NPC — AGM Information 2018

Jun 28, 2018

NAN YA PLASTICS CORPORATION

2018 ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK

(Summary)

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

JUNE 19, 2018

Table of Contents

Meeting Procedure …….……………………………………	Page 1
Meeting Agenda ..………..………………..…………………	Page 2
Report Items …..……………………………………………	Page 3
Ratification Items …………………………………………….	Page 13
Discussion Items ……………………………………………	Page 15
Appendices …………………………………………………	Page 32

NAN YA PLASTICS CORPORATION 2018 ANNUAL SHAREHOLDERS’ MEETING PROCEDURE

1. Call Meeting to Order

2. Chairman’s Address

3. Report Items

4. Ratification Items

5. Discussion Items

6. Extraordinary Motions

7. Meeting Adjourned

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NAN YA PLASTICS CORPORATION 2018 ANNUAL SHAREHOLDERS’ MEETING AGENDA

Time: 2:00 p.m., Tuesday, June 19, 2018

Venue: 2F, International Ballroom, Sunworld Dynasty Hotel

  - (No. 100 Dun Hua North Road, Taipei, Taiwan)

1. Report Items

2. (1) 2017 Business Report

3. (2) Audit Committee’ Review Report on the 2017 Financial Statements

4. (3) Distribution of 2017 Employees Compensation

5. (4) Issue of 2017 Domestic Unsecured Ordinary Corporate Bonds

6. Ratification Items

7. (1) Please approve the 2017 Business Report and Financial Statements

   • as required by the Company Act.

8. (2) Please approve the Proposal for Distribution of 2017 Profits as required by the Company Act.

9. Discussion Items

10. (1) Amendment of the Articles of Incorporation of the Company. Please discuss and resolve.

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

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Report Items

1. About the Company’s results of operation for fiscal year 2017, please refer to Business Report for further details (on page 5 of the Handbook.) which is hereby reported for record.

2. The Company’s Audit Committee members reviewed the 2017 Business Report and Financial Statements and issued their Review Report according to the applicable laws. Please refer to Audit Committee’s Review Report (on page 12 of the Handbook.)

3. The company has issued the report on compensation distributed to its employees for 2017.

4. The pre-tax profit prior to deducting employees compensation distributable for 2017 is NT$58,908,391,007. The company has no accumulated losses. Adopted by the Board Meeting on March 23, 2018, 0.1% of the profit is allocated as employees’ compensation in accordance with Article 25 of the Articles of Incorporation. The total allocated amount is NT$58,908,391, which shall be distributed in cash. The above is hereby reported for record.

5. Issue of NT$9.5 Billion Domestic Unsecured Ordinary Corporate Bonds in 2017

To raise funds to pay off loans, the Board of Directors resolved on Mar. 24, 2017 to issue domestic unsecured ordinary corporate bonds of NT$9.5 billion in 2017. The company successfully issued the bonds on July 10, 2017 to satisfy its capital needs. A summary of the major terms of the aforementioned bonds are as follows:

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Tranche	Size (NT$ billion)	Coupon Rate(%,fixed annual rate)	Tenor (Year)	Principal Repayment Year
A	6.5	1.03	5	Half of the principal shall be repaid upon the end of the fourth year and the fifth year, respective from the date of issue.
B	3.0	1.25	7	Half of the principal shall be repaid upon the end of the sixth year and the seventh year, respective from the date of issue.
Coupon Frequency	Annual. Interest shall be paid as simple interest rate.

The above is hereby reported for record.

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NAN YA PLASTICS CORPORATION

1.2017 Business Report

The company’s consolidated operating revenue in 2017 was NT$ 306.14 billion, which represents an increase of 11.2% from NT$ 275.29 billion in 2016. The consolidated profit before tax was NT$62.78 billion, which represents an increase of 16.6% from NT$53.85 billion in the previous year.

In 2017, the global economic momentum was strengthened. Advanced, emerging and developing countries recovered simultaneously, and global trade activities also increased. The International Monetary Fund (IMF) repeatedly revised estimates for the global economy and global trade volume growth rate. It was the best year for economic growth since the financial crisis of 2009. The United States has driven economic growth due to the growth of non-governmental investment, the expansion of manufacturing PMI, and the promotion of tax reform. Although mainland China was restrained by supply-side reforms and strong reinforcement of environmental protection inspections, its economic growth rate reached 6.9% due to strong personal consumption, strong import and export, and stable expansion of the service industry. In other major countries such as Euro countries and Japan, the effectiveness of the expansionary fiscal policy has averted the impact of deflation, and economic growth is generally better than expected.

Under steady global economy growth, Nan Ya has been striving to expand domestic and international markets with full production and sales, and actively increasing the proportion of differentiated and high-value product sales, with remarkable results, including the rapid expansion of electronics material applications, resulting in production and sale is booming, and price is rising. Adding to petrochemical products rising prices follow crude oil prices, the increasing demand has led to widening interest, and as a result, profits have increased significantly. In addition to

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the increased return recognized by the investment in Nanya Technology and Formosa Petrochemical, the company’s annual pretax profit rose 16.6% compared to last year.

The four main categories of products of Nan Ya are plastic processing products, petrochemicals, polyesters and electronic materials.

On plastic processing products, most three-stage plastic processing companies in Taiwan have relocated to mainland China and Southeast Asia where raw materials are locally available at cheaper prices, hence the decreasing demand on domestic two-stage processing products. To adapt to changing markets and external environmental factors, Nan Ya continues to transform and accelerate research and development of new applications, new materials, environmental trends and unique specifications to develop new niche markets, and actively strive to collaborate with international manufacturers in production, marketing and strategic alliances, combined with e-commerce and online marketing to vigorously expand high-end markets such as the U.S. and Japan and potential emerging markets. Through the development of manufacturing services to provide customer satisfaction and other efforts, plastic processing products can still maintain stable profits.

In terms of petrochemicals, in response to the vertical integration of the sixth naphtha cracker plant in Mailiao District, our petrochemical products, including EG, BPA, 1,4BG, DEHP, PA, 2EH, and EPOXY, are all integrated vertically with upstream and downstream industries to form a complete supply chain, respectively, to support the development of downstream industries such as the plastic processing, electronics, and polyester industries. Due to the rapid economic growth in mainland China and ASEAN countries, the petrochemical industry is developing rapidly in Asia. The Mailiao plant maintains its highly competitive advantages in terms of production scale, product range, and shortened delivery times, which has made it the Company’s key profit contributor for numerous years.

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In 2017, petrochemical product prices were affected by the rise in international oil prices, and the prices gradually increased. The EG demand was better than expected due to mainland China’s economic growth, and the downstream polyester industry’s operating rate gradually increased. Demand for EG increased, resulting in higher profits. For DEHP, the operating performance has been improved due to process optimization, production capacity improvement and product structure adjustment. BPA is affected by unfavorable factors such as overcapacity, high raw material prices and costs, which creates challenges for the operation. However, after enhanced promotional efforts by the sales department, the situation has improved. Although petrochemical products have been heavily affected by upstream raw material price fluctuations, the company continues to promote optimization of various processes, cost down improvements and monitoring of raw material and product pricing, as well as timely adjustment of production, sales and inventory, and strengthening the sales outside mainland China and actively diversifying market risks, and through the adjustment of production and marketing strategies, increased profitability has been achieved.

As for polyester products, since major international brands haven’t recovered its sales fully in the first half of 2017, orders to manufacturers remained low but gradually increased by the second half of the year. The startup rate of mainland China manufacturers has increased, accompanied by strong market competition. Polyester fiber and yarn continued to perform with good profits from good differentiation and high-valued products. While the PET chip and industrial film product market faces challenges due to oversupply. In the face of difficult external environmental factors, Nan Ya responded to the international requests for eco-products and focused on recycling and green products, collaborated with world renowned brands for better business opportunities, leading to further increased sales that maintained stable profitability.

With regard to electronic materials, in 2017, China, the U.S. and

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European countries continued to promote new energy vehicles and electrical vehicles. The demand for Lithium battery, copper foil, and related products in the upstream market has grown rapidly. In addition, the demand for PCBs for automobiles and smart home appliances continue to grow, which drove up the supply of upstream electronic materials and as a result, the sales of various products and revenues have increased. In the future, we will integrate the advantages of upstream and downstream vertical integration, accelerate adjustment of production and marketing strategies, and respond to market development trends. We actively promote main products including differentiated products such as high density Interconnection CCL (HDI), high layer count CCL (HLC), automotive electronics CCL, low Dk epoxy, ultrathin glass fiber cloth, high frequency copper foil, and thick copper foil. Increased proportion of niche product sales with high added value and high functionality drives profits and growth.

Our investment in the Nan Ya Printed Circuit Board Corporation, which has long focused on the development and production of PCBs and IC substrate products was devoted to product transformation in 2017 in order to reduce the proportion of PC related products and increase auto electronics, internet communication, and other niche market products. However the transformation rate was behind expectation and operating performance failed to achieve the goal. To catch up with future trends such as AI and machine learning, Nan Ya PCB has actively strengthened its R&D capabilities and developed new products, and continued to improve the rationalization of process configuration and automation of production equipment. In the future, Nan Ya PCB shall continue to expand new customers, strive for more niche-type product orders, and continue to improve production technology, increase yields, and reduce costs to improve operating performance.

Our investment in Nanya Technology relies on DRAM (Dynamic Random-Access Memory) product development, manufacturing and sales.

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The company completed the 20nm process technology upgrade plan in 2017, which not only increased productivity but also significantly reduced production costs. In addition, to lower the operation risk as well as respond to market changes, the company has already developed and produced high-density products such as 8Gb DDR4, and will introduce a series of high margin products such as consumer and low-power products in the future, which will further diversify the application of products and enhance competitiveness. As the overall DRAM industry was in short supply in 2017, the operating profit of the company increased significantly, and the recognition of the sale of Micron Technology stock interests brought substantial return on investment to the company this year.

In the future, it is expected that 5G, AI, auto-drive and Big Data will lead the industry, bringing along DRAM products as indispensable key components. Nanya Technology will continue to improve its production technology, product design and customer service capabilities in response to market demand, and provide customers with the best memory solutions.

2.2018 Business Outlook

Looking to 2018, it is expected that the global economy will continue to grow steadily. Advanced, emerging and developing countries are expected to be driven by manufacturing. Meanwhile, the global economic situation has changed rapidly, and it is greatly influenced by international political and economic conditions as well as oil prices in various countries. In particular, the economic and trade conflicts brought about by international trade frictions, tariff barriers formed under regional alliances, and the sudden deterioration of the global financial environment, geopolitical situations and so on may all hinder economic development.

After U.S. President Trump’s tax reformation policy was passed, investment in U.S. domestic and foreign capital companies will bring a positive boost to economic growth, better employment rates, and boost consumption and capital expenditure as the U.S. is the world’s largest

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consumer market. The reduction in taxes will increase the disposable income of U.S. citizens, thus Effectively increasing U.S. demand. The transnational supply chain that supplies the U.S. will continue to expand and operate, thus stimulating international trade and prosperity. However, President Trump promotes the “America First” policy and adopts protectionist measures one after another, causing international economic and trade conflicts and creating barriers to trade, which may adversely impact economy recovery and global trade.

Mainland China will continue its industrial restructuring in the future. The Central Economic Work Conference has clearly stated that China’s economy should transform from ‘high speed’ to ‘high quality’. With China continuing on restructuring the industry and the ‘Made in China 2025’ strategy, its overall industry chain localization will weigh in and bring high threats to Taiwan outbound performance due to great dependence on Chinese market, plus Taiwan being isolated from regional trade organizations where the most favorable trade terms apply, exportation is becoming increasingly unfavorable. In the long run, we fear that the economic development shall stagnate. It depends on the government and all industries to work together to make breakthroughs, and attach importance to and mobilize cross-strait economic and trade relations.

The complex and ever-changing international environment and uncertainties in the future may interfere with economic development. In short term the global economic recovery momentum should continue. However, in the long term, the global economy will still be unable to shake off the low productivity growth and uneven income distribution. Faced with the multiple uncertainties of the global economy, Nan Ya upholds the philosophy of always exploring the bottom line and finishing with perfection, and continuous improvement and pursuit of rationalization. The production department fully promotes process optimization with production data collection, analysis and trend management to achieve the best production conditions to improve production performance..

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Furthermore, promotion of circular economy through reduction, reuse and so on, improves resource recycling efficiency to reduce production costs and create maximum economic benefits.

With the joint efforts of the production, sales, and technical departments, we continue to strengthen R&D and expand potential markets, and increase the proportion of differentiated and high-value product sales. By making Taiwan the center of our business operations, we have applied rich experience in diversification and vertical integration, adjusted resources from domestic and foreign companies in which we have invested in order to arrange the best configuration of production and sales, increase our overall competitiveness, and create maximum benefits for our shareholders.

Nan Ya current investment include the addition of production equipment for high-end PEPA synthetic paper, PET film, release film, and a new copper foil plant in Taiwan. In China, production equipment expansion projects include high value-added plastic leather and aluminum-plastic film in Nantong, CCL, prepreg and glass fiber cloth expansion in Huizhou; and the expansion of a new EG plant in Texas. Among them, the new copper foil plant and aluminum-plastic film equipment are developing power and energy storage applications mainly for diversified applications such as differentiated copper foil and battery housing materials for lithium batteries. In Huizhou, the electronic material expansion focuses on local South China market exploration; the new EG plant in Texas utilizes the benefit of cheap local natural gas and is expected to have an annual capacity of 828 thousand tons, and is scheduled for completion in two years, which will be able to expand the production and marketing scale and increase operating income to ensure that the company’s performance continues to increase.

Chairman: Chia Chau, Wu President: Ming Jen, Tzou In-charge Accountant: Li Ta, Pai

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NAN YA PLASTICS CORPORATION Audit Committee’ Review Report

The Board of Directors has prepared the Company’s 2017 Business Report, Financial Statements, including Consolidated and Individual Financial Statements, and Proposal for Profits Distribution. The CPA firm of KPMG was retained to audit Nan Ya Plastics Corporation’s Financial Statements and has issued an audit report relating to Financial Statements. The Business Report, Financial Statements, and Proposal for Profits Distribution have been reviewed and determined to be correct and accurate

by the Audit Committee members of Nan Ya Plastics Corporation. According to the Securities and Exchange Act and the Company Act, we hereby submit this report. Please be advised accordingly.

Nan Ya Plastics Corporation

Chairman of the Audit Committee: Chih-Kang, Wang

March 23, 2018

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Ratification Items Proposal 1

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

Proposed by the Board of Directors

Explanation:

1. The preparation of the Company’s 2017 Consolidated and Individual Financial Statements were completed. The aforementioned Financial Statements were reviewed by the Audit Committee and approved by the Board Meeting on March 23, 2018, and audited by independent auditors, Ms. Hsin-Yi, Kuo and Mr. Chi-Lung, Yu, of KPMG. The aforesaid Financial Statements together with the Business Report were reviewed by the Audit Committee, which the Audit Committee’ Review Report is presented.

2. For the aforementioned Business Report, please refer to page 5 through page 11 of the Meeting Handbook. As for the Financial Statements, please refer to page 32 through page 39 of the Handbook. Please approve the Business Report and the Financial Statements.

Resolution:

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Ratification Items Proposal 2

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

Proposed by the Board of Directors

Attachment:

Please refer to page 40 of the Handbook for the Statement of Profits Distribution, which has been reviewed by the Audit Committee members on of Nan Ya Plastics Corporation and approved by the Board of Directors March 23, 2018.

Resolution:

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Discussion Items Proposal 1

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

Pro osed b the Board of Directors p y

Article	Current Article	Amended Article	Reason for Amendment
Article 16	The Corporation shall have 15 Directors, to be elected at the shareholders’meeting from the nominees listed in the roster of candidates under the candidate nomination system. The tenure of office of Directors shall be three years and they shall be eligible for successive assignment. The total number of shares held by the Directors of the Corporation shall follow the rules promulgated by the competent securities authority. (Below Omitted)	The Corporation shall have11 to15 Directors, to be elected at the shareholders’meeting from the nominees listed in the roster of candidates under the candidate nomination system. The tenure of office of Directors shall be three years and they shall be eligible for successive assignment. The total number of shares held by the Directors of the Corporation shall follow the rules promulgated by the competent securities authority. (Below Omitted)	To conform to the needs of commercial practice, the company proposes to adjust the number of directors to increase flexibility.
Article 17	The directors constitute the Board of Directors and shall	The directors constitute the Board of Directors and shall	To refer to Article 208 of CompanyLaw

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	electfiveManaging Directors from among themselves by a majority vote at a meeting attended by over two-thirds of the directors. At least one of the Managing directors shall be an independent Director. Meanwhile, the Managing Directors shall elect among them a Chairman and a vice Chairman by way of preceding election. The Chairman shall represent the Corporation.		elect at least three Managing Directors, shall not more than one-third of total number of the directors, from among themselves by a majority vote at a meeting attended by over two-thirds of the directors. At least one of the Managing directors shall be an independent Director. Meanwhile, the Managing Directors shall elect among them a Chairman and a vice Chairman by way of preceding election. The Chairman shall represent the Corporation.	regarding managing directors, the company amend its Articles of Incorporation accordingly.
Article 29	(omitted)		Add‘67th Amendment on June 19, 2018.’ to the existing Article.	To amend directors related articles, the Company encloses the date of the 67th amendment.

Resolution:

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Discussion Items Proposal 2

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

Proposed by the Board of Directors

Explanation:

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

Article			Article before Amendment	Article		Article after Amendment
Article 4		Thenatureof the Company’s derivatives transactionscan be classified into“hedging purposes”and“trading purposes”, which apply to different exposure limits, stop-loss limits and accounting principles, based on the purposes of the transactions.		Article 4		Theprinciple of the Company’s derivatives transactions is to manage volatility resulting from fluctuation in the financial markets such as movements in foreign exchange rates, interest rates, and asset price.
Article 5		The total contract amount of derivatives transactions of the Company shall not exceed 50% of the Company’s net worth, and the maximum loss		Article 5		The total contract amount of derivatives transactions of the Company shall not exceed 50% of the Company’s net worth, and the maximum loss limit is 10% of the contract

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	limit is 10% of the contract amount for all contracts in aggregate or for any individual contract. The content of individual derivatives contract shall be approved by high-level manager(s), who is authorized by the Board of Directors. Major derivatives transactions of the Company requires approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of			amount for all contracts in aggregate or for any individual contract. The content of individual derivatives contract shall be approved by high-level manager(s), who is authorized by the Board of Directors based on the scope of the approval level of the Company. Major derivatives transactions of the Company requires approved by more than half of all audit committee members and submitted to the Board of Directors for a resolution. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the Audit Committee shall be recorded in the minutes of the Board of Directors meeting.

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	Directors meeting.	Directors meeting.
Article 6		The transaction personnel of the Department, which is in charge of derivatives transactions, shall follows the trading strategy in accordance with the approved deal terms and conditions of derivatives transactions andexecute trades directlyto counterparties. After the foresaid trades are done, the transaction personnel shall deliver the relevant transaction receipts to the settlement personnel to conduct the settlement procedures. The settlement personnel shall proceed contracts signing, bank accounts opening, settlement, accounts closing, etc. with counterparties in accordance with the trading conditions.	Article 6		The transaction personnel of the Department, which is in charge of derivatives transactions, shall follows the trading strategy in accordance with the approved deal terms and conditions of derivatives transactions. Also, the transaction personnel shallexecute trades directly with counterparties. After the foresaid trades are done, the transaction personnel shall deliver the relevant transaction receipts to the settlement personnel to conduct the settlement procedures. The settlement personnel shall proceed contracts signing, bank accounts opening, settlement, accounts closing, etc. with counterparties in accordance with the trading conditions.

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Article 7		For the derivatives transactions of the Company, the Department that is charge of establishing management regulationsshall establish a comprehensive management information system towards the balance position of the Company, profit/loss analysis, etc. to control risk properly and to respond to abnormal situations immediately.	Article 7	For the derivatives transactions of the Company, theCompany shall establish a comprehensive management information system towards the balance position of the transactions,profit/loss analysis, etc. to control risk properly and to respond to abnormal situations immediately.
Article 8		The Company shall compile monthly report on the status of derivatives transactions (including purposes of hedging and purposes of trading) engaged in up to the end of the previous month by itself and enter the information in the regulated form into the information reporting website designated by	Article 8	The Company shall compile monthly report on the status of derivatives transactions engaged in up to the end of the previous month by itself and enter the information in the regulated form into the information reporting website designated by the competent securities authority before the tenth day of each month. If derivatives transactions of

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				the competent securities authority before the tenth day of each month. If derivatives transactions of which maximum loss for all or individual contract exceeds 10% of contract amount respectively, or any amendment, termination or cancellation of the original contract occurs, the Company shall report and make public announcements accordingly on the information reporting website designated by the competent securities authority within two days from the date of occurrence of the event.		which maximum loss for all or individual contract exceeds 10% of contract amount respectively, or any amendment, termination or cancellation of the original contract occurs, the Company shall report and make public announcements accordingly on the information reporting website designated by the competent securities authority within two days from the date of occurrence of the event.
	Chapter 4			Accounting Principles		(Chapter Deleted)
		Article 13		The accounting treatment towards the Company’s derivatives transactions will be conducted in		(Article Deleted)

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			accordance with the requirements of the General Accepted Accounting Principles and the relevant Financial Accounting Principle Statement announced by the Accounting Research and Development Foundation.
	Article 14		When the Company prepares periodical financial reports (including annual reports, semi-annual reports, quarterly reports and consolidated reports), the Company shall disclose the general relevant items of derivatives transactions by product purposes in the footnotes of the financial statements in accordance with the regulations of the Statements of Financial Accounting Standards No. 34‘Accounting for Financial Instruments’ and No. 36‘Disclosure		(Article Deleted)

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			and Presentation of Financial Instruments’ announced by the Accounting Research and Development Foundation.
	Article 15		Regarding the derivatives products of trading purposes, in addition to the general disclosure items, the Company shall disclose the net income/loss arising from the current trading activities and its item presented in the income statement by product types.		(Article Deleted)
	Article 16		Regarding the derivatives products of hedging purposes, in addition to the general disclosure items, the Company shall disclose the following items: 1. Hedging for the exiting assets or liabilities: (1) The hedged assets or the liability amount and the type of derivatives products for		(Article Deleted)

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				the foresaid hedged assets or liability amount. (2) The definite but deferred or realized profit/loss amount due to hedging. 2. Hedging for the anticipated positions (including future positions from definite commitments and contingent commitments)： (1) Description of the content of the anticipated transactions. (2) Description of the content of the type of the adopted derivatives products. (3) The definite but deferred profit/loss amount due to hedging.
	Chapter 5			Internal Control and Internal Audit		Chapter		Internal Control and Internal Audit
							4
		Article 17		The Company engaging in derivatives transactions shall adopt appropriate risk managementpractices			Article 13	The Company engaging in derivatives transactions shall adopt appropriate risk management practices with regards to credit risk,

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

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

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		reports (e.g. the holding position has reached the maximum loss limit), the Company shall immediately take necessary measures to deal with the situation and report to the Board of Directors. There shall be independent directors attending the Board of Directors meeting and expressing their opinions.				with the situation and report to the Board of Directors. There shall be independent directors attending the Board of Directors meeting and expressing their opinions.
	Article 19	The Company shall establish a log book to record all its derivatives transaction information, including types and amounts of derivatives transactions, and matters to be evaluated cautiously in accordance with Article 18hereof. The Company's internal audit personnel shall be in charge of periodically assessing the appropriateness of the internal control regardingthe		Article 15		The Company shall establish a log book to record all its derivatives transaction information, including types and amounts of derivatives transactions, and matters to be evaluated cautiously in accordance with Article 14hereof. The Company's internal audit personnel shall be in charge of periodically assessing the appropriateness of the internal control regarding the derivatives transactions,shall conduct monthly audit to evaluate whether the

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			derivatives transactions, andtake the responsibility of auditing the trading department's compliancewith the Procedures,analyzing the transaction cycle, preparing the monthly auditing reportand submitting the auditing report to the high-level management personnel authorized by the Board of Directors.If any material violation is discovered, the Audit Committee shall be notified in writing and the Company should, depending on the status of such material violation, penalize the relevant personnel in accordance with the Human Resources Management Policies.				trading department conform tothe Procedures, and shall prepare the monthly auditing report accordingly. If any material violation is discovered, the Audit Committee shall be notified in writing and the Company should, depending on the status of such material violation, penalize the relevant personnel in accordance with the Human Resources Management Policies.
	Article 20		The Company’s control and monitoring procedures towards the derivatives transactions by the Company’s subsidiaries are as		Article 16		The Company’s control and monitoring procedures towards the derivatives transactions by the Company’s subsidiaries are as follows:

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	follows: 1. If the Company’s subsidiaries intend to conduct derivatives transactions, the Company shall ensure that its subsidiaries establish their own “Procedures for Engaging in Derivatives Transactions”. 2. The Company’s subsidiaries shall submit the reference content of the derivatives transactions of the previous month to the Company for review by the fifth date of every month. 3. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall submit a written notice to the Company of such violations. The Company shall closely monitor the violations and the resulting improvements.		1. If the Company’s subsidiaries intend to conduct derivatives transactions, the Company shall ensure that its subsidiaries establish their own “Procedures for Engaging in Derivatives Transactions”. 2. The Company’s subsidiaries shall submit the reference content of the derivatives transactions of the previous month to the Company for review by the fifth date of every month. 3. If any material violation is found by the internal auditors of the subsidiaries, the subsidiaries shall submit a written notice to the Company of such violations. The Company shall closely monitor the violations and the resulting improvements.

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	Chapter 6	Chapter 6	Additional Provision		Chapter	Chapter	Additional Provision
						5
		Article 21	After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may			Article 17	After the Procedures are approved by the Board of Directors, the Procedures shall be submitted to the Shareholders Meeting for approval before its implementation. Any amendment is subject to the same procedure. The independent directors' opinions specifically expressing dissent or reservations about any matter shall be included in the minutes of the Board of Directors meeting. The matters for which paragraph 1 requires submitted to the Board of Directors for a resolution shall first be approved by more than half of all audit committee members. If the approval by more than half of all audit committee members is not obtained, the aforesaid matter may be implemented if approved by more than two-thirds of all Directors, and the resolution of the

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

Resolution:

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NAN YA PLASTICS CORPORATION Statement of Profits Distribution For the year of 2017 Unit：NT$	Explanation	1. The proposed distribution is $5.1 in cash per share, including dividend of $2.298 and bonus of $2.802. 2. The total distribution of dividends and bonuses amount to $40,447,190,104; all of which are from net income of 2017. 3. The distribution of dividends and bonuses will be rounded to the nearest dollar for each individual shareholder. 4. Change in retained earnings resulting from Other Comprehensive Income is the remeasurement of defined benefit obligation.
	Amount	5,452,101,621 6,819,825,046 40,447,190,104 10,955,058,470	63,674,175,241
	Items	Distribution Items: (1) Appropriation of Legal reserve (10% of the Net Income) (2) Appropriation of Special reserve (unrealized investing profit under equity method) (3) Distribution of dividends and bonuses in cash ($5.1 per share) (4) Unappropriated retained earnings	Total
	Amount	10,801,511,761 54,521,016,210 -1,648,352,730	63,674,175,241
	Items	Available for Distribution: (1) Unappropriated retained earnings of previous years (2) Net Income of 2017 (3) Change in retained earnings resulting from Other Comprehensive Income	Total

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

Compensation to Adopted by the Board of Directors of the Company:	Compensation to Adopted by the Board of Directors of the Company:
1. Amounts of employees’ cash compensation, stock compensation, and Directors’ compensation:
Employees Cash Compensation	NT$58,908,391
Employees Stock Compensation	NT$0
Directors Compensation	NT$0
2. Share amount of the employees’ stock compensation and the percentage of the share amount to that of all stock dividend:
Share amount of employees’ stock compensation	0 share
percentage of the share amount to that of all stock dividend	0%

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

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

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

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Nan Ya Plastics Corporation Shareholdings of Directors

Title	Name	Shareholding (share)
Chairman	Chia Chau, Wu	79,030
ManagingDirector	Wen Yuan, Wong	38,206,752
Managing Director	Wilfred Wang Representative of Formosa PetrochemicalCorporation	179,214,423
ManagingDirector	RueyYu, Wang	19,052,421
Managing Director (Independent Director)	Chih Kang, Wang	0
Independent Director	Yi Fu, Lin	0
Independent Director	Yun Peng, Chu	1,199
Director	MingJen, Tzou	188,742
Director	Kuei Yung, Wang	11,164,271
Director	Chin Jen, Wu Representative of Formosa Plastics Corporation	783,356,866
Director	Shen Yi, Lee Representative of Formosa Chemicals &Fibre Corporation	413,327,750
Director	FongChin, Lin	25,458
Director	Zo Chun, Jen	303,377
Director	Sin Yi, Huang	806
Director	Ching Cheng , Chang Representative of Freedom Internation Enterprise Company	3,287,472

Note: According to Article 26 of the Securities and Exchange Act, the minimum of the Directors are shareholdings Company’s 126,893,146 shares. As of April 21, 2018, the actual shareholdings of the Company’s Directors are 1,448,208,567 shares.

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