application of International Financial Reporting Standards (IFRS) No.9 in definition of financial instruments to amend the scope of derivative instruments with polishing in wording as appropriate.

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4.6 Assets acquired or disposed through 4.6 Assets acquired or disposed through A change in Article
mergers, demergers, acquisitions, or mergers, demergers, acquisitions, or order.
transfer of shares in accordance with transfer of shares in accordance with
law: Refers to assets acquired or law: Refers to assets acquired or
disposed through mergers, disposed through mergers,
demergers, or acquisitions conducted demergers, or acquisitions conducted
under the Business Mergers and under the Business Mergers and
Acquisitions Act and other acts, or to Acquisitions Act and other acts, or to
transfer of shares from another transfer of shares from another
company through issuance of new company through issuance of new
shares of its own as the consideration shares of its own as the consideration
therefore (hereinafter "transfer of therefore (hereinafter "transfer of
shares") under Article 156, paragraph shares") under Article 156-3 of the
8 of the Company Act. Company Act.
4.10 Professional appraisers and their 4.10 The professional appraisers and their This expressly
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4.6 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 therefore (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act. 4.6 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 therefore (hereinafter "transfer of shares") under Article 156-3of the Company Act. A change in Article order.	4.6 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 therefore (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act. 4.6 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 therefore (hereinafter "transfer of shares") under Article 156-3of the Company Act. A change in Article order.	4.6 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 therefore (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act. 4.6 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 therefore (hereinafter "transfer of shares") under Article 156-3of the Company Act. A change in Article order.	4.6 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 therefore (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act. 4.6 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 therefore (hereinafter "transfer of shares") under Article 156-3of the Company Act. A change in Article order.
4.10 Professional appraisers and their	4.10 The professional appraisers and their		This expressly
officers, certified public accounts, attorneys, and securities underwriters that provide the Company with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of any party to the transaction.		1)	defines the responsibility of outsourced experts and takes reference to the Regulations Governing the Preparation of Financial Reports by Securities Issuers about rationality of the relevant evaluation and appraisal reports by Certified Public Accountants, audits and declarations. It expressly defines the evaluation, audit and declaration about appraisal reports or opinions by relevant experts.
		2)
		3)
		1)
		2)

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adequate working procedures, in order
to produce a conclusion and use the
conclusion as the basis for issuing the
report or opinion. The related working
procedures, data collected, and
conclusion shall be fully and
accurately specified in the case
worksheets.
3) They shall conduct an item-by-item
evaluation of the integration, accuracy,
and rationality of the sources of data
used, the parameters, and the
information, as the basis for issuance
of the appraisal report or the opinion.
4) The declaration attesting to the
professional competence and
independence of the personnel who
prepared the report or opinion, and that
they have evaluated and found that the
information used is rational, accurate
with sound compliance with
applicable laws and regulations.
5.2.1 In acquiring or disposing of real 5.2.1 In acquiring or disposing of real In coordination
estate or equipment where the estate, equipment, or right-of-use with application of
transaction amount reaches 20 assets thereof where the transaction International
percent of the Company's paid-in amount reaches 20 percent of the Financial Reporting
capital or NT$300 million or more, Company's paid-in capital or Standards (IFRS)
the company, unless transacting NT$300 million or more, the No.16 regarding
with a government organ, engaging company, unless transacting with a leasehold gazette.
others to build on its own land, domestic government agency, with amendment to
engaging others to build on rented engaging others to build on its own Paragraph I to have
land, or acquiring or disposing of land, engaging others to build on right-of-use assets
equipment for business use, shall rented land, or acquiring or covered within this
obtain an appraisal report prior to disposing of mechanical equipment Article.
the date of occurrence of the event or right-of-use assets thereof for
from a professional appraiser and business use, shall obtain an
shall further comply with the appraisal report prior to the date of
following provisions: occurrence of the event from a
1) Where due to special professional appraiser and shall
circumstances it is necessary further comply with the following
to give a limited price, provisions:
specified price, or special 1) Where due to special
price as a reference basis for circumstances it is necessary
the transaction price, the to give a limited price,
transaction shall be submitted specified price, or special
for approval in advance by the price as a reference basis for
board of directors, and the the transaction price, the
same procedure shall be transaction shall be submitted
followed for any future for approval in advance by the
changes to the terms and board of directors; the same
conditions of the transaction. procedure shall also be
followed whenever there is
any subsequent change to the
terms and conditions of the
transaction.
5.4.1 Where the Company acquires or 5.4.1 Where the Company acquires or In the reason for
disposes of memberships, disposes of memberships, adjustment same as
intangible assets and the intangible assets or right-of-use 5.2.1, with
transaction amount of other major assets thereof and the transaction amendment to
assets reaches twenty percent amount of other major assets wording as
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(20%) or more of paid-in capital or reaches twenty percent (20%) or appropriate.
NT$300 million or more, except in more of paid-in capital or NT$300
transactions with a government million or more, except in
agency, the Company shall engage transactions with a domestic
a certified public accountant prior government agency, the Company
to the date of occurrence of the shall engage a certified public
event to render an opinion on the accountant prior to the date of
rationality of the transaction price; occurrence of the event to render an
the CPA shall comply with the opinion on the rationality of the
provisions of Statement of transaction price; the CPA shall
Auditing Standards No. 20 comply with the provisions of
published by the ARDF. Statement of Auditing Standards
No. 20 published by the ARDF.
5.5.2 When the public companies intends 5.5.2 When the public companies intends Amidst the
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(20%) or more of paid-in capital or NT$300 million or more, except in transactions with a 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. reaches twenty percent (20%) 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. appropriate.	(20%) or more of paid-in capital or NT$300 million or more, except in transactions with a 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. reaches twenty percent (20%) 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. appropriate.	(20%) or more of paid-in capital or NT$300 million or more, except in transactions with a 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. reaches twenty percent (20%) 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. appropriate.	(20%) or more of paid-in capital or NT$300 million or more, except in transactions with a 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. reaches twenty percent (20%) 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. appropriate.
5.5.2 When the public companies intends	5.5.2 When the public companies intends		Amidst the
to acquire or dispose of real estate from or to a related party, or intends to acquire or dispose of assets other than real estate from or to a related party and the transaction amount reaches 20 percent or more of paid- in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of domestic money market funds issued by the securities investment trust enterprises, the Company shall not proceed to enter into a transaction contract or make a payment until the following matters have been agreed by more than half of all audit committee members in principles and then resolved by the board of directors: 1) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2) The reason for choosing the related party as a trading counterparty. 3) With respect to the acquisition of real estate from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 5.5.3. …… The Company and its subsidiaries’ the Board of Directors may authorize the chairman to carry out beforehand within the specified credit limit and to report to the most recent board of directors meeting for retrospective acknowledgement afterward.		to acquire or dispose of real estateor right-of-use assets thereoffrom or to a related party, or intends to acquire or dispose of assets other than real estateor right-of-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading ofdomestic government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of domestic money market funds issued by the securities investment trust enterprises, the Company shall not proceed to enter into a transaction contract or make a payment until the following matters have been agreed by more than half of all audit committee members in principles and then resolved by the board of directors: 1) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets. 2) The reason for choosing the related party as a trading counterparty. 3) With respect to the acquisition of real estateor right-of-use assets thereoffrom a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 5.5.3. …… In case of transactions carried out by and among the Company, its subsidiaries or subsidiaries with 100% holdings of issued shares or total capital,the Board of Directors may authorize the chairman to carry out beforehand within the specified	different credits of foreign governments, they are not exempted under this Article. Therefore, they are limited only to domestic government bonds. In addition, in accordance with the provisions of International Financial Reporting Standards (IFRS) No.16 Lease Bulletin, the right- of-use assets are included in the provisions of this Article, so that they are definite enough here. Another consideration is that the parent company, subsidiaries or its directly or indirectly 100%- owned subsidiaries are transferred to each other (including trading or subletting) for the overall planning of the business, or lease of real estate, sub-lease where the risk of such transactions is relatively low, it is necessary to relax the restriction over the equipment acquired or

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		credit limit and to report to the most recent board of directors meeting for retrospective acknowledgement afterward. 1) The equipment or right-of-use assets thereof is acquired or disposed for business use. 2) The real estate right-of-use assets is acquired or disposed for business use. The amount of transaction mentioned in the preceding Paragraph shall be counted under Article 5.8.1. The term"within the preceding year"as set forth herein denotes the one-year period retrospectively preceding the date of occurrence of the fact. The part having been approved by the Board of Directors and acknowledged by the Audit Committee needs not be counted inclusive.	disposed of for use by the Company, its right-of-use assets or real estate use rights assets for business use, the chairman is bestowed with plenipotentiary power to handle such business beforehand.
5.5.3 Appraisal of reasonableness of the transaction cost 1) In acquiring real estate from a related party, the Company shall appraise the reasonableness of the transaction costs by the following means: …… 2) Where land and house thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the house may be separately appraised in accordance with either of the means listed in the preceding paragraph. 3) Where Company acquires real estate from a related party and appraises the cost of the real estate in accordance with two subparagraphs of Paragraph 1, the Company shall also engage a CPA to check the appraisal and render a specific opinion. 4) When the results of the Company's appraisal conducted for acquisition of real estate in accordance with two subparagraphs of Paragraph 1 are uniformly lower than the transaction price, the matter shall be handled in compliance with Paragraph 5. ……	5.5.3	Appraisal of reasonableness of the transaction cost 1) In acquiring real estateor right-of-use assets thereof from a related party, the Company shall appraise the reasonableness of the transaction costs by the following means: …… 2) Where land and house thereupon are combined as a single property purchasedor leasedin one transaction, the transaction costs for the land and the house may be separately appraised in accordance with either of the means listed in the preceding paragraph. 3) Where Company acquires real estate or right-of-use assets thereoffrom a related party and appraises the cost of the real estateor right-of-use assets thereofin accordance with two subparagraphs of Paragraph 1, the Company shall also engage a CPA to check the appraisal and render a specific opinion. 4) When the results of the Company's appraisal conducted for acquisition of real estate in accordance with two subparagraphs of Paragraph 1 ofArticle 5.5.3 are uniformly lower than the	In coordination with application of International Financial Reporting Standards (IFRS) No.16 Leasehold Gazette, it covers the right-of-use assets covered within this Article. In coordination with the substantial practice of real estate leasing such as factory buildings, the Company has

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(1) (2)	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 Transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices. ③ Completed leasing transactions by unrelated parties for other floors of the same property within the preceding year, where the transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance with standard property leasing market practices. Where the Company acquiring real estate, from a related party provides evidence that the terms of the transaction are similar to the terms of completed transactions for the acquisition of		transaction price, the matter shall be handled in compliance with Paragraph 5 ofArticle 5.5.3. …… (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 Transaction cases 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 lease practices. (2) Where the Company acquiring real estate,or obtaining real estate right-of-use assets through leasing,from a related party provides evidence that the terms of the transaction are similar to the terms of transactions for the acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year. Transactions for neighboring or closely valued parcels of land in the preceding paragraph in principle	obtained the right to acquire real estate use rights from related parties, and has been able to use the non-relevant lease transactions in the adjacent area for one year as a reference case for calculating and estimating the rationality of the transaction price. This adds the transaction cases in leasehold and consolidates Item 3 to Item 2Paragraph II to make the provisions more definite.

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neighboring or closely refers to parcels on the valued parcels of land same or an adjacent of a similar size by block and within a unrelated parties within distance of no more the preceding year. than 500 meters or Completed transactions parcels close in publicly for neighboring or announced current closely valued parcels value; transaction for of land in the preceding similarly sized parcels paragraph in principle in principle refers to refers to parcels on the transactions by same or an adjacent unrelated parties for block and within a parcels with a land area distance of no more of no less than 50 than 500 meters or percent of the property parcels close in publicly in the planned announced current transaction; within the value; transaction for preceding year refers to similarly sized parcels the year preceding the in principle refers to date of occurrence of transactions completed the acquisition of the by unrelated parties for real estate or right-ofparcels with a land area use assets thereof. of no less than 50 5) Where the Company acquires percent of the property real estate or right-of-use in the planned assets thereof from a related transaction; within the party and the results of preceding year refers to appraisals conducted in the year preceding the accordance with preceding date of occurrence of two paragraphs are uniformly the acquisition of the lower than the transaction real estate. price, the following steps shall 5) Where the Company acquires be taken: real estate from a related party (1) A special reserve shall and the results of appraisals be set aside in conducted in accordance with accordance with preceding four paragraphs are paragraph 1, Article 41 uniformly lower than the of the Securities and transaction price, the Exchange Act against following steps shall be taken: the difference between (1) A special reserve shall the real estate or rightbe set aside in of-use assets thereof accordance with transaction price and Paragraph 1, Article 41 the appraised cost, and of the Securities and may not be distributed Exchange Act against or used for capital the difference between increase or issuance of the real estate bonus shares. transaction price and …… the appraised cost, and Where the Company may not be distributed amortizes special reserve in or used for capital accordance with the increase or issuance of aforementioned provisions, bonus shares. Where the Company shall not use the the Company uses the special reserve until the loss equity method to for depreciation has been account for its recognized for assets investment in another purchased or leased at high company, then the prices, or has been disposed special reserve called of, or the leasing contract has

48 -

for under Paragraph 1 been terminated or with of Article 41 of the appropriate compensation or Securities and with restoration to the status Exchange Act shall be quo ante or there has been set aside pro rata in a other evidence proving no proportion consistent irrationality, as approved by with the share of public Financial Supervisory company's equity stake Commission. in the other company. For transaction of real estate …… or right-of-use assets thereof Where the Company with related parties, if there is amortizes special reserve in other evidence indicating that accordance with the the transaction was not in aforementioned provisions, conformity with arm’s length, the Company shall not use the the Company shall follow the special reserve until the loss requirements of the above two for depreciation has been subparagraphs. recognized for assets 6) Where the Company acquires purchased at high prices, or real estate or right-of-use has been disposed of, with assets thereof from a related appropriate compensation or party and one of the following with restoration to the status circumstances exists, the quo ante or there has been acquisition shall be conducted other evidence proving no in accordance requirements irrationality, as approved by relating to Article 5.5.2, and Financial Supervisory the requirement relating to Commission. appraisal of reasonableness of For transaction of real estate transaction cost under two with related parties, if there is subparagraphs of Paragraph 1 other evidence indicating that of Article 5.5.3 do not apply: the transaction was not in (1) The related party conformity with arm’s length, acquired the real estate the Company shall follow the or right-of-use assets requirements of the above two thereof through subparagraphs. inheritance or as a gift. 6) Where the Company acquires (2) More than 5 years will real estate from a related party have elapsed from the and one of the following time the related party circumstances exists, the signed the contract to acquisition shall be conducted obtain the real estate or in accordance requirements right-of-use assets relating to Article 5.5.2, and thereof to the signing the requirement relating to date for the current appraisal of reasonableness of transaction. transaction cost under two (3) The real estate is subparagraphs of Paragraph 1 acquired through of this Article do not apply: signing of a joint (1) The related party development contract acquired the real estate with the related party, or through inheritance or through engaging a as a gift. related party to build (2) More than 5 years will real estate, either on the have elapsed from the company's own land or time the related party on rented land. signed the contract to (4) The acquisition of obtain the real estate to business-use real estate the signing date for the right-of-use assets current transaction. between the Company (3) The real estate is and its subsidiaries, or the subsidiaries in With consideration

6) Where the Company acquires real estate from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance requirements relating to Article 5.5.2, and the requirement relating to appraisal of reasonableness of transaction cost under two subparagraphs of Paragraph 1 of this Article do not apply: (1) The related party acquired the real estate through inheritance or as a gift.

(2) More than 5 years will have elapsed from the time the related party signed the contract to obtain the real estate to the signing date for the current transaction. (3) The real estate is acquired through

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signing of a joint development contract with the related party, or through engaging a related party to build real estate, either on the company's own land or on rented land.		which it directly or indirectly holds 100 percent of the issued shares or authorized capital.	of the facts that a listed public company and its parent company, its subsidiaries, or its directly or indirectly 100%- owned subsidiaries, due to the overall planning of the business, there is the possibility of coordinating collective leasing of real estate and sub-leasing. Paragraph 4 is duly added to rule out such transactions regarding the rationality of the transaction costs (the price at which the acquirer obtains the real estate in the transaction or the price paid for the lease of the real estate) in accordance with this section. Where such transaction already rules out applicability of the present Article, it no longer calls for burden of proof according to Article 5.5.3 about price rationality and acts to amortize special reserve as required this Paragraph.
5.8.1 Where the Company acquires or disposes of assets where any one among those circumstances enumerated below occurs, the Company shall, based on the specified formula, launch public announcement and filing through the website promulgated by the competent authority within two (2) days from date of occurrence of the fact: 1) Acquisition or disposal of real estate from or to a related party, or acquisition or disposal of assets other than real estate from or to a related	5.8.1 Where the Company acquires or disposes of assets where any one among those circumstances enumerated below occurs, the Company shall, based on the specified formula, launch public announcement and filing through the website promulgated by the competent authority within two (2) days from date of occurrence of the fact: 1) Acquisition or disposal of real estateor right-of-use assets thereoffrom or to a related party, or acquisition or disposal of assets other than		In coordination with application of International Financial Reporting Standards (IFRS) No.16, it covers the right-of-use assets covered within this Article.

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party where the transaction real estate or right-of-use amount reaches 20 percent or assets thereof from or to a more of paid-in capital, 10 related party where the percent or more of the transaction amount reaches 20 company's total assets, or percent or more of paid-in NT$300 million or more; capital, 10 percent or more of provided, this shall not apply the company's total assets, or to trading of government NT$300 million or more; bonds or bonds under provided, this shall not apply repurchase and resale to trading of domestic agreements, or subscription or government bonds or bonds repurchase of domestic money under repurchase and resale market funds issued by agreements, or subscription or securities investment trust repurchase of domestic money enterprises. market funds issued by …… securities investment trust 4) Where the type of asset enterprises. acquired or disposed is …… equipment for business use, 4) Where the type of asset the trading counterparty is not acquired or disposed is a related party, and the equipment or right-of-use transaction amount meets any assets thereof for business use, of the following criteria: the trading counterparty is not …… a related party, and the 5) Where land is acquired under transaction amount meets any an arrangement on engaging of the following criteria: others to build on the …… company's own land, engaging 5) Where land is acquired under others to build on rented land, an arrangement on engaging joint construction and others to build on the allocation of housing units, company's own land, engaging joint construction and others to build on rented land, allocation of ownership joint construction and percentages, or joint allocation of housing units, construction and separate sale, joint construction and and the amount the company allocation of ownership expects to invest in the percentages, or joint transaction is less than construction and separate sale, NT$500 million. and furthermore the trading Where an asset transaction other counterparty is not a related than any of those referred to in the party, and the amount the preceding five subparagraphs, a company expects to invest in disposal of receivables by a the transaction is less than financial institution, or an NT$500 million. investment in the mainland China Where an asset transaction other area reaches 20 percent or more of than any of those referred to in the the Company’s paid-in capital or preceding five subparagraphs, a NT$300 million; provided, this shall disposal of receivables by a not apply to the following financial institution, or an circumstances: investment in the mainland China 1) Trading of government bonds. area reaches 20 percent or more of 2) Where done by professional the Company’s paid-in capital or investors-securities trading on NT$300 million; provided, this securities exchanges or OTC shall not apply to the following markets, or subscription of circumstances: ordinary corporate bonds or 1) Trading of domestic general bank debentures government bonds. without equity characteristics 2) Where done by professional that are offered and issued in investors-securities trading on the primary market, or securities exchanges or OTC

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subscription by a securities markets, or subscription of
firm of securities as ordinary corporate bonds or
necessitated by its undertaking general bank debentures
business, or where a securities without equity characteristics
dealer to meet its need in (excluding subordinated debt)
underwriting serves as a that are offered and issued in
securities firm of securities as the primary market, or
necessitated by its undertaking subscription or redemption of
business or as an advisory securities investment trust
recommending securities firm funds or futures trust funds, or
for an emerging stock subscription by a securities
company, in accordance with firm of securities as
the rules of the Taipei necessitated by its undertaking
Exchange (TPEx). business, or where a securities
3) Trading of bonds under dealer to meet its need in
repurchase/resale agreements, underwriting serves as a
or subscription or repurchase securities firm of securities as
of domestic money market necessitated by its undertaking
funds issued by securities business or as an advisory
investment trust enterprises. recommending securities firm
The amount of transaction for an emerging stock
mentioned in the preceding company, in accordance with
Paragraph shall be calculated as the rules of the Taipei
follows: Exchange (TPEx).
(1) The amount of any individual 3) Trading of bonds under
transaction. repurchase/resale agreements,
(2) The cumulative transaction or subscription or repurchase
amount of acquisitions or of domestic money market
disposals of the same type of funds issued by securities
underlying asset with the same investment trust enterprises.
trading counterparty within the The amount of transaction
preceding year. mentioned in the preceding
(3) The cumulative transaction Paragraph shall be calculated as
amount of real estate follows:
acquisitions or disposals (1) The amount of any individual
(cumulative acquisitions and transaction.
disposals, respectively) within (2) The cumulative transaction
the same development project amount of acquisitions or
within the preceding year. disposals of the same type of
(4) The cumulative transaction underlying asset with the same
amount of acquisitions or trading counterparty within the
disposals (cumulative preceding year.
acquisitions and disposals, (3) The cumulative transaction
respectively) of the same amount of real estate or right-
security within the preceding of-use assets thereof
year. acquisitions or disposals
(cumulative acquisitions and
disposals, respectively) within
the same development project
within the preceding year.
(4) The cumulative transaction
amount of acquisitions or
disposals (cumulative
acquisitions and disposals,
respectively) of the same
security within the preceding
year.
5.8.2 When the Company at the time of 5.8.3 When the Company at the time of The original 5.8.2
public announcement makes an public announcement makes an is amended and
error or omission in an item required error or omission in an item required relocated to 5.8.3
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by regulations to be publicly by regulations to be publicly
announced and so is required to announced and so is required to
correct it, all the items shall be again correct it, all the items shall be again
publicly announced and reported. publicly announced and reported in
their entirety within two days
counting inclusively from the date
of knowing of such error or
omission.
5.11 Other issues concerned 5.11 Other issues concerned Where the share
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publicly announced and reported.	publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission.	publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission.
5.11 Other issues concerned	5.11 Other issues concerned		Where the share
5.11.2 Where the share certificates issued by the Company bear no denomination or where the par value is not NT$10 per share, with respect to the requirement for transaction amounts of twenty percent (20%) of paid-in capital, ten percent (10%) of shareholders’ equity attributable to the parent company shall be used in the calculation.	5.11.2	Where the share certificates issued by the Company bear no denomination or where the par value is not NT$10 per share, with respect to the requirement for transaction amounts of twenty percent (20%) of paid-in capital, ten percent (10%) of shareholders’ equity attributable to the parent company shall be used in the calculation.In the provision of transaction amount with paid-in capital up to NT$10 billion in these Operational Procedures, in the event that the share certificates issued by the Company bear no denomination or are in par value not NT$10 per share, it shall be counted based on NT$20 billion of the equity attributable to owners of the parent company.	certificates issued by the Company bear no denomination or where the par value is not NT$10 per share, these Operational Procedures take the parent company's NT$20 billion in equity attributable to owners instead of NT$10 billion paid-in capital.

Resolution:

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Proposal 3

Proposed by the Board of Directors

Subject: It is proposed that the Company’s “Operational Procedures for Loaning Funds to Others” be duly amended. Please reserve a decision as appropriate.

Descriptions: 1. Handling as appropriate exactly in accordance with “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” promulgated by Financial Supervisory Commission, Executive Yuan with its Letter Jin-Guan-Zheng-Fa-Zi 1080304826.
Comparative Table of Pre-Amendment and Post-Amendment Contents below:

==> picture [493 x 520] intentionally omitted <==

----- Start of picture text -----

Current contents Post-amendment contents Descriptions
4.4 The term “date of occurrence of fact” as 4.4 The term “date of occurrence of fact” as Given the fact that
set forth herein denotes the date of set forth herein denotes the date of the loan or
contract signing, date of payment, date contract signing, date of payment, date endorsement of
when resolved in the Board of Directors when resolved in the Board of Directors funds is not a
or other date which is adequate to prove or other date which is adequate to prove transactional nature.
the target transaction and amount of the target loanee and amount, the wording is duly
transaction, whichever is the earlier. whichever is the earlier. amended as
appropriate.
Nil 5.2 Maximum limits of the aggregate total The Financial
of funds loaned and the individual Supervisory
targets. Commission,
5) Funds loaned by and between the Executive Yuan
Company and the foreign eases up the funds
company(ies) where the Company to be loaned amidst
holds 100% voting power either the foreign
directly or indirectly, or from the subsidiaries in the
foreign companies where the same holding
Company directly and indirectly relationship and in
holds 100% voting powers to the 100% shareholding,
Company, the funds loaned are and loaned toward
free of the restriction of foreign companies
Subparagraph 1 of Article 5.2; in 100% voting
however, the limits on total powers, no longer
amounts loaned and the limits on with restriction of
individual loanee shall specified 40% of the net
and the duration of loaning of fund worth and one-year
shall be expressly provided. period.
Nil 5.3.4 Where the Company's responsible In coordination
person proves in contravention of with amendment by
provisions set forth under Articles the Financial
5.1 and 5.2, such responsible person Supervisory
shall team up with the loanee to Commission,
assume the joint responsibility. In Executive Yuan on
the event that the Company is the Regulations
impaired as a result, such Governing Loaning
responsible person shall assume the of Funds and
responsibility for damage indemnity Making of
as well. Endorsements/Guar
antees by Public
Companies.
5.8 Enforcement and amendments 5.8 Enforcement and amendments Adjustment in
An amendment to these Operational An amendment to these Operational wording with
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Procedures shall be implemented after Procedures shall be implemented after reference to the approval of the shareholders' the approval of the shareholders' provisions set forth meeting and the approval of the meeting and the approval of the under Article 14-3 shareholders' meeting after the shareholders' meeting after the of Securities and approval of more than one-half of the approval of more than one-half of the Exchange Act. members of the Audit Committee and members of the Audit Committee and the resolution of the Board of Directors. the resolution of the Board of Directors; In the event that the aforementioned the opinions of the independent issue is not approved by more than onedirectors shall be fully considered when half of all members of the Audit the issue is submitted to the Board of Committee, It may be agreed by more Directors for discussion. Objections or than two-thirds of all directors, and the reserved opinions shall be stated in the resolutions of the Audit Committee minutes of the board of directors shall be expressly stated in the minutes meeting. In the event that a director of the board of directors meeting. expresses objection as backed by a record or written statement, the Company shall submit the objection to the Audit Committee and report it to the shareholders meeting for discussion. This same provision is applicable mutatis mutandis to an event of amendment. In the event that the aforementioned issue is not approved by more than one-half of all members of the Audit Committee, It may be agreed by more than two-thirds of all directors, and the resolutions of the Audit Committee shall be expressly stated in the minutes of the board of directors meeting.

Resolution:

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Proposed by the Board of Directors

Proposal 4

Subject: It is proposed that the Company’s “Operational Procedures for Making Endorsements / Guarantees” be duly amended. Please reserve a decision as appropriate.
Descriptions: 1. Handling as appropriate exactly in accordance with “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” promulgated by Financial Supervisory Commission, Executive Yuan with its Letter Jin-Guan-Zheng-Fa-Zi 1080304826.
In response to the Company's plans to invest in subsidiaries in the future, the ratio of the aggregate total endorsements/guarantees rendered by the Company to the net worth of the Company as shown through its financial statements of the most recent term is raised from 40% to 80%; the ratio of the amount of endorsements/guarantees rendered to a single enterprise to the net worth of the Company as shown through its financial statements of the most recent term is raised from 20% to 70%.
Comparative Table of Pre-Amendment and Post-Amendment Contents below:

	Current contents		Post-amendment contents	Descriptions
4.7	The term “date of occurrence of fact” as set forth herein denotes the date of contract signing, date of payment, date when resolved in the Board of Directors or other date which is adequate to prove the target transaction and amount of transaction,whichever is the earlier.	4.7	The term “date of occurrence of fact” as set forth herein denotes the date of contract signing, date of payment, date when resolved in the Board of Directors or other date which is adequate to prove the endorsement/guaranteetargets and amount of transaction, whichever is the earlier.	Given the fact that the loan or endorsement of funds is not a transactional nature. the wording is duly amended as appropriate.
5.2 5.4	Credit limits of endorsements/guarantees 5.2.1 The aggregate total of endorsements/guarantees granted by the Company externally shall not exceed 40% of the Company's net worth as shown through its most recent financial statements. The amount of the endorsements/guarantees granted by the Company toward a single enterprise shall not exceed 20% of the Company's net worth as shown through its most recent financial statements. Handling fee for endorsements/guarantees	5.2 5.4	Credit limits of endorsements/guarantees 5.2.1 The aggregate total of endorsements/guarantees granted by the Company externally shall not exceed 80%of the Company's net worth as shown through its most recent financial statements. The amount of the endorsements/guarantees granted by the Company toward a single enterprise shall not exceed70%of the Company's net worth as shown through its most recent financial statements. Handling fee for endorsements/guarantees	In response to the need by the Company's investees in the working capitals, it raises the maximum limit of the aggregate total of endorsements/guarantees and amount loaned to a single enterprise. To assure no impairment to the Company's interests, the fees for endorsements/guarantees are amended into the base of the actual capital cost charged from the guaranteed beneficiaries. To expressly define the investment of long-term attribute, amendment is duly conductedin

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5.4.1 Where the guarantees meet the requirements under 5.1, 5.2 and 5.3 of these Operational Procedures, the guarantee fee shall be charged within the credit limit and public facilities of endorsements/guarantees. The guarantee rate is 0.75% per transaction. 5.7 Procedures for announcement and report 5.7.2 3) The balance of endorsements/guarantees by the Company and its subsidiaries for a single enterprise reaches NT$10 million or more and the aggregate amount of all endorsements/guarantees for, investment of a long-term nature in,and balance of loans to, such enterprise reaches 30 percent or more of public company's net worth as stated in its latest financial statement. 5.9 Other matters 5.9.2 An amendment to these Operational Procedures shall be implemented after the approval of the shareholders' meeting and the approval of the shareholders' meeting after the approval of more than one-half of the members of the Audit Committee and the resolution of the Board of Directors. In the event that the aforementioned issue is not approved by more than one- half of all members of the Audit Committee, It may be agreed by more than two- thirds of all directors, and the resolutions of the Audit Committee shall be expressly stated in the minutes of the board of directors meeting.	5.4.1 Where the guarantees meet the requirements under 5.1, 5.2 and 5.3 of these Operational Procedures, the guarantee fee shall be charged within the credit limit and public facilities of endorsements/guarantees. The guarantee rate is calculated based on the actual assistance and the acquiring costs. 5.7 Procedures for announcement and report 5.7.2 3) The balance of endorsements/guarantees by the Company and its subsidiaries for a single enterprise reaches NT$10 million or more and the aggregate amount of all endorsements/guarantees for, the book value of investment under equity method in,and balance of loans to, such enterprise reaches 30 percent or more of public company's net worth as stated in its latest financial statement. 5.9 Other matters 5.9.2 An amendment to these Operational Procedures shall be implemented after the approval of the shareholders' meeting and the approval of the shareholders' meeting after the approval of more than one-half of the members of the Audit Committee and the resolution of the Board of Directors.The opinions of the independent directors shall be fully considered when the issue is submitted to the Board of Directors for discussion. Objections or reserved opinions shall be stated in the minutes of the board of directors meeting. In the event that a director expresses objection as backed by a record or written statement, the Company shall submit the objection to the Audit Committee and report it to	accordance with Subparagraph 1, Paragraph 4, Article 9 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers. Adjustment in wording with reference to provisions set forth under Article 14~3 of Securities and Exchange Act.

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the shareholders meeting for discussion. This same provision is applicable mutatis mutandis to an event of amendment. In the event that the aforementioned issue is not approved by more than onehalf of all members of the Audit Committee, It may be agreed by more than twothirds of all directors, and the resolutions of the Audit Committee shall be expressly stated in the minutes of the board of directors meeting.

Resolution:

Proposal 5

Proposed by the Board of Directors

Subject: It is proposed that the directors be lifted from prohibition of business strife. Please resolve the decision as appropriate.
Descriptions: 1. In response to the overall operational needs of the Company, it is proposed that the Company's Director Mr. Tseng Chia-Hsiung be lifted from prohibition of business strife in accordance with Article 209 of the Company Act.
Key contents of the potential business strife of the Director: Mr. Tseng Chia-Hsiung, statutory representative of Lai Fu Investment Co., Ltd. concurrently serves with Zhangzhou Chimei Chemical Co., Ltd. as its director.
Comparative Table of Pre-Amendment and Post-Amendment Contents below:

Resolution:

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Incidental Motion

Adjournment

59 -

Three. Annex:

Annex I

Grand Pacific Petrochemical Corporation “Rules and Procedures for Shareholders’ Meeting”

Officially resolved in the Board of Directors on March 27, 2002 Officially resolved in the shareholders’ meeting on June 27, 2002

The Company’s Shareholders’ Meeting shall be duly handled in accordance with these Rules unless otherwise prescribed in laws.
In case of a shareholders’ meeting, the sign-in book should be prepared so that the participating shareholders may sign in. A participating shareholder may, as well, submit his or her sign-in card instead of an act to sign in. The number of shares represented by the participating shareholders shall be duly counted based on the sign-in books or the submitted sign-in cards.
The participation and voting by shareholders shall be calculated based on the number of shares.
The shareholders’ meeting shall be convened at a venue where the Company is postponement or a venue appropriate to convening of the shareholders’ meeting. The shareholders’ meeting shall not start at a time earlier than 9:00 a.m. or later than 3:00 p.m.
The shareholders’ meeting shall be chaired by the chairman if it is convened by the board of directors. In the event that the chairman is on leave or is unable to exercise the power by any reason, the vice chairman shall act on behalf. In case of no vice chairman or in the event that the vice chairman is on leave or is unable to exercise the power by any reason, the chairman shall appoint one managing director to act on behalf. In case of no managing director, the chairman shall appoint one director to act on behalf. In the event that the chairman does not appoint a substitute, one managing director or one director shall be elected from among themselves to act on behalf. Where a shareholders’ meeting is convened by another authorized person beyond the board of directors, the shareholders’ meeting shall be chaired by that convener. In case of two or more conveners, one shall be elected from among themselves to act on behalf.
The retained Attorney-at-Law appointed by the Company, Certified Public Accountant or the relevant personnel may participate in the shareholders’ meeting as non-voting (guest) participants. The staff members for a shareholders’ meeting shall wear identity certificates or armbands.
The process of a shareholders’ meeting shall be recorded with audio or video proofs which shall be archived for a minimum of one year
The chairperson shall calls to start the meeting when the time is up. In the event that the meeting is attended by shareholders who do not constitute a half of the total outstanding shares, nevertheless, the chairperson may announce a postponement for the meeting. The total of the postponements shall not exceed the maximum of twice and the aggregate total of postponements shall not exceed one hour. In the event that the shareholders’ meeting is attended by shareholders who represent still less than one-third of the total outstanding shares
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after twice postponements, the chairperson may announce that the shareholders’ meeting be aborted. In the event that the shareholders’ meeting is attended by shareholders who represent still less than one-third of the total outstanding shares after twice postponements, a tentative resolution in accordance with Paragraph 1 of Article 175. In the event that the total of the outstanding shares represented by the participating shareholders exceeds a half of the aggregate total, the chairperson may put the tentative resolution so resolved to the shareholders’ meeting for further resolution in accordance with Article 174 of the Company Act.

Where a shareholders’ meeting is convened by the board of directors, the agenda shall be worked out by the board of directors and shall be handled based on the scheduled agenda. The agenda shall not be changed unless duly resolved by the shareholders’ meeting. The provision set forth under the preceding paragraph is equally applicable mutatis mutandis to an event where the shareholders’ meeting is convened by another convener beyond the board of directors.

The chairperson shall not announce adjournment of the meeting unless duly resolved, before the issues on the agenda as mentioned in the two preceding paragraphs (including extraordinary motions) are concluded. After the meeting is adjourned, the shareholders shall no longer elect another chairperson to continue the meeting at the same or a new venue; Where the chairperson breaches the Procedure Rules for Shareholders’ Meeting and announces adjournment of the meeting, one person may be elected through a majority vote of the participating shareholders to serve as the chairperson to continue the meeting.

Before a shareholder takes the floor, he or she shall fill up the speech slip which shall expressly bear the subject of his or her speech, shareholder account number (or participation certificate number) and name of account holder. The chairperson shall fix the subsequent order of the floor. Where a shareholder does not speak up after having submitted a slip of the floor, he or she is deemed to have not spoken up. In case of a discrepancy between the contents actually spoken and those shown on the contents of the floor, the contents actually spoken shall prevail. Where a shareholder speaks, other shareholders shall not speak to interfere unless consented by the chairperson and the speaking shareholder. The chairperson may stop an offender, if any.
For a same issue, a shareholder shall not speak more than twice, and not over five minutes in each speech. Where a shareholder breaches the requirements or speaks beyond the specified scope in accordance with the preceding paragraph, the chairperson may stop his or her speech.
Where a juristic person is commissioned to participate in a shareholders’ meeting, that juristic person may assign only one representative to participate in the meeting. Where a juristic person shareholder appoints more than two representatives to participate in the shareholders’ meeting, only one among them may take the floor for a same issue.
After a shareholder completes the floor, the chairperson may reply either in person or through another designated by the chairperson.
If the Chairman deems that the proposal in discussion is ready for a vote, he or she may declare an end to the discussion, and put it forward for a vote.
In the voting process, the monitors and calculators shall be designated by the chairperson. A monitor shall be designated among shareholders. Voting results shall be reported on site and a record shall be made.
During the progress of a meeting, the chairperson may announce a recess as appropriate at his
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discretion.

Unless otherwise provided for in the Company Act or the Articles of Incorporation, decisions in the shareholders' meeting shall be resolved by a majority vote of the participating shareholders. In the voting process, the aggregate total of the voting powers shall be announced by the chairperson on a case-by-case basis.
Where an issue has an amendment or an alternate, the chairperson shall decide the order of voting process along with the initial issue. Where one issue has been duly resolved, other issue(s) shall be deemed vetoed and shall call for no more voting process.
The chairperson may instruct the picketers (or security guards) to help maintain the order of a shareholders’ meeting venue. Where the picketers (or security guards) help maintain the order at the venue, they shall wear the armbands bearing “Picketers”.
These Rules shall be put into enforcement after being resolved in the shareholders’ meeting. This same provision is mutatis mutandis applicable to an event of an amendment.
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Annex II

Grand Pacific Petrochemical Corporation

Articles of Incorporation

(Post-amendment contents)

Officially resolved in the Board of Directors on April 25, 2019

Chapter I General Provisions

Article 1: This Company is duly incorporated under the provisions set forth in the Company Act in the full name of Grand Pacific Petrochemical Corporation (Hereinafter referred to as the Company).
Article 2: The Company shall engage in business operation within the scope enumerated below:
C801020 Petrochemical Manufacturing
C801100 Synthetic Resin & Plastic Manufacturing
C802990 Other Chemical Products Manufacturing
F401010 International Trade
D101050 Cogeneration
D401010 Heat Energy Supplying
G801010 Warehousing and Storage
H701020 Industrial Factory Buildings Lease Construction and Development 9. F501060 Restaurants
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
Article 2-1: The aggregate total of outward investment by the Company is free of the 40% of the Company’s paid-in capital.
Article 3: The Company is headquartered in Kaohsiung City of the Republic of China and may have branches or factories established elsewhere at home and abroad as appropriate. The establishment and change of the Headquarters, a branch or factory shall be duly handled exactly as resolved in the Board of Directors.
Article 4: (Deleted)

Chapter II Shares

Article 5: The Company's authorized capital amounts to Twenty Billion New Taiwan Dollars, divided into two billion shares at NT$10 par value. For the unissued shares, the Board of Directors is authorized with plenipotentiary power to issue in partial installments as the actual situations may justify and to issue preferred shares for a part of the unissued shares.
The Company may issue employee stock option certificates to employees of the Company and its subsidiaries at home and abroad. Amidst the aggregate total of shares mentioned in the preceding Paragraph, 50 million shares may be reserved to issue employee stock option certificates which may be issued in partial installments as resolved by the Board of Directors. Where the Company falls in a need to repurchase itself, the Board of Directors is authorized with plenipotentiary power to duly act as
63 -

appropriate.

Where the price of subscription to the employee stock option certificates issued by the Company is below the closing price of the Company's common shares on the date of issuance, or where the price of treasury stocks transferred to employees is below the average price of the shares repurchased by the Company, it shall be subject to consent in the shareholders’ meeting through one half majority vote cast by participating shareholders who represent two-thirds of the total of voting powers.

The preferred shares issued by the Company in 1984 (listed through Taiwan Stock Exchange Corporation (TWSC) in Stock Code 1312A, (hereinafter referred to as Year 1984 Grand Pacific Preferred Shares) bear the rights & obligations as enumerated below:

Allocation of dividend in the terms as set forth under Article 29 of these Articles of Incorporation.
Preferential allocation of the Company's residual properties.
3 Other rights equivalent to those borne by common shares.
Article 5-1: The Company's preferred shares bear the rights & obligations and other significant terms for issuance as enumerated below except Year 1984 Grand Pacific Preferred Shares which shall be duly handled in accordance with Article 5 & Article 29 and not subject to provisions set forth under this Article:
Preferred shares bear dividend within the maximum limit of 8% per annum, to be counted based on the issuance price per share. The dividend is payable in cash once per annum. The dividend of the preceding year shall be paid on the base day resolved and fixed by the Board of Directors. The amount of dividend in the year of issuance and the year of recovery shall be counted based on the numbers of days of issuances in that year(s). The day of issuance is defined as the base day on which the preferred shares are issued.
Toward allocation of preferred share dividend, the Company has a discretionary power and may not allocate to preferred share dividend as resolved in the Board of Directors. In a year while the Company shows no earning in the final account or while the Board of Directors resolves not to allocate preferred share dividend, the preferred share dividend not allocated shall not be accumulated to the subsequent year(s) for deferred payment.
The preferred share shareholders supersede common shareholders in allocation of dividend but are next to the shareholders of Year 1984 Grand Pacific Preferred Shares. Except receipt of the dividend mentioned under Subparagraph II of this Paragraph, the preferred share shareholders shall not participate in the distribution of earnings of common shares and an event where the capital reserve is allocated for cash dividend or for expansion of capital.
The preferred share shareholders supersede common shareholders in allocation of the Company's residual properties but are next to the shareholders of Year 1984 Grand Pacific Preferred Shares. Except Year 1984 Grand Pacific Preferred Shares, the shareholders of all sorts of preferred shares are entitled to the same priority orders in receipt of payments and shall not exceed the amount of issuance.
The preferred share shareholders are not entitled to voting power and election power in a shareholders’ meeting but are entitled to be elected to be directors; and are entitled to voting powers in the preferred shareholders’ meeting and a shareholders’ meeting linked up with the rights & obligations of preferred shareholders’ meeting.
A preferred share shall not be converted into a common share.
The preferred shares shall not be fixed with an expiring date. In case of the period of issuance, such period of issuance shall not be shorter than seven (7) years. A preferred shareholder shall not request the Company to retrieve the preferred shares held by him or her. The Company may, nevertheless, fix the retrieving date and
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the retrieving date so fixed shall not be earlier than the expiring date of a five-year period. After the expiring date or starting from the date of retrieval fixed by the Company, the Company may retrieve the issued preferred shares either in whole or in part at issue price and relevant issuance rules in cash or other method where permitted by law. In the event that where the time is due, the Company is unable to retrieve the preferred shares either in whole or in part as a result of objective factor or force majeure, the rights of the preferred shares not retrieved shall be extended based on the conditions of issuance until the time point when the Company retrieves in full. In the event that the Company resolves to grant dividend in that year, the dividend payable as of the date of retrieval shall be counted based on the number of days of issuance in that year.

For the title of the preferred shares, date of issue and the concrete conditions, the Board of Directors is authorized with plenipotentiary power to handle based on the facts of the capital markets, the investors' intent to subscribe to, the Company's Articles of Incorporation and laws and ordinances concerned at the moment of actual issuance.

Article 6: The Company's share certificates shall be in the registered ones in all events.
Article 7: The Company's share certificates shall be signed or affixed with seals by three or more directors, serially numbered, affixed with the Company's official seal and duly authorized before issuance.
For shares issued by the Company, the Company may be exempted from printing share certificates but shall consult with the Taiwan Depository & Clearing Corporation (TDCC) for registration or custody.
Article 8: The Company's registered share certificates shall bear the shareholders' names, or title of the juristic person if held by a juristic person.
Article 9: Unless otherwise specified in laws and ordinances concerned and rules & regulations regarding securities, the transfer by shareholders for the share certificates, pledge of rights, report-for-loss, inheritance, bestowal as a gift, report-for-loss for or change in registered specimen seal and all sorts of rights of securities of the Company shall be duly handled exactly in accordance with “Regulations Governing the Administration of Shareholder Services of Public Companies”.
Article 10: (Deleted)
Article 11: (Deleted)
Article 12: Transfer of stock ownership shall be discontinued within sixty (60) days prior to a shareholders' regular meeting, within thirty (30) days prior to a special shareholders meeting and within five (5) days prior to the base day scheduled for allocation of dividend, bonus or other interests.
Article 13: Where a share certificates is lost or stolen, the shareholder or the lawful holder shall duly report to the security authority, fill up the application form for report-for-loss of the share certificates and submit it to the Company for audit registration, petition to the jurisdictional court for the public summons procedures in accordance with the Code of Civil Procedure within five (5) days. That same applicant shall submit the duplicate copy of the application and the photocopy of the receipt issued by the court to the Company otherwise the application shall be abolished. After the public summons
65 -

procedures are duly ruled by the court, the applicant shall submit one copy of the newspaper bearing the public summons procedures to the Company. Upon expiry of the period for the public summons procedures, the applicant shall apply to the Company based on the judgment issued by the court for reissuance of new share certificates.

Article 14: (Deleted)

Chapter III Shareholders’ meeting

Article 15: The Company's special shareholders meeting shall be duly convened within six (6) months from closing of every fiscal year, with the notices f or the meeting to be served to all shareholders thirty (30) days prior to the date scheduled for the shareholders' regular meeting. A special shareholders meeting may be convened whenever necessary with notices to be served to all shareholders fifteen (15) days in advance. The notices mentioned in the preceding Paragraph shall bear the date, venue, reasons to convene the meeting. A shareholders’ meeting shall be duly convened by the Board of Directors unless otherwise specified in Company Act.
Article 16: A shareholders’ meeting shall be duly convened in accordance with Company Act. A shareholder who is unavailable to attend a shareholders' meeting in person may appoint a proxy by issuing a power of attorney (proxy) to expressly bear the scope of the authorized power, duly sign and affix seal thereupon to authorize a proxy to attend on his or her behalf. Except for a trust enterprise or a stock agency 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 exceed 3% of the total number of voting powers of the company, otherwise, the portion of excessive voting power shall not be counted. Unless otherwise specified in the Company Act, the participation in a shareholders’ meeting by a shareholder through a proxy shall be duly handled exactly in accordance with “Regulations Governing Use of Proxies in the Shareholders’ Meeting of Public Companies”.
A shareholder of the Company may exercise voting power through electronic means. A shareholder who exercises voting power through electronic means is deemed to have participated in the meeting in person. All relevant issues shall be duly handled in accordance with the laws and ordinances concerned.
Article 17: A shareholders’ meeting shall be chaired by the chairman. During the chairman's absence, the shareholders’ meeting shall be chaired by the vice chairman. Where the vice chairman is absent either, the chairman shall appoint one director to chair the meeting. Where the chairman does not appoint a director, one director shall be elected from among themselves to chair the meeting.
Article 18: Unless otherwise provided for in the Company Act, decisions in the shareholders' meeting shall be resolved by over one half majority vote in the meeting which is attended by shareholders who represent over one half majority of the total issued shares.
Article 19: With the shares held by shareholders, each share hereof is entitled to one voting power, provided that the Company has no voting power for shares held under Article 179 of the Company Act. Where a juristic person functions as a shareholder of the Company, the representative is not confined to one person. The voting power so exercised shall, nevertheless, still be counted based comprehensively based on the shares so held.
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Article 20: Minutes shall be duly worked out for decisions resolved in a shareholders’ meeting and shall be duly signed or affixed with seal by the chairperson and served to all shareholders within twenty (20) days after the meeting. The minutes may be served by means of a public announcement.
The minutes of a meeting shall expressly bear the month/day/year, venue of the meeting, name of the chairperson, method of resolution, highlights and outcome of the meeting and shall be archived permanently throughout the period while the Company exists. The sign-in book for participating shareholders and written proxies shall be archived for one year minimum, provided, that where a shareholder lodges litigation in accordance with Article 189 of the Company Act, the same shall be archived until after the litigation is concluded.

Chapter IV Directors, Audit Committee and Managerial officers

Article 21: The Company has seven directors to organize the Board of Directors. The directors shall be elected by the shareholders’ meeting from the candidates with disposing capacity, with a three-year tenure of office, eligible for reelection. The number of independent directors shall not be below the minimum of three.
Directors are elected under the candidates nomination system as set forth under Article 192~1 of the Company Act. The director candidates shall be nominated, accepted for the candidacy and put into public announcement exactly in accordance with the Company Act, Securities and Exchange Act and laws and ordinances concerned. Both independent directors and non-independent directors shall be elected in the same package with the numbers of elected winners to be counted respectively.
Article 22: In the Board of Directors, through participation by more than two-thirds of total number of directorship seats and one half majority votes of the participating directors, one chairman and one vice chairman shall be elected. The chairman shall represent the Company externally.
Article 23: Except the first board of directors meeting which shall be duly convened in accordance with Article 203 of the Company Act, all meetings of the board of directors shall be convened and chaired by the chairman. The Board of Directors shall convene one meeting on a quarterly basis as the minimum. The notices to a board of directors meeting shall expressly bear the cause(s) or subject(s) of the meeting and shall be served to all directors seven (7) days in advance. An extraordinary meeting may be convened any time as necessary. Unless otherwise provided for in the Company Act, decisions in the board of directors meeting shall be resolved by over one half majority in the meeting attended by directors representing over one half majority of the total number of directors. A director who is unavailable to attend a board of directors meeting may authorize another director to act as his or her proxy. The notices for a board of directors meeting mentioned in the preceding Paragraph may be served in writing, e-mail or by FAX.
Article 24: The Company's Board of Directors is subject to the responsibilities and powers as enumerated below:
To enact business policies, review business plans and oversee implementation of the business operation.
To review budget and final accounts.
To propose increase/decrease of capital.
To review distribution of earnings.
To approve of significant external contracts.
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To propose amendment to Articles of Incorporation.
To review the Company's organizational rules and major articles.
To determine establishment, reorganization or dissolution of a branch.
To appoint and discharge of the ranking staff above manager level.
To convene shareholders’ meetings.
To approve of procurement and disposal of real estate.
Article 25: The Company shall set up Audit Committee in accordance with Article 14~4 of Securities and Exchange Act. The Audit Committee or the members of the Audit Committee shall execute the responsibilities and powers of the supervisors as bestowed under the Company Act, Securities and Exchange Act and other laws and ordinances concerned.
Article 26: The total of the Company's registered share certificates held by all directors shall be pursuant to the ratios specified under the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies promulgated by the competent authority.
Article 27: The remuneration to directors shall be granted disregarding whether the Company operates at a profit. The Board of Directors is bestowed with the plenipotentiary power to fix the amount of the remuneration to directors at the rate normally profitable in the other companies in the same industry.
Article 28: The Company’s fiscal year is starting from January 1 until December 31 of every calendar year. Upon closure of every fiscal year, the Board of Directors shall work out the following documents to be submitted to and acknowledged by the shareholders' regular meeting:
Business report.
Financial statements.
Surplus earnings distribution or loss make-up proposal.
Article 29: The Company shall set aside 1% of the profit earned by the Company in a year as remuneration to employees and a sum within 2% maximum of the profit earned by the Company in a year as remuneration to directors based on the profit status of the year. Where the Company remains in accumulated loss, nevertheless, such loss shall be made up beforehand.
The term “the profit status of the year” as set forth herein denotes the profit before tax in that year after deduction the sum for allocation of remuneration to employees and remuneration to directors.
From the earnings of the Company in a year as shown through the annual account settlement, after the sum to pay tax and make up previous loss, if any, is set aside, a sum 10% out of the balance shall be set aside as legal reserve. The balance of the Company's earnings after annual final account settlement, after payment of tax, making up loss, setting aside 10% legal reserve, setting aside or reversal of special reserve shall be allocable earnings which, along with the unappropriated retained earnings of the preceding year, shall be the accumulated unappropriated retained earnings wherewith, dividend for Year 1984 Grand Pacific Preferred Shares at 6% per annum shall be set aside. In the event that the annual dividend is not allocated in full, the shortage shall be made with the allocable earnings of the ensuing year preferentially. With the balance of the unappropriated retained earnings, the Board of Directors shall propose the percentages of allocation based on laws and ordinances concerned, dividend policies and status of working capital. Where the dividend is allocated by means of issuance
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of new shares, it shall call for consent from the shareholders’ meeting beforehand. When the dividend is allocated in cash, it calls for approval under a decision to be resolved in the Board of Directors.

The Company currently lies amidst the highly changeable industrial environment is changeable. The life cycle of the Company is amidst stable growth. The Company shall firmly dominate the economic environment to assure sustainable operation. Given the Company's long-term financial planning, future capital needs with efforts to protect the interests of shareholders, the Company shall allocate annual cash dividends are not less than 10% of the total cash and stock dividends of the current year (excluding dividend of Year 1984 Grand Pacific Preferred Shares at 6% per annum).

Chapter V Supplementary provisions

Article 30: All contracts executed by the Company externally, disregarding the counterparties, shall bear the terms and conditions consistent with the principles of fair competition aiming at the Company's interests in the top concern.
Article 31: The Company's organizational rules and all operational regulations shall be enacted by the Board of Directors separately.
Article 32: The Company may render guarantee services externally. Matters not specified in these Articles of Incorporation, if any, shall be duly handled in accordance with the Company Act and laws and ordinances concerned.
Article 33: These Articles of Incorporation were duly enacted on June 25, 1973. Duly amended on June 27, 1974 as the 1[st] amendment.

Duly amended on June 14, 2019 as the 38[th] amendment.

These Articles of Incorporation shall be put into enforcement after the amendment is duly resolved in the shareholders’ meeting.

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Annex III

Grand Pacific Petrochemical Corporation Procedures for Acquisition or Disposal of Assets

(Post-amendment contents)

Officially resolved in the Board of Directors on March 21, 2019

Objectives

These Operational Procedures are duly enacted in accordance with Article 36~1 of Securities and Exchange Act and rules & regulations concerned promulgated by the Financial Supervisory Commission, Executive Yuan.

Scope of application

Targets applicable to: Finance Department, Accounting Department, General Manager's Office.

Relevant referential papers
3.1 The “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” amended and promulgated by the Financial Supervisory Commission` and letters & decrees concerned.
3.2 FAM-01 Regulations Governing Property Management
3.3 INC-02 Regulations Governing Authorization in Duties
3.4 PRC-01 Public Relations Operations
3.5 ACC-01 Budgeting Operations
3.6 ACC-06 Regulations Governing Capital Expenditures
Definition of terms
4.1 The term “assets” as set forth in these Procedures includes:
- 4.1.1 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
- 4.1.2 Real estate (including land, houses and buildings, investment property, rights to use land, and construction enterprise inventory) and equipment
- 4.1.3 Memberships
- 4.1.4 Patents, copyrights, trademarks, franchise rights, and other intangible assets
- 4.1.5 Right-of-use assets
- 4.1.6 Claims of financial institutions (including receivables, bills purchased and discounted, loans, and overdue receivables)
- 4.1.7 Derivatives
- 4.1.8 Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with law
- 4.1.9 Other major assets

All the aforementioned assets shall be duly acquired or disposed of exactly in accordance

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with these Operational Procedures.

4.2 Date of occurrence: Refers to the date of contract signing, date of payment, date of consignment trade, date of transfer, dates of the board of directors resolutions, or other date that can confirm the trading counterparty and monetary amount of the transaction, whichever date is earlier; provided, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.
4.3 Professional appraiser: Refers to a real estate appraiser or other person duly authorized by law to engage in the value appraisal of real estate or equipment.
4.4 Related party or subsidiary: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
4.5 Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term “forward contracts” does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements.
4.6 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 therefore (hereinafter “transfer of shares”) under Article 156-3 of the Company Act.
4.7 The term “within one year” as set forth in these Procedures denotes the period of one year starting retrospectively backward from the date of occurrence of the fact. The part promulgated under the Rules amended and promulgated by the Financial Supervisory Commission, Executive Yuan in Article 3.1 is no longer required to be counted inclusive.
4.8 The term “financial statements of the most recent term” as set forth in these Procedures denotes the Company's financial statements of the most recent term audited or certified by the Certified Public Accountant(s).
4.9 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.
4.10 Independence of experts: The professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Company and its subsidiaries with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall meet the following requirements:
1) Having not previously received a final and unappealable sentence to imprisonment for one year or longer in contravention 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 three years have already elapsed since completion of service of the sentence, since expiration of the period of a suspended sentence, or since a pardon was received.
2) Having not been a related party or de facto related party of any party to the transaction.
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3) Where 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.

Upon issuance of an appraisal report or opinion, the personnel referred to in the preceding paragraph shall comply with the following:

  - 1) Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence.

  - 2) Upon auditing a case, they shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case worksheets.

  - 3) They shall conduct an item-by-item evaluation of the integration, accuracy, and rationality of the sources of data used, the parameters, and the information, as the basis for issuance of the appraisal report or the opinion.

  - 4) The declaration attesting to the professional competence and independence of the personnel who prepared the report or opinion, and that they have evaluated and found that the information used is rational, accurate with sound compliance with applicable laws and regulations.

Handling procedures & explanation:
5.1 Prerequisite for investment in negotiable securities:

5.1.1 Appraisal procedures

The acquisition or disposal of the investment in securities of the Company is carried out by the executing unit to analyze the relevant benefits and assess the potential risks. Upon evaluation, the Company shall obtain the financial statements of the most recent term audited or certified by the Certified Public Accountant(s) of the target companies or other relevant information and data before date of occurrence of the fact to function as the reference for the transaction prices. If the dollar amount of the transaction is 20 percent of the company's paidin capital or NT$300 million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the CPA needs to use the report of an expert as evidence, the CPA shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the Financial Supervisory Commission.

5.1.2 Operational procedures

In terms of investment in negotiable securities, the chairman authorizes the general manager to carry out the investment within the credit limit approved by the Board of Directors. In case of acquisition or disposal of stocks, corporate bonds, negotiable securities in private placement not trade in the centralized exchange or over-the-counter exchanges, approval from the Board of Directors shall be obtained beforehand.

Acquisition or disposal of negotiable securities shall be duly handled in accordance with the operational procedures of the Company's internal control system.

5.1.3 Implementing unit

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Investment in the negotiable securities by the Company shall be executed by the Finance Department.

5.2 Prerequisite for investment in real estate and other fixed assets
5.2.1 Appraisal procedures

In acquiring or disposing of real estate, 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 mechanical equipment or rightof-use assets thereof for business use, shall obtain an appraisal report prior to the date of occurrence of the event from a professional appraiser and shall further comply with the following provisions:

1) Where due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be 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.
2) Where the transaction amount is NT$1 billion or more, appraisals from two or more professional appraisers shall be obtained.
3) Where any one of the following circumstances applies with respect to the professional appraiser's appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or all the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ROC Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reason for the discrepancy and the appropriateness of the transaction price:
(1) The discrepancy between the appraisal result and the transaction amount is 20 percent or more of the transaction amount.
(2) The discrepancy between the appraisal results of two or more professional appraisers is 10 percent or more of the transaction amount.
4) No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the publicly announced current value for the same period is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

5.2.2 Operational procedures

1) For acquisition or disposal of real estate, the publicly announced current value, evaluated value, prices in transactions actually concluded for the neighboring real estate, conditions to resolve for the transaction and transaction prices.
2) In acquisition or disposal of other fixed assets, the Company shall conduct through inquiry, price competition, price negotiation bargaining process or open tender.
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3) The transaction shall be conducted within the amounts to be determined based on the Regulations Governing Authorization of Duties.

5.2.3 Implementing unit

In acquiring or disposing of real estate or other fixed assets, the using unit or financial unit shall be responsible for implementation thereof after approval thereof from the approval authority under the preceding paragraph is obtained.

5.3 The credit limits of investment in negotiable securities and real estate
5.3.1 The aggregate total amount of investment by the Company and its subsidiaries into negotiable securities shall not exceed 150% of the Company's net worth as shown through its financial statements of the most recent term, and the amount in an individual investment in negotiable securities shall not exceed 50% of the aforementioned net worth.
5.3.2 The aggregate total amount and the individual amount of investment by the Company and its subsidiaries into real estate not for business use shall not exceed 10% of the Company's net worth as shown through its financial statements of the most recent term.
5.4 Procedures for acquisition and disposal of memberships or intangible assets
5.4.1 Appraisal procedures

Where the Company acquires or disposes of memberships, intangible assets, rightof-use assets thereof and other major assets and the transaction amount reaches twenty percent (20%) 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 rationality of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

5.4.2 Operational procedures

1) In acquisition or disposal of memberships, intangible assets, other major assets, the Company shall conduct through inquiry, price competition, price negotiation bargaining process or open tender.
2) The transaction shall be conducted within the amounts to be determined based on the Regulations Governing Authorization of Duties.

5.4.3 Implementing unit

In acquiring or disposing of memberships, intangible assets, other major assets, the using unit or the Finance Department shall be responsible for implementation thereof after approval thereof from the approval authority under the preceding paragraph is obtained.

The amounts of transactions for assets mentioned under Articles 5.1, 5.2 and 5.4 shall be duly handled in accordance with the promulgation under Article 5.8.1, 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.

5.5 The operational procedures of acquisition or disposal of assets with related parties
5.5.1 When the Company shall engage in any acquisition or disposal of assets from or
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to a related party, in addition to the process in accordance with the abovementioned requirements, and the relevant resolution procedure adopted and the appraisal of rationality of trading terms appraised according to the following requirements, 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 as required. The calculation of the amount of transaction mentioned in the preceding Paragraph referred to in the preceding paragraph shall be made in accordance with the above-mentioned requirements hereof. When judging whether a trading counterparty is a related party, in addition to legal formalities, the substance of the relationship shall also be considered.

5.5.2 When the Company intends to acquire or dispose of real estate or right-of-use assets thereof from or to a related party, or intends to acquire or dispose of assets other than real estate or right-of-use assets thereof from or to a related party and the transaction amount reaches 20 percent or more of paid-in capital, 10 percent or more of the company's total assets, or NT$300 million or more, except in trading of domestic government bonds or bonds under repurchase and resale agreements, or subscription or repurchase of domestic money market funds issued by the securities investment trust enterprises, the Company shall not proceed to enter into a transaction contract or make a payment until the following information have been agreed by more than half of all audit committee members in principles and then resolved by the board of directors:
1) The purpose, necessity and anticipated benefit of the acquisition or disposal of assets.
2) The reason for choosing the related party as a trading counterparty.
3) With respect to the acquisition of real estate or right-of-use assets thereof from a related party, information regarding appraisal of the reasonableness of the preliminary transaction terms in accordance with Article 5.5.3.
4) The date and price at which the related party originally acquired the real estate, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party.
5) Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.
6) An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article.
7) Restrictive covenants and other important stipulations associated with the transaction.

In case of transactions carried out by and among the Company, its subsidiaries or subsidiaries with 100% holdings of issued shares or total capital, the Board of Directors may authorize the chairman to carry out beforehand within the specified credit limit and to report to the most recent board of directors meeting for retrospective acknowledgement afterward.

① The equipment or right-of-use assets thereof is acquired or disposed for business use.
② The real estate right-of-use assets is acquired or disposed for business use.
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The amount of transaction mentioned in the preceding Paragraph shall be counted under Article 5.8.1. The term “within the preceding year” as set forth herein denotes the one-year period retrospectively preceding the date of occurrence of the fact. The part having been approved by the Board of Directors and acknowledged by the Audit Committee needs not be counted inclusive.

If approval of more than half of all audit committee members as required in the transaction mentioned in the preceding Paragraph is not obtained, the procedures may be implemented if approved by more than two-thirds of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting. The terms “all audit committee members” in the preceding paragraph and “all directors” in the preceding paragraph shall be counted as the actual number of persons currently holding those positions.

5.5.3 Appraisal of reasonableness of the transaction cost
1) In acquiring real estate or right-of-use assets thereof from a related party, the Company shall appraise 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 nonfinancial industry lending rate announced by the Ministry of Finance.
- ② Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70 percent or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.
2) Where land and house thereupon are combined as a single property purchased or leased in one transaction, the transaction costs for the land and the house may be separately appraised in accordance with either of the means listed in the preceding paragraph.
3) Where Company acquires real estate or right-of-use assets thereof from a related party and appraises the cost of the real estate or right-of-use assets thereof in accordance with two subparagraphs of Paragraph 1, the Company shall also engage a CPA to check the appraisal and render a specific opinion.
4) When the results of the Company's appraisal conducted for acquisition of real estate in accordance with two subparagraphs of Paragraph 1 of Article 5.5.3 are uniformly lower than the transaction price, the matter shall be handled in compliance with Paragraph 3 of Article 5.5.3. However, where the following circumstances exist, objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real estate appraiser and a CPA has been obtained, this restriction shall not apply:
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(1) Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions:
- ① Where undeveloped land is appraised in accordance with the means in two subparagraphs of Paragraph 1 of Article 5.5.3, and house according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The “Reasonable construction profit” shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.
- ② Transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market sale or lease practices.
(2) Where the Company acquiring real estate, or obtaining real estate right-of-use assets through leasing, from a related party provides evidence that the terms of the transaction are similar to the terms of transactions for the acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year. Transactions for neighboring or closely valued parcels of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transaction for similarly sized parcels in principle refers to transactions by unrelated parties for parcels with a land area of no less than 50 percent of the property in the planned transaction; the “within the preceding year” refers to the year preceding the date of occurrence of the acquisition of the real estate or right-of-use assets thereof.
5) Where the Company acquires real estate or right-of-use assets thereof from a related party and the results of appraisals conducted in accordance with preceding two paragraphs are uniformly lower than the transaction price, the following steps shall be taken:
(1) A special reserve shall be set aside in accordance with paragraph 1, Article 41 of the Securities and Exchange Act against the difference between the real estate or right-of-use assets thereof transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares. Where the Company uses the equity method to account for its investment in another company, then the special reserve called for under Paragraph 1 of Article 41 of the Securities and Exchange Act shall be set aside pro rata in a proportion consistent with the share of public company's equity stake in the other company.
(2) Audit committee shall comply with Article 218 of the Company Act.
(3) Actions taken pursuant to subparagraph (1) and subparagraph (2) shall
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be reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus.

Where the Company amortizes special reserve in accordance with the aforementioned provisions, the Company shall not use the special reserve until the loss for depreciation has been recognized for assets purchased or leased at high prices, or has been disposed of, or the leasing contract has been terminated or with appropriate compensation or with restoration to the status quo ante or there has been other evidence proving no irrationality, as approved by the Financial Supervisory Commission.

For transaction of real estate or right-of-use assets thereof with related parties, if there is other evidence indicating that the transaction was not in conformity with arm’s length, the Company shall follow the requirements of the above two subparagraphs.

6) Where the Company acquires real estate or right-of-use assets thereof from a related party and one of the following circumstances exists, the acquisition shall be conducted in accordance requirements relating to Article 5.5.2, and the requirement relating to appraisal of reasonableness of transaction cost under two subparagraphs of Paragraph 1 of Article 5.5.3 do not apply:
- (1) The related party acquired the real estate or right-of-use assets thereof through inheritance or as a gift.
- (2) More than 5 years will have elapsed from the time the related party signed the contract to obtain the real estate or right-of-use assets thereof to the signing date for the current transaction.
- (3) The real estate is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real estate, either on the company's own land or on rented land.
- (4) The acquisition of business-use real estate right-of-use assets between the Company and its subsidiaries, or the subsidiaries in which it directly or indirectly holds 100 percent of the issued shares or authorized capital.
5.6 Operational Procedures of derivative instruments

The Company has separately enacted “Operational Procedures to Engage in Transaction and Disposal of Derivatives” (FIN-10) as the very grounds for transaction in derivative instruments.

5.7 Operational Procedures for a merger, demerger, acquisition, or transfer of shares
5.7.1 Appraisal and operational procedures
- 1) In conducting a merger, demerger, acquisition, or transfer of shares, the Company shall, prior to convening the board of directors to resolve on the matter, engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and 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 the Company directly or indirectly holds 100 percent of the issued shares or authorized capital, and in the case of a merger between subsidiaries
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in which the Company directly or indirectly holds 100 percent of the respective subsidiaries’ issued shares or authorized capital.

2) The Company 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 the preceding paragraph 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 exempts a company from convening a shareholders’ meeting to approve the merger, demerger, or acquisition, this restriction shall not apply.

Additionally, 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.

5.7.2 Other key points for attention:
1) Dates to convene the board of directors meeting and shareholders’ meeting: Unless otherwise specified in laws and ordinances concerned or in case of an extraordinary factor approved by the Financial Supervisory Commission, Executive Yuan beforehand, the companies participating in merger, demerger, acquisition shall convene the shareholders’ meetings and board of directors meetings on the same day to resolve the decision about merger, demerger, acquisition affairs. Unless otherwise specified in laws and ordinances concerned or in case of an extraordinary factor approved by the Financial Supervisory Commission, Executive Yuan beforehand, the companies participating in acceptance of transfer of another company's shares merger shall convene the board of directors meetings on the same day.

Of the companies participating in merger, demerger, acquisition, or acceptance of transfer of another company's shares with the exchange-listed (over-the-counter) stocks at the business venues of securities dealers, the Company shall work out integrated records in writing as enumerated below and archive them for five (5) years ready for audit.

(1) Basic identification data for personnel: Including the position 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 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 meetings.
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Those companies participating in merger, demerger, acquisition, or acceptance of transfer of another company's shares and in buys, sales of stocks at securities dealers shall declare through Internet system toward the Financial Supervisory Commission for future reference according to the statutory format the information set forth under Subparagraphs 1 and 2, of the preceding paragraph within two (2) days after the decision is resolved in the Board of Directors.

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, With the a company that is listed on an exchange or has its shares traded on an OTC market, the Company shall execute an agreement and shall duly handle the business based on the aforementioned provisions.

2) Commitment to confidentiality obligations beforehand: 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.
3) Principles for stipulation and change in share swap ratios and acquisition prices: the Company may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract:
(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, which 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 publicly disclosed.
4) Contents to be recorded in the contract: The contract shall record the rights and obligations of the companies participating in the merger, demerger, acquisition, or transfer of shares, and shall also record the following:
(1) Handling of breach of contract
(2) 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.
(3) The amount of treasury stock participating companies are permitted
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under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.

     - (4) The manner of handling changes in the number of participating entities or companies.

     - (5) Preliminary progress schedule for plan execution, and anticipated completion date.

     - (6) Relevant operational procedures for the scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures

  - 5) In case of a change in the number of companies participating in merger, demerger, acquisition, or acceptance of share transfer: 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.

  - 6) 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 paragraphs 1, 2 and 5 of this Article.

5.8 Timeframe and contents of the public announcement and filing
5.8.1 Where the Company acquires or disposes of assets where any one among those circumstances enumerated below occurs, the Company shall, based on the specified formula, launch public announcement and filing through the website promulgated by the competent authority within two (2) days from date of occurrence of the fact:
- 1) Acquisition or disposal of real estate or right-of-use assets thereof from or to a related party, or acquisition or disposal of assets other than real estate 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 repurchase of domestic money market funds issued by securities investment trust enterprises.
- 2) Merger, demerger, acquisition, or transfer of shares.
- 3) Losses from derivatives trading reaching the limits on aggregate losses or losses on individual contracts set out in the special case approved by the Board of Directors.
- 4) Where the type of asset acquired or disposed is equipment or right-of-use assets thereof for business use, the trading counterparty is not a related party, and the transaction amount meets any of the following criteria:
  - (1) For the paid-in capital is less than NT$10 billion, the transaction
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amount reaches NT$500 million or more.

(2) For the paid-in capital is NT$10 billion or more, the transaction amount reaches NT$1 billion or more.
5) Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the trading counterparty is not a related party, and the amount the company expects to invest in the transaction is less than NT$500 million.

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

(1) Trading of domestic government bonds.
(2) Where done by professional investors-securities trading on securities exchanges or OTC markets, or subscription of ordinary corporate bonds or general bank debentures without equity characteristics (excluding subordinated debt) that are offered and issued in the primary market, or subscription or redemption of securities investment trust funds or futures trust funds, or subscription by a securities firm of securities as necessitated by its undertaking business, or where a securities dealer to meet its need in underwriting serves as a securities firm of securities as necessitated by its undertaking business or as an advisory recommending securities firm for an emerging stock company, in accordance with the rules of the Taipei Exchange (TPEx).
(3) Trading of bonds under repurchase/resale agreements, or subscription or repurchase of domestic money market funds issued by securities investment trust enterprises.

The amount of transaction mentioned in the preceding Paragraph shall be calculated as follows:

(1) The amount of any individual transaction.
(2) The cumulative transaction amount of acquisitions or disposals of the same type of underlying asset with the same trading counterparty within the preceding year.
(3) The cumulative transaction amount of real estate or right-of-use assets thereof acquisitions or disposals (cumulative acquisitions and disposals, respectively) within the same development project within the preceding year.
(4) The cumulative transaction amount of acquisitions or disposals (cumulative acquisitions and disposals, respectively) of the same security within the preceding year.
5.8.2 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
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information reporting website designated by the competent authority within 2 days commencing immediately 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.

5.8.3 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.
5.8.4 The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and opinions of CPA, attorney, and securities underwriter at the Company, where they shall be retained for 5 years except where another law provides otherwise.
5.9 The control procedures over subsidiaries in acquisition or disposal of assets.
5.9.1 A subsidiary shall, as well, duly enact the “Procedures for Acquisition or Disposal of Assets” in accordance with the “Regulations Governing the Acquisition and Disposal of Assets by Public Companies” and submit them to all supervisors and shareholders’ meeting for approval after being resolved in the Board of Directors. This same provision is applicable mutatis mutandis to an event of amendment.

A subsidiary of the Company, while acquiring or disposing of assets, shall duly handle in accordance with the “Internal Control System” and “Operational Procedures for the Acquisition or Disposal of Assets” enacted by itself.

5.9.2 If a subsidiary is not a domestic public company, its acquisition or disposal of assets has met the standards for public announcement and report of “Regulations Governing the Acquisition or Disposal of Assets by Public Companies”, the Company shall also make public announcement and report on behalf of such subsidiary.
5.9.3 The term “the paid-in capital or total assets” as used in the standards for public announcement and filing in Article 5.8 applicable to the subsidiary in the preceding paragraph shall refer to paid-in capital or total assets of the parent company (the Company).
5.10 Penalty clauses

Where the managerial officer and person-in-charge in loaning the Company’s funds to others are found in contravention of these Operational Procedures, they shall be reported for performance evaluation in accordance with the Company’s Employee Rewards and Punishments Procedures as the actual situations may justify.

5.11 Other issues concerned
5.11.1 Amidst the standards/criteria of public announcement and filing by a subsidiary, the term “up to 20% of the paid-in capital or 10% of the total assets” is on the grounds of the paid-in capital or total assets calculated with the individual or respective financial statements of the Company of the most recent term.
5.11.2 Where the share certificates issued by the Company bear no denomination or where the par value is not NT$10 per share, with respect to the requirement for
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transaction amounts of twenty percent (20%) of paid-in capital, ten percent (10%) of shareholders’ equity attributable to the parent company shall be used in the calculation. In the provision of transaction amount with paid-in capital up to NT$10 billion in these Operational Procedures, in the event that the share certificates issued by the Company bear no denomination or are in par value not NT$10 per share, it shall be counted based on NT$20 billion of the equity attributable to owners of the parent company.

5.11.3 Where the Company’s assets are acquired or disposed of through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or CPA opinion.
5.11.4 Enforcement and amendment

An amendment to these Operational Procedures calls for consent by entire Audit Committee members by one-second majority vote and shall be resolved in the Board of Directors. If not consented by entire Audit Committee members by one-second majority vote, it may go ahead with consent by more than two-thirds of the total number of directorship seats. Where an independent director voices an objection or a reserved opinion, it shall be expressly remarked in the minutes of the board of directors meeting. The decision resolved in the Audit Committee shall be expressly remarked as well and shall be further submitted to the shareholders’ meeting for consent after being resolved in the Board of Directors. This same provision is applicable mutatis mutandis to an event of amendment.

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Annex IV

Grand Pacific Petrochemical Corporation Operational Procedures for Loaning Funds to Others

(Post-amendment contents)

Officially resolved in the Board of Directors on March 21, 2019

Objectives

Scope of application
2.1 Targets applicable to: Finance Department, Accounting Department, General Manager's Office.
Relevant referential papers

PRC-01 Public Relations Operations

Definition of terms
4.1 The amount and duration of a loan mentioned in these Operational Procedures shall be:
- 1) The term “financing amount” as set forth herein denotes the accumulated balance of the short-term financing granted by the Public Companies.
- 2) 所 The term as a short-term refers to one year or one business cycle (whichever is the longer).
4.2 The term the parent company or subsidiary shall be identified in accordance with the requirements of Regulations Governing the Preparation of Financial Reports by Securities Issuers.
4.3 The term “net worth” as set forth herein denotes the equity attributable to owners within the ascription of the parent company, as shown through the Company’s balance sheet which has been worked out in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
4.4 The term “date of occurrence of fact” as set forth herein denotes the date of contract signing, date of payment, date when resolved in the Board of Directors or other date which is adequate to prove the target loanee and amount, whichever is the earlier.
Operational Procedures and descriptions:
5.1 The causes and necessities of funds to be loaned to others: The funds loaned amidst the need of short-term financing shall be confined to those as enumerated below:
- 1) Where a company where the Company holds shares with voting powers in excess of 50% either directly or indirectly falls in a need for short-term financing.
- 2) Where another company falls in a need for short-term financing for purchase of materials for as working capital.
- 3) In another need where the Company's Board of Directors agrees to loan fund with.
5.2 Maximum limits of the aggregate total of funds loaned and the individual targets.
- 1) The aggregate total amount of the fund loaned by the Company shall not exceed 20% of the Company's net worth.
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2) Toward a company in business transaction with the Company, the amount of an individual loan shall not exceed the amount of business transaction by and between both parties. The term “the amount of business transaction” as set forth herein denotes the amount of purchases or sales, whichever is the higher.
3) The credit limit of the fund to be loaned by the Company or its subsidiary toward a single enterprise shall not exceed 10% of the Company's net worth as shown through its financial statements of the most recent term.
4) In a case of fund loaned, amidst the change in situations afterward, the target loanee becomes inconsistent with these Operational Procedures or the balance of the loan exceeds the specified maximum limit, the Company shall work out corrective plan and shall submit such corrective plan to the Audit Committee and shall duly complete the corrective action within the time limit specified in the plan.
5) Funds loaned by and between the Company and the foreign company(ies) where the Company holds 100% voting power either directly or indirectly, or from the foreign companies where the Company directly and indirectly holds 100% voting powers to the Company, the funds loaned are free of the restriction of Subparagraph 1 of Article 5.2; however, the limits on total amounts loaned and the limits on individual loanee shall specified and the duration of loaning of fund shall be expressly provided.
5.3 Operational Procedures of funds to be loaned:
5.3.1 Credit investigation
- 1) Where the Company loans fund, the loanee shall first submit the Company data and financial data as necessary and shall apply to the Company for financing credit in writing.
- 2) After the Company accepts the application, the Finance Department shall conduct investigation and evaluation over the target loanee's business undertakings, financial conditions, solvency, profitability and purposes of the loan use and shall work out report.
5.3.2 Collateral for security

Where the Company loans funds, the Company shall acquire a commercial promissory note for security in amount equivalent to the loan and shall proceed with mortgage establishment with real estate or movable properties and insurance against fire risk. For the aforementioned security need, in the event that the loan applicant provides an individual or a company with adequate financial capability as the guarantee instead of collateral security, the Board of Directors may, as appropriate, take reference to the credit investigation report worked out by the Department of Finance instead. Where a company serves as the guarantor, the Company shall check and make sure whether its Articles of Incorporation bear the terms to permit guarantee.

5.3.3 Scope of the authorized power

The Company shall establish the information for the purpose of the fund to be loaned and shall prepare for memorandum data toward such facts of the target loanees, amounts, the date of pass by the Board of Directors, and the date when the fund is loaned which shall be put into prudential investigation into the memorandum record. After the Company's Finance Department completes the credit investigation process, the credit investigation report shall be submitted to the chairman for approval, reported to the Board of Directors for resolution beforehand.

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5.3.4 Other issues concerned

Where the Company's responsible person proves in contravention of provisions set forth under Articles 5.1 and 5.2, such responsible person shall team up with the loanee to assume the joint responsibility. In the event that the Company is impaired as a result, such responsible person shall assume the responsibility for damage indemnity as well.

5.4 Duration of loan and method for interest
5.4.1 Each case of loan shall be granted for a period of one year in principle. Such period of the loan may be extended as appropriate in response to approval granted by the Board of Directors in an extraordinary case.
5.4.2 In a case of fund loaned by the Company, the interest rate shall not be lower than the highest interest rate when the Company borrows from a financial institution. In a case of fund loaned by the Company, the interest shall be payable on a monthly basis in principle. In an extraordinary event, the interest pay interval may be subject to flexible adjustment in response to approval by the Board of Directors.
5.4.3 A loan case by and between the Company and its parent company or subsidiary or between the Company and its subsidiaries shall be submitted to and approved by the board of directors through resolution in accordance with the preceding Paragraph. The board of directors may appropriate the loan in installments or on a circulatory basis within the duration not beyond one year and within the amount not beyond the specified limit.
5.5 Timeframe and contents of public announcement and filing
5.5.1 The Company's Accounting Department shall launch public announcement and filing of the balances of the funds loaned by the Company and its subsidiaries as of the preceding month not later than the 10[th] day of every month.
5.5.2 Where balance of the funds loaned by the Company meets any one among those standards/criteria as enumerated below, the Finance Department shall launch public announcement and filing according to the requirements of the competent authority within two (2) days from date of occurrence of the fact.
- 1) Where the balance of the funds loaned by the Company and its subsidiaries exceeds 20% of the net worth as shown through the Company’s financial statements of the latest term.
- 2) Where the balance of the funds loaned by the Company and its subsidiaries to a single enterprise exceeds 10% of the net worth as shown through the Company’s financial statements of the latest term.
- 3) Where the amounts of the funds newly loaned by the Company or its subsidiaries are up to NT$10 million or 2% of the net worth as shown through the Company’s financial statements of the latest term.
5.5.3 Where a subsidiary of the Company is not a firm publicly listed in the Republic of China and where that subsidiary is required to announce to public Subparagraph 3 of the preceding paragraph, that announcement to public shall be conducted by the Company instead.
5.6
Penalty clauses

Where the Company’s managerial officer and person-in-charge in loaning the Company’s funds to others are found in contravention of these Operational Procedures, they shall be

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reported for performance evaluation in accordance with the Company’s Employee Rewards and Punishments Procedures as the actual situations may justify.

5.7 The subsequent follow-up control measures for the amounts having been loaned, procedures to manage overdue creditor’s rights
5.7.1 After a loan is appropriated, the Company shall closely watch the financial conditions, business performance and relevant credit standing of the loanee and the guarantor(s). If collateral has been provided, the Company shall closely watch a potential change in the collateral value. In case of a significant change, the personnel in charge shall report to the chairman forthwith and take measures to safeguard the credit as instructed.
5.7.2 Where a loanee pays back his or her loan when due or before due date, the Company shall first calculate the interest payable. The loanee shall clear off the interest along with the principal in full before the commercial promissory note may be cancelled and returned to the loanee or before the mortgage can be cancelled.
5.7.3 As soon as the loan expires, the loanee shall pay off the principal and interest immediately. If the loan is not repaid and needs to be extended, the improvement plan shall be duly worked out and submitted to the Board of Directors for approval. In case of violation, the Company may dispose of or claim payback with the provided collateral or guarantor(s).
5.7.4 The Company’s internal auditors shall audit the Operational Procedures for Loaning Funds to Others and the implementation thereof on a quarterly basis as the minimum and shall work out documented records. In case of a significant offense noticed, the internal auditors shall keep the audit committee informed forthwith in writing.
5.7.5 The Company shall duly evaluate the facts of funds loaned and appropriate adequate allowance for potential bad debts and shall duly disclose the relevant information and provide the supporting data to the certified public accountant(s) to implement the audit procedures as necessary.
5.8 Enforcement and amendments

An amendment to these Operational Procedures shall be implemented after the approval of the shareholders' meeting and the approval of the shareholders' meeting after the approval of more than one-half of the members of the Audit Committee and the resolution of the Board of Directors; the opinions of the independent directors shall be fully considered when the issue is submitted to the Board of Directors for discussion. Objections or reserved opinions shall be stated in the minutes of the board of directors meeting. In the event that a director expresses objection as backed by a record or written statement, the Company shall submit the objection to the Audit Committee and report it to the shareholders meeting for discussion. This same provision is applicable mutatis mutandis to an event of amendment. In the event that the aforementioned issue is not approved by more than one-half of all members of the Audit Committee, It may be agreed by more than two-thirds of all directors, and the resolutions of the Audit Committee shall be expressly stated in the minutes of the board of directors meeting.

5.9
Other significant issues

Where a subsidiary of the Company intends to loan its fund to others, the Company shall order that subsidiary to duly work out “Operational Procedures for Loaning of Funds to Others” based on its “internal control system” and these Operational Procedures. That subsidiary shall duly act based on the Operational Procedures so worked out and shall

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declare the balances, target loanees, duration of the loans of the preceding month to the Company not later than the 5[th] day of every month.

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Annex V

Grand Pacific Petrochemical Corporation Operational Procedures for Making Endorsements / Guarantees

(Post-amendment contents)

Officially resolved in the Board of Directors on March 21, 2019

Objectives

These Operational Procedures are duly enacted in accordance with Article 36~1 of Securities and Exchange Act and rules & regulations concerned of the Financial Supervisory Commission, Executive Yuan.

Scope of application
2.1 Targets applicable to: Finance Department, Accounting Department, General Manager's Office.
Relevant referential papers

INC-03 Regulations Governing Management over Seals

PRC-01 Public Relations Operations

Definition of terms

The term “endorsements/guarantees” as used in these Operational Procedures refers to the following:

4.1 Financing endorsements/guarantees:
1) Bill discount financing.
2) Endorsement or guarantee made to meet the financing needs of another company.
3) Issuance of a separate negotiable instrument to a non-financial enterprise as security to meet the financing needs of the company itself.
4.2 Customs duty endorsement/guarantee: meaning an endorsement or guarantee for the Company itself or another company with respect to customs duty matters.
4.3 Other endorsements/guarantees: meaning endorsements or guarantees beyond the scope of the above two subparagraphs.
4.4 Any creation by the Company of a pledge or mortgage on its chattel or real estate as security for the loans of another company shall also comply with these Operational Procedures.
4.5 The term the parent company or subsidiary shall be identified in accordance with the requirements of Regulations Governing the Preparation of Financial Reports by Securities Issuers.
4.6 The term “net worth” as set forth herein denotes the equity attributable to owners within the ascription of the parent company, as shown through the Company’s balance sheet which has been worked out in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
4.7 The term “date of occurrence of fact” as set forth herein denotes the date of contract signing, date of payment, date when resolved in the Board of Directors or other date which is adequate to prove the endorsement/guarantee targets and amount of transaction, whichever is the earlier.
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Operational Procedures and descriptions:
5.1 Counter parties of endorsements/guarantee
- 5.1.1 The Company may grant endorsements/guarantees only toward the targets as confined below.
  - 1) A company with which the Company does business.
  - 2) A company in which the Company directly and indirectly holds more than 50 percent of the voting powers.
  - 3) A company that directly and indirectly holds more than 50 percent of the voting powers in the Company.
    - Companies in which the Company holds, directly or indirectly, 90% or more of the voting powers may make endorsements/guarantees for each other, and the amounts of endorsements/guarantees may not exceed 10% of the net worth of the Company, provided that this restriction shall not apply to endorsements/guarantees made between companies in which the Company holds, directly or indirectly, 100% of the voting powers.
5.2 Credit limits of endorsements/guarantees
- 5.2.1 The aggregate total of endorsements/guarantees granted by the Company externally shall not exceed 80% of the Company's net worth as shown through its most recent financial statements. The amount of the endorsements/guarantees granted by the Company toward a single enterprise shall not exceed 70% of the Company's net worth as shown through its most recent financial statements.
- 5.2.2 The amount of the endorsements/guarantees granted to a company with business transaction shall not exceed the aggregate total amount of the business transaction by and between both parties over the past one year or 50% of the Company's net worth as shown through the most recent financial statements audited or certified by a Certified Public Accountant, whichever is the lower. The term “amount of the business transaction” as set forth herein denotes the amount of purchases or sales, whichever is the higher.
- 5.2.3 In the event that the Company and its subsidiaries have stipulated that the total amount of endorsements/guarantees could go more than 50% of the Company's net worth, the Company and its subsidiaries shall explain its necessity and rationality toward the shareholders' meeting.
5.3 Hierarchy of decision-making authority and delegation thereof
- 5.3.1 When the Company engages in endorsements/guarantees, it shall duly proceed with in accordance with the procedures specified under Article 5.5 of these Operational Procedures, and shall be approved through the resolution of the Board of Directors. However, in order to meet the timeliness requirements, when the Company and the company(ies) with holding of 100% voting powers either directly or indirectly, within the total amount of NT$500 million and the amount of NT$300 million toward a single enterprise, the Board of Directors may authorize the Chairman to make a decision and report to the Board of Directors for retrospective acknowledgement afterward.
- 5.3.2 If the Company engages in endorsements/guarantees in excess of the endorsement/guarantee limit specified in Article 5.2 of these Operational Procedures, it must be approved by the Board of Directors with resolution through more than half of the directors with joint guarantee in their names for the potential loss in the endorsements/guarantees so rendered. If this is the case,
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the Operational Procedures should be amended and reported to the shareholders meeting for retrospective acknowledgement. In the event that the shareholders' meeting disagrees, the plan should be revised to eliminate the overruns within a certain period of time.

5.4 Handling fee for endorsements/guarantees
5.4.1 Where the guarantees meet the requirements under Articles 5.1, 5.2 and 5.3 of these Operational Procedures, the guarantee fee shall be charged within the credit limit and public facilities of endorsements/guarantees. The guarantee rate is calculated based on the actual assistance and the acquiring costs.
5.4.2 The guarantee fee shall be charged in full before the seal(s) is(are) to be affixed for the guarantee process.
5.5 Handling procedures of endorsements/guarantees
5.5.1 When handling the endorsements/guarantees process, the finance unit shall examine the qualifications of the endorsements/guarantees targets on the item by item basis to check and make sure whether the quota meets the requirements of these Operational Procedures and whether the required reporting standards have been met, and shall assess the risks and record of the endorsements/guarantees. (Cf. Annex 6.2 Endorsement/Guarantee Risk Assessment Report), and collateral should be obtained as necessary. The relevant endorsement/guarantee contents, reasons and risk assessment results of the relevant endorsements shall be submitted to the chairman for approval and shall be approved by the Board of Directors. If it still falls within the specified credit limit, the chairman may approve of the case on the grounds of the creditworthiness and financial status of the endorsements/guarantees targets and then report to the nearest upcoming board of directors meeting for retrospective acknowledgement.
5.5.2 The Department of Finance shall establish the information for the endorsements/guarantees. After the endorsements/guarantees case is agreed upon by the Board of Directors or approved by the chairman, in addition to the application procedures for affixing of the seal in accordance with the prescribed procedures, and the committed guarantee, the name of the guaranteed target, the risk assessment result, the amount and date of endorsements/guarantees, the date of the chairman's approval or the chairman's decision, the date of obtaining the collateral and the conditions and date for the termination of the endorsements/guarantees, etc., shall be clearly stated. The relevant bills, the agreement and other documents shall also be photocopied into prudential custody.
5.5.3 The accounting unit shall prepare a detailed list of the guarantee issues that occur and are cancelled in every month, control the tracking and report the public announcement and filing, and shall assess or recognize the contingent loss of the endorsement on a quarterly basis, and properly disclose the endorsement/guarantee information in the financial statements. Furthermore, the accounting unit shall provide relevant information to the Certified Public Accountant(s) to perform the necessary check procedures.
5.5.4 In the event that an entity for which an endorsement/guarantee target is made was consistent with the provisions of Article 5.1 of these Operational Procedures but becomes inconsistent afterward, or if the endorsement/guarantee amount exceeds the specified credit limit due to a change in the basis of the calculation of the limit, the endorsement/guarantee amount or overdue portion of the entity for which an endorsement/guarantee is made shall be eliminated within the
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time limit specified under the contract or the Department of Finance shall work out the relevant improvement plan and submit it to the Audit Committee, and after the approval of the chairman, the excess shall be eliminated within the specified time limit and shall be reported to the Board of Directors.

5.5.5 Before the expiring date of the endorsement/guarantee, the Department of Finance shall take the initiative to notify the guaranteed enterprise to take back the guarantee notes retained in the bank or creditor institution, and cancel the endorsement/guarantee related papers and deeds.
5.5.6 The internal auditors shall audit the Operational Procedures for Endorsements/Guarantees and the implementation thereof on a quarterly basis and shall work out documented records. In case of a significant offense noticed, the internal auditors shall keep the audit committee informed forthwith in writing.
5.5.7 In case of a change in the circumstances afterward and, as a result, an entity for which an endorsement/guarantee target was made does not meet the requirements of these Operational Procedures or the balance exceeds the contracted limit, the corrective action plan should be worked out and with the relevant improvement plan to be submitted to the Audit Committee, and the corrective action plan should be completed as scheduled.
5.5.8 In the event that an entity for which an endorsement/guarantee target is made is a subsidiary whose net worth is less than one-half of the its paid-in capital, it shall evaluate its financial status and operating results on a monthly basis, review the potential risk in the endorsement/guarantee and work out the countermeasures. In the event that the subsidiary's stock has no denomination or the denomination of each share is not for NT$10 par value, the amount of paid-up capital shall be calculated according to the regulations based on the total of the capital reserve plus the issuance premium.
5.6 Custody and procedure of corporate seal
5.6.1 The Company shall use the company seal which was used to apply for incorporation registration with the Ministry of Economic Affairs as the special seal for endorsement/guarantee. The seal shall be kept by the secretary to the chairman after the approval by the Board of Directors. In case of a change in the seal custodian, it shall be reported to the Board of Directors for approval. The official registered specimen seal shall be included in the handover procedures.
5.6.2 After the endorsement/guarantee case is approved with the resolution by the Board of Directors or by the chairman, the Department of Finance shall fill in the “application form for affixing of the seal” along with the approval record, the risk assessment report and the endorsement/guarantee contract or guarantee voucher(s) and the like to obtain approval from the competent head before the official registered specimen seal may be used from the hand of the custodian.
5.6.3 Upon use of the registered specimen seal, the seal custodian shall check and make sure whether there is an approval record, whether the application form for the seal is approved by the competent head and whether the application for the affixing of the seal is consistent with the requirements before the registered specimen seal is used. After the seal is used, it should be marked on the “application for use of registered specimen seal “ before being archived.
5.6.4 When the Company makes a guarantee for a foreign company, the chairman or general manager is authorized by the board of directors to sign on the guarantee letter issued therefore.
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5.7 Procedures for announcement and report
5.7.1 Before the 10[th] day of every month, the accounting unit shall put the balance of the endorsement/guarantee by the Company and its subsidiaries as of the preceding month along with the monthly sales turnover into promulgation on a monthly basis.
5.7.2 In addition to the public announcement and filing process for the balance of the endorsement/guarantee on a monthly basis, if the balances of the endorsements/guarantees granted by the Company and its subsidiaries reach the following standards/criteria, the finance unit shall launch public announcement and filing within two days from the date of occurrence of the fact:
- 1) The aggregate balance of endorsements/guarantees by the Company and its subsidiaries reaches 50 percent or more of the Company's net worth as stated in its latest financial statement.
- 2) The balance of endorsements/guarantees by the Company and its subsidiaries for a single enterprise reaches 20 percent or more of the Company's net worth as stated in its latest financial statement.
- 3) The balance of endorsements/guarantees by the Company and its subsidiaries for a single enterprise reaches NT$10 million or more and the aggregate amount of all endorsements/guarantees for, the book value of investment under equity method in, and balance of loans to, such enterprise reaches 30 percent or more of public company's net worth as stated in its latest financial statement.
- 4) The amounts of new endorsements/guarantees made by the Company or its subsidiaries have reached more than NT$30 million and have reached more than 5 percent of the Company's net worth as stated in its latest financial statement.
5.7.3 The Company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to subparagraph 4 of the preceding paragraph.
5.8 Penalty
5.8.1 Where the managerial officer and person-in-charge in loaning the Company’s funds to others are found in contravention of these Procedures, they shall be reported for performance evaluation in accordance with the Company’s Employee Rewards and Punishments Procedures as the actual situations may justify.
5.9 Other matters
5.9.1 In the event that a subsidiary of the Company intends to render endorsement/guarantee to another, the Company shall order such subsidiary to establish “Operational Procedures for Endorsements/Guarantees” in accordance with its “internal control system” and these Operational Procedures, and shall handle the procedures according to the specified Operational procedures. The subsidiary shall report the balance of endorsements/guarantees, target endorsement/guarantee beneficiaries, and duration of the endorsements/guarantees to the Company before the 5th day of every month.
5.9.2 An amendment to these Operational Procedures shall be implemented after the approval of the shareholders' meeting and the approval of the shareholders'
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meeting after the approval of more than one-half of the members of the Audit Committee and the resolution of the Board of Directors; the opinions of the independent directors shall be fully considered when the issue is submitted to the Board of Directors for discussion. Objections or reserved opinions shall be stated in the minutes of the board of directors meeting. In the event that a director expresses objection as backed by a record or written statement, the Company shall submit the objection to the Audit Committee and report it to the shareholders meeting for discussion. This same provision is applicable mutatis mutandis to an event of amendment. In the event that the aforementioned issue is not approved by more than one-half of all members of the Audit Committee, It may be agreed by more than two-thirds of all directors, and the resolutions of the Audit Committee shall be expressly stated in the minutes of the board of directors meeting.

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Annex VI

The Shareholding Status of the Company's directors

==> picture [544 x 359] intentionally omitted <==

----- Start of picture text -----

Base date: April 16, 2019
Number of shares held when elected Current shareholding in numbers Remarks
% to the % to the
Dates when
Position titles Names Number of current Number of current
elected Categories Categories
shareholding outstanding shares outstanding
shares shares
common common
Jing Kwan Investment Co., Ltd. 20,380,000 2.25% 20,280,000 2.24%
share share
Chairman Statutory representative: Yang June 16, 2017
preference 0 0.00% preferred 0 0.00%
Pin-Cheng
share share
Tsung, Chia- Lai Fu Investment common common
Director 100,000 0.01% 100,000 0.01%
Hsiung Co., Ltd. share share
June 16, 2017
Tien, Chen- Statutory preferred 0 0.00% preferred 0 0.00%
Director
Ching representative share share
common common
Chung Kwan Investment Co., Ltd. 28,262,722 3.12% 28,262,722 3.12%
share share
Director Statutory representative: Huang June 16, 2017
preferred preferred 0.00%
Shi-Hui 0 0.00% 0
share share
common common
0 0.00% 0 0.00%
Independent share share
Shih, Kuang-Shun June 16, 2017
director preferred preferred
0 0.00% 0 0.00%
share share
common common
0 0.00% 0 0.00%
Independent share share
Chen, Sung-Tung June 16, 2017
director preferred preferred
0 0.00% 0 0.00%
share share
common common
0 0.00% 0 0.00%
Independent share share
Chen, Wen-Tsung June 16, 2017
director preferred preferred
0 0.00% 0 0.00%
share share
common common
48,742,722 48,642,722
share share
Total
preferred preferred
share 0 share 0
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Aggregate total of outstanding common shares as of June 16, 2017:

Aggregate total of outstanding preferred shares as of June 16, 2017:

Aggregate total of outstanding common shares as of April 16, 2019:

Aggregate total of outstanding preferred shares as of April 16, 2019:

906,620,328 shares

20,000,000 shares 906,620,328 shares 20,000,000 shares

Note: Statutory total shareholder by numbers by all directors: 29,651,850 shares. As of April 16, 2019, the shareholding by number 48, 642,722 shares

Where the Company has set up the Audit Committee, the shareholding requirements for supervisors are not applicable.

The number of shares held by independent directors is excluded from shareholding of directors
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Thank you all for participation in the shareholders’ meeting.

Please feel free to offer your valuable comments and advice!

97 -

AI assistant

GPPC — AGM Information 2019

51770_rns_2019-07-03_a3e45097-95a7-49b4-99e6-b86b3a814ba4.pdf

2019 Annual Meeting of Shareholders

Meeting Handbook

Date: June 14, 2019

－ Policy of Quality of － Grand Pacific

Table of Contents

Page No.

One. Procedures of the Meeting

Grand Pacific Petrochemical Corporation Agenda of 2019 Annual Meeting of Shareholders

Two. Agenda

Report Items

I. 2018 Business Report

Grand Pacific Petrochemical Corporation 2018 Business Report

(I) Implementation Results of Operating Plan

(II) R&D Status

Grand Pacific Petrochemical Corporation Audit Committee’s Audit Report

Ratification Items

Grand Pacific Petrochemical Corporation CPA Audit Report

Audit Opinions

Bases for the Audit Opinions

Key Matters Being Audited

Recognition of Income

Impairment evaluation of real estate, plants and equipment

Valuation of investment balance adopting the equity method

－ Other Matters Mentioning Audits by other CPAs

Responsibilities of Management and Governance Unit to Individual Financial Reports

Responsibilities of CPAs in Inspecting Individual Financial Statement

Grand Pacific Petrochemical Corporation Individual Balance Sheet December 31, 2018 and 2017

Grand Pacific Petrochemical Corporation Individual Comprehensive Income Statement January 1 through December 31, 2018 and 2017

Grand Pacific Petrochemical Corporation Individual Statement of Cash Flows January 1 through December 31, 2018 and 2017

Grand Pacific Petrochemical Corporation and Its Subsidiaries CPA Audit Report

Audit Opinions

Bases for the Audit Opinions

Key Matters Being Audited

Recognition of Income

Cash and cash equivalents

Valuation of investment balance adopting the equity method

－ Other Matters Mentioning Audits by other CPAs

Other Matters - Individual Financial Statement

Responsibilities of Management and Governance Unit for Consolidated Financial Statement

Responsibilities of CPAs in Inspecting Consolidated Financial Statement

Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Balance Sheet December 31, 2018 and 2017

Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Balance Sheet December 31, 2018 and 2017

January 1 through December 31, 2018 and 2017

Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Statement of Changes in Equity January 1 through December 31, 2018 and 2017

Grand Pacific Petrochemical Corporation and Its Subsidiaries Consolidated Statement of Cash Flows January 1 through December 31, 2018 and 2017

Grand Pacific Petrochemical Corporation The 2018 Earnings Distribution Table

Discussion Items

Incidental Motion

Adjournment

Three. Annex:

Annex I

Grand Pacific Petrochemical Corporation “Rules and Procedures for Shareholders’ Meeting”

Annex II

Grand Pacific Petrochemical Corporation

Articles of Incorporation

Chapter I General Provisions

Chapter II Shares

Article 14: (Deleted)

Chapter III Shareholders’ meeting

Chapter IV Directors, Audit Committee and Managerial officers

Chapter V Supplementary provisions

Annex III

Grand Pacific Petrochemical Corporation Procedures for Acquisition or Disposal of Assets

5.1.1 Appraisal procedures

5.1.2 Operational procedures

5.1.3 Implementing unit

5.2.2 Operational procedures

5.2.3 Implementing unit

5.4.2 Operational procedures

5.4.3 Implementing unit

Annex IV

Grand Pacific Petrochemical Corporation Operational Procedures for Loaning Funds to Others

5.3.4 Other issues concerned

Annex V

Grand Pacific Petrochemical Corporation Operational Procedures for Making Endorsements / Guarantees

Annex VI

The Shareholding Status of the Company's directors

GPPC AGM Information 2019

`－` Policy of Quality of `－` Grand Pacific

`－` Other Matters Mentioning Audits by other CPAs