TFC - AGM Information 2017 | FinancialReports.eu

Stock Code :1722

Taiwan Fertilizer Co., Ltd.

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2017 Annual General Shareholders’ Meeting

Handbook

June 14, 2017

Venue: Armed Forces Cultural Center (No. 69, Section I, Zhonghua Road, Taibei City)

Table of Contents	Table of Contents
Meeting Procedure ----------------------------------------------------------------------		1
Report Items ------------------------------------------------------------------------------		2
I.	2016 Business Report---------------------------------------------------------------	2
II.	Report on the Audit of Final Accounting Statements for 2016 by
	Supervisors---------------------------------------------------------------------------	6
III.	Report on the Remuneration for Directors, Supervisors, and Employees
	for FY 2016---------------------------------------------------------------------------	7
Acceptance Items ------------------------------------------------------------------------		8
I.	Adoption of the Business Report and the Financial Results for FY 2016----	8
II.	Approval of the Proposal for appropriation of profit & loss and
	distribution of earnings for FY 2016----------------------------------------------	23
Discussion Items -------------------------------------------------------------------------		36
I.	Some Revision of Articles of Incorporation--------------------------------------	36
II.	Some Revision of the Procedures for Acquisition and Disposal of Assets---	43
III.	Some Revision of the Regulations on Election of Directors and
	Supervisors---------------------------------------------------------------------------	50
Motions ------------------------------------------------------------------------------------		54
Annex --------------------------------------------------------------------------------------		55
I.	Rules of Procedure for Shareholders’ Meeting-----------------------------------	56
II.	Articles of Incorporation------------------------------------------------------------	61
III.	Procedures for Acquisition and Disposal of Assets------------------------------	69
IV.	Regulations on Election of Directors and Supervisors--------------------------	91
V.	Shareholdings of Directors and Supervisors-------------------------------------	93
VI.	Effect of the gratuitous allotment of shares on operation performance,
	earnings per share and return rate on investment for shareholders------------	94

Taiwan Fertilizer Co., Ltd. 2017 Annual General Shareholders’ Meeting Meeting Procedure

Time : June 14, 2016 (Wednesday) at 9:00 a.m.

Venue : Armed Forces Cultural Center

(No. 69, Sec. 1, Zhonghua Rd., Taipei City)

Agenda :

I. Commencement: Report on Number of Shares Present or Represented
II. Chairman’s Address
III. Report Items
IV. Acceptance Items
V. Discussion Items
VI. Motions

VII. Dismissal of the Meeting

Report Item 1

Subject : 2016 Business Report

Business Report

I. Preface

After review of the year 2016, global economic growth slowed to a history low since 2008 financial tsunami, and the international market of raw materials was weak in pessimistic atmosphere. In spite of unfriendly external environment, the Company’s fertilizer, chemical, and leasing incomes increased substantially with conscientious efforts of the management team but real estate income declined sharply, causing that the consolidated operating revenue, consolidated gross profit, and consolidated operating benefit of the Company decreased by 30.00%, 48.23%, and 74.60% than those in 2015. Besides, the loss on long-term investment in Jubail Fertilizer Co., Ltd. and Taiwan Yes Deep Ocean Water Co., Ltd. recognized with equity method constituted the Company’s consolidated nonoperating loss. Finally, the consolidated net loss of the Company in current period is NTS129,503,000.00, 105.34% less than the net profit in 2015.

II. Status of Operations

1. Production and marketing

The actual production of fertilizer products in 2016 was 600,037 tonnes, a decrease of 1.13% compared to 2015, 156,144 tonnes of chemical products, an increase of 6.57% compared to 2015. The actual sales of fertilizer products was 814,489 tonnes, a decrease of 5.63% compared to 2015, 180,345 tonnes of chemical products, an increase of 12.84% compared with 2015.

2. Revenue and Profit

(1) Individual Financial Statements

The operating revenue of 2016 was NT$11,893,266,000, a decrease of 30.53% compared with NT$17,120,807,000 in 2015, and the operating profit was NT$675,215,000, a decrease of 71.89% over 2014. The nonoperating profit was NT$741,654,000, a decrease of 630.87% over 2014, and the net loss after taxes was NT$129,503,000, a decrease of 105.34% compared with that of 2015.

(2) Consolidated Financial Statements

1) The operating revenue of 2016 was NT$12,240,920,000, a decrease of 30.00% compared with NT$17,487,077,000 in 2015, and the operating

profit was NT$595,694,000, a decrease of 74.60% over 2014. The nonoperating loss was NT$616,713,000, a decrease of 452.98% over 2015, and the net loss after taxes was NT$129,503,000, a decrease of 105.34% compared with that of 2014.

3. Financial Structure

(1) Individual Financial Statements

The company's financial structure is sound, including the total assets of NT$76,621,155,000, liabilities of NT$26,016,729,000, the liabilities ratio of 33.95%, shareholders' equity of NT$50,604,426,000, net worth per share NT$51.64 as of December 31, 2016.

(2) Consolidated Financial Statements

This Company's financial structure is sound, including the total assets of NT$76,717,802,000, liabilities of NT$26,113,376,000, the liabilities ratio of 34.03%, shareholders' equity of NT$50,604,426, net worth per share NT$51.64 as of December 31, 2016.

4. Investment Planning

In terms of chemical fertilizer industry, Taichung plant will continue to make phosphate fertilizer workshop relocation, nitrate concentration plan, and ten factories construction planning in the west area of Taichung plant. Moreover, in order to continue to develop electronic grade chemicals business, after the electronic grade ammonia aquatic line construction program is completed, it will carry out the construction of sulfuric acid workshop and sulfanilic workshop.

In real estate development, the vacant house sales and handover of Nangang Trade Park R5 residence development program continue. Nangang Trade Park C2 development program will be licensed in 2017 before intended design change, continuous wall construction, engineering contracting, etc. Regarding the development plan of Hsinchu technology commercial park D7A, beam locating ceremony was held in January 2016. It is scheduled to get the license and to start business invitation in 2017. The first and second phases of Hsinchu have been ongoing.

III. Prospect

In 2017, the global economy is recovering gradually, yet its growth is somewhat on the weak side while the marginal efficiency of the long-term monetary easing policy has been lowered. In many countries, fiscal policy is to become the main vehicle to stimulate economic growth, replacing the monetary

policy. According to a forecast released by Global Insight in January, the global economy is to grow 2.8% this year, a 2.5% improvement in comparison with 2016 last year, whereas it will be 3.1% next year. According to a report on the “Update of World Economic Outlook” issued on January 16th, 2017 by International Monetary Fund (IMF), global economic activity is to accelerate this year to a total growth of 3.4%, a 3.1% improvement in comparison with 2016. The outlook for the advanced economies has improved slightly – 1.9% growth is expected this year, a 1.6% improvement in comparison with 2016. It is mainly due to the increased economic activity in the second half of last year as well as the fiscal policy adopted by the United States for economic stimulation. As for the financial environment in emerging markets and in developing economies, it is unanimously showing a tightening phenomenon with growth slightly level around 4.5% this year.

As risky factors are imposing on the current international economy, close attention is worth being paying to - including the economic and trade policy of the US new government and the fluctuation of interest rate.; the growth momentum of the mainland China and some emerging economies; the direction of the United Kingdom after its Brexit; the successive elections undergoing in Europe; the risk associated with geopolitics; the pricing turmoil on international crude oil and commodity, the volatility of global financial and stock market; the trade protectionism, etc., all having impacted the outlook of the international economy.

Adversely affected by the slow pace of global economic growth, the demand from the external has been weakened. The only booming seen in the domestic market lies in Internet of Things (IoT), automotive electronics, and other emerging smart applications. It is foreseen that investment in high-end capacity in the semiconductor industry shall continue to increase, thanks to the government’s efforts in actively improvement of the investment environments and the implementation of the Five plus Two Innovative Industry Development Plan which has helped maintain the momentum of investment growth. According to Directorate General of Budget, Accounting and Statistics of Executive Yuan, it is summarized that in 2016 economic growth was 1.50%; whereas in 2017 it will be 1.92% with the gradual pick-up of global economy.

Looking into the year 2016, in face of rapid changes in domestic and overseas industrial conditions, we will continue to uphold the business philosophy of foundation consolidation, innovation and sustainable development to carry out restructuring and upgrading, and continue to targets at profit growth, competitiveness optimization and sustainable development to draw the

development blueprint of two major businesses, namely, "fertilizer chemicals business", “real estate investment business”, by the use of diverse business development and multi-perspective modes of operation., to achieve the Company’s goal of sustainable operation and development. Special thanks will go to all the shareholders for your supports and encouragement and I also wish you good health and good luck!

Chairman: Kang Hsinhong Manager: Huang Yaoxing

Accounting supervisor: Chien Chaoren

Report Item 2

Item : Supervisors’ review report

Supervisors' Report for FY 2016

The Business Report, Financial Statements and the Proposal for Earning Distribution of 2016 were prepared and submitted by the Board of Directors of Taiwan Fertilizer Co., Ltd. The Financial Statements were audited and certified by the certified public accountants of Deloitte Touche Tohmatsu (DTT) in Taiwan, Wang Yiwen and Kuo Wenji..

The said Business Report, Financial Statements and the Proposal for Earning Distribution of 2016 were reviewed by the Supervisors, and also were in compliance with the Company Act. This report is made according to the Article 219 of the Company Act.

Supervisor: Chunghwa Post Co., Ltd.

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Representative : Wu Yuan Jen Chen Chailai

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Tsai Linglan

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March 31, 2017

Report Item 3

(Proposed by the Board of Directors)

Proposal : Remuneration for Directors, Supervisors, and Employees for FY 2016

Description:

It shall be dealt with according to Article 27-1 of TFC’s Articles of Incorporation.
According to the audit on financial statement in 2016 by Deloitte Touche Tohmatsu (DTT) in Taiwan, TFC won a profit (pre-tax interest before deducting the remuneration of employees, directors and supervisors) of NT$66,439,000. Thus, there is no remuneration payable for TFC’s directors, supervisors, and employees according to TFC’s Articles of Incorporation.

Acceptance Item 1

(Proposed by the Board of Directors)

Proposal : Adoption of the Business Report and the financial results for 2016

Description:

TFC’s 2016 Financial Statements and combined financial statements of TFC’s subsidiaries and affiliated companies, which were approved by the TFC’s Board of Directors in the 20th Board Meeting of the 33rd tenure on March 24, 2017 and then were audited and certified by the certified public accountants, together with the business report which was passed at the same board meeting (refer to Pages 2 to 5 in this manual), were reviewed and approved by the supervisors.
TFC’s 2016 audit report and the financial statements are submitted for acceptation (see the annex)

Resolution :

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders Taiwan Fertilizer Co., Ltd.

Opinion

We have audited the accompanying financial statements of Taiwan Fertilizer Co., Ltd. (the “Corporation”), which comprise the balance sheets as of December 31, 2016 and 2015, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to the Other Matters paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2016 and 2015, and its financial performance and the cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Corporation in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Corporation’s financial statements for the year ended December 31, 2016 are stated as follows:

Impairment Assessment of Property, Plant and Equipment

As described in Note 5 of the accompanying financial statements, the impairment assessment of property, plant and equipment is significant for the Corporation. The balance of property, plant and equipment amounted to NT$26,619,098 thousand (35% of the Corporation’s total assets) as of December 31, 2016. For disclosures of property, plant and equipment, refer to Note 13 of the Corporation’s financial statements.

In accordance with IAS 36 “Impairment of Assets”, management will regularly assess whether there is any indication that the property, plant and equipment may be impaired. If there is an indication that an asset may be impaired, management must rely on subjective judgment as well as the asset’s usage and industry conditions to estimate the recoverable amount of the cash-generating unit of the

aforementioned asset. Since management’s evaluation of the impairment indication and the decision of the recoverable amount are subject to management’s judgment and assumptions, such impairment assessment has been identified as a key audit matter.

Impairment Assessment of Investments Accounted for by the Equity Method (Including Goodwill and Intangible Assets with Indefinite Useful Lives)

As described in Note 16 of the accompanying financial statements, the Corporation acquired control of Taiwan Yes Deep Ocean Water Co., Ltd. (“Taiwan Yes”) on January 7, 2013 and accounted for the acquisition by using the equity method (including the goodwill and trademark with indefinite useful lives). In accordance with IAS 36 “Impairment of Assets”, goodwill and intangible assets with indefinite useful lives should be tested for impairment annually, and based on the estimated future cash flows of Taiwan Yes (the cash-generating unit), the recoverable amount was evaluated in order to determine whether there is any impairment of the aforementioned investment accounted for by using the equity method (including the goodwill and intangible assets with indefinite useful lives). Since the estimated future cash flows requires management’s forecasting of the industry overview and the future operating performance of Taiwan Yes, should the situation change, the recoverable amount will be affected and an impairment loss will be incurred. Therefore, the impairment assessment of equity-method investments has been identified as a key audit matter.

Our main audit procedures performed in response to this key audit matter included obtaining the management-appointed appraiser’s impairment appraisal report of goodwill and trademark, understanding and evaluating the rationality of the pricing model used for computing the relevant recoverable amount, evaluating the assumptions of the pricing model, such as the discount rate, growth rate and weighted average cost of capital (including the risk-free return rate and the volatility and risk premium remuneration), and considering the past operating performance, industry overview, and future trend of the Corporation. In conclusion, our audit team comprehensively assessed the rationality of the impairment evaluation of the investment in Taiwan Yes which was accounted for by using the equity method (including goodwill and trademark with indefinite useful lives).

Other Matters

We did not audit the financial statements as of and for the years ended December 31, 2016 and 2015 of certain investees, but such financial statements had been audited by other auditors, whose reports have been furnished to us. Our opinion, insofar as it relates to the amounts included in the Corporation’s financial statements for these investees, is based solely on the reports of the other auditors. As of December 31, 2016 and 2015, the investments in the aforementioned investees were 14.22% (NT$10,896,351 thousand) and 14.11% (NT$11,352,927 thousand), respectively, of the Corporation’s total assets. For the years ended December 31, 2016 and 2015, the investment (loss) income on the above said investees were 384.61% (NT$(255,534) thousand) and 40.51% (NT$1,029,740 thousand), respectively, of the Corporation’s (loss) income before income tax.

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

Management is responsible for the preparation and fair presentation of the financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Corporation’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including supervisor) are responsible for overseeing the Corporation’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with the auditing standards generally accepted in the Republic of China, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Corporation’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Corporation to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with statements that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yi-Wen Wang and Wen-Chi Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China March 28, 2017

Notice to Readers

The accompanying financial statements are intended only to present the financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and financial statements shall prevail. Also, as stated in Note 4 to the financial statements, the additional footnote disclosures that are not required under generally accepted accounting principles were not translated into English.

TAIWAN FERTILIZER CO., LTD.

BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Available-for-sale financial assets - current (Notes 4 and 7) Notes receivable (Note 8) Accounts receivable (Notes 4 and 8) Other receivables (Note 25) Inventories (Notes 4 and 10) Buildings and land held for sale (Notes 4 and 11) Other financial assets - current (Note 6) Other current assets Total current assets NONCURRENT ASSETS Financial assets carried at cost - noncurrent (Notes 4 and 9) Investments accounted for using equity method (Notes 4 and 12) Property, plant and equipment (Notes 4 and 13) Investment properties (Notes 4 and 14) Intangible assets (Note 4) Deferred tax assets (Notes 4 and 20) Long-term receivable (Note 8) Other financial assets - noncurrent (Notes 6 and 26) Long-term prepayments for leases (Note 15) Other non-current assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Notes payable Accounts payable (Note 25) Other payables Current tax liabilities (Note 4) Receipts in advance (Note 11) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Provisions - noncurrent (Note 4) Deferred tax liabilities (Notes 4 and 20) Deferred revenue - noncurrent (Note 14) Accrued pension liabilities (Notes 4 and 16) Guarantee deposits received Total noncurrent liabilities Total liabilities EQUITY (Note 17) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2016 Amount % $ 947,774 1 3,246,512 4 365,123 1 1,294,561 2 10,695 - 1,375,952 2 350,375 1 7,205,000 9 239,080 - 15,035,072 20 449,582 - 11,546,081 15 26,619,098 35 21,156,703 28 20,567 - 155,695 - 385,490 - 13,800 - 1,215,950 2 23,117 - 61,586,083 80 $ 76,621,155 100 $ 6,890 - 880,304 1 473,880 1 7,465 - 179,265 - 34,546 - 1,582,350 2 223,648 - 7,214,538 10 16,584,651 22 94,353 - 317,189 - 24,434,379 32 26,016,729 34 9,800,000 13 2,232,791 3 3,683,109 4 33,590,309 44 703,332 1 37,976,750 49 594,885 1 50,604,426 66 $ 76,621,155 100	2015
			Amount % $ 2,349,622 3 8,729,292 11 432,542 1 1,657,690 2 924 - 1,828,072 2 271,198 - 2,600,000 3 775,962 1 18,645,302 23 495,041 1 12,471,615 15 26,918,099 33 19,773,087 25 28,311 - 260,690 - 540,884 1 13,800 - 1,286,561 2 23,652 - 61,811,740 77 $ 80,457,042 100 $ 2,213 - 1,182,132 2 738,336 1 16,140 - 201,490 - 60,732 - 2,201,043 3 327,750 - 7,293,298 9 16,977,124 21 468,040 1 221,927 - 25,288,139 31 27,489,182 34 9,800,000 12 2,237,678 3 3,440,401 4 33,590,944 42 3,146,060 4 40,177,405 50 752,777 1 52,967,860 66 $ 80,457,042 100

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 28, 2017)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

OPERATING REVENUE (Notes 4, 14, 18 and 25) OPERATING COSTS (Notes 10, 16, 18, 19 and 25) GROSS PROFIT OPERATING EXPENSES (Notes 16 and 19) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other gains and losses (Note 19) Finance costs Share of (loss) profit of subsidiaries, associates and joint ventures (Notes 4 and 12) Other income (Note 19) Total non-operating income and expenses (LOSS) PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 20) NET (LOSS) PROFIT FOR THE YEAR OTHER COMPREHENSIVE (LOSS) INCOME Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 20)		2016 Amount % $ 11,893,266 100 9,917,534 84 1,975,732 16 235,361 2 999,871 8 65,285 1 1,300,517 11 675,215 5 (186,529) (1) (6,711) - (710,839) (6) 162,425 1 (741,654) (6) (66,439) (1) 63,064 - (129,503) (1) (15,845) - 2,693 - (13,152) -		2015
				Amount % $ 17,120,807 100 13,303,947 78 3,816,860 22 242,637 1 1,106,097 7 66,133 - 1,414,867 8 2,401,993 14 (847,596) (5) (14,131) - 932,099 6 69,334 - 139,706 1 2,541,699 15 114,616 1 2,427,083 14 (25,498) - 4,335 - (21,163) - (Continued)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Unrealized gain (loss) on available-for-sale financial assets Share of the other comprehensive (loss) income of subsidiaries, associates and joint ventures Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 4 and 20) Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE YEAR (LOSS) EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 21) Basic Diluted		2016 Amount % $ 20,580 - (212,364) (2) 33,892 - (157,892) (2) (171,044) (2) $ (300,547) (3) $ (0.13) $ (0.13)		2015
				Amount % $ (20,353) - 412,596 2 (70,262) - 321,981 2 300,818 2 $ 2,727,901 16 $ 2.48 $ 2.47


		$

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 28, 2017)

(Concluded)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Amounts Per Share)

BALANCE AT JANUARY 1, 2015 Appropriation of the 2014 earnings Legal reserve Cash dividends - NT$2.2 per share Net profit in 2015 Other comprehensive (loss) income in 2015, net of income tax Total comprehensive income (loss) in 2015 Adjustment to capital surplus due to non-proportional investment in an investee's shares issued for a capital increase BALANCE AT DECEMBER 31, 2015 Appropriation of the 2015 earnings Legal reserve Cash dividends - NT$2.1 per share Net loss in 2016 Other comprehensive (loss) income in 2016, net of income tax Total comprehensive (loss) income in 2016 Reversal of special reserve due to sale of land Loss of significant influence as disposal of investment BALANCE AT DECEMBER 31, 2016	Share Capital $ 9,800,000 - - - - - - 9,800,000 - - - - - - - $ 9,800,000	Capital Surplus $ 2,234,334 - - - - - 3,344 2,237,678 - - - - - - (4,887) $ 2,232,791	Retained Earnings	Retained Earnings	Other Equity	Total $ 430,796 - - - 321,981 321,981 - 752,777 - - - (157,892) (157,892) - - $ 594,885	Total Equity $ 52,392,615 - (2,156,000) 2,427,083 300,818 2,727,901 3,344 52,967,860 - (2,058,000) (129,503) (171,044) (300,547) - (4,887) $ 50,604,426
					Exchange Unrealized Differences on Gain (Loss) on Translating Available-for- Foreign sale Financial Operations Assets $ 368,104 $ 62,692 - - - - - - 342,334 (20,353) 342,334 (20,353) - - 710,438 42,339 - - - - - - (178,472) 20,580 (178,472) 20,580 - - - - $ 531,966 $ 62,919
			Legal Reserve $ 3,133,567 306,834 - - - - - 3,440,401 242,708 - - - - - - $ 3,683,109	Special Unappropriated Reserve Earnings $ 33,590,944 $ 3,202,974 - (306,834) - (2,156,000) - 2,427,083 - (21,163) - 2,405,920 - - 33,590,944 3,146,060 - (242,708) - (2,058,000) - (129,503) - (13,152) - (142,655) (635) 635 - - $ 33,590,309 $ 703,332

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated March 28, 2017)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES (Loss) profit before income tax Adjustments for: Share of loss (profit) of subsidiaries, associates and joint ventures Depreciation expenses Amortization expenses Interest income Dividend income Gain on disposal of investments Impairment loss recognized on financial assets Finance costs Impairment loss recognized on other receivables Unrealized net (gain) loss on foreign currency exchange (Gain) loss on disposal of property, plant and equipment Impairment loss recognized on property, plant and equipment Donation expenses Recognition of provisions Gain on disposal of investment properties Changes in operating assets and liabilities Notes receivable Accounts receivable Other receivables Inventories Buildings and land held for sale Other current assets Long-term receivables Notes payable Accounts payable Other payables Provisions Receipts in advance Other current liabilities Accrued pension liabilities Deferred revenue Cash generated from operations Interest received Dividends received Interest paid Return of income tax Income tax paid Net cash generated from operating activities	2016 $ (66,439) 710,839 659,673 83,913 (59,919) (41,782) (23,381) 15,000 6,711 4,294 (3,757) (3,584) - - - - 67,419 358,709 (78,510) 452,120 124,204 171,241 155,394 4,677 (493,967) 130,878 (38,370) (22,225) (26,186) (389,532) (392,473) 1,304,947 58,632 41,782 (6,711) 247,184 - 1,645,834	2015 $ 2,541,699 (932,099) 623,469 86,699 (17,490) (42,868) (1,018) - 14,131 247,251 37,530 70,575 279,387 223,650 65,732 (8,291) (49,213) 1,823,136 (99,793) 285,406 1,449,579 213,024 (162,634) (7,790) (88,509) (86,336) - (1,445,795) (25,459) 23,581 14,196,118 19,213,672 17,505 1,137,048 (51,084) - (607,313) 19,709,828

(Continued)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds of the sale of available-for-sale financial assets Increase in other financial assets Increase in investment properties Payments for property, plant and equipment Purchase of available-for-sale financial assets Return of capital on financial assets carried at cost Proceeds of the disposal of property, plant and equipment Purchase of intangible assets Decrease in refundable deposits Increase in investments accounted for using equity method Proceeds of the disposal of investment properties Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid Increase in guarantee deposits received Repayment of short-term borrowings Repayment of long-term borrowings Repayment of long-term borrowings, net of current portion Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	2016 $ 5,606,626 (4,605,000) (1,291,949) (744,510) (84,772) 32,790 9,959 (5,558) 535 - - (1,081,879) (2,058,000) 95,262 - - - (1,962,738) (3,066) (1,401,849) 2,349,622 $ 947,773	2015 $ 1,306,275 (2,590,000) (1,045,989) (949,311) (9,948,617) 63,415 54,475 (3,454) 1,640 (49,400) 8,481 (13,152,485) (2,156,000) 53,096 (1,700,000) (790,000) (140,000) (4,732,904) 6,445 1,830,884 518,738 $ 2,349,622

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 28, 2017) (Concluded)

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Shareholders

Taiwan Fertilizer Co., Ltd.

Opinion

We have audited the accompanying consolidated financial statements of Taiwan Fertilizer Co., Ltd. and subsidiaries (the “Group”), which comprise the consolidated balance sheets as of December 31, 2016 and 2015, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the reports of other auditors (refer to the Other Matters paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2016 and 2015, and its consolidated financial performance and the cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with The Norm of Professional Ethics for Certified Public Accountant of the Republic of China, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2016. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matters for the Group’s consolidated financial statements for the year ended December 31, 2016 are stated as follows:

Impairment Assessment of Property, Plant and Equipment

As described in Note 5 of the accompanying consolidated financial statements, the impairment assessment of property, plant and equipment is significant for the Group. The balance of property, plant and equipment amounted to NT$26,753,401 thousand (35% of the consolidated total assets) as of December 31, 2016. For disclosures of property, plant and equipment, refer to Note 14 of the consolidated financial statements.

In accordance with IAS 36 “Impairment of Assets”, management will regularly assess whether there is any indication that property, plant and equipment may be impaired. If there is an indication that an asset may be impaired, management must rely on subjective judgment as well as the asset’s usage and industry conditions to estimate the recoverable amount of the cash-generating unit of the aforementioned asset. Since management’s evaluation of the impairment indication and the decision of the recoverable amount are subject to management’s judgment and assumptions, such impairment assessment has been identified as a key audit matter.

Our main audit procedures performed in response to this key audit matter included reviewing the evaluation report compiled by management of assets’ indications of impairment and evaluating oneby-one the internal and external information which management took into consideration in order to assess the rationality of the evaluation executed by management of the impairment indicators. In addition, we obtained the management-appointed appraiser’s impairment appraisal report and understood and evaluated the rationality of the pricing model used for computing the recoverable amount, the assumptions used for the pricing model, such as the discount rate, growth rate and weighted average cost of capital (including the risk-free return rate and the volatility and risk premium remuneration). And we considered whether the appraiser considered the past operating performance, industry overview, and future trend of the Group. In conclusion, our audit team comprehensively assess the rationality of the impairment evaluation of the Group’s assets.

Impairment Assessment of Intangible Assets

As described in Note 16 of the consolidated financial statements, the Group acquired control of Taiwan Yes Deep Ocean Water Co., Ltd. (“Taiwan Yes”) on January 7, 2013 and recognized the goodwill and trademark with indefinite useful lives from such acquisition. In accordance with IAS 36 “Impairment of Assets”, goodwill and intangible assets with indefinite useful lives should be tested for impairment annually, and based on the estimated future cash flows of Taiwan Yes (the cash-generating unit), the recoverable amount was evaluated in order to determine whether there is any impairment of the aforementioned goodwill and trademark. Since the estimated future cash flows requires management’s forecasting of the industry overview and the future operating performance of Taiwan Yes, should the situation change, the recoverable amount will be affected and an impairment loss will be incurred. Therefore, the impairment assessment of intangible assets has been identified as a key audit matter.

Our main audit procedures performed in response to this key audit matter included obtaining the management-appointed appraiser’s impairment appraisal report of goodwill and trademark, understanding and evaluating the rationality of the pricing model used for computing the relevant recoverable amount, evaluating the assumptions of the pricing model, such as the discount rate, growth rate and weighted average cost of capital (including the risk-free return rate and the volatility and risk premium remuneration), and considering the past operating performance, industry overview, and future trend of the Group. In conclusion, our audit team comprehensively assessed the rationality of the impairment evaluation of goodwill and trademark.

Other Matters

As described in Note 13 of the Group’s consolidated financial statements, we did not audit the financial statements as of and for the years ended December 31, 2016 and 2015 of certain investees, but such financial statements had been audited by other auditors, whose reports have been furnished to us. Our opinion, insofar as it relates to the amounts included and the information shown in Note 32 of the accompanying consolidated financial statements for these investees, is based solely on the reports of the other auditors. As of December 31, 2016 and 2015, the investments in the aforementioned investees were NT$10,896,351 thousand and NT$11,352,927 thousand, respectively. For the years ended December 31, 2016 and 2015, the investment (loss) income on the above said investees were NT$(255,534) thousand and NT$1,029,740 thousand, respectively.

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

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and the IFRS, IAS, IFRIC, and SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (including supervisor) are responsible for overseeing the Group’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2016 and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yi-Wen Wang and Wen-Chi Kuo.

Deloitte & Touche Taipei, Taiwan Republic of China

March 28, 2017

Notice to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to audit such consolidated financial statements are those generally applied in the Republic of China.

For the convenience of readers, the independent auditors’ report and the accompanying consolidated financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ report and consolidated financial statements shall prevail.

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2016 AND 2015

(In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Available-for-sale financial assets - current (Notes 4 and 7) Notes receivable (Notes 4 and 8) Accounts receivable (Notes 4, 8 and 8) Other receivables (Note 28) Inventories (Notes 4 and 10) Buildings and land held for sale (Notes 4 and 11) Other financial assets - current (Note 6) Other current assets Total current assets NONCURRENT ASSETS Financial assets carried at cost - noncurrent (Notes 4 and 9) Investments accounted for using equity method (Notes 4 and 13) Property, plant and equipment (Notes 4 and 14) Investment properties (Notes 4 and 15) Intangible assets (Notes 4 and 16) Deferred tax assets (Notes 4 and 23) Long-term receivables (Note 8) Other financial assets - noncurrent (Note 29) Long-term prepayments for leases (Note 17) Other noncurrent assets Total noncurrent assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term loan borrowings (Note 18) Notes payable Accounts payable (Note 28) Other payables Current tax liabilities (Notes 4 and 23) Receipts in advance (Note 11) Other current liabilities Total current liabilities NONCURRENT LIABILITIES Provisions - noncurrent (Note 4) Deferred tax liabilities (Notes 4 and 23) Deferred revenue - noncurrent (Note 15) Accrued pension liabilities (Notes 4 and 19) Guarantee deposits received Total noncurrent liabilities Total liabilities EQUITY (Note 20) Share capital Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2016 Amount % $ 1,084,835 1 3,246,512 4 366,324 1 1,305,881 2 11,925 - 1,451,224 2 350,375 1 7,237,898 9 246,332 - 15,301,306 20 449,582 1 10,896,351 14 26,753,401 35 21,157,600 28 257,986 - 209,113 - 385,490 - 65,800 - 1,215,950 2 25,223 - 61,416,496 80 $ 76,717,802 100 $ 46,000 - 6,924 - 897,834 1 504,629 1 7,975 - 180,763 - 35,937 - 1,680,062 2 223,648 - 7,214,538 9 16,584,651 22 94,353 - 316,124 1 24,433,314 32 26,113,376 34 9,800,000 13 2,232,791 3 3,683,109 5 33,590,309 43 703,332 1 37,976,750 49 594,885 1 50,604,426 66 $ 76,717,802 100	2015
			Amount % $ 2,474,406 3 8,729,292 11 432,891 1 1,671,883 2 1,673 - 1,903,509 2 271,198 - 2,628,202 3 787,291 1 18,900,345 23 495,041 1 11,352,927 14 27,232,915 34 19,773,984 24 471,995 1 358,990 - 540,884 1 65,800 - 1,286,561 2 24,363 - 61,603,460 77 $ 80,503,805 100 $ 10,000 - 2,214 - 1,196,312 2 758,177 1 16,339 - 203,781 - 61,901 - 2,248,724 3 327,750 - 7,293,298 9 16,977,124 21 468,040 1 221,009 - 25,287,221 31 27,535,945 34 9,800,000 12 2,237,678 3 3,440,401 4 33,590,944 42 3,146,060 4 40,177,405 50 752,777 1 52,967,860 66 $ 80,503,805 100

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 28, 2017)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

OPERATING REVENUE (Notes 4, 15, and 21) OPERATING COSTS (Notes 21, 22,and 28) GROSS PROFIT OPERATING EXPENSES (Note 22) Selling and marketing expenses General and administrative expenses Research and development expenses Total operating expenses PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Other gains and losses (Note 22) Finance costs Share of (loss) profit of associates and joint ventures (Notes 4 and 13) Other income (Note 22) Total non-operating income and expenses (LOSS) PROFIT BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 23) NET (LOSS) PROFIT FOR THE YEAR OTHER COMPREHENSIVE (LOSS) INCOME Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans Income tax relating to items that will not be reclassified subsequently to profit or loss (Notes 4 and 23)		2016 Amount % $ 12,240,920 100 10,234,666 84 2,006,254 16 338,576 3 1,006,693 8 65,291 - 1,410,560 11 595,694 5 (522,467) (4) (7,029) - (255,534) (2) 168,317 1 (616,713) (5) (21,019) - 108,484 1 (129,503) (1) (15,845) - 2,693 - (13,152) -		2015
				Amount % $ 17,487,077 100 13,612,077 78 3,875,000 22 357,113 2 1,106,781 6 66,094 1 1,529,988 9 2,345,012 13 (845,721) (5) (14,285) - 962,031 6 72,693 - 174,718 1 2,519,730 14 92,647 - 2,427,083 14 (25,498) - 4,335 - (21,163) -

(Continued)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

Items that may be reclassified subsequently to profit or loss: Exchange differences arising on translation of foreign operations Unrealized gain (loss) on available-for-sale financial assets Share of the other comprehensive (loss) income of associates and joint ventures Income tax relating to items that may be reclassified subsequently to profit or loss (Notes 4 and 23) Other comprehensive (loss) income for the year, net of income tax TOTAL COMPREHENSIVE (LOSS) INCOME FOR THE YEAR NET (LOSS) INCOME ATTRIBUTABLE TO: Owners of the Corporation TOTAL COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO: Owners of the Corporation (LOSS) EARNINGS PER SHARE (NEW TAIWAN DOLLARS; Note 24) Basic Diluted		2016 Amount % $ (13,653) - 20,580 - (198,711) (1) 33,892 - (157,892) (1) (171,044) (1) $ (300,547) (2) $ (129,503) (1) $ (300,547) (2) $(0.13) $(0.13)		2015
				Amount % $ (891) - (20,353) - 413,487 2 (70,262) - 321,981 2 300,818 2 $ 2,727,901 16 $ 2,427,083 14 $ 2,727,901 16 $2.48 $2.47

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated March 28, 2017)

(Concluded)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Amounts Per Share)

		Equity Attributable to Owners of the Corporation	Equity Attributable to Owners of the Corporation	Equity Attributable to Owners of the Corporation
Share Capital $ 9,800,000 - - - - - - 9,800,000 - - - - - - - $ 9,800,000	Capital Surplus $ 2,234,334 - - - - - 3,344 2,237,678 - - - - - - (4,887) $ 2,232,791	Retained Earnings		Other Equity
				Exchange Unrealized Differences on Gain (Loss) on Translating Available-for- Foreign sale Financial Operations Assets $ 368,104 $ 62,692 - - - - - - 342,334 (20,353) 342,334 (20,353) - - 710,438 42,339 - - - - - - (178,472) 20,580 (178,472) 20,580 - - - - $ 531,966 $ 62,919
		Legal Reserve $ 3,133,567 306,834 - - - - - 3,440,401 242,708 - - - - - - $ 3,683,109	Special Unappropriated Reserve Earnings $ 33,590,944 $ 3,202,974 - (306,834) - (2,156,000) - 2,427,083 - (21,163) - 2,405,920 - - 33,590,944 3,146,060 - (242,708) - (2,058,000) - (129,503) - (13,152) - (142,655) (635) 635 - - $ 33,590,309 $ 703,332

The accompanying notes are an integral part of the consolidated financial statements.

(With Deloitte & Touche audit report dated March 28, 2017)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES (Loss) profit before income tax Adjustments for: Depreciation expenses Share of loss (profit) of associates and joint ventures Impairment loss recognized on intangible assets Impairment loss recognized on property, plant and equipment Amortization expenses Interest income Dividend income Gain on disposal of investments Impairment loss recognized on financial assets Unrealized net (gain) loss on foreign currency exchange Finance costs (Reversal of) write-down of inventories Impairment loss recognized on other receivables (Gain) loss on disposal of property, plant and equipment Donation expenses Recognition of provisions Gain on disposal of investment properties Changes in operating assets and liabilities Notes receivable Accounts receivable Other receivables Inventories Buildings and land held for sale Other current assets Long-term receivables Notes payable Accounts payable Other payables Provisions Receipts in advance Other current liabilities Accrued pension liabilities Deferred revenue Cash generated from operations Interest received Dividends received Interest paid Return of income tax Income tax paid Net cash generated from operating activities	2016 $ (21,019) 709,759 255,534 206,000 136,101 83,990 (62,445) (41,782) (23,381) 15,000 (13,570) 7,029 (6,157) 4,294 (3,584) - - - 66,567 361,582 (78,752) 458,442 124,204 175,338 155,394 4,710 (490,616) 140,889 (38,370) (23,018) (25,964) (389,532) (392,473) 1,294,170 61,193 41,782 (7,029) 246,935 - 1,637,051	2015 $ 2,519,730 670,370 (962,031) - 279,387 86,900 (19,995) (42,868) (1,018) - 35,334 14,285 10,900 247,251 70,554 223,650 65,732 (8,291) (48,766) 1,823,681 (97,936) 289,476 1,449,579 217,797 (162,634) (7,863) (95,106) (88,540) - (1,444,172) (25,914) 23,581 14,196,118 19,219,191 20,017 1,137,048 (51,239) - (607,788) 19,717,229

(Continued)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM INVESTING ACTIVITIES Proceeds of the sale of available-for-sale financial assets Increase in other financial assets Increase of investment properties Payments for property, plant and equipment Purchase of available-for-sale financial assets Return of capital on financial assets carried at cost Proceeds of the disposal of property, plant and equipment Purchase of intangible assets (Increase) decrease in refundable deposits Proceeds of the disposal of investment properties Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Cash dividends paid Increase in guarantee deposits received Proceeds from (repayments of) short-term borrowings Repayment of long-term borrowings Repayment of long-term borrowings, net of current portion Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS, END OF YEAR	2016 5,606,626 (4,609,696) (1,291,949) (752,620) (84,772) 32,790 9,959 (5,558) (860) - (1,096,080) (2,058,000) 95,115 36,000 - - (1,926,885) (3,657) (1,389,571) 2,474,406 $ 1,084,835	2015 1,306,275 (2,595,209) (1,045,989) (968,937) (9,948,617) 63,415 54,722 (3,454) 2,883 8,481 (13,126,430) (2,156,000) 50,050 (1,700,000) (790,000) (140,000) (4,735,950) 8,997 1,863,846 610,560 $ 2,474,406

The accompanying notes are an integral part of the consolidated financial statements. (With Deloitte & Touche audit report dated March 28, 2017)

(Concluded)

INDEPENDENT AUDITORS’ REVIEW REPORT

The Board of Directors and Shareholders Taiwan Fertilizer Co., Ltd.

We have reviewed the accompanying combined balance sheet of Taiwan Fertilizer Co., Ltd. (the “Corporation”) and its affiliates (collectively referred to as the “Group”) as of December 31, 2016 and the related combined statement of comprehensive income for the year then ended. We conducted our review in accordance with the Guidelines for the Review of the Combined Financial Statements of Affiliates. A review consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the Republic of China, the objective of which is the expression of an opinion regarding the combined financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the combined financial statements of Taiwan Fertilizer Co., Ltd. and its affiliates as of and for the year ended December 31, 2016 referred to in the first paragraph for them to be in conformity with the Criteria Governing Preparation of Affiliation Reports, Combined Business Reports and Combined Financial Statements of Affiliated Enterprises, the Regulations Governing the Preparation of Financial Reports by Securities Issuers and related regulations.

Deloitte & Touche Taipei, Taiwan Republic of China

March 28, 2017

Notice to Readers

The accompanying combined financial statements are intended only to present the combined financial position and results of operations in accordance with accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdictions. The standards, procedures and practices to review such combined financial statements are those generally accepted and applied in the Republic of China.

For the convenience of readers, the independent auditors’ review report and the accompanying combined financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language independent auditors’ review report and combined financial statements shall prevail.

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED BALANCE SHEET DECEMBER 31, 2016

(In Thousands of New Taiwan Dollars)

(Reviewed, Not Audited)

ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 4 and 6)

Available-for-sale financial assets - current (Notes 4 and 7)
Other financial assets - current (Note 6)
Notes receivable (Note 8)
Accounts receivable (Notes 4 and 8)
Other receivables
Inventories (Notes 4 and 10)
Buildings and land held for sale (Notes 4 and 11)
Other assets - current

Total current assets

NONCURRENT ASSETS
Financial assets carried at cost - noncurrent (Notes 4 and 9)
Other financial assets - noncurrent (Note 6 and 29)
Investments accounted for by the equity method (Notes 4 and 13)
Property, plant and equipment (Notes 4 and 14)
Investment properties (Notes 4 and 15)
Intangible assets (Notes 4 and 16)
Deferred tax assets (Notes 4 and 23)
Long-term receivables (Note 8)
Long-term prepayments for lease (Note 17)
Other assets - noncurrent

Total noncurrent assets

TOTAL

LIABILITIES AND EQUITY
CURRENT LIABILITIES
Short-term borrowings (Note 18)

Notes payable
Accounts payable (Note 28)
Other payables
Current tax liabilities (Notes 4)
Receipts in advance (Note 11)
Other current liabilities

Total current liabilities

NONCURRENT LIABILITIES
Provisions - noncurrent (Notes 4)
Deferred tax liabilities (Notes 4 and 23)
Deferred revenue - noncurrent (Note 15)
Accrued pension liabilities (Notes 4 and 19)
Guarantee deposits received

Total noncurrent liabilities

Total liabilities

EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 20)
Share capital

Capital surplus

Retained earnings
Legal reserve
Special reserve
Unappropriated earnings

Total retained earnings

Other equity

Equity attributable to owners of the Corporation
NONCONTROLLING INTERESTS

Total equity

TOTAL

Amount
%
$ 1,084,835
1
3,246,512
4
7,237,898
9
366,324
1
1,305,426
2
54,425
-
1,456,029
2
350,375
1

255,386

-

15,357,210

20
449,582
1
65,800
-
10,896,351
14
27,469,294
35
21,157,600
27
314,524
-
209,113
-
385,490
1
1,215,950
2

147,817

-

62,311,521

80
$ 77,668,731
100
$ 359,152
1
161,770
-
931,701
1
779,050
1
7,975
-
180,763
-

35,937

-

2,456,348

3
223,648
-
7,214,538
9
16,584,651
22
94,353
-

316,124

1

24,433,314

32

26,889,662

35

9,800,000

12

2,232,791

3
3,683,109
5
33,590,309
43

703,332

1

37,976,750

49

594,885

1
50,604,426
65

174,643

-

50,779,069
65
$ 77,668,731
100

The accompanying notes are an integral part of the combined financial statements.

(With Deloitte & Touche review report dated March 28, 2017)

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

OPERATING REVENUE (Notes 4, 15 and 21)

OPERATING COSTS (Notes 19, 21, 22 and 28)

GROSS PROFIT

OPERATING EXPENSES (Notes 19 and 22)
Marketing
General and administrative
Research and development

Total operating expenses

OPERATING INCOME

NON-OPERATING INCOME AND EXPENSES
Other losses (Note 22)
Finance costs
Share of losses of associates (Notes 4 and 13)
Other income (Note 22)

Total nonoperating expenses

LOSS BEFORE INCOME TAX
INCOME TAX EXPENSE (Notes 4 and 23)

NET LOSS FOR THE YEAR

OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified subsequently to profit or loss:
Remeasurement of defined benefit plans
Income tax relating to items that will not be reclassified subsequently
to profit or loss (Notes 4 and 23)
Items that may be reclassified subsequently to profit or loss:
Share of other comprehensive loss of associates
Exchange differences arising on translation of foreign operations
Unrealized gain on available-for-sale financial assets
Income tax relating to components of other comprehensive income
(Notes 4 and 23)

Other comprehensive loss for the year, net of income tax

TOTAL COMPREHENSIVE LOSS FOR THE YEAR

Amount
%
$ 12,240,920
100
10,234,666
84
2,006,254
16
338,862
3
1,100,109
9
65,291

-
1,504,262
12
501,992

4
(518,387)
(4)
(7,029)
-
(255,534)
(2)
164,645

1
(616,305)
(5)
(114,313)
(1)
(108,484)
(1)
(222,797)
(2)
(15,845)
-
2,693
-
(168,434)
(1)
(13,653)
-
20,580
-
33,892

-
(140,767)
(1)
$ (363,564)
(3)

(Continued)

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

NET LOSS ATTRIBUTABLE TO: Owners of the Corporation Noncontrolling interests TOTAL COMPREHENSIVE LOSS ATTRIBUTABLE TO: Owners of the Corporation Noncontrolling interests LOSSES PER SHARE (NEW TAIWAN DOLLARS; Note 24) Basic Diluted	Amount % $ (129,503) (1) $ (93,294) (1) $ (300,547) (2) $ (63,017) (1) $(0.13) $(0.13)

The accompanying notes are an integral part of the combined financial statements. (With Deloitte & Touche review report dated March 28, 2017) (Concluded)

Acceptance Item 2

(Proposed by the Board of Directors)

Proposal : Approval of the proposal for appropriation of profit & loss and distribution of earnings for FY2016

Description :

TFC’s financial statements of 2016 were audited by the certified public accountants of Deloitte Touche Tohmatsu (DTT) in Taiwan. The amount for 2016 loss after tax was NT$129,502,273.
The 2016 appropriation of profit & loss and undistributed earnings available are distributed as follows
(1) 2016 appropriation of profit & loss :

The profits earned from 2011 will be appropriated to make up the 2016 loss after tax of NT$129,502,273.

(2) Reversal of special reserve :
(a) In 2002, 2005, and 2008, a special earned surplus of NT$861,411,300 had been set aside for the purpose of investment on and relocation to Taichung Plant. Since the purpose was no longer valid, such a surplus had been reversed into the undistributed earnings.
(b) From 2001 to 2003, a special earned surplus of NT$1,168,892,301 had been set aside for profits in business investment. Since the purpose was no longer valid, such a surplus had been reversed into the undistributed earnings.
(c) Distribution of bonus

In view of 2016 loss after tax, after the adjusted unallocated earnings of NT$832,834,744, the end unallocated earnings of NT$675,636,072 were excluded from the amount for 2016 earnings available after tax, the remaining earnings of NT$2,058,000,000 could be distributed at cash of NT$2.1 to each shareholder’s share.

This proposal was approved by the Board of Directors in the 20th Board Meeting of the 33rd session on March 24, 2017, and also reviewed and approved by the supervisors. After the proposal is approved in this general shareholders' meeting, the Board will be authorized to set up the date for dividends distribution. Furthermore, according to TSE Law No. 28-2, if TFC converts or buys back its stock before the record date has therefore dulite or decrease the outstanding shares, the Board would like to ask the authorization from shareholders’ meeting to adjust the dividend distribution ratio accordingly.

The information on the actual objects and the amounts for 2015 employees’ bonus distribution have been disclosed in the TFC's Annual Report and Market Observation Post System.
TFC does not prepare financial forecast and failures to the gratis allotment for the new shares, so the gratis allotment is not applicable for the evaluation for effects on Taiwan Fertilizer’s operating performance, the surplus and shareholders’ return rate for investment.
TFC’s 2016 Statement of appropriation of profit & loss and distribution of earnings was attached (see the annex)

Resolution

Taiwan Fertilizer Co., Ltd.

2016 STATEMENT OF APPROPRIATION OF PROFIT & LOSS AND DISTRIBUTION OF EARNINGS

Unit : NT$

Item	Amount	Note
I. Distributable distribution : Beginning undistributed earnings TIFRS Reversal of Special Reserve Actuarial (loss) profit listed in retained earnings Undistributed earnings after adjustment Net loss of this year Allocated legal surplus（10%） Reversal of special reserve Earnings distributable this year II. Distribution items : Shareholders’ bonus in cash (NT$2.1 per common share X 980,000,000 shares) Undistributed earnings at the end of the year	845,351,384 634,690 (13,151,330) 832,834,744 (129,502,273) (0) 2,030,303,601 2,733,636,072 (2,058,000,000) 675,636,072	Note 1 Note 2
Note: (1) The profits earned from 2011 will be appropriated to make up the 2016 loss after tax of NT$129,502,273. (2) In order to meet TFC’s operation planning, both (1) a special earned surplus of NT$861,411,300 which had been set aside for the purpose of investment on and relocation to Taichung Plant in 2002, 2005 and 2008, and (2) a special earned surplus of NT$1,168,892,301 which had been set aside for profits in business investment from 2001 to 2003 will be reversed into the undistributed earnings. (3) The cash dividend will be listed in the column of other income of the Company if it amounts less than NT$1.

Note 1: Article 237-1 of the Company Act

A company, when allocating its surplus profits after having paid all taxes and dues, shall first set aside ten percent of said profits as legal reserve. Where such legal reserve amounts to the total authorized capital, this provision shall not apply.

Note 2: Article 27-3, Articles of Incorporation of TFC

Any earning after final accounting by this Company each year shall be made good for deficit for previous years after payment of taxes by law, and if there are still earnings, there shall be provision for 10 percent of statutory surplus reserve, and there shall also be provision for or transfer of special surplus reserve by law, and then the balance and total retained earnings for the previous year shall serve as the distributable earnings, but they shall be retained by discretion as business requires or there shall be provision for special surplus reserve by discretion before they will be distributed. The distribution shall be proposed by the Board of Directors and submitted to the shareholders’ meeting for their recognition.

(Proposed by the Board of Directors)

Discussion Item 1

Proposal : Some revision of TFC’s Articles of Incorporation to be submitted for approval

Description :

According to the provision under Article 14.4.1 of the Securities and Exchange Act and a letter under J. G. Z. F. tzi No. 10200531121 issued by Financial Supervisory Commission on December 31st, 2013, TFC was to establish an Audit Committee in place of supervisors upon the expiry of the term of the incumbent (i.e. the 33rd session of the) Directors and Supervisors in 2018.
The update of the TFC’s Articles of Incorporation this time was to include amendment of 12 articles, deletion of 2 existing articles, and introduction of 2 new articles where the update are listed as follows:
(1) According to the stipulation under Article 14.4 of the Securities and Exchange Act, TFC was to establish an Audit Committee, clearly defining relevant regulations about the Audit Committee (including the date of implementation); therefore, stipulations related to election of and remuneration for Supervisors were to be deleted (consequently, Articles 9, 16, 21, 24 and 25 were amended, Article 16.2 added, and Article 21 to 22 deleted).
(2) In accordance with the deployment of the Audit Committee, the number of Directors (including Independent Directors) was changed to nine (please refer to Article 16).
(3) In accordance with the deployment of the Audit Committee, the number of Independent Directors was adjusted to three (please refer to Article 16.1).
(4) The date the amendment made this time was newly listed while provisions specifically related to Supervisors were deleted. All changes were to take effect as of the date since the inception of the Audit Committee (please refer to Article 29).
Attached are the Comparison of Articles of Incorporation Before and After amendment,. and its Articles of Incorporations as revised set out in the annex.

Resolution:

Taiwan Fertilizer Co., Ltd. Comparison of the Articles of Incorporation Before and After Amendment

	Amendment
After amendment	Before amendment	Remark
Article 9 Shareholders meetings may be ordinary meetings or extraordinary meetings. Ordinary meetings shall be convened annually by the Board of Directors within six months after the end of each fiscal year. Unless the Company Act otherwise provides, when necessary, the extraordinary meeting will be convened by the board of directors or independent directors. If there are shareholders with more than 3% of the total number of the issued shares for more than one year, the proposed matters and the reasons should also be written and requested the Board of Directors to convene it.	Article 9 Shareholders meetings may be ordinary meetings or extraordinary meetings. Ordinary meetings shall be convened annually by the Board of Directors within six months after the end of each fiscal year. Unless the Company Act otherwise provides, when necessary, the extraordinary meeting will be convened by the board of directors or supervisors. If there are shareholders with more than 3% of the total number of the issued shares for more than one year, the proposed matters and the reasons should also be written and requested the Board of Directors to convene it.	The Audit Committee was to be established in accordance with Article 14.4 of the Securities and Exchange Act. The convening of Shareholders’ Meeting was handled by Supervisors previously and now was to by Independent Directors in accordance with Article 220 of the Company Act.
Chapter IV. Directors and Audit Committee	Chapter IV. Directors and Supervisors
Article 16 The Company will have nine Directors elected from the capable shareholders with the three-year term, and the Directors can be re- elected. But the continuing office term of an independent director shall not be over nine years. The total shares of the registered stocks of the Company from all directors and independent directors should be in accordance with the provision of the implementation rules about the ratio for voting right of directors, supervisors of the public offered company and the verification. During the terms of the Company's directors and independent	Article 16 The Company will have seven to nine Directors elected from the capable shareholders with the three-year term, and the Directors can be re-elected. But the continuing office term of an independent director shall not be over nine years. The total shares of the registered stocks of the Company from all directors should be in accordance with the provision of the implementation rules about the ratio for voting right of directors, supervisors of the public offered company and the verification. During the terms of the Company's directors and supervisors,the	1. The Audit Committee was to be established in place of Supervisors in accordance with provisions under Article 14.4 of the Securities and Exchange Act. Provisions specifically related to Supervisors were deleted. 2. The number of Directors (including Independent Directors) was changed to nine.

After amendment	Before amendment	Remark
directors, the executive business scope should include the liability to purchase the liability insurance in accordance with the laws.	executive business scope should include the liability to purchase the liability insurance in accordance with the laws.
Article 16-1 Among the quota of directors as stated the first paragraph of Article 16, three directors shall be independent directors. A candidate nomination system is adopted for the election of independent directors and non- independent directors. Shareholders shall elect independent directors and non- independent directors from among the candidates listed in the slate at the shareholders’ meeting. The independent director election and the non-independent directors election shall be held together and the number of independent and non-independent directors elect shall be counted separately. An independent director’ professional qualifications, shares held, restrictions on part-time jobs, nomination and appointment methods and other matters to be complied with shall be dealt with in accordance with applicable regulations provided by the securities authority.	Article 16-1 The independent directors among the directors of this Company shall not be less than 2 persons and shall not be less than one-fifth of the directors. A candidate nomination system is adopted for the election of independent directors and non- independent directors. Shareholders shall elect independent directors and non- independent directors from among the candidates listed in the slate at the shareholders’ meeting. The independent director election and the non-independent directors election shall be held together and the number of independent and non-independent directors elect shall be counted separately. An independent director’ professional qualifications, shares held, restrictions on part-time jobs, nomination and appointment methods and other matters to be complied with shall be dealt with in accordance with applicable regulations provided by the securities authority.	The Audit Committee was to be established in place of Supervisors in accordance with provisions under Article 14.4 of the Securities and Exchange Act. The number of Independent Directors elected for TFC was to be amended.
Article 16-2 The Audit Committee was established by TFC in accordance with the Securities and Exchange Act, consisting of all Independent Directors where one of them was to act as convener whereas at least one member shall be expert in accounting or finance. The responsibilities,organization and	New article	1. In accordance with provisions under Article 14.4 of the Securities and Exchange Act, the Audit Committee was to be established for the execution of the Company Act, the Securities and

After amendment	Before amendment	Remark
rules, execution of authority, and other matters shall be deployed in accordance with provisions stipulated by the component authority. The establishment of the Audit Committee was to take effect upon the re-election of the 34th session of Directors and Independent Directors. Upon the establishment of the Audit Committee, all Supervisors of the 33rd session were to be removed from their roles.		Exchange Act, and other authority stipulated for Supervisors under other decrees. 2. The establishment of the Audit Committee was clearly specified.
Article 16-3 The Remuneration Committee was to be established by TFC in accordance with the provisions under Article 14.6 of the Securities and Exchange Act. The execution of authority of the Remuneration Committee and its members shall be deployed in accordance with rules set for the deployment of Remuneration Committee for the TWSE/GTSM Companies and relevant methods for the execution of the authority.	New article	According to the provisions under Article 27 of the “Practice Principles for Corporate Governance” of TFC, the Remuneration Committee was meant to be a functional committee under the Board of Directors and shall be specified clearly in the Articles; hence, the addition of Article 16-3.
Article 21 (deleted)	Article 21 This Corporation will have three (3) directors who shall be elected by shareholders with the legal capacity. The term of office of each director shall be three (3) years. The directors are eligible for re-election after the expiry of their term of office.	The Audit Committee was to be established in place of Supervisors in accordance with provisions under Article 14.4 of the Securities and Exchange Act. Provisions specifically related to Supervisors were deleted.
Article 22 (deleted)	Article 22 The power of supervisors shall be as follows: 1. To review financial standing of the Company; 2. To review the Company’s books	In accordance with provisions under Article 14.4 of the Securities and Exchange Act, the Audit Committee was to be established for the

After amendment	Before amendment	Remark
	and documents; and 3. Other power entitled to by regulations and resolutions of meetings of shareholders.	execution of the Company Act, the Securities and Exchange Act, and other authority stipulated for Supervisors under other decrees.
Article 21 The remuneration for the chairman of the Board shall be calculated on the basis of 1.25 times the income payable to the general manager. The remuneration for other directors and independent directors shall be paid on the basis not exceeding the standards of the highest pay for employees of this Company.	Article 23 The remuneration for the chairman of the Board shall be calculated on the basis of 1.25 times the income payable to the general manager. The remuneration for other directors and supervisors shall be paid on the basis not exceeding the standards of the highest pay for employees of this Company.	1. Change of Article numbering. 2. In accordance with provisions under Article 14.4 of the Securities and Exchange Act, the Audit Committee was to be established for the execution of the Company Act, the Securities and Exchange Act, and other authority stipulated for Supervisors under other decrees.
Article 22 There is one general manager for the Company, who shall deal with all business and direct and supervise the employees by observing decisions and guidelines of the Board of Directors and obeying orders of the chairman of the Board. There will be 2 to 4 vice general managers, who shall assist the general manager in dealing with business. The employment, dismissal and remuneration of the said managers shall be subject to the Article of the CompanyAct.	Article 24 There is one general manager for the Company, who shall deal with all business and direct and supervise the employees by observing decisions and guidelines of the Board of Directors and obeying orders of the chairman of the Board. There will be 2 to 4 vice general managers, who shall assist the general manager in dealing with business. The employment, dismissal and remuneration of the said managers shall be subject to the Article of the CompanyAct.	Change of Article numbering.
Article 23 The Company’s accounting year shall start on January 1 and end on December 31. The financial statements of the	Article 25 The Company’s accounting year shall start on January 1 and end on December 31. The financial statements of the	Change of Article numbering.

After amendment	Before amendment	Remark
Company shall be prepared at the end of each accounting year.	Company shall be prepared at the end of each accounting year.
Article 24 The Board of Directors shall prepare and issue the following statements at the close of each accounting year with certification of the certified public accountant and with the approval of the Audit Committee thirty days before shareholders’ meeting, and shall submit the statements to the shareholders' meeting for acknowledgement. 1. Business report; 2. Financial statement; and 3. Proposal for distributing earnings or covering losses.	Article 26 The Board of Directors shall prepare and issue the following statements at the close of each accounting year with certification of the certified public accountant and with the approval of supervisor thirty days before shareholders’ meeting, and shall submit the statements to the shareholders' meeting for acknowledgement. 1. Business report; 2. Financial statement; and 3. Proposal for distributing earnings or covering losses.	1. Change of Article numbering. 2. The Audit Committee was established in accordance with the provisions under Article 14.4 of the Securities and Exchange Act. The auditing of the statements and reports compiled annually by the Board of Directors is now to be conducted by the Audit Committee in accordance with the provisions of Article 219 and 228 of the CompanyAct.
Article 25 For any profit of the Company, it should allocate 2.4% of the current year profit as the remuneration of employees, and no more than 1.6% as the remuneration of directors. However, remedy amount should be reserved in advance in case of any accumulated deficit. The above mentioned remuneration of employees, directors was determined with the agreement of more than half of present directors, among more than 2/3 of present directors of the board of directors, and has been reported to the board of shareholders. (omitted)	Article 27 For any profit of the Company, it should allocate 2.4% of the current year profit as the remuneration of employees, and no more than 1.6% as the remuneration of directors and supervisors. However, remedy amount should be reserved in advance in case of any accumulated deficit. The above mentioned remuneration of employees, directors and supervisors was determined with the agreement of more than half of present directors, among more than 2/3 of present directors of the board of directors, and has been reported to the board of shareholders. (omitted)	1. Change of Article numbering. 2. In accordance with provisions under Article 14.4 of the Securities and Exchange Act, the Audit Committee was to be established for the execution of the Company Act, the Securities and Exchange Act, and other authority stipulated for Supervisors under other decrees.
Article 26 As required bythe business of the	Article 28 As required bythe business of the	Change of Article numbering.

After amendment	Before amendment	Remark
Company, it shall be necessary to conduct external guarantee subject to the provisions set out in the Operating Procedures for Capital Loans and Endorsement Guarantee worked out based on “the Treatment Standards for Capital Loans and Endorsement Guarantee byPublic Companies”.	Company, it shall be necessary to conduct external guarantee subject to the provisions set out in the Operating Procedures for Capital Loans and Endorsement Guarantee worked out based on “the Treatment Standards for Capital Loans and Endorsement Guarantee byPublic Companies”.
Article 27 Any matters not provided for in the Articles of Incorporation shall be dealt with in accordance with the Company Act and other relevant laws	Article 29 Any matters not provided for in the Articles of Incorporation shall be dealt with in accordance with the Company Act and other relevant laws	Change of Article numbering.
Article 28 The organizational rules and by- laws of this Company shall be prescribed separately.	Article 30 The organizational rules and by- laws of this Company shall be prescribed separately.	Change of Article numbering.
Article 29 This suit of Articles of Incorporation was initially set forth in the meeting of June 4, 1947 when this Company was established. Amendment was made in the shareholders’ meeting of Sept. 1, 1952. Amendment was made in the extraordinary shareholders’ meeting of June 19, 1953. (omitted) Amendment was made in the shareholders’ meeting of June 29, 2016. Amendment was made in the shareholders’ meeting of June 14, 2017. The deletion of provisions regarding the supervisor(s) under the Articles of Incorporation won’t take effect until the date on which the Audit Committee is to be established.	Article 31 This suit of Articles of Incorporation was initially set forth in the meeting of June 4, 1947 when this Company was established. Amendment was made in the shareholders’ meeting of Sept. 1, 1952. Amendment was made in the extraordinary shareholders’ meeting of June 19, 1953. (omitted) Amendment was made in the shareholders’ meeting of June 29, 2016.	1. Change of Article numbering. 2. The date the amendment made this time is newly listed. 3. The deletion of provisions regarding the supervisor(s) under the Articles of Incorporation won’t take effect until the date on which the Audit Committee is to be established.

Discussion Item 2

(Proposed by the Board of Directors)

Proposal : Some revision of the Procedures for Acquisition and Disposal of Assets of Taiwan Fertilizer Co., Ltd. to be submitted for approval

Description :

It will be subject to the Notice of Taiwan Stock Exchange Corporation dated February 14, 2017, No. 1060002157.
This proposal was approved by the Board of Directors in the 20th Board Meeting of the 33rd tenure on March 24, 2017 and also reviewed and approved by the supervisors.
Attached is the Comparison of the Procedures for Acquisition and Disposal of Assets Before and After amendment, and its text as revised set out in the annex.

Resolution :

Taiwan Fertilizer Co., Ltd.

Comparison of the Procedures for Acquisition and Disposal of Assets Before and After Amendment

After amendment

Before amendment

Remark

Article 9

The wording of the base articles had been revised in accordance with the competent authorities, while simultaneously the relevant texts corrected.

It is required to appoint experts to It is required to appoint experts to articles had been revised provide the scope of application of provide the scope of application of in accordance with the valuation reports. For the valuation reports. For the competent authorities, acquisition or disposal of acquisition or disposal of while simultaneously the immovable properties or immovable properties or relevant texts corrected. equipment by this Company, equipment by this Company, except machinery and equipment except machinery and equipment used for the operation purpose used for the operation purpose such as transaction with such as transaction with governmental authorities , selfgovernmental authorities, selfowned land construction, leased owned land construction, leased land construction or acquisition, land construction or acquisition, disposal, if the transaction amount disposal, if the transaction amount lives up to 20% of the Company’s lives up to 20% of the Company’s paid-up capital amount or to paid-up capital amount or to NT$300,000,000 or more, it is NT$300,000,000 or more, it is necessary to provide valuation necessary to provide valuation reports (with the matters recorded reports (with the matters recorded as set out in Annex 1) provided by as set out in Annex 1) provided by professional valuators’ valuation professional valuators’ valuation reports on or before the date of reports on or before the date of fact, and they shall meet the fact, and they shall meet the following provisions. following provisions. Article 21 Article 21 The domestic money Evaluation and operation Evaluation and operation market fund refers to the procedures. procedures. money market fund When this Company acquires or When this Company acquires or issued by the institution disposes of immovable assets from disposes of immovable assets from of securities investment interested parties, or acquires or interested parties, or acquires or trusts, and approved by disposes of assets other than disposes of assets other than the Financial Supervisory immovable assets with interested immovable assets with interested Commission in parties, with the trading amount parties, with the trading amount accordance with the living up to 20% of the paid-up living up to 20% of the paid-up provisions of the capital of the Company, 10% of capital of the Company, 10% of Securities Investment total assets or to NT$300,000,000 total assets or to NT$300,000,000 Trust and Consulting Act or more, except purchase or sale of or more, except purchase or sale of – where simultaneously government bonds, bonds government bonds, bonds the relevant texts had embedded with the call or put embedded with the call or put been corrected.

After amendment	Before amendment	Remark
option, and purchase or redemption of money market funds which are issued by any domestic securities investment trust enterprise, it is necessary to submit the following data to the Board of Directors for the adoption thereof and the supervisors for the acceptance thereof before trading contracts can be entered into and payment can be made.	option, and purchase or redemption of domestic money market funds, it is necessary to submit the following data to the Board of Directors for the adoption thereof and the supervisors for the acceptance thereof before trading contracts can be entered into and payment can be made.
Article 31 When conducting merger, split, acquisition or transfer of shares, this Company shall, before resolution of meetings of directors, appoint certified public accountants, lawyers or securities underwriters to express their opinions on the rationality of share change percentages, prices of acquisition or cash or other properties to be allotted to shareholders, and shall request the meeting of directors to discuss and adopt the same. But, the opinions about the rationality issued by the experts shall be waived under the following circumstances: 1) when TFC undergoes the merger with its subsidiaries whose public shares or total assets were 100% owned directly or indirectly by TFC; or 2) when subsidiaries, whose public shares or total assets were 100% owned directly or indirectly by TFC, were undergoing mergers among themselves.	Article 31 When conducting merger, split, acquisition or transfer of shares, this Company shall, before resolution of meetings of directors, appoint certified public accountants, lawyers or securities underwriters to express their opinions on the rationality of share change percentages, prices of acquisition or cash or other properties to be allotted to shareholders, and shall request the meeting of directors to discuss and adopt the same.	In accordance with the
		Merger and Acquisition
		Law, mergers between
		TFC and its subsidiaries -
		whose public shares or
		total assets were 100%
		owned directly or
		indirectly by TFC – or
		mergers among TFC’s
		subsidiaries - whose
		public shares or total
		assets were 100% owned
		directly or indirectly by
		TFC – shall be deemed
		as reorganization within
		the same group itself the
		same group without
		being subject to the
		negotiation of the
		shareholding exchange
		ratio or the cash or
		property distribution to
		shareholders . Therefore,
		such mergers shall be
		treated in a more relaxed
		manner and the opinions
		about the rationality on
		the shareholding
		conversion ratio issued
		by the experts shall be
		waived

After amendment Before amendment Remark Article 38 Article 38 1. The ground for Under any of the following Under any of the following revision of Item1 circumstances in respect of circumstances in respect of Paragraph 1 is the acquisition or disposal of assets, acquisition or disposal of assets, same as that for Article this Company shall perform this Company shall perform 21. announced declaration of relevant announced declaration of relevant 2. The equipment that information at the website information at the website acquired or distributed designated by the Bureau within 2 designated by the Bureau within 2 for business use is a days from the date of the fact by days from the date of the fact by necessary item for the nature in the format as set out by nature in the format as set out by day-to-day business of the competent authorities. the competent authorities. TFC. Considering a 1. Any acquisition or disposal of 1. Any acquisition or disposal of large-scale company immovable assets from immovable assets from like TFC, if the interested parties or acquisition interested parties or acquisition declaring standards are or disposal of assets other than or disposal of assets other than too low, then the immovable assets along with the immovable assets along with the announcement about interested parties with the interested parties with the declaring will tend to trading amount living up to 20% trading amount living up to 20% be too frequent and the of the paid-up capital of the of the paid-up capital of the significance of Company, to 10% of total assets Company, to 10% of total assets information disclosure or to NT$300,000,000 or more, or to NT$300,000,000 or more, will also be reduced. provided, however, any provided, however, any Therefore, the existing purchase or sale of government purchase or sale of government Item 4.4 Paragraph 4 bonds or bonds with buyback or bonds or bonds with buyback or was revised so that for sellback conditions, and/or sellback conditions or purchase any listed companies purchase or redemption of and sale of government bonds with paid-up capital money market funds which are will not be included therein over NT$ 100 million, issued by any domestic immovable properties. when equipment is securities investment trust acquired or disposed of enterprise, will not be included for the business therein immovable properties. purpose the purpose of 2. Performing merger, split, 2. Performing merger, split, obtaining or disposing acquisition or transfer of shares. acquisition or transfer of shares. of the equipment for 3. The loss arising from the trading 3. The loss arising from the trading business use, and when of derivative instruments live up of derivative instruments live up the transaction to the upper limits of all or to the upper limits of all or counterparty is not separate contracts as specified separate contracts as specified related to the under the treatment procedures. under the treatment procedures. transaction, hereby the 4. The types of assets acquired or 4. The trading amount lives up to transaction amount is disposed of are equipment used 20% of the paid-up capital of the raised up to NT$ 1 for business purposes, the Company or to NT$300,000,000 billion and the clause transaction counterparty is not or more except the trading of is moved to be listed related to the transaction, and assets set out in the foregoing under Item 4 the transaction amount is under three clauses, disposal of Paragraph 1.

After amendment	Before amendment	Remark
NT$ 500 million. 5. The types of assets acquired or disposed of by the listed companies engaged in construction business are real estate property used for construction purposes, the transaction counterparty is not related to the transaction, and the transaction amount is under NT$ 500 million. 6. Regarding the kinds of real estate properties that are acquired through own-to-build, lease-to-build, co-build-to-sub housing, co-build-to-profit sharing, co-build-to-sub sales, TFC is to invest more than NT$ 500 million in dealing with these kinds of transactions. 7. (2) For the purpose of investing as a professional, including buying and selling securities at the stock exchange office or securities business premises at home or abroad; or subscribing to the general corporate bonds and the general financial bonds not involved in shareholding interest in the domestic primary market; or subscribing to the securities due to the need of underwriting business of the securities firm, or acting as a securities dealer recommending and offering the counseling to emerging companies in accordance with the provisions set forth by Taipei Exchange (TPEx). (3) Any purchase or sale of government bonds or bonds	creditors’ rights by financial institutions or capital investment in Mainland China, with exception of the following circumstances. (1) Purchase and sale of government bonds. (2) Purchase and sale of negotiable securities made by overseas stock exchanges or securities underwriter business offices with capital investment as their occupation, or marketable securities subscribed by securities dealers in primary market or in compliance with applicable regulations (3) Purchase and sale of bonds with buyback and sellback conditions, or purchase or redeem domestic money market funds. (4) When the categories of assets acquired or disposed of belong to machinery and equipment for operation purposes with trading objects not being interested parties, and with the trading amount failing to live up to NT$500,000,000 or more. (5) Operation of the acquisition or disposal of immovable properties for operation purposes by public companies in the construction industry, with the trading objects not being interested parties, and with transaction amount failing to live up to NT$500,000,000 or more. (6) For the acquisition of	3. The existing Item 4.5 and Item 4.6 under Paragraph 1 are moved to be listed under Item 5 and 6 of Paragraph 1. And the existing Item 4 under Paragraph 1 is moved to be listed under Item 7 of Paragraph 1. 4. The existing provisions of Item 1.4 under Paragraph 4 has been revised and moved to be listed under Item 7.2 of Paragraph 1. (1) In view of the fact that for those investing as a professional, the general corporate bonds and the general financial bonds not involved in shareholding interest acquired in the domestic primary market fall into the conduct of recurrent business with its main purpose of earning interest, hence, the nature is simple; furthermore, when these bonds are sold in the secondary market, it is unnecessary to make announcement as per the existing regulations. Based

After amendment	Before amendment	Remark
with buyback or sellback conditions, and/or purchase or redemption of money market funds which are issued by any domestic securities investment trust enterprise Amounts of transaction mentioned in the foregoing clause shall be calculated in the following manner: 1. Amount of each transaction. 2. The total trading amount of the acquisition or disposal of the subject matter of the same nature with the same interested party within one year. 3. The total amount of immovable properties in the same development plan for the acquisition or disposal of (with respective accumulation of such acquisition or disposal thereof) within one year. 4. The total amount of the acquisition or disposal (with respective accumulation of such acquisition or disposal thereof) of negotiable securities within one year. “Within one year” as referred to in the foregoing clause shall be traced back for one year based on the date of the fact of this trading, with the portion as announced subject to the Procedures exempted from being no longer calculated therein. This Company shall enter the circumstances of the performance of trading of derivative instruments by this Company and its subsidiaries not being domestic public companies upto the end of	immovable properties in the manner of own land construction, leased land construction, joint building for sharing housing, joint construction for sharing profits, and joint construction for respective sale, the estimated investment by the Company fails to live up to NT$500,000,000 or more. Amounts of transaction mentioned in the foregoing clause shall be calculated in the following manner: 1. Amount of each transaction. 2. The total trading amount of the acquisition or disposal of the subject matter of the same nature with the same interested party within one year. 3. The total amount of immovable properties in the same development plan for the acquisition or disposal of (with respective accumulation of such acquisition or disposal thereof) within one year. 4. The total amount of the acquisition or disposal (with respective accumulation of such acquisition or disposal thereof) of negotiable securities within one year. “Within one year” as referred to in the foregoing clause shall be traced back for one year based on the date of the fact of this trading, with the portion as announced subject to the Procedures exempted from being no longer calculated therein. This Companyshall enter the	on the efficiency of information disclosure and on the benefits and consistency, the scope of applicability of the announcement is excluded. Also, according to the provision of Article 2.1 of the Methods for Financial Bond issued by the bank, the subordinated financial bonds shall not be included in the abovementioned general financial bonds not involved in shareholding interest. (2) Also, if the securities firm - due to the need of underwriting business or acting as a securities dealer offering counseling to emerging companies, recommending emerging companies, and registering emerging companies – has subscribed the unlisted securities of the emerging companies in accordance with

After amendment	Before amendment	Remark
the last month in the fixed format on or before 10th day each month into the information declaration website as designated by the Securities and Futures Bureau. Any error or omission in the announced projects in the time of announcement by this Company subject to relevant provisions shall be corrected or supplemented, and the Company shall also make announcement declaration of all projects within two days after it is informed. In the case of acquisition or disposal of assets, this Company shall prepare and keep the relevant contracts, journals, reference books, valuation reports, opinions issued by certified public accountants, lawyers or securities underwriters at this Company, and unless otherwise specified by law, such shall be kept for at least five years.	circumstances of the performance of trading of derivative instruments by this Company and its subsidiaries not being domestic public companies up to the end of the last month in the fixed format on or before 10th day each month into the information declaration website as designated by the Securities and Futures Bureau. Any error or omission in the announced projects in the time of announcement by this Company subject to relevant provisions shall be corrected or supplemented, and the Company shall also make announcement declaration of all projects. In the case of acquisition or disposal of assets, this Company shall prepare and keep the relevant contracts, journals, reference books, valuation reports, opinions issued by certified public accountants, lawyers or securities underwriters at this Company, and unless otherwise specified by law, such shall be kept for at least five years.	the provisions set forth by Taipei Exchange (TPEx), it shall also be excluded from the scope of applicability of the announcement. 5. The ground for revision of the existing Item 4.3 Paragraph 1 is the same as that for Article 21 and is moved to be listed under Item 3 of Paragraph 7.
		6. With reference to the
		relevant provisions of
		Article 38 that TFC
		shall re-announce any
		necessary changes to
		the notice within 2
		days after the declaring
		notice was made by
		TFC, it is clearly
		required that TFC shall
		re-announce the
		declaring notice in full
		within 2 days after
		realizing that errors or
		omissions were
		existent and
		rectification was
		necessary. Therefore
		Paragraph 5 has been
		revised.

Discussion Item 3

(Proposed by the Board of Directors)

Proposal : Some revision of the Regulations on Election of Directors and Supervisors of Taiwan Fertilizer Co., Ltd. to be submitted for approval

Description :

In order to comply with the amendments to “the Articles of Incorporation of Taiwan Fertilizer Co., Ltd.”, TFC shall set up the Audit Committee to replace the Supervisors. The relevant provisions about Supervisors in the Articles of Incorporation shall be invalidated on the date of the establishment of the Audit Committee. Meanwhile, “the Procedures for the Election of Supervisors” was renamed to “the Procedures for the Election of Directors and Independent Directors”.
Attached please find the Comparison of the Procedures for Election of Directors and Supervisors Before and After Amendment (please see Annex for details).

Resolution:

Taiwan Fertilizer Co., Ltd.

Comparison of the Regulations on Election of Directors and Supervisors Before and After Amendment

Item	After amendment	Before amendment	Remark
	Election of directors and independent directors	Election of directors and supervisors	Revision of the name of the Procedures
Article 1	The election of directors and independent directors of this Company shall be subject to these Procedures unless otherwise specified by the Company Act or other regulations.	The election of directors and supervisors of this Company shall be subject to these Procedures unless otherwise specified by the Company Act or other regulations.	With the amendments to the Articles of Incorporation, set the Audit Committee to replace the inspectors, and delete the relevant provisions of the inspectors.
Article 2	This Company adopts the candidate nomination system for the election ofindependent directors, non-independent directors and supervisors. Shareholders shall elect such number ofdirectors and supervisorsas provided in the Article of Incorporation of this Company from the slate of candidates. The candidates with more votes, based on the votes from electronic communication platforms and the votes casted at the meeting, shall be elected asindependent directors, non- independent directors or supervisors.If two or more candidates have the same number of votes for the seats limited, the candidates with the same number of votes shall draw lots to decide. The chairman of the meeting shall draw lots on behalf of any candidate not attendingthe	This Company adopts the candidate nomination system for the election of independent directors, non-independent directors and supervisors. Shareholders shall elect such number of directors and supervisors as provided in the Article of Incorporation of this Company from the slate of candidates. The candidates with more votes, based on the votes from electronic communication platforms and the votes casted at the meeting, shall be elected as independent directors, non- independent directors or supervisors. If two or more candidates have the same number of votes for the seats limited, the candidates with the same number of votes shall draw lots to decide. The chairman of the meeting shall draw lots on behalf of any candidate not attendingthe	1. Relevant provisions about Supervisors have been deleted and wording has been slightly amended. 2. The provisions under Article 2.2 have been incorporated into Paragraph 2. 3. In line with the deployment of the Audit Committee, the provisions under Paragraph 3 has been deleted.

Item	After amendment	Before amendment	Remark
	meeting in person.	meeting in person. If a shareholder is elected as director and supervisor at the same time, the shareholder shall decide at his or her discretion to serve as director or supervisor. If the shareholder fails to make the decision, the shareholder shall be deemed as director. If any elected director or supervisor is not qualified or incompetent to meet the requirements of applicable laws and statutes, the candidate with the second highest votes shall replace his or herposition.
Article 2-2	(deleted)	The independent directors and non-independent directors of this Company shall be elected at the same time and the numbers of the elected independent and non- independent directors shall be counted separately. The candidates with more votes are elected as independent directors and non-independent directors.	The provision under Article 2.2 has been incorporated into Paragraph 2.
Article 3	In the time of election of directors and independent directors of this Company, the single accumulative disclosed ballot way is used, with each share having the right to vote corresponding to the same number of directors and independent directors to be elected. Shareholders shall elect several persons from the ballots in a centeralized manner, provided, however, that in the time of distribution of severalpersons,the total of	In the time of election of directors and supervisors of this Company, the single accumulative disclosed ballot way is used, with each share having the right to vote corresponding to the same number of directors and supervisors to be elected. Shareholders shall elect several persons from the ballots in a centeralized manner, provided, however, that in the time of distribution of several persons, the total of the number of	Delete the relevant provisions of the inspectors.

Item	After amendment	Before amendment	Remark
	the number of rights to vote may not exceed the total number of rights to vote.	rights to vote may not exceed the total number of rights to vote.
Article 9	The directors and independent directors successfully elected shall be given the written notices bythe Company.	The directors and supervisors successfully elected shall be given the written notices by the Company.	Delete the relevant provisions of the inspectors.
Article 11	These Procedures shall be implemented after they are adopted by the meeting of shareholders, with the same as the case of revision. The deletion of this Methods related to Supervisors shall take effect as of the date of the establishment of the Audit Committee.	These Procedures shall be implemented after they are adopted by the meeting of shareholders, with the same as the case of revision.	In case there is a gap before the Supervisors can be elected to make up the supplementary seats, the valid procedures for election can be followed.

Motions ：

Dismissal of the meeting ：

Annex

I. Rules of Procedure for Shareholders’ Meeting
II. Articles of Incorporation
III. Procedures for Acquisition and Disposal of Assets
IV. Regulations on Election of Directors and Supervisors
V. Shareholdings of Directors and Supervisors
VI. Effect of the gratuitous allotment of shares on operation performance, earnings per share and return rate on investment for shareholders

Annex 1

Taiwan Fertilizer Co., Ltd. Rules for Procedures of Shareholders’ Meetings

Revised in the general shareholders’ meeting of June 24, 2014

Article 1 Shareholders’ meetings of this Company, unless otherwise specified by Company Law, Articles of Association and other relevant regulations, shall be subject to these Rules.
Article 2 The shareholders as referred to in these Rules shall refer to shareholders themselves and proxies authorized by them.
Article 3 The Company shall specify the time and venue for reporting as well as other matters in its shareholders’ meeting notice.

The time for reporting shall be 30 minutes earlier before the meeting starts. The location for reporting shall be marked obviously and there are enough persons in site to deal with such reporting.

A shareholder shall attend a shareholders meeting on the basis of the attendance card, sign-in card, or other supporting document. Solicitors soliciting proxy forms shall also bring identification documents for verification.

This Company shall have signing books for shareholders present to sign on, or the shareholders present shall present attendance cards instead of signing of the attendance. The number of shares present shall be calculated on the basis of signing books or attendance cards so presented, as well as the shares with the voting rights exercised in writing or by way of electronic transmission.

This Corporation shall furnish attending shareholders with the meeting agenda book, annual report, attendance card, speaker's slips, voting slips, and other meeting materials. Where there is an election of directors or supervisors, pre-printed ballots shall also be furnished.

Article 4 Attendance at shareholders meetings shall be calculated based on numbers of shares. The shares held by shareholders having no voting right shall not be counted in the total number of issued shares while adopting a resolution at a meeting of shareholders. In passing any resolution at the shareholders' meeting, shares for which voting right cannot be exercised as provided in Article 178 shall not be counted in the number of votes of shareholders present at the meeting.
Article 5 The places where shareholders’ meetings of this Company are convened shall be the place where this Company is located or any other place that is convenient for the presence by shareholders and is suitable to the holding of shareholders’ meetings, with the time for starting meetings not earlier than 9:00 a.m. or later than 15:00 p.m.
Article 6 If shareholders’ meetings are convened by the Board of Directors, the chairman shall be acted by the chairman of the Board. When the chairman of the Board takes leave or is unable to exercise power, the chairman of the Board shall designate one director to act on his behalf. If the chairman of the Board fails to designate any proxy, directors shall elect one of them to act on behalf of the chairman of the Board.

In case a director is elected to act on behalf of the chairman of the Board, he/she shall work for the Company more than six months and shall understand the financial conditions of the Company well. The same requirement is also applied to the corporate director who acts on behalf of the chairman of the Board.

In the case where shareholders’ meetings are convened by other persons entitled to the convening of meetings other than the Board of Directors, the chairman shall be acted by the person entitled to the convening of the meetings. When there are more than two persons entitled to the convening thereof, one person shall be elected to act for the position.

Article 7 This Company shall appoint attorneys, certified public accountants or related personnel it appointed to attend shareholders’ meeting as nonvoting delegates. Personnel conducting services for shareholders’ meetings shall wear identification certificates or armbands
Article 8 The Company shall record the proceedings of a shareholders meeting in their entirety in audio or video, including reporting, meeting proceedings, and voting proceedings. The recording shall be retained for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Law, the recording shall be retained until the conclusion of the litigation.
Article 9 When the time of a meeting has arrived, the chairman shall announce the start of meetings, but when less than half of shareholders representing the total number of shares issued attend meetings, the chairman may announce postponement of the meeting time, provided that only two postponements may be made, and the postponement not exceeding one hour. When no more than 1/3 of shareholders representing the total number of shares issued attend a meeting after two postponements, interim resolutions shall deemed subject to the provisions set out in Clause 1 of Article 175. Each shareholder of the Company shall be given the interim resolutions as well as the notice that another shareholders’ meeting will be convened within one month.

When a meeting does not end, if the number of shares representing the shareholders present lives up to more than one half of the shares issued, the chairman shall make interim resolutions, and shall submit the same to be voted at a general meeting once again subject to the provisions set out in Article 174 of the Company Law.

Article 10 If a shareholders’ meeting is convened by the Board of Directors, the procedures shall be determined by the Board of Directors, and the meeting shall be proceeded with subject to the scheduled procedures, which may not be changed unless subject to resolutions at shareholders’ meetings.

If a shareholders’ meeting is convened by persons entitled to the right of convening the meeting other than the Board of Directors, such shall be subject to the foregoing provisions. When the procedures scheduled in the foregoing two clauses are used for deliberation (including interim motions), unless subject to resolutions before the end thereof, the chairman may not forthwith declare adjournment of a meeting.

Article 11 Unless the chairman declares adjournment of a meeting in breach of these Rules of Procedures, after such adjournment, no shareholders may elect another chairman to continue the meeting at the original address or at any other place whatsoever.
Article 12 In the process of a meeting, the chairman shall declare a break for a considerable time. Before shareholders present speak at a meeting, they must fill in the notes of speeches specifying essential purposes of speeches, numbers of shareholders (or attendance numbers) and their names, and the chairman shall determine the sequence of their speeches. If shareholders present only have the notes of speech but do not speak at a meeting, such shall be deemed as no speech at the meeting. If the content of speech fails to comply with that recorded in the notes of speech, the content of speech shall prevail. When shareholders present speak at a meeting, other shareholders may not interfere with such speech unless subject to consent of the chairman of the shareholders speaking at the meeting. In the case of any breach thereof, the chairman shall stop the same.

Article 13 Every shareholder may speak for the same proposal. Unless consented to by the chairman, speaking may not exceed two times, and may not exceed five minutes. If shareholders’ speech is in breach of the provisions set out in the foregoing clause or beyond the range of deliberation, the chairman shall stop their speech.
Article 14 When a government authority or a corporation is authorized to attend a shareholders’ meeting, such authority or corporation may appoint more than one proxy to attend the meeting.
If a corporation shareholder appoints two persons or more to attend a shareholders’ meeting on its behalf, the same proposal may be spoken for by only one of them.
Article 15 After shareholders present speak at a meeting, the chairman shall make a reply in person or by designated personnel.
Article 16 Shareholders shall have one voting power for each share, except that he/she has no voting power in the circumstances set forth in the Article 179-2 of Company Law.

When this Company convenes the shareholders’ meeting, a shareholder may exercise his or her voting right in writing or by way of electronic transmission. The shareholder exercising his or her voting right in writing or by way of electronic transmission shall be deemed to have been present in the shareholders’ meeting. But for any extemporary motions or any amendments to the original proposal, such shareholder shall be deemed to have waived his or her voting right.

Any shareholder that intends to exercise his or her voting right in writing or by way of electronic transmission shall inform this Company of his or her intention in writing or by way of electronic transmission 2 days prior to the commencement of the shareholders’ meeting. In case of the intention received more than once, the intention received first shall prevail. But this clause is not applicable to the withdrawal of the intention informed previously.

If the shareholder who has exercised his or her voting right in writing or by way of electronic transmission wants to attend the shareholders’ meeting personally, the shareholder shall use the same way to withdraw his or her previous 2 days before the commencement of the shareholders’ meeting. Failure to withdraw in the given period shall result in the acceptance of the voting right exercised in writing or by way of electronic transmission. If the voting right is exercised in writing or by way of electronic transmission and a power of attorney is also issued to appoint a proxy to attend the shareholders’ meeting, the voting right exercised by the proxy shall prevail.

Except share agencies approved by trust undertakings or by competent securities authorities, if one shareholder is authorized by two or more shareholders, the voting power of its proxy may not exceed 3% of the total voting power of shares issued. In the time of excess thereof, the excess of voting power may not be calculated therein.

Article 17 The chairman of the Board shall allow ample opportunity during the meeting for explanation and discussion of proposals and of amendments or extraordinary motions put forward by the shareholders; when the chair is of the opinion that a proposal has been discussed sufficiently to put it to a vote, the chair may announce the discussion closed and call for a vote.

Appointment or discharge of directors and supervisors, any changes in the Articles of Incorporation, the dismissal, merger or separation of the company, and the matters provided in the first paragraph of Article 185 of Company Law and Articles 26-1 and 43-6 shall be itemized in the subject of convening the meeting and shall not be proposed as extemporary motions.

Article 18 Except otherwise provided in the Company Law or the Articles of Incorporation of this Company, the proposal shall be resolved with the consent of the majority of the attending shareholders with voting rights.

If there are amendments or alternatives to be resolved for a proposal, the chairman of the meeting shall combine these amendments and alternatives and decide the order of resolution. If one of the amendments or alternatives is passed, the others shall be deemed to have been rejected and shall not be arranged for resolution again.

The persons responsible for vote monitoring and counting shall be designated by the chairman of the meeting, but the persons responsible for vote monitoring shall be shareholders.

The voting or election shall be conducted publicly in the place where the shareholders’ meeting is held. After the completion of vote counting, the voting result, including the votes counted, shall be announced at the meeting and then documented.

Failing to use the votes prepared by this Company
Votes failing to be cast into vote counters
Blank votes without words or blank votes without expression of voting opinions thereon
Votes additionally mixed with other words in addition to the items that should be filled in
Votes with handwriting hard to be recognized or altered
Proxies using votes in breach of the provisions set out in the Rules for Using Letters of Authorization at Shareholders’ Meeting Attended by Public Companies.
Article 19 A shareholder may complete the power of attorney printed by this Company, indicating the scope of authorization and appointing a proxy to attend the shareholders’ meeting on the behalf of the shareholder.

A shareholder may issue the power of attorney to appoint one proxy only and the power of attorney shall be delivered to this Company 5 days prior to the commencement of the shareholders’ meeting. In case of more than one copy of power of attorney issued and delivered, the first copy of power of attorney received shall prevail. This clause is not applicable to the withdrawal of the power of attorney sent previously.

If the shareholder whose power of attorney has been delivered to this Company intends to attend the shareholders’ meeting in person or exercise his or her voting right in writing or by way of electronic transmission, the shareholder shall withdraw, in writing, his or her power of attorney 2 days before the commencement of the shareholders’ meeting. If the shareholder fails to withdraw in the given period, the voting right exercised by the proxy shall prevail.

Article 20 The election of directors or supervisors at a shareholders meeting shall be held in accordance with the applicable election and appointment rules adopted by this Corporation, and the voting results shall be announced on-site immediately. The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the monitoring personnel and kept in proper custody for at least 1 year. If, however, a shareholder files a lawsuit pursuant to Article 189 of the Company Law, the ballots shall be retained until the conclusion of the litigation.
Article 21 The chairman of the Board may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor."

At the place of a shareholders meeting, if a shareholder attempts to speak through any device other than the public address equipment set up by this Corporation, the chair may prevent the shareholder from so doing.

When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.

Article 22 When a meeting is in progress, the chair may announce a break based on time considerations. If a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.

If the meeting venue is no longer available for continued use and not all of the items (including extraordinary motions) on the meeting agenda have been addressed, the shareholders meeting may adopt a resolution to resume the meeting at another venue.

A resolution may be adopted at a shareholders meeting to defer or resume the meeting within 5 days in accordance with Article 182 of the Company Law.

Article 23 These Rules shall be implemented after they are adopted by the shareholders’ meeting, with revision thereof as the same.

Annex 2

Articles of Incorporation Of Taiwan Fertilizer Co., Ltd.

Amended in the general shareholders’ meeting of June 29, 2016

Chapter I. General Provisions

Article 1 This Company is incorporated under the Company Law and named Taiwan Fertilizer Co., Ltd.

Article 2 The scope of business of this Corporation shall be as follows:
C801010 Basic Industrial Chemical Manufacturing
C801020 Petrochemical Manufacturing
C801110 Fertilizer Manufacturing
C801990 Other Chemical Materials Manufacturing
C802100 Cosmetics Manufacturing
C802170 Poisonous Chemical Material Manufacturing
C802990 Other Chemical Products Manufacturing
CC01060 Wired Communication Equipment and Apparatus Manufacturing
CC01080 Electronic Parts and Components Manufacturing
CE01030 Photographic and Optical Equipment Manufacturing
F102180 Wholesale of Alcohol
F107050 Wholesale of Manure
F107060 Wholesale of Virulence Chemical Substance
F107080 Wholesale of Environment Medicines
F107200 Wholesale of Chemistry Raw Material
F107990 Wholesale of Other Chemical Products
F108040 Wholesale of Cosmetics
F113070 Wholesale of Telecom Instruments
F119010 Wholesale of Electronic Materials
F203030 Retail Sale of Alcohol
F207050 Retail Sale of Manure
F207060 Retail Sale of Virulence Chemical Materials
F207080 Retail Sale of Environment Medicine
F207200 Retail sale of Chemistry Raw Material 25. F207990 Retail Sale of Other Chemical Products 26. F208040 Retail Sale of Cosmetics
F212011 Gasoline Stations
F212990 Retail Sale of Other Petroleum Products and Fuels
F214030 Retail Sale of Motor Vehicle Parts and Supplies
F301010 Department Stores
F301020 Supermarkets
F401010 International Trade
F501060 Restaurants

G202010 Parking Garage Business
G406061 Harbor Cargoes Forwarding Services
G801010 Warehousing and Storage
H701010 Residence and Buildings Lease Construction and Development
H701020 Industrial Plant Buildings Lease Construction and Development
H701040 Specialized Field Construction and Development
H701050 Public Works Construction and Investment
H703010 Lease of Factory Buildings 42. H703020 Lease of Warehouse
H703030 Lease of Business Buildings 44. I301010 Software Design Services
I301020 Data Processing Services
I301030 Digital Information Supply Services
I401010 General Advertising Services
J101030 Waste Disposing
J101040 Waste Disposing
J101060 Wastewater (Sewage) Treatment
JA01990 Other Automobile Services
ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special approval.
(After the relevant business license is obtained,.the Harbor Cargoes Forwarding Services as specified in the Item 35 shall be approved by the competent authority.)
Article 3 The total reinvestments made by this Company shall not exceed the net value listed in the latest financial statements audited or examined by CPAs, and are not subject to Article 13 of Company Act, which regulates the total reinvested amount not to exceed the 40% of the paid-in capital. Total reinvestments made by this Company in non-core business shall not exceed the 100% of the paid-in capital of this Company.
Article 4 The main office of this Company shall be in Taipei City. When demand necessary, branches may be set up on domestic and/or foreign localities. Any establishment, changes or dissolvation of the branches shall be subject to the resolution of the Board of Directors.
Article 5 All notifications of this company shall be dispatched in circular letters and be published in the conspicuous place of current newspapers of its office, except that stipulated by the securities authorities.

Chapter II. Stocks

Article 6 The authorized capital of this Company shall be NT$9,800,000,000.00 in 980,000,000 common shares of capital stock with par value at NT$10 each; all shares are issued.
Article 7 This Company may issue registered stock without printing share certificates, provided that, any shares shall be recorded by a centralized securities custodian or placed under the custody of such custodian.
Article 8 Registration of share transfers on our share register shall be suspended for sixty (60) days prior to any ordinary meeting of shareholders, thirty (30) days prior to any extraordinary meeting of shareholders, and five (5) days prior to any date on which dividends, bonuses or any other benefits are scheduled to be distributed by this Company.

Chapter II. Shareholders’ Meetings

Article 9 Shareholders meetings may be ordinary meetings or extraordinary meetings. Ordinary meetings shall be convened annually by the Board of Directors within six months after the end of each fiscal year. Unless the Company Law otherwise provides, when necessary, the extraordinary meeting will be convened by the board of directors or supervisors. If there are shareholders with more than 3% of the total number of the issued shares for more than one year, the proposed matters and the reasons should also be written and requested the Board of Directors to convene it.
Article 10 The meeting date, location and the convened subject matters of the ordinary meeting of the shareholders should be notified for each of the shareholder in 30 days before the date of meeting, 15 days for the extraordinary of the meeting. For the shareholders with less than one thousand registered stocks, the convened notice of the Ordinary shareholders’ meeting shall be notified in 30 days before the meeting, in 15 days for the Extraordinary Shareholders' Meeting by the announcement.
Article 11 Any shareholder who is unable to attend a shareholders’ meeting may appoint a proxy to attend any shareholders’ meeting by delivering to this Company a proxy form printed by this Company specifying the scope of proxy, with his/her seal or signature as registered.
Shareholders of this Company may exercise their rights of voting electronically in accordance with the authorities. A shareholder exercising his or her right of voting eclectonically shall be deemed to have exercised the right of voting at the applicable meeting. Relevant matters shall be taken care of in accordance with applicable laws and regulations.
Article 12 Unless the Company Act or relevant laws otherwise provides on the higher percentage of the shareholders, the Shareholders' meeting should be resolved based on the present represented shareholders with more than half numbers of the total numbers of issued shares and the agreement of a majority of the shareholders' voting rights.
Article 13 Whereas the Shareholders' meeting convened by the Board of Directors, the chairman is chaired by the chairman of the board meeting. When the chairman is on leave or unable to exercise their functions and powers, the chairman shall appoint an agent from the directors. When the chairman doesn’t appoint any agent, one agent can be elected from one director by the recommendation from each other.
The appointed director to be the chairman shall have been served as a director for more than 6 months and know the financial status of this Company very well; this clause is also applicable to any representative of a corporation to be appointed as chairman.
The chairman should be the person with convened rights whereas the meeting would be convened by the person other than that of the Board of Directors. When there are more than two persons with convened rights, one person can be recommendated from each other as the chairman.
Article 14 Unless otherwise specified in laws or regulations, each shareholder shall be entitled to one vote for each share owned.
Article 15 The shareholders' meeting shall keep its resolution record which shall indicate the date and location which the meeting was held, the name of Chairman, the resolution events

and how they were resolved. This record shall be completed with the signature and seal of the Chairman, and shall be sent to each shareholder within 20 days after the shareholders’ meeting is held. The above procedure rules can be distributed by the announcement.

Chapter IV. Directors and Supervisors

Article 16 The Company will have seven to nine Directors elected from the capable shareholders with the three-year term, and the Directors can be re-elected. The total shares of the registered stocks of the Company from all directors and supervisors should be in accordance with the provision of the implementation rules about the ratio for voting right of directors, supervisors of the public offered company and the verification.
During the terms of the Company's directors and supervisors, the executive business scope should include the liability to purchase the liability insurance in accordance with the laws.
Article 16-1 The independent directors among the directors of this Company shall not be less than 2 persons and shall not be less than one-fifth of the directors.
A candidate nomination system is adopted for the election of independent directors and non-independent directors. Shareholders shall elect independent directors and nonindependent directors from among the candidates listed in the slate at the shareholders’ meeting. The independent director election and the non-independent directors election shall be held together and the number of independent and non-independent directors elect shall be counted separately.

An independent director’ professional qualifications, shares held, restrictions on part-time jobs, nomination and appointment methods and other matters to be complied with shall be dealt with in accordance with applicable regulations provided by the securities authority.

Article 17 The directors have the responsibility to organize the Board of Directors, and the Chairman of the Board should be elected from the directors among themselves. The Chairman of the Board represents the Company from the external aspect, the meeting of the shareholders and the Chairman of the Board from the internal aspect, and comprehensively manages the affairs of the Company based on the guidance of the Board of Directors.

Article 18 The responsibilities of the Board of Directors are as follows:

Approval of business plans and financial guidelines; 2 Approval of business plans and supervision of approval and execution thereof; 3. Approval of budgets and final accounting; 4. Working out any increase or decrease in capital; 5. Approval of issue of corporate bonds; 6. Working out distribution of earnings or making good deficits; 7. External significant contracts and acquisition, transfer and grant of important
expertise and patent rights as well as approval, revision and termination of technical
cooperation contracts;
Revision and preparation of the Company’s articles of association;
Approval of organization rules and important articles of association of the Board of
Directors and the Company;

Conclusion of the establishment, modification and cancellation of branches; 11. Appointment and removal of the general manager and vice general managers;
Appointment and removal of certified public accountants for the Company;
Review of endorsement, commitments and limits of acceptance in the name of the Company;
Approval of significant transactions between interested parties (including related enterprises);
Convening meetings of shareholders; and
Other power entitled to according to regulations and resolutions of the meeting of shareholders.
Article 19 The Board of Directors shall have one regular meeting each month. An interim meeting shall be summoned by the chairman of the Board in the case of emergency or upon request of more than one half of directors, with the chairman of the Board as the chairman of the meeting. When the chairman of the Board fails to exercise his power when taking leave or for any other reason whatsoever, the chairman of the Board shall appoint one of the directors to act on his behalf. If the chairman of the Board fails to designate any proxy, one person shall be elected by the directors.

In the case where directors fail to be present at a meeting for some reason, they shall entrust other directors in writing to act for and on behalf of them in exercising power.

Article 20 Unless otherwise specified by the Company Law or relevant regulations, the resolutions of the Board of Directors must have more than one half of directors present with consent of more than one half of the directors present. There shall be the signature and seal of the chairman attached to journals and such shall be subject to the provisions set out in Article 15 of these Articles of Incorporation.
Article 21 This Corporation will have seven (7) directors who shall be elected by shareholders with the legal capacity. The term of office of each director shall be three (3) years. The directors are eligible for re-election after the expiry of their term of office.
Article 22 The power of supervisors shall be as follows:
To review financial standing of the Company; 2. To review the Company’s books and documents; and 3. Other power entitled to by regulations and resolutions of meetings of shareholders.
Article 23 The remuneration for the chairman of the Board shall be calculated on the basis of 1.25 times the income payable to the general manager. The remuneration for other directors and supervisors shall be paid on the basis not exceeding the standards of the highest pay for employees of this Company.

Chapter V. Managers

Article 24 There is one general manager for the Company, who shall deal with all business and direct and supervise the employees by observing decisions and guidelines of the Board of Directors and obeying orders of the chairman of the Board. There will be 2 to 4 vice general managers, who shall assist the general manager in dealing with business. The employment, dismissal and remuneration of the said managers shall be subject to the Article of the Company Law.

Chapter VI. Accounting

Article 25 The Company’s accounting year shall start on January 1 and end on December 31.

The financial statements of the Company shall be prepared at the end of each accounting year.

Article 26 The Board of Directors shall prepare and issue the following statements at the close of each accounting year with certification of the certified public accountant and with the approval of supervisor thirty days before shareholders’ meeting, and shall submit the statements to the shareholders' meeting for acknowledgement.
Business report; 2. Financial statement; and 3. Proposal for distributing earnings or covering losses.
Article 27 For any profit of the Company, it should allocate 2.4% of the current year profit as the remuneration of employees, and no more than 1.6% as the remuneration of directors and supervisors. However, remedy amount should be reserved in advance in case of any accumulated deficit.
The above mentioned remuneration of employees, directors and supervisors was determined with the agreement of more than half of present directors, among more than 2/3 of present directors of the board of directors, and has been reported to the board of shareholders.

The board of directors should, according to the prepared annual surplus distribution proposal, submit the regular meeting of shareholders to make solution on the distribution of shareholders ＇ bonus.

Any earning after final accounting by this Company each year shall be made good for deficit for previous years after payment of taxes by law, and if there are still earnings, there shall be provision for 10 percent of statutory surplus reserve, and there shall also be provision for or transfer of special surplus reserve by law, and then the balance and total retained earnings for the previous year shall serve as the distributable earnings. Therefore, the board of directors should, according to the prepared annual surplus distribution proposal, submit the regular meeting of shareholders to make solution on the distribution of shareholders ＇ bonus, after special surplus reserve is reserved or allocated with consideration according to the business demands.

The shareholders’ dividends of this Company shall refer to diversified operation of business and characteristics of changes in economic boom with consideration taken to the demand of life cycles of products or services on future funds as well as business development and shareholders’ equity. For the payment of shareholders’ dividends, except substantial investment plans, significant changes in financial standing, substantial changes in operation and productivity expansion or other substantial capital expenditure and other capital demands for that year, the cash dividend distribution ratio shall be on the whole not be lower than 10 percent of the total dividends for that year, and shall be submitted to the meeting of shareholders for consent before the same is handled.

Chapter VI. Supplemental Provisions

Article 28 As required by the business of the Company, it shall be necessary to conduct external guarantee subject to the provisions set out in the Operating Procedures for Capital Loans and Endorsement Guarantee worked out based on “the Treatment Standards for Capital Loans and Endorsement Guarantee by Public Companies”.
Article 29 Any matters not provided for in the Articles of Incorporation shall be dealt with in accordance with the Company Law and other relevant laws

Article 30 The organizational rules and by-laws of this Company shall be prescribed separately.

Article 31 This suit of Articles of Incorporation was initially set forth in the meeting of June 4, 1947 when this Company was established. Amendment was made in the shareholders’ meeting of Sept. 1, 1952. Amendment was made in the extraordinary shareholders’ meeting of June 19, 1953. Amendment was made in the shareholders’ meeting of April 5, 1954. Amendment was made in the shareholders’ meeting of March 31, 1955. Amendment was made in the shareholders’ meeting of April 25, 1958. Amendment was made in the extraordinary shareholders’ meeting of November 15, 1958. Amendment was made in the shareholders’ meeting of May 14, 1959. Amendment was made in the first extraordinary shareholders’ meeting of May 10, 1960. Amendment was made in the second extraordinary shareholders’ meeting of Oct. 21, 1960. Amendment was made in the shareholders’ meeting of April 29, 1961. Amendment was made in the shareholders’ meeting of March 18, 1963. Amendment was made in the shareholders’ meeting of March 22, 1964. Amendment was made in the shareholders’ meeting of March 31, 1965. Amendment was made in the shareholders’ meeting of August 16, 1967. Amendment was made in the shareholders’ meeting of August 20, 1969. Amendment was made in the shareholders’ meeting of Sept. 15, 1970. Amendment was made in the shareholders’ meeting of Oct. 6, 1972. Amendment was made in the shareholders’ meeting of Mar. 2, 1974. Amendment was made in the shareholders’ meeting of July 24, 1976. Amendment was made in the shareholders’ meeting of May 14, 1982. Amendment was made in the shareholders’ meeting of May 20, 1983. Amendment was made in the shareholders’ meeting of May 23, 1986. Amendment was made in the shareholders’ meeting of May 22, 1987. Amendment was made in the first extraordinary shareholders’ meeting of Nov. 30, 1987. Amendment was made in the shareholders’ meeting of Sept. 27, 1980. Amendment was made in the shareholders’ meeting of Sept. 21, 1991. Amendment was made in the shareholders’ meeting of Sept. 17, 1993. Amendment was made in the shareholders’ meeting of Sept. 29, 1994. Amendment was made in the first extraordinary shareholders’ meeting of May 20, 1995. Amendment was made in the shareholders’ meeting of Sept. 30, 1995. Amendment was made in the shareholders’ meeting of Sept. 30, 1996. Amendment was made in the shareholders’ meeting of Sept. 27, 1997. Amendment was made in the shareholders’ meeting of Nov. 10, 1999. Amendment was made in the first extraordinary shareholders’ meeting of May 16, 2000.

Amendment was made in the shareholders’ meeting of June 26, 2001. Amendment was made in the shareholders’ meeting of June 21, 2002. Amendment was made in the shareholders’ meeting of June 23, 2003. Amendment was made in the shareholders’ meeting of June 25, 2004. Amendment was made in the shareholders’ meeting of June 24, 2005. Amendment was made in the shareholders’ meeting of June 14, 2006. Amendment was made in the shareholders’ meeting of June 13, 2007. Amendment was made in the shareholders’ meeting of June 16, 2009. Amendment was made in the shareholders’ meeting of June 17, 2010. Amendment was made in the shareholders’ meeting of June 22, 2011. Amendment was made in the shareholders’ meeting of June 27, 2012. Amendment was made in the shareholders’ meeting of June 25, 2013. Amendment was made in the shareholders’ meeting of June 24, 2014. Amendment was made in the shareholders’ meeting of June 29, 2016.

Annex 3

Taiwan Fertilizer Co., Ltd. Procedures for the Acquisition or Disposal of Assets

Amended in the shareholders’ meeting of June 24, 2014 Amended in the shareholders’ meeting of June 29, 2016

CHAPTER I. GENERAL PROVISIONS

Article 1 The Procedures are stipulated according to the Article 36-1 of Securities and Exchange Law and the Letter No. Tai-tsai-cheng-yi-tzi-di 0910006105 as of December 10, 2002 from the Securities and Futures Commission, Ministry of Finance. Unless the law and regulations otherwise provides, the Procedures will prevail.
Article 2 The scope of assets as referred to under the Procedures shall be as follows :
stocks, government bonds, corporate bonds, financial bonds, domestic beneficiary certificates, overseas mutual funds, depositary receipts, call (put) warrants, beneficiary securities, asset basic securities and other long-term investment.
Immovable properties (including land, house and building, investment property, land use right, inventory of construction business) and equipment.
Membership cards.
Patent rights, copyrights, trademark rights, franchises and other intangible assets.
Creditors’ rights of financial institutions (including receivables, exchange purchases and discounts and loans and collection of payment).
Derivative instruments.
Assets acquired or disposed subject to merger, split, acquisition or transfer of shares by law.
Other significant assets.

Article 3 The definition of terms under the Procedures shall be as follows :

Derivative instruments: refer to transaction contracts whose values are derived from instruments such as interest rates, exchange rates, etc, including forward contracts, option contracts, exchange contracts, and compound contracts composed of the foregoing instruments. The forward contracts shall not include insurance contracts, performance contracts, after-sale service contracts, long-term leasing contracts and long-term purchase (sale) contracts.
Assets acquired or disposed of subject to merger, split, acquisition or transfer of shares by law: refer to the assets acquired or disposed of subject to merger, split or acquisition by the corporate acquisition law, financial shareholding company law, financial institution merger law or other laws, or assign of shares from other companies by issuing new shares as set out in Clause 6 of Article 156 of the Company Law (hereinafter referred to as “transfer of shares”)

Interested parties and subsidiaries: shall be determined in accordance with applicable statements of the International Financial Reporting Standards or the International Accounting Standards.
Professional evaluators: refer to valuators of immovable properties or other valuators engaged in valuation of immovable properties and equipment.
Date of fact: refer to the date of transaction signing, date of payment, date of entrusted deal, date of transfer, date of resolution made by the Board of Directors or other date enough to confirm trading objects or trading amounts, whatever is earlier. However, for the investment approved by the competent authorities, it will be based on the earlier of the opening date or the date as approved by the competent authorities.
Investment in Mainland China: refer to investment in Mainland China put by the Investment Commission, MOEA or investment in Mainland China as specified by technical cooperation license procedures.
Article 4 For valuation reports of this Company or written opinions of certified public accountants, lawyers or securities underwriters, such professional valuators and their valuation personnel, certified public accountants, lawyers or securities underwriters and interested parties in transactions may not act as interested parties.
Article 5 In the case of acquisition or disposal of assets by this Company subject to auction procedures of a court, there shall be documentation provided by the court in lieu of valuation reports or opinions of certified public accountants.

CHAPTER II. EVALUATION PROCEDURES FOR THE ACQUISITION OR DISPOSAL OF IMMOVABLE PROPERTIES OR EQUIPMENT

Article 6 Evaluation and operation procedures :

The evaluation procedures for the acquisition or disposal of immovable properties or equipment shall be subject to the regulations as set out in the Articles 7 and 9.
The organizers shall submit causes for the proposed acquisition or disposal, subject matters, dealing objects, prices of transfer, receipt and payment terms, reference basis of prices, etc to the authorities in charge for the judgment thereof.
The related operation shall be subject to internal control system of this Company and relevant provisions set out in the Procedures.

Article 7 Procedures for determining trading conditions and authorization limits :

Acquisition or disposal of immovable properties or equipment by the Company shall be subject to the prior consent of the Board of Directors or subsequent confirmation or reference; and if it belongs to the matter set out in Article 185 of the Company Law, it must be subject to the consent of the meeting of shareholders.
The decision procedures and reference basis for the trading conditions of the acquisition or disposal of immovable properties or equipment this Company

acquisition or disposal of immovable properties or equipment shall be subject to the following circumstances.

(1) For the acquisition or disposal of immovable properties, it is necessary to reference the announced current values, evaluated prices, actual trading prices of adjacent immovable properties and the provisions set out in Article 9 to appoint professional valuation agencies to provide valuation reports, etc, to determine trading conditions and trading prices, on the basis of which analysis reports are prepared. And it is necessary to review and approve them subject to the “Form of Division of Power and Duties of Managers”, “the Details of Authorization by Levels” and “the Form of Division of Power and Duties of General Management Office and Different Plants” of this Company. In addition, the acquisition or disposal of immovable properties by this Company shall be made by alternative ways such as comparison of prices, negotiation of prices or bidding.
(2) The acquisition or disposal of equipment shall be made by any one of ways such as comparison of prices, negotiation of prices or bidding, with compliance with requirements to be based on relevant provisions to be able to provide valuation reports by professional valuation agencies.

Article 8 Execution organizations

Immovable properties: to be executed by Land Development Office
Equipment: to be executed by the research and development division.
Article 9 It is required to appoint experts to provide the scope of application of valuation reports For the acquisition or disposal of immovable properties or equipment by this Company, except machinery and equipment used for the operation purpose such as transaction with government offices, self-owned land construction, leased land construction or acquisition, disposal, if the transaction amount lives up to 20% of the Company’s paidup capital amount or to NT$300,000,000 or more, it is necessary to provide valuation reports (with the matters recorded as set out in Annex 1) provided by professional valuators’ valuation reports on or before the date of fact, and they shall meet the following provisions.
When fixed prices or specific prices are taken as reference basis for trading prices for any special reason whatsoever, such transaction shall be first of all submitted to the Board of Directors for the adoption by resolutions, and any change in future trading conditions shall also be subject to the foregoing procedures.
When the transaction amount lives up to NT$1,000,000,000 or more, it is necessary to appoint more than two professional valuators valuation.
Under any of the following circumstances of this Company in valuation results of professional valuators, except valuation results of acquisition of assets are higher than transaction amounts, or valuation results of disposal of assets are lower than transaction amounts, it is necessary to appoint certified public accountants to fulfill procedures subject to No. 20 of the Statement of Auditing Standards issued by the

Accounting Research and Development Foundation (“ARDF”), and to express specific opinions on reasons of differences and appropriateness of trading prices.

(1) When the difference between valuation results and transaction amounts lives up to more than 20%
(2) Difference of valuation results from more than two professional valuators lives up to more than 10%.
The time for the valuation reports submitted by any professional valuator shall not be more than three months after the contracts are entered, provided, however, that if they apply the announced current values of the same period and they do not exceed six months, written opinions shall be provided by the original professional valuators.

The calculation of transaction amounts shall be subject to the provisions set out in Clause 2 of Article 38, and there shall be no longer calculation therein for the portion for which valuation reports provided by professional valuators have been obtained subject to the provisions set out in the Procedures or opinions of certified public accountants have been obtained.

Construction industry may take into account restricted prices, specific prices and special rises to determine transaction prices. If the evaluation report is not available for due reasons, the evaluation report and the opinions of CPAs mentioned in the item 3 of the preceding paragraph shall be obtained within 2 weeks of the occurrence of the reasons.

Article 10 Limits of acquisition of immovable properties not for operation purposes

The total amount of the purchase of immovable properties not for operation purposes with investment by this Company shall be limited to no more than 20% of the paid-up capital of this Company for that period; and the total amount of immovable properties purchased by subsidiaries with separate investment not for operation purposes shall be limited to no more than 20% of the paid-up capital of subsidiaries for that period.

CHAPTER III. PROCEDURES FOR THE ACQUISITION OR DISPOSAL OF NEGOTIABLE SECURITIES OF THIS COMPANY

Article 11 Evaluation and operation procedures

The procedures for the acquisition or disposal of long-term and short-tem negotiable securities of this Company shall be subject to the investment cycle operation of this Company’s internal control system and the relevant provisions set out in the Procedures.

Article 12 Procedures for the determination of trading conditions and authorization limits
For purchase and sale of negotiable securities by the Company, except open domestic beneficiary certificates, overseas mutual funds, government bonds and bonds with purchase (sale) conditions, it is necessary to first of all take the financial statements of the subject company audited, certified or reviewed by certified public accountants as reference of evaluation trading prices, with consideration taken to net values per share, profitability and future development potentials, etc, and make them as analysis reports to be submitted to the chairman of the Board, and to the Board of Directors for the

adoption thereof, provided, however, such shall be subject to the provisions if it is otherwise specified in the “Form of Division of Power and Duties of Managers of the Board of Directors” of this Company.

Article 13 Execution organizations

Long-term negotiable securities: to be executed by organizing departments
Short-term negotiable securities: to be executed by organizing departments

Article 14 Opinions by professional evaluation

Under any of the following circumstances in this Company, and if the transaction amount lives up to 20% of paid-up capital of the Company or to NT$300,000,000 or more, it is necessary to appoint certified public accounts to express their opinions on the rationality of trading prices on or before the date of the fact, and if certified public accountants need to adopt expert reports, then it shall be subject to the provisions set out in No. 20 of the Statement of Auditing Standards issued by ARDF, except marketable securities with public prices in active market or otherwise provided by Financial Supervisory Commission, R.O.C.
For acquisition or disposal of negotiable securities not purchased and sold at stock exchanges or offices of dealers in securities, the purchase and sale of open domestic beneficiary certificates, overseas mutual funds, government bonds, and securities with purchase (sale) conditions are not included therein.
Acquisition or disposal of private placement negotiable securities

The calculation of the foregoing transaction amount shall be subject to the provisions set out in Clause 2 of Article 38, and there shall be no longer calculation therein for the portion for which valuation reports provided by professional valuators have been obtained subject to the provisions set out in the Procedures or opinions of certified public accountants have been obtained.

Article 15 Limits of the acquisition of negotiable securities not for operation purposes

In addition to the acquisition of assets for operation purposes, this Company and subsidiaries shall also invest in negotiable securities not for operation purposes, with the limits of investment as follows:
The total amount of negotiable securities of any long- and short-term share certificates invested by this Company may not exceed the limits fixed by the articles of association of this Company, and the total amount of negotiable securities of any long- and short-term share certificates invested respectively by this Company may not exceed the limits fixed by the articles of association of this Company.
The total amount of negotiable securities of any long- and short-term share certificates invested by subsidiaries of this Company respectively may not exceed NT$1,000,000,000, and the total amount of negotiable securities of respective longand short-term share certificates so invested may not exceed NT$1,000,000,000; but the long- and short-term negotiable securities in the case where this Company

establishes its shareholding company in a country or region with tax preference overseas, or this Company establishes its subsidiaries in a country or region with tax preference overseas for the coordination with this Company in the requirement for reorganization, or subsidiaries of this Company entitled to tax preference overseas invest with them shall not be limited by the total investment by respective subsidiaries as mentioned above, but the same must be reported to the meeting of shareholders after such events.

The total amount of negotiable securities other than any long- and short-term share certificates invested by this Company may not exceed the paid-up share capital, and the total amount of respective negotiable securities so invested may not exceed 20% of paid-up share capital. The total amount of negotiable securities other than respective long- and short-term share certificates invested by subsidiaries may not exceed NT$80,000,000, and among them, the total amount of negotiable securities other than respective long- and short-term share certificates so invested may not exceed NT$20,000,000.

CHAPTER IV. EVALUATION AND OPERATION PROCEDURES FOR ANY ACQUISITION OR DISPOSAL OF MEMBERSHIP CARDS OR INTANGIBLE ASSETS BY THIS COMPANY

Article 16 Evaluation and operation procedures

The evaluation and operation procedures for any acquisition or disposal of membership cards or intangible assets by this Company shall be subject to Article 17 and relevant provisions of this Company.

Article 17 Procedures for determining trading conditions and authorization limits

For the acquisition or disposal of membership cards, it is necessary to reference fair market prices, resolved trading conditions and trading prices, on the basis of which analysis reports are prepared. They shall be reviewed and approved by levels subject to the provisions set out in the “Form of Division of Power and Duties of the Board of Directors and Managers”, the “Form of Details of Authorization by Levels” and the “Form of Division of Power and Duties of General Administration Office and Plants” of this Company.
For the acquisition or disposal of intangible assets (trademark rights, expertise, patent rights, copyrights, goodwill), it is necessary to first of all take into account whether such will enable the Company to make economic benefits in the future, and to reference expert evaluation reports or fair market prices, resolved trading conditions and trading prices, on the basis of which analysis reports are prepared.

Article 18 Execution organizations

Any acquisition or disposal of membership cards or intangible assets by this Company shall be executed by Research and Development Division, relevant departments or administration departments.

Article 19 Reports on expert evaluation opinions

If any acquisition or disposal of membership cards by this Company or transaction amount of intangible assets lives up to 20$ of paid-up capital or to NT$300,000,000 or more, except the transaction with governmental authorities, it is necessary to appoint certified public accountants to express opinions on the rationality of trading prices on or before the date of the fact, and the certified public accountants shall fulfill the procedures subject to No. 20 of the Statement of Auditing Standards issued by ARDF.

CHAPTER V. TRADING WITH INTERESTED PARTIES

Article 20 In the case where this Company and interested parties performs acquisition or disposal of assets, in addition to the compliance with the Treatment Procedures in the first three chapters and relevant resolution procedures set out in this Chapter as well as the evaluation of the rationality of trading conditions, if the transaction amount lives up to more than 10% of the total assets of the Company, there shall also be provision of valuation reports provided by professional valuators or opinions of certified public accountants as set out in the first three chapters.

The calculation of the foregoing transaction amounts shall be subject to the provisions set out in Clause 2 of the foregoing article.

When there is any judgment of whether trading objects are interested parties, in addition to legal forms that should be specified, substantial relationships shall be taken into account.

Article 21 Evaluation and operation procedures

When this Company acquires or disposes of immovable assets from interested parties, or acquires or disposes of assets other than immovable assets with interested parties, with the trading amount living up to 20% of the paid-up capital of the Company, 10% of total assets or to NT$300,000,000 or more, except purchase or sale of government bonds, bonds embedded with the call or put option, and purchase or redemption of domestic money market funds, it is necessary to submit the following data to the Board of Directors for the adoption thereof and the supervisors for the acceptance thereof before trading contracts can be entered into and payment can be made.

Purposes, necessity and estimated results of the acquisition or disposal of immovable properties of assets.
Reasons for the selection of interested parties as trading objects.
Relevant information on the rationality of scheduled trading conditions subject to the evaluation set out in Article 22 and Article 23 in the case of acquisition of immovable assets from interested parties.
Matters such as dates and prices of original acquisition by interested parties, trading objects and relationship with the Company and the interested parties.
Estimation of forecast of cash receipt and payment for different months in the future year starting from the month of the contract and evaluation of the necessity of

trading and rationality of capital utilization.

Valuation reports provided by professional valuators or opinions of certified public accountants acquired subject to the provisions set out in the foregoing clause.
Restricted conditions and other important covenant matters for the transaction

The calculation of the trading amounts as mentioned in the foregoing clause shall be subject to the provisions set out in Clause 2 of Article 38, and there shall be no longer calculation of the portion for which they are submitted to the Board of Directors for the adoption thereof or to the supervisors for the acceptance thereof subject to the provisions set out in the Procedures.

For machinery and equipment acquired or proposed for operation purposes between this Company and subsidiaries, the Board of Directors shall authorize the chairman of the Board to determine the same in advance within a considerable quota on the basis of Article 6 and the Form of Division of Power and Duties of the Board of Directors and Managers of this Company, and after the event, the same shall be submitted to the latest meeting of Directors for confirmation thereof.

When this Company sets up independent director positions and reports to the board of directors for further discussion in accordance with the provisions of the preceding paragraph, the opinion of each independent director shall be fully considered and each independent director’s reason for consent or opposition or retained opinions shall be specified in the minutes.

When this Company sets up the auditing committee, the matters to be recognized by supervisors under the provisions of the preceding paragraph shall be consented by more than one half of all members of the auditing committee and then submitted to the board of directors for resolution. If the matters are not consented by more than one half of all members of the auditing committee, the matters may be approved with the consent of the two-thirds of all directors, providing that the resolution made by the auditing committee shall be specified in the minutes of the board meeting.

All members of the auditing committee and all directors mentioned in the provisions of the preceding paragraph shall be the members or directors currently being in office.

Article 22 Evaluation of the rationality of trading costs

Any acquisition of immovable properties by this Company from any interested party shall be subject to the evaluation of the rationality of trading costs in the following manner.

It is required to add necessary capital interests and costs that should be assumed by the buyer by law on the basis of trading prices for interested parties. The so-called necessary capital interests and costs shall be calculated on the basis of the weighted average interest rates of the borrowings for the year of purchase of assets by the Company, but they may not be higher than the highest loan interests of non financial industry as issued by the Ministry of Finance.

If interested parties set mortgaged loans from financial institutions by such subject matters, and financial institutions evaluate the total values of loans of subject matters, the total values of actual loan of such subject matters by the financial institutions shall live up to 70% or more of the total evaluation values of the loans with the loan period for more than one year, but such will not be applicable to the circumstances when financial institutions and trading parties are related parties to each other.

For the joint purchase of land and housing of the same subject matter, it shall be necessary to evaluate trading coats by any of the methods mentioned in the foregoing clause on the land and housing respectively.

If this Company acquires immovable properties from interested parties, it shall be necessary to evaluate costs of such immovable properties subject to the provisions set out in Clause 1 and Clause 2 of this Article, and it shall also be necessary to engage certified public accountants for the review thereof and express specific opinions thereupon.

Under any of the following circumstances when this Company acquires immovable properties from interested parties, it shall be subject to the provisions set out in the evaluation and operation procedures in Article 21, for which the provisions on the evaluation of the rationality of trading costs in the foregoing three clauses will not be applicable.

The interested parties acquire immovable properties by means of inheritance or gift.
The duration for the acquisition of immovable properties by contracts by the interested parties has been more than 5 years away from the date of contract in this transaction.
Immovable properties are acquired by making a joint construction contract with the interested parties or contracting interested parties to build on his or her own land or rented land.

Article 23 When the revaluation results of immovable properties acquired by this Company from interested parties subject to the provisions set out in Clause 1 and Clause 2 of the foregoing article are lower than trading prices, such shall be subject to the provisions set out in Article 24. However, the following circumstances and the presentation of objective evidence and provision of specific opinions on the rationality by professional valuators and certified public accountants will not be included therein.

If the interested parties perform construction by acquisition of land or leasing of land, it shall be necessary to testify that one of the following conditions should be satisfied.
(1) If land is evaluated in the manner as specified in the foregoing article, then reasonable construction profits shall be added on the basis of construction costs of the interested parties, and the total amounts shall exceed the actual trading prices. The so-called reasonable construction profits shall be based on the

average operating gross profit rates of the construction departments of the interested parties over the past three years or the latest gross profit rates of the construction industry as published by the Ministry of Finance, which is lower.

(2) For other floors of the same subject matter real estate or cases of deal other than by interested parties in adjacent areas within one year, if the areas are similar and the trading conditions have the equivalent conditions after evaluation of due reasonable floor or regional price differences subject to the practice of purchase and sale of immovable properties.
(3) For other cases of leasing of other floors of the same subject matter real estate by non interested parties within one year, the trading conditions after the evaluation of due reasonable floor price differences are similar subject to the practice of the leasing of immovable properties
This Company presents evidence that immovable properties purchased from interested parties, with the trading conditions equivalent to other cases of deal by none interested parties in adjacent areas within one year and with the similar areas

The cases of deal in adjacent areas as referred to in the foregoing clause shall be based on the same or neighboring streets and the distance from the traded subject matters not exceeding 500 square meters or the proximity of the announced current values; the socalled similar area shall be based on the fact that the area of other case of deal by non interested parties is not lower than 50% of the area of the traded subject matter; and the so-called “within one year” is based on the date of the fact of the acquisition of immovable properties to be calculated by tracing back to one year ago.

Article 24 For the acquisition of immovable properties by this Company from interested parties, if the result of evaluation subject to the provisions set out in Article 22 and Article 23 is lower than the trading prices, the following matters shall be fulfilled.
It shall be required to provide for special surplus reserve for the balance between trading prices and evaluated cots of immovable properties subject to the provisions set out in Clause 1 of Article 41 of the Securities Trading Law, and there may be no distribution or allotment of shares by transfer of and increase in capital. If investors putting capital investment in this Company by the evaluation on the equity basis are public companies, it shall also be necessary to provide for special surplus reserve on the basis of the amount that should be provided for by the percentage of shareholding subject to the provisions set out in Clause 1 of Article 41 of the Securities Trading Law.
Supervisors shall fulfill the procedures subject to Clause 218 of the Company Law.
It is necessary to submit the treatment conditions set out in Clause 1 and Clause 2 to the meeting of shareholders, and to disclose the trading details in annual reports and public specifications.

If this Company provides for special surplus reserve as specified in the foregoing clause, such special surplus reserve can be used when assets purchase at high prices

have been provided for impairment loss or disposal or subject to appropriate compensation or recovery to original conditions when the same is proved to be irrational by other evidence and upon consent of Securities and Futures Bureau, Financial Supervisory Commission. (“Securities and Futures Bureau” or “the Bureau”). When this Company acquires immovable properties from interested parties, in the case of any matter on noncompliance with normal business operation with regard to the trading as shown by other evidence, it shall be subject to the provisions set out in the foregoing two clauses.

CHAPTER VI. DERIVATIVE FINANCIAL INSTRUMENTS UNDERTAKEN BY THIS COMPANY

Article 25 Trading principles and guidelines

Trading categories
Derivative financial instruments undertaken by this Company refer to trading contracts derived from instruments such as interest rates and exchange rates, etc, including forward contracts, option contracts, exchange contracts, and compound contracts composed of by the foregoing instruments. The foregoing forward contracts do not include insurance contracts, performance contracts, after-sale service contracts, long-term leasing contracts and long-term purchase (sale) contracts.
Operation and hedging strategies

The trading of derivative financial instruments undertaken by this Company shall take the hedging of risks as the main purpose. For trading instruments, it shall be necessary to use those that may mainly avoid risks arising from business operation of this Company, and the currencies held must be mainly based on the foreign currencies necessary for actual import and export transactions of this Company, and the net portion of foreign currency receipt and payment as a whole shall be on the self leveling basis so as to reduce risks in overall foreign exchanges and to save costs of foreign currency operation.

Division of power and duties
(1) Financial personnel :
- 1.It is required to obtain market information, judge trends and risks, to be familiar with financial instruments, relevant regulations and operation skills, etc., and to be engaged in transactions subject to authorization quota and upon approval by supervisors in charge of power and duties so as to avoid risks in the fluctuation of market prices.
- 2.It is required to determine the portion of foreign exchange, and to fix the upper limits and target exchange rates of the hedging portion for each period (on a monthly or quarterly basis) subject to estimated quantity of purchase and cost

ranges of target exchange rate costs after purchasing personnel provide purchasing orders so as to minimize the degree of risks in the exposure to the portion of foreign exchange.

3.It is required to regularly present performance assessment reports for all portions held to senior executives as designated by the Board of Directors for referenced assessment.
(2) Accounting personnel :
1.Responsible for account treatment
2.Responsible for disclosing information on transactions of this Company in financial reports
3.Responsible for the confirmation of transactions and audit of part of balances
4.Performing announcements and declaration
(3) Auditing personnel :

To be responsible for regularly understanding the fairness of internal control over the trading of derivative instruments, and to perform monthly check of the compliance with the Procedures by trading departments, and to prepare auditing reports. Any substantial breach of rules found shall be notified in writing to supervisors.

Principles and procedures for performance evaluation
(1) Hedging transactions
- 1.The cost ranges of target exchange rates estimated after purchasing personnel provide purchasing orders and profits and losses arising from the trading of derivative instruments shall be taken as the basis for performance evaluation.
- 2.The financial personnel shall perform evaluation of the portion held for the trading of derivative instruments at least twice a month, with the evaluation reports to be submitted to the senior executives as designated by the Board of Directors.
(2) Financial transactions
- 1.Actual profits and losses that actually arise shall be the basis for the evaluation of performance
- 2.The financial personnel shall perform evaluation of the portion held for the trading of derivative instruments at least once a month, with the evaluation reports to be submitted to the senior executives as designated by the Board of Directors.
In order to have a good mastery of and to express risks in the evaluation of
(3) trading, this Company applies the monthly settlement evaluation way to perform evaluation of profits and losses.
Finalization of total contract amounts and upper limits of losses

(1) Total contract amounts and upper limits of losses

	Hedgingtransactions	Financial transaction
Limit of all contract investment	Accounting for 70% of operating income for the latestquarter	Accounting for 10% of operating income for the latestquarter
Amount of upper limit of all contract loss	20% of all contract amounts	10% of all contract amounts
Amount of upper limit of separate contract loss	20% of amount of separate contract	10% of amount of separate contract

(2) Stop-loss points are fixed subject to average prices of derivative instrument contracts already entered into. If they are beyond the stop-loss points, it is necessary to immediately report the same to the senior executives designated by the Board of Directors to take necessary solutions, and to report the same to the Board of Directors.

Article 26 Operation procedures

It is required to analyze foreign exchange trends and risks for that period, to judge whether to avoid risks, to fix upper limits of hedging portions and target exchange rates and to prepare the hedging solution statement and review subject to the target exchange rate cost ranges and net portions of foreign exchange of purchasing orders estimated by purchasing personnel.

It is required to finalize the following form of authorization limits on the basis of the growth of the Company’s turnover and changes in risks.

(1) Hedging transactions

Level	Amount of single sum deal	Total amount of total netportions
General manager	USD16,000,000 or equivalent dollars	USD32,000,000 or equivalent dollars
Supervisor Vicegeneral manager	USD8,000,000 or equivalent dollars	USD16,000,000 or equivalent dollars
Financial supervisor	USD4,000,000 or equivalent dollars	USD8,000,000 or equivalent dollars

(2) Financial transaction

Level	Amount of single sum deal	Total amount of total net portions
General manager	USD2,000,000 or equivalent dollars	USD4,000,000 or equivalent dollars
Supervisor Vice general manager	USD1,000,000 or equivalent dollars	USD2,000,000 or equivalent dollars

Level	Amount of single sum deal	Total amount of total net portions
Financial supervisor	USD500,000 or equivalent dollars	USD1,000,000 or equivalent dollars

Execution of transactions
(1) Execution organization: As the trading of derivative instruments has a special nature of abrupt changes, significant amounts, frequent trading and complexity of calculation, such shall be acted and executed by financial department.
(2) Signing of contracts: The Board of Directors shall authorize the chairman of the Board and financial department to enter into trading contracts for derivative instruments.
(3) Execution flows: procedures for the trading of derivative instruments of this Company: (1) trading authorization or approval; (2) trading operation; (3) confirmation operation; (4) settlement and clearance; (5) accounting treatment; (6) risk management; and (7) auditing operation
For the trading of derivative instruments, this Company shall establish reference books, and types and amounts of trading of derivative instruments, date of adoption by the Board of Directors and matter on prudent evaluation set out in the foregoing clause shall be recorded in details in the reference books for reference.

Article 27 Measures for the management of risks

Management of credit risks
(1) The selection of trading objects shall be based on domestic and foreign famous financial institutions with transactions with this Company, and with good prestige capable of providing professional information.
(2) The total trading amounts not set off in the same trading object shall not exceed 20% of the total authorization limits of this Company, but what have been approved by the general manager will not be included therein.
Management of market risks

Markets shall mainly consist of over-the-counter by trading objects.

Management of liquidity risks

For the purpose of ensuring liquidity, the selection of financial instruments shall be mainly based on those with higher liquidity, and trading objects must have sufficient equipment, information, capital and ability to carry out trading in any market at any time.

Management of cash flow risks

For the purpose of ensuring the stability of the turnover of working capital, sources of capital for the trading of financial instruments by this Company shall be limited

by its own capital, and the authorized trading personnel shall, in addition to the compliance with all provisions in the Form of Authorization Limits, note cash flows of this Company at normal times so as to ensure sufficient cash payment in the time of settlement. Moreover, the credit status of the trading objects must be noted from time to time.

Management of operation risks

It shall be required to observe authorization limits, operation flows and standards for internal control so as to avoid risks in operations.

(1) Personnel engaged in the trading of derivative instruments and personnel engaged in confirmation and settlement, etc may not hold concurrent posts or office.
(2) Trading personnel are required to submit trading certificates or contracts to confirming personnel for the registration thereof, and to note whether trading exceeds the proposed authorization limits, trading amounts and upper limits of loss.
(3) The confirming personnel must regularly check details and total amounts of trading with trade-related persons.
(4) Any measurement, supervision and control of risks shall be reported to the Board of Directors by senior executives as designated by the Board of Directors/
Management of instrument risks

Internal trading personnel and trading objects shall have complete and proper professional knowledge of financial instruments of trading, and require trading objects to adequately disclose risks so as not to cause any loss arising from misuse of financial instruments.

Management of legal risks

Any documents signed with banks must be reviewed by legal personnel or legal consultants of this Company before they are formally signed so as to avoid any legal risks.

Article 28 Ways for regular evaluation and treatment of abnormalities

The financial department shall carry out evaluation of the portion of derivative instruments held for trading by this Company at least once a week, and hedging transactions fulfilled as business requires shall be evaluated at least twice a month. Such evaluation reports shall be submitted to senior executives designated by the Board of Directors.
The Board of Directors shall regularly evaluate the performance of the trading of derivative instruments to see whether it satisfies the set business operation strategies, and whether the risks assumed are within the range of endurance as permitted by the Company.

Senior executives designated by the Board of Directors shall regularly evaluate whether the risk control measures being currently used are appropriate, and ensure that they are fulfilled pursuant to the Treatment Standards for the Acquisition or Disposal of Assets” as formulated by Securities and Futures Bureau and the Procedures.
Senior executives designated by the Board of Directors shall from time to time supervise trading and profits and losses, and for any abnormalities found, necessary solutions shall be taken, with the same to be immediately reported to the Board of Directors. If this Company has established independent directors, the Board of Directors shall have the independent directors present, who shall express their opinions.

Article 29 Internal audit system

Internal audit personnel shall regularly understand the fairness of internal control over the trading of derivative instruments, check and review the conditions of the compliance with the Procedures by trading sections, and analyze trading cycles, and prepare auditing reports. Any gross breach of rules shall be notified in writing to supervisors.
The auditing reports mentioned in the foregoing clause shall be declared to Securities and Futures Bureau along with the execution of annual review plans for internal audit operation before the end of February in the following year, and improvements of abnormalities must be declared to Securities and Futures Bureau for reference no later than the end of May in the following year.
Article 30 Principles for supervisory administration by the Board of Directors in the time of trading derivative instruments
Senior executives designated by the Board of Directors shall from time to time note the supervision of risks in the trading of derivative instruments, with the administration principles as follows
- (1) It is required to regularly evaluate whether the risk control measures being currently used are appropriate, and ensure that they are fulfilled pursuant to the Treatment Standards for the Acquisition or Disposal of Assets” as formulated by Securities and Futures Bureau and the Procedures.
- (2) It is required to supervise trading and profits and losses, and for any abnormalities found, necessary solutions shall be taken, with the same to be immediately reported to the Board of Directors. If this Company has established independent directors, the Board of Directors shall have the independent directors present, who shall express their opinions.
It is required to regularly evaluate the performance of the trading of derivative instruments to see whether it satisfies the set business operation strategies, and whether the risks assumed are within the range of endurance as permitted by the Company.

When this Company authorizes corresponding personnel to conduct the trading of derivative instruments subject to the provisions set out in the Procedures, such shall be subsequently submitted to the recent Board Meeting of Directors.

CHAPTER VII. PROCEDURES FOR MERGER, SPLIT, ACQUISITION OR TRANSFER OF SHARES

Article 31 Evaluation and operation procedures

When conducting merger, split, acquisition or transfer of shares, this Company shall, before resolution of meetings of directors, appoint certified public accountants, lawyers or securities underwriters to express their opinions on the rationality of share change percentages, prices of acquisition or cash or other properties to be allotted to shareholders, and shall request the meeting of directors to discuss and adopt the same.
This Company shall prepare public documents to shareholders before holding a meeting of shareholders in respect of content of important covenants and related matters on merger, split or acquisition, and shall deliver the same to the shareholders along with the foregoing expert opinions and notices for convening a meeting of shareholders so as to take them as the reference for whether to agree upon the case of such merger, split or acquisition, provided, however, that merger, split or acquisition without necessary resolution of a meeting of shareholders subject to other laws and regulations will not be included therein.
For attending a meeting of shareholders by companies or any party in respect of merger, split or acquisition, due to insufficient number of presence at the meeting, insufficient voting power or other legal restriction, rendering it unable to be held or resolved, or if proposals are subject to veto by shareholders, the companies involved in merger, split or acquisition shall forthwith publish the causes for them, subsequent treatment operation and estimated date for holding a meeting of shareholders.
Article 32 Unless otherwise specified by law or for any special reason making it necessary to submit the case to the Bureau for the consent thereof, the companies involved in merger, split or acquisition shall convene a meeting of directors and a meeting of shareholders on the same day to determine matters on merger, split or acquisition.
Unless otherwise specified by law or for any special reason making it necessary to submit the case to the Bureau for the consent thereof, the companies involved in transfer of shares shall convene a meeting of directors on the same day.
Article 33 All persons involved in and being aware of plans in merger, split, acquisition or transfer of shares of the company shall provide written nondisclosure commitments. Before information is made available to public, they may not disclose content of the plans, nor may they perform purchase or sale of stocks and other negotiable securities of the equity nature of all companies in relation to the case of merger, split, acquisition or transfer of

shares.

Article 34 In the case of involvement in merger, split, acquisition or transfer of shares by this Company, except the following circumstances, stock change percentages or prices of acquisition may not be changed arbitrarily. Such changes shall be defined under contracts for merger, split, acquisition or transfer of shares.
Cash capital increase, issue of convertible corporate bonds, gratuitous allotment of shares, issue of corporate bonds with warrants, issue of special stocks with warrants, warrant certificates and other negotiable securities of stock equity nature
Actions affecting financial business of the Company such as disposal of the Company’s substantial assets, etc.
Occurrence of matters affecting shareholders’ equity or prices of securities of the Company such as substantial disasters, and great technical changes, etc.
Adjustment to legal buyback of treasury shares by any party of the company involved in merger, split, acquisition or transfer of shares
Increase or decrease in the subject or number of companies involved in merger, split, acquisition or transfer of shares
Other conditions that must be changed as defined under contracts, and that have been exposed to the public

Article 35 In the case where this Company is involved in merger, split, acquisition or transfer of shares, there shall be contracts specifying rights and obligations of the companies involved in merger, split, acquisition, or transfer of shares and specifying the following matters.

Treatment of defaults.
Treatment principles for elimination arising from merger or issue of negotiable securities of equity nature or buyback of treasury shares by the split of the company.
Number of legal buyback of treasury stocks and treatment principles by the companies involved therein after the base date of calculation of stock exchange percentages.
Ways for dealing with increase or decrease in subjects involved therein or number thereof.
Estimated plan execution progress and estimated completion programs.
Treatment procedures for the date of preset convening of meetings of shareholders by law when plans fail to be finished in due time.
Article 36 If any party of the companies involved in merger, split, acquisition or transfer of shares plans to perform merger, split, acquisition or transfer of shares with other companies after information is made available to public, except any decrease in the number thereof involved, and that a meeting of shareholders so resolves and authorizes the Board of Directors to change the authority, the companies involved therein may not have to hold a meeting of shareholders for making resolutions once again, in the original case of

merger, split, acquisition or transfer of shares, the ongoing completion procedures or legal acts shall be made or done by all companies involved therein.

Article 37 If there is any non public company among companies involved in merger, split, acquisition or transfer of shares, this Company shall enter agreements with that, and shall fulfill the procedures in the provisions set out in changes in number of companies involved therein subject to Articles 32, 33 and 36.

CHAPTER VIII. INFORMATION DISCLOSURE

Article 38 Under any of the following circumstances in respect of acquisition or disposal of assets, this Company shall perform announced declaration of relevant information at the website designated by the Bureau within 2 days from the date of the fact by nature in the format as set out by the competent authorities.

Any acquisition or disposal of immovable assets from interested parties or acquisition or disposal of assets other than immovable assets along with the interested parties with the trading amount living up to 20% of the paid-up capital of the Company, to 10% of total assets or to NT$300,000,000 or more, provided, however, any purchase or sale of government bonds or bonds with buyback or sellback conditions or purchase and sale of government bonds will not be included therein immovable properties.
Performing merger, split, acquisition or transfer of shares.
The loss arising from the trading of derivative instruments live up to the upper limits of all or separate contracts as specified under the treatment procedures.
The trading amount lives up to 20% of the paid-up capital of the Company or to NT$300,000,000 or more except the trading of assets set out in the foregoing three clauses, disposal of creditors’ rights by financial institutions or capital investment in Mainland China, with exception of the following circumstances.
(1) Purchase and sale of government bonds.
(2) Purchase and sale of negotiable securities made by overseas stock exchanges or securities underwriter business offices with capital investment as their occupation, or marketable securities subscribed by securities dealers in primary market or in compliance with applicable regulations
(3) Purchase and sale of bonds with buyback and sellback conditions, or purchase or redeem domestic money market funds.
(4) When the categories of assets acquired or disposed of belong to machinery and equipment for operation purposes with trading objects not being interested parties, and with the trading amount failing to live up to NT$500,000,000 or more.
(5) Operation of the acquisition or disposal of immovable properties for operation purposes by public companies in he construction industry, with the trading objects not being interested parties, and with transaction amount failing to live

up to NT$500,000,000 or more.

(6) For the acquisition of immovable properties in the manner of own land construction, leased land construction, joint building for sharing housing, joint construction for sharing profits, and joint construction for respective sale, the estimated investment by the Company fails to live up to NT$500,000,000 or more.

Amounts of transaction mentioned in the foregoing clause shall be calculated in the following manner:

Amount of each transaction.
The total trading amount of the acquisition or disposal of the subject matter of the same nature with the same interested party within one year.
The total amount of immovable properties in the same development plan for the acquisition or disposal of (with respective accumulation of such acquisition or disposal thereof) within one year.
The total amount of the acquisition or disposal (with respective accumulation of such acquisition or disposal thereof) of negotiable securities within one year.

“Within one year” as referred to in the foregoing clause shall be traced back for one year based on the date of the fact of this trading, with the portion as announced subject to the Procedures exempted from being no longer calculated therein.

This Company shall enter the circumstances of the performance of trading of derivative instruments by this Company and its subsidiaries not being domestic public companies up to the end of the last month in the fixed format on or before 10[th] day each month into the information declaration website as designated by the Securities and Futures Bureau.

Any error or omission in the announced projects in the time of announcement by this Company subject to relevant provisions shall be corrected or supplemented, and the Company shall also make announcement declaration of all projects.

In the case of acquisition or disposal of assets, this Company shall prepare and keep the relevant contracts, journals, reference books, valuation reports, opinions issued by certified public accountants, lawyers or securities underwriters at this Company, and unless otherwise specified by law, such shall be kept for at least five years.

Article 39 After the announcement of the declared trading as set out in the foregoing clause, under any of the following circumstances, this Company shall declare the relevant information by announcement via the website designated by the Bureau within two days from the date of the date when the fact takes place.
Matters on the modification, termination or rescission of relevant contracts entered into for the original trading.
Merger, split, acquisition or transfer of shares fails to be completed subject to the preset schedule under contracts.
Changes in content of original declaration by announcement.

Article 40 Declaration of the announcement of the acquisition or disposal of assets by subsidiaries

Any matter that should be declared by announcements subject to the provisions set out in this Chapter in respect of acquisition or disposal of assets by subsidiaries of this Company not belonging to domestic public companies shall be done by this Company.

The provisions for the standards for declaration by announcement living up to 20% of the paid-up capital or to 10% of the total assets applicable to Paragraph 5 of Clause 1 of Article 38 by the foregoing subsidiaries shall be based on the paid-up capital or total assets of this Company.

CHAPTER IX. SUPPLEMENTAL PROVISIONS

Article 41 Procedures for control over subsidiaries

The subsidiaries shall work out “the Treatment Procedures for Acquisition or Disposal of Assets” on the basis of relevant provisions set out in the Treatment Standards for the Acquisition or Disposal of Assets by Public Companies”, and after adopted by the boards of directors of such subsidiaries, the same shall be submitted to the meeting of shareholders of the subsidiaries for the execution thereof, with the same requirements for the revision thereof.

Any acquisition or disposal of assets by subsidiaries shall be subject to the requirements of this Company.

The 10% of total assets under the procedure shall be calculated based on the total assets indicated in the latest individual financial statements prepared in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers.

If the subsidiary’s stock has no par value or the par value per share is not NT$10, the transaction amount equivalent to the 20% of the paid-in capital under the procedure shall be calculated at the 10% of the proprietary equity of this Company.

Article 42 Internal audit

For the auditing of the acquisition or disposal of asset treatment procedures, unless otherwise specified in the Procedures, such shall be subject to the internal control systems of this Company and relevant regulations.

Article 43 Penalty

In the case where employees for this Company are in breach of the provisions set out in the Procedures in fulfilling the matters on the acquisition or disposal of assets, such shall be subject to the punishment according to the severity of the cases on the basis of the procedures for the assessment of personnel of this Company.

Article 44 Implementation and revision of the Procedures

The conclusion of treatment procedures for the acquisition or disposal of assets by this Company, after adopted by the Board of Directors, shall be submitted to all supervisors and to the meeting of shareholders for the consent before the implementation thereof, with the same procedures when they are revised. If directors express objection and there

have been records or written statements, this Company shall deliver information on the objection by directors to all supervisors.

If there is any establishment of independent directors, when this Company submits the Treatment Procedures for the Acquisition or Disposal of Assets set out in the foregoing clause to the Board of Directors for deliberation, opinions of all independent directors shall be fully considered, with their consent or objection and causes to be listed in minutes of meetings.

Article 45 Any matters as not mentioned in the Procedures shall be subject to the relevant laws and regulations.

Annex 4

Procedures for the Election of Directors and Supervisors of Taiwan Fertilizer Co., Ltd.

Amended in the general shareholders’ meeting of June 23, 2003 Amended in the general shareholders’ meeting of June 24, 2014

Article 1 : The election of directors and supervisors of this Company shall be subject to these Procedures unless otherwise specified by the Company Law or other regulations.
Article 2 : This Company adopts the candidate nomination system for the election of independent directors, non-independent directors and supervisors. Shareholders shall elect such number of directors and supervisors as provided in the Article of Incorporation of this Company from the slate of candidates.
The candidates with more votes, based on the votes from electronic communication platforms and the votes casted at the meeting, shall be elected as independent directors, non-independent directors or supervisors. If two or more candidates have the same number of votes for the seats limited, the candidates with the same number of votes shall draw lots to decide. The chairman of the meeting shall draw lots on behalf of any candidate not attending the meeting in person.
If a shareholder is elected as director and supervisor at the same time, the shareholder shall decide at his or her discretion to serve as director or supervisor. If the shareholder fails to make the decision, the shareholder shall be deemed as director. If any elected director or supervisor is not qualified or incompetent to meet the requirements of applicable laws and statutes, the candidate with the second highest votes shall replace his or her position.
Article 2-1 : The qualifications and election of this Company’s independent directors shall meet the requirements provided in Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies and applicable laws and statutes.
Article 2-2 : The independent directors and non-independent directors of this Company shall be elected at the same time and the numbers of the elected independent and nonindependent directors shall be counted separately. The candidates with more votes are elected as independent directors and non-independent directors.
Article 3 : In the time of election of directors and supervisors of this Company, the single accumulative disclosed ballot way is used, with each share having the right to vote corresponding to the same number of directors and supervisors to be elected. Shareholders shall elect several persons from the ballots in a centeralized manner, provided, however, that in the time of distribution of several persons, the total of the number of rights to vote may not exceed the total umber of rights to vote.
Article 4 : If shareholders authorize agents to cast ballots, except trust entities or share service agencies as approved by the competent securities authorities, when one person is entrusted by more than two shareholders, the voting power represented may not exceed 3% of the total voting powers of the outstanding shares. The excess voting power may not be calculated therein.
Article 5 : Electoral votes are produced and printed by the Board of Directors, and they are coded by presence certificate numbers with seals of the number of rights to vote affixed thereon. Each shareholder present will be provided with one Electoral vote. Electros must specify

names of the selected persons and account names of shareholders in the column of “the elected persons”. If any elected person does not have the capacity of a shareholder, he shall specify the name and ID number of the elected person. However, when the government or a corporation is the elected person, it is necessary to specify the name of such a government or a corporation, and it is also necessary to specify the name of such a government or a corporation as well as the name of its representative; when there are several representatives, it is necessary to add names of such representatives.

Article 6 : Before election, the chairman shall designate two scrutineers from shareholders present.
Article 7 : Electoral votes under any of the circumstances listed on the left shall be invalid, and the number of rights within such Electoral votes may not be calculated under such elected persons.
Failing to fulfill the check-in procedures.
Using ballots other than produced and printed by the Board of Directors of this Company.
Handwriting being careless and unable to be distinguished.
The elected persons on Electoral votes exceeding the required quota.
The total number of rights to vote by elected persons exceeding the total number of rights to vote.
Altering words on ballots or having other words other than content that should be filled in.
Electoral votes not thrown in ballot boxes and blank ballots without word written on them.
Information filled in about the electors failing to be specified subject to Article 5 or verified noncompliance therewith.
Article 8 : After completion of vote casting, votes will be disclosed on the site under the supervision of vote supervisors, with results of such disclosure to be forthwith declared by the chairman.
Article 9 : The directors and supervisors successfully elected shall be given the written notices by the Company.
Article 10: Any matters as not set out under these Procedures shall be subject to the Articles of Incorporation of this Company, the Company Law and other relevant regulations.
Article 11: These Procedures shall be implemented after they are adopted by the meeting of shareholders, with the same as the case of revision.

Annex 5

Taiwan Fertilizer Co., Ltd. Shareholdings of Directors and Supervisors

According to the Article 26 of the Securities and Exchange Law, the Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies, and the Articles of Incorporation of TFC, all of TFC’s directors are required to hold in the aggregate not less than 31,360,000 TFC shares, and all of TFC’s supervisors, not less than 3,136,000 TFC shares.
As of April 16, 2017 when the registration of share transfers on TFC share register was suspended, the shareholding of individuals and directors (including independent directors) as well as supervisors of Taiwan Fertilizer are as follows:

Position	Position	Name	Number of Common Shares	Percentage of Shareholding
Chairman		Council of Agriculture, Executive Yuan Representative : Kang Hsinhong	235,886,376	24.07%
Director		Council of Agriculture, Executive Yuan Representative : Chen Chichung
Director		Council of Agriculture, Executive Yuan Representative : Huang Hsuhung
Director		Council of Agriculture, Executive Yuan Representative : Hsu Shengming
Director		Council of Agriculture, Executive Yuan
Director		Tsai Changhai	356,000	0.03%
Director		Hsu Chinglien	100,000	0.01%
Independent Director		Hsu Mingtsai	0	-
Independent Director		Shen Huiya	0	-
Total number of shares which the directors together hold			236,342,376	24.11%
Supervisor	Chunghwa Post Co., Ltd. Representative : Wu Yuanjen		36,085,000	3.68%
Supervisor	Chen Chailai		100,000	0.01%
Supervisor	Tsai Linglan		135,000	0.01%
Total number of shares which the supervisors together hold			36,320,000	3.70%

Annex 6

Effect of the gratuitous allotment of shares on operation performance, earnings per share and return rate on investment for shareholders :

Not applicable.

AI assistant

TFC — AGM Information 2017

51902_rns_2017-07-04_e6c71479-c3c5-4436-9ccb-96a42939e6a7.pdf

Taiwan Fertilizer Co., Ltd.

2017 Annual General Shareholders’ Meeting

Handbook

June 14, 2017

Table of Contents

Taiwan Fertilizer Co., Ltd. 2017 Annual General Shareholders’ Meeting Meeting Procedure

Report Item 1

Subject : 2016 Business Report

Business Report

I. Preface

II. Status of Operations

1. Production and marketing

2. Revenue and Profit

(1) Individual Financial Statements

(2) Consolidated Financial Statements

3. Financial Structure

4. Investment Planning

III. Prospect

Report Item 2

Item : Supervisors’ review report

Supervisors' Report for FY 2016

Description:

Acceptance Item 1

(Proposed by the Board of Directors)

Description:

Resolution :

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Impairment Assessment of Property, Plant and Equipment

Other Matters

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Notice to Readers

TAIWAN FERTILIZER CO., LTD.

BALANCE SHEETS DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Amounts Per Share)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

TAIWAN FERTILIZER CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

Impairment Assessment of Property, Plant and Equipment

Impairment Assessment of Intangible Assets

Other Matters

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2016 AND 2015

(In Thousands of New Taiwan Dollars)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except (Loss) Earnings Per Share)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars, Except Amounts Per Share)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015 (In Thousands of New Taiwan Dollars)

INDEPENDENT AUDITORS’ REVIEW REPORT

Notice to Readers

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED BALANCE SHEET DECEMBER 31, 2016

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

TAIWAN FERTILIZER CO., LTD. AND AFFILIATES

COMBINED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED DECEMBER 31, 2016 (In Thousands of New Taiwan Dollars, Except Earnings Per Share) (Reviewed, Not Audited)

TFC AGM Information 2017