TFC - AGM Information 2021 | FinancialReports.eu

Stock No.: 1722

TAIWAN FERTILIZER CO., LTD.

==> picture [97 x 98] intentionally omitted <==

2021 General Shareholders’ Meeting Meeting Handbook

June 29, 2021

Venue: Armed Force Officers’ Club

(No. 142, Yen-Ping S. Rd., Taipei City)

Meeting Agenda ........................................................................................................... 1 Reported Items ............................................................................................................. 2 1. The Companys 2020 business report ...................................................................... 2 2. The Audit Committee’s report on the Company’s 2020 annual final accounts and statements ......................................................................................................... 4 3. The report on remuneration to the Companys directors and employees in 2020 ......................................................................................................................... 5 4. The report on amendments to the “Code of Ethical Conduct for the Companys Directors and the Highest -level Executives and above” in part ........... 6 Ratification Items ........................................................................................................ 8 1. The Companys 2020 business report and financial statements .............................. 8 2. The Companys 2020 earnings distribution ........................................................... 32 Discussion and Election Items .................................................................................. 34 1. The amendments to the Companys “Rules of Procedure for Shareholders Meetings” in part ................................................................................................... 34 2. The amendments to the Companys “Procedures of Electing Directors and Independent Directors” in part. ............................................................................. 38 3. Election of the Company’s 35th Board of Directors (including independent directors) ................................................................................................................ 41 4. Proposal to release the institutional shareholder of the 35th term, Council of Agriculture, Executive Yuan, from the non-compete restrictions. ........................ 46 5. Proposal to release the candidate of director of the 35th term, Tsao, ChiHung, from the non-compete restrictions. ............................................................. 47 6. Proposal to release the candidate of independent director of the 35th term, Lin, Su-Ming, from the non-compete restrictions. ................................................ 48 7. Proposal to release the candidate of independent director of the 35th term, Weng, Ming-Jang, from the non-compete restrictions. ......................................... 50 Extemporaneous Motions ............................................................................................. Appendix .................................................................................................................... 52 1. Rules of Procedure for Shareholders Meetings of Taiwan Fertilizer Co., Ltd.. ... 53 2. Articles of Incorporation of Taiwan Fertilizer Co., Ltd. ....................................... 60 3. The Procedures for Electing Directors and Independent Directors of Taiwan Fertilizer Co., Ltd.. ................................................................................................ 70 4. Code of Ethical Conduct for the Companys Directors an d the Highest-level

Executives and above of Taiwan Fertilizer Co., Ltd.. ........................................... 73 5. Shareholdings by Directors (including Independent Directors) of Taiwan Fertilizer Co., Ltd.. ................................................................................................ 77 6. The Impact of Stock Dividend Issuance on Business Performance, EPS and Shareholder Return ................................................................................................ 78

TAIWAN FERTILIZER CO., LTD. 2021 General Shareholders’ Meeting Agenda

Date: June 29, 2021, 9:00AM (Tuesday)

Venue: Armed Forces Officers Club （ No. 142, Yen-Ping S. Rd., Taipei City ）

Agenda:

Meeting called to order: Report the number of shares represented by the shareholders present
Speech given by the chairperson
Report Items
Ratification Items
Discussion and Election Items
Extemporaneous Motions
Meeting Adjourned
1 -

Report No. 1

Subject: The Company’s 2020 business report

Description

I. The 2020 Business Report have been reviewed by the Audit Committee, and approved by the Board of Directors in the 27th meeting, 34th Term on March 25, 2021.
II. Attached please find the Company's 2020 business report

Business Report

1. Foreword:

Looking back to 2020, all industries were severely impacted by the global pandemic. Although the Company’s revenue is no exception, but with the hard working and efforts made by the management team, the gross profit of fertilizer, chemical engineering, and lease achieved growth. In addition, the re-investment gain of Al-Jubail Fertilizer Company, and the gain from disposing investment real estate are recognized. The final consolidated net profit of the term is NTD 2,452,881 thousands, or 18.84% higher from 2019.

2. Overview of Business:

(I) Production and marketing :

The Companys actual output of fertilizer products totaled 550,500 tons in 2020, decreased by 5.48% from 2019. The output of chemical engineering products totaled 193,318 tons, decreased by 1.69% from 2019. The actual sales of fertilizer products totaled 634,983 tons, decreasing by 16.64% from 2019, (the domestic sales of fertilizer products increased, but the re-sale of urea by Al-Jubail decreased, and thus the total sales decreased.) And that of chemical engineering products totaled 194,274 tons, decreased by 2.84% from 2019.

(II) Operating revenue and profit:

1. Parent-only financial statement

The operating revenue was NTD9,931,129 thousand in 2020, decreased by 21.34% from NTD12,624,716 thousand in 2019. The net operating profit, NTD1,188,302 thousand, decreased by 27.04% from 2019. The net non-operating profit was NTD1,775,881 thousand, increased by 112.80% from 2019. The current net profit was NTD2,452,881 thousand ， increased by 18.84% from 2019.

Consolidated financial statements

The operating revenue was NTD10,169,742 thousand in 2020, decreased by 21.11% from NTD12,890,565 thousand in 2019. The net operating profit, NT$1,247,689 thousand, decreased by 23.27% from 2019. The net non-operating profit was NTD1,717,686 thousand, increasing by 104.91% from 2019. The current net profit wasNTD2,452,881 thousand ， increased by 18.84% from 2019.

(III) Financial structure:

1. Parent-only financial statement

The Company had solid financial structure. Until December 31, 2020, the Company has had the assets totaled NTD75,768,371 thousand, and liabilities totaled NTD24,459,660 thousand. The liability ratio was 32.28%. The equity amounted to NTD51,308,711 thousand, and EPS NTD52.36.

Consolidated financial statements

The Company had solid financial structure. Until December 31, 2020, the Company has had the assets totaled NTD76,346,127 thousand, and liabilities totaled NTD25,037,416 thousand. The liability ratio was 32.79%. The equity amounted to NTD 51,308,711 thousand, and EPS NT$52.36.

(IV) Investment plan:

The new compounded fertilizer factory and chemical tanks newly constructed at the West 10th Pier of Taichung Harbor have been completed in 2020, and the mass production has been started gradually in the latter half of 2020. In the future, the synergies of operation and management are expected to increase the overall profit. For the C2 development in Nangang Software Park, the construction progress has achieved 67.12% (as of December 2020). The development operation is in progress as scheduled. And the construction permit for C4 development project has been received and the construction was started. The development, planning, and merchant recruitment for the Hsinchu Science and Commerce Park, and the land of old plant in Kaohsiung are in progress, too. The sustainable properties are established in a gradual manner, to become a foundation of stable profit for the Company.

III. Outlook

The international geopolitics, the U.S-Sino trade dispute, and pandemic are slowing down, but they impact the macro economy greatly. The Company will keep on monitoring the development of international conditions, for better responses.

In the regard of fertilizer and chemical engineering business, the strategy to develop niche product will still be applied. Other than expanding business scope to increase revenue, the synergies of operation and management are expected to increase the overall profit.

For the real estate development business, we will continue to be very selective, and establish the sustainable properties. The development projects of Nangang Software Park and Hsinchu Science and Commerce Park are advanced as planned, to ensure the operational guideline of increasing profit weight of sustainable properties.

==> picture [36 x 36] intentionally omitted <==

Chairman of Board: Yao-Hsing Huang

General Manager: Yao-Hsing Huang

==> picture [45 x 44] intentionally omitted <==

Chief Accountant: Mei-Ling Huang

==> picture [37 x 36] intentionally omitted <==

Report No. 2

Subject: The Audit Committee’s report on the Company’s 2020 annual final accounts and statements

Audit Report of the Audit Committee

The Company's 2020 business report, financial statements and statement of earnings distribution were submitted by the Company’s Board of Directors. The financial statements were already audited by Kuo-Yang Tseng, CPA and Heng-Sheng Lin of KPMG, who also issued the auditor report accordingly.

The Audit Committee, after completing the audit of said business report, financial statements and statement of earnings distribution, believes that they are free of material misstatement, and thus produces this report according to Article 219 of the Company Act.

Please review accordingly.

To:

2021 General Shareholders’ Meeting of the Company

TAIWAN FERTILIZER CO., LTD. Convener of Audit Committee: Lin, Hung-Chang

==> picture [219 x 65] intentionally omitted <==

March 25, 2021

Report No. 3

Subject: The report on remuneration to the Company's directors and employees in 2020.Please proceed to report.

Submitted by the Board of Directors

Description:

I. This matter is handled in accordance with the subparagraph 1 of Article 25 of the Company's Articles of Incorporation.
II. The profit sought by the Company in 2020 based on the financial statements as audited by KMPG (the income before earnings before tax less remuneration to employees, directors and supervisors) totaled NT$3,087,690,792.
III. The remuneration payable to directors and employees pursuant to the Company's Articles of Incorporation is stated as following:
(I) Remuneration to directors/supervisors, NT$49,403,052, in cash Meet the requirement about 1.6% of the profit, NT$3,087,690,792, in 2020.
(II) Remuneration to employees, NT$74,104,579, in cash: Meet the requirement about 2.4% of the profit, NT$3,087,690,792, in 2020.
5 -

Report No. 4

Subject: The report on amendments to the “Code of Ethical Conduct for the Company's Directors and the Highest-level Executives and above” in part

Submitted by the Board of Directors

Description

I. By referring to the amended “Guidelines for the Adoption of Codes of Ethical Conduct for TWSE/GTSM Listed Companies,“ announced by TWSE with Letter Tai-Zheng-Zhi-Li-Zhi No. 10900094681, dated June 3, 2020,” Article 3, 9, 10, 11, and 12 of the “Code of Ethical Conduct for the Company's directors and 1st-level executive officer and above“ were amended, and approved by the Board of Directors in the 21st meeting, 34th Term on June 30, 2020.
II. The comparison table for amendments to the “Code of Ethical Conduct for Directors and 1st-level executive officer and above of Taiwan Fertilizer Co., Ltd.” is enclosed herewith (see Attachment).
6 -

Code of Ethical Conduct for the Companys Directors and the - Highest level Executives and above of Taiwan Fertilizer Co., Ltd.

Amended Provision

Current Provision

Article 3 Preventing Conflict of Interest

The directors and 1st-level The directors and 1st-level executive officer and above executive officer and above shall avoid the conflicts of shall avoid the conflicts of interest arising when personal interest arising when personal interest intervenes or is likely to interest intervenes or is likely to intervene in the overall interest intervene in the overall interest of the Company, as for example of the Company, as for example when they are unable to perform when they are unable to perform their duties in an objective and their duties in an objective and efficient manner, or when they efficient manner, or when they take advantage of their positions take advantage of their positions in the Company to obtain in the Company to obtain improper benefits for either improper benefits for either themselves or their spouses, or themselves or their spouses, II. relatives within the second parents, children, or relatives degree of kinship. In order to within the third degree of prevent the conflict of interest, kinship. In order to prevent the the loans of funds, provisions of conflict of interest, the loans of guarantees, and major asset funds, provisions of guarantees, transactions between the and major asset transactions Company and said persons or between the Company and said the affiliates in which they work persons or the affiliates in which for shall be subject to review they work for shall be subject to and approval by the Board of review and approval by the Directors. The relevant Board of Directors. The purchase (sale) shall be handled relevant purchase (sale) shall be by taking into consideration the handled by taking into Company’s maximum interest. consideration the Company’s maximum interest.

Remark

By referring Article 26-3 Paragraph 3 of the Securities and Exchanges Act, and Article 17 Paragraph 1, Subparagraph 3 of the “Supplementary Provisions to the Taiwan Stock Exchange Corporation Rules for Review of Securities Listings” issued by TWSE, the criteria of independence among directors and supervisors, the requirement of relatives in Article 3 is amended. As parents and children are both within the second degree of kinship, the wording is simplified.

Ratification No. 1

Subject: The Company's 2020 business report and financial statements are submitted for ratification,rought forth for your ratification.

Submitted by the Board of Directors

Description

I. The Company’s 2020 financial statements and its subsidiaries’ consolidated financial statements have already audited by the external auditors with audit report. Said financial statements, together with the business report (please see Pages 2~3 of the Handbook), were also reviewed by the Audit Committee and the audit report is issued accordingly.
II. The proposal was approved up the deliberation of Board in the 27th meeting, 34th Term on March 25, 2021.
III. Enclosed please find the Company's 2020 Independent Auditor’s Report and Financial Statements (see Attachment).

Resolution:

Stock Code:1722

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors ’ Report For the Years Ended December 31, 2020 and 2019

Address: 6F, No.88, Nanjing E. Rd., Sec 2, Taipei City 10457, Taiwan Telephone: (02)2542-2231

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

Contents 1. Cover Page 2. Table of Contents 3. Representation Letter 4. Independent Auditors’Report 5. Consolidated Balance Sheets 6. Consolidated Statements of Comprehensive Income 7. Consolidated Statements of Changes in Equity 8. Consolidated Statements of Cash Flows 9. Notes to Consolidated Financial Statements (1) Company history (2) Approval date and procedures of the consolidated financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information		Page
	1 2 3 4 5 6 7 8 9 9 9～10 11～29 29～30 30～66 66～68 68 68～69 69 69 69 70～74 74～75 75 76 76～77

Representation Letter

The entities that are required to be included in the combined financial statements of TAIWAN FERTILIZER CO., LTD. as of and for the year ended December 31, 2020 under the Criteria Governing the Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with International Financial Reporting Standards No. 10 by the Financial Supervisory Commission, "Consolidated Financial Statements." In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, TAIWAN FERTILIZER CO., LTD. and Subsidiaries do not prepare a separate set of combined financial statements.

Company name: TAIWAN FERTILIZER CO., LTD. Chairman: Huang-Yao Hsing Date: March 25, 2021

Independent Auditors ’ Report

To the Board of Directors of TAIWAN FERTILIZER CO., LTD.:

Opinion

We have audited the consolidated financial statements of TAIWAN FERTILIZER CO., LTD. and its subsidiaries (“the Group”), which comprise the consolidated Balance Sheets as of December 31, 2020 and 2019, and the consolidated statement of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for the year ended December 31, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRSs”), International Accounting Standards (“IASs”), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the 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 Certified Public Accountants Code of Professional Ethics in Republic of China (the “Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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, 2020. 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. The key audit matters that, in our professional judgment, should be communicated are as follows:

Impairment assessment of intangible assets

For the accounting policy of impairment assessment of intangible assets, please refer to note 4 (m) “Intangible assets” of the consolidated financial statements. For the accounting estimate and uncertainty assumption of impairment assessment of intangible assets, please refer to note 5 of the consolidated financial statements. For the impairment assessment of intangible assets, please refer to 6(l) of the consolidated financial statements.

4-1

Key audit matters:

As described in Note 6(l) of the consolidated financial statements, the Group acquired control over Taiwan Yes Deep Ocean Water Co., Ltd. (“ Taiwan Yes” ), which was accounted for as acquisition 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, the recoverable amount will be affected and an impairment loss will be incurred should there be any change in the situation. Therefore, the impairment assessment of equity-method investments has been identified as a key audit matter.

How the matter was addressed in our audit:

Our principal audit procedures included confirming whether the management has properly assessed the recoverability of goodwill based on the forecasted cash flows within the following 5 years, wherein the assessment has been reviewed by the competent authority; and verifying whether the management has disclosed the impairment of goodwill in the financial statements on a timely manner after identifying such circumstance. In addition, we also assessed the adequacy of the forecasting methods and the discount rate used ’ by the management, and compared the discount rate with external information; verified the management s assumptions with external relevant information, and evaluated the major assumptions (including the forecast revenue growth rate, discount rate and forecast margin).

Other Matter

We did not audit the consolidated financial statements as of and for the years ended December 31, 2020 and 2019 of the certain investees in equity method. Those statements were audited by other auditors, whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included in the corporation's financial statements for these investees, is based solely on the report of other auditors. As of December 31, 2020 and 2019, the investments in the aforementioned investees are 12.05% (NT$9,202,183 thousand) and 12.30% (NT$9,304,896 thousand) of consolidated total assets. For the years ended December 31, 2020 and 2019, the investment income on the above said investees are 20.02% (NT$593,696 thousand) and 30.49% (NT$751,432 thousand) of the Company's income before income tax.

TAIWAN FERTILIZER CO., LTD. has additionally prepared its parent company only financial statements as of and for the years ended December 31, 2020 and 2019, on which we have issued an unqualified opinion.

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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed 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.

4-2

Those charged with governance 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 auditor’s 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.

As part of an audit in accordance with 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 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 auditor’s 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.

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 a statement 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.

4-3

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 of the current period 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 Kuo-Yang Tseng and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 25, 2021

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the 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 accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and consolidated financial statements, the Chinese version shall prevail.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2020 Amount % $ 3,062,027 4 1,300,013 2 112,566 - 118,885 - 659,112 1 12,797 - 6 - 2,822,354 4 364,115 - 1,066,109 1 8,935 -	December 31, 2020	December 31, 2020	December 31, 2020
	Amount	%	Amount
	2,232,969 3 2,042,946 3
	455,120 1 223,648 - 7,104,724 10 7,089,164 10 160,439 - 192,913 - 14,627,720 19 15,018,003 20 131,319 - 107,486 - 325,125 - 257,583 -
9,526,919 12
2,712,178 4 28,507 - 9,282,092 12 14,758,989 20 1,150,181 2 38,102,213 50 122,639 - 325,883 - 115,396 - 193,730 - 27,400 -
	22,804,447 30 22,888,797 30
	25,037,416 33 24,931,743 33
	9,800,000 13 9,800,000 13 2,244,652 3 2,244,073 3 3,397,549 4 3,191,153 4 30,823,647 41 31,147,849 41 3,391,695 4 2,994,828 4 1,651,168 2 1,347,150 2
66,819,208 88
	51,308,711 67 50,725,053 67
$ 76,346,127 100	$ 76,346,127 100 75,656,796 100

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

2020	% 100 (75)	2019	% 100 (76)
Amount $ 10,169,742 (7,580,633)		Amount 12,890,565 (9,859,254)
2,589,109	25	3,031,311	24
299,990 974,846 66,584	3 9 1	298,297 1,040,379 66,624	2 8 1
1,341,420	13	1,405,300	11
1,247,689	12	1,626,011	13
44,080 80,046 1,019,917 (4,561) 578,204	- 1 10 - 6	86,167 79,017 (49,252) (5,216) 727,540	- - - - 6
1,717,686	17	838,256	6
2,965,375 512,494	29 5	2,464,267 400,312	19 3
2,452,881	24	2,063,955	16
(35,816) 715,107 10,833 (7,163)	- 7 - -	(4,398) 195,108 2,740 (879)	- 2 - -
697,287	7	194,329	2
(7,717) (504,660) (101,288)	- (5) (1)	(3,996) (195,916) (39,297)	- (2) -
(411,089)	(4)	(160,615)	(2)
286,198	3	33,714	-
$ 2,739,079	27	2,097,669	16
$ 2,452,881	24	2,063,955	16
$ 2,739,079	27	2,097,669	16
$	2.50		2.11
$	2.50		2.10

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

			Equity attributable to ow	Equity attributable to ow	ners of parent
Share capital	Capital surplus		Retained earnings			Total other equity interest
						Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total other equity interest
Ordinary shares		Legal reserve	Special reserve	Unappropriate d retained earnings	Total retained earnings
- - - - 2,063,955 2,063,955 - - - 2,063,955 - - - - (779) (779) (160,615) 195,108 34,493 33,714
- - - - 2,063,176 2,063,176 (160,615) 195,108 34,493 2,097,669
- - 228,131 - (228,131) - - - - - - - - - (2,156,000) (2,156,000) - - - (2,156,000) - - - (86,838) 86,838 - - - - - - 438 - - - - - - - 438
9,800,000 2,244,073 3,191,153 31,147,849 2,994,828 37,333,830 (51,551) 1,398,701 1,347,150 50,725,053 - - - - 2,452,881 2,452,881 - - - 2,452,881 - - - - (17,820) (17,820) (411,089) 715,107 304,018 286,198
- - - - 2,435,061 2,435,061 (411,089) 715,107 304,018 2,739,079
- - 206,396 - (206,396) - - - - - - - - - (2,156,000) (2,156,000) - - - (2,156,000) - - - (324,202) 324,202 - - - - - - 579 - - - - - - - 579
$ 9,800,000 2,244,652 3,397,549 30,823,647 3,391,695 37,612,891 (462,640) 2,113,808 1,651,168 51,308,711

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Expected credit gain for bad debt expense Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates and joint ventures accounted for using equity method (Gain) loss on disposal of property, plant and equipment, net Gain on disposal of investment properties Impairment loss on non-financial assets Unrealized foreign current exchange (gain) loss Donation expense Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Decrease (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Total changes in operating assets Increase (decrease) in contract liabilities Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in other payable Increase (decrease) in receipts in advance Increase (decrease) in other current liabilities Increase (decrease) in net defined benefit liability Increase (decrease) in deferred credits Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow (outflow) generated from operations Interest received Dividends received Interest paid Income taxes refund (paid) Net cash flows from (used in) operating activities	For the years ended December 31 2020 2019 $ 2,965,375 2,464,267 1,074,367 1,004,707 6,524 6,662 - (1,323) (5,065) (9,926) 4,561 5,216 (44,080) (86,167) (41,776) (41,806) (578,204) (727,540) (1,025) 33 (1,047,961) (15,405) - 12,891 (11,245) 22,775 10,075 19,532 (633,829) 189,649 75,782 (5,515) 80,799 296,739 3,591 1,602 (377,280) 366,905 (200,631) 375,182 (5,472) 149 (423,211) 1,035,062 (18,436) (60,751) (8,957) 8,096 (156,269) (146,012) (16,595) (103,907) 292,522 8,964 6,522 (4,298) (11,983) (11,159) (390,367) (392,092) (303,563) (701,159) (726,774) 333,903 (1,360,603) 523,552 1,604,772 2,987,819 45,422 86,310 234,284 1,324,413 (4,561) (5,216) (555,851) (675,289) 1,324,066 3,718,037
	2020 $ 2,965,375 1,074,367 6,524 - (5,065) 4,561 (44,080) (41,776) (578,204) (1,025) (1,047,961) - (11,245) 10,075
	(633,829)
	75,782 80,799 3,591 (377,280) (200,631) (5,472)
	(423,211)
	(18,436) (8,957) (156,269) (16,595) 292,522 6,522 (11,983) (390,367)
	(303,563)
	(726,774)
	(1,360,603)
	1,604,772 45,422 234,284 (4,561) (555,851)
	1,324,066

8-1

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (CONT ’ D)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of financial assets designated at fair value through profit or loss Proceeds from disposal of financial assets designated at fair value through profit or loss Acquisition of investments accounted for using equity method Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease in other receivables Acquisition of intangible assets Acquisition of investment properties Proceeds from disposal of investment properties Decrease (increase) in other financial assets Decrease (increase) in other non-current assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase in short-term loans Decrease in short-term loans Increase (decrease) in guarantee deposits received Payment of lease liabilities Cash dividends paid Net cash flows from (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	For the years ended December 31 2020 2019 (150,000) - 98,000 2,927 (5,710,000) (1,826,799) 5,975,233 2,083,118 - (10,000) (943,905) (1,145,721) 1,039 224 20,718 129,375 (2,230) - (2,516,076) (1,065,863) 1,422,740 22,826 3,118,621 (586,643) 30,535 (7,770) 1,344,675 (2,404,326) 24,000 136,000 (36,000) (136,000) 67,542 (22,815) (31,832) (30,689) (2,156,000) (2,156,000) (2,132,290) (2,209,504) 5,948 (25,637) 542,399 (921,430) 2,519,628 3,441,058 $ 3,062,027 2,519,628
	2020 (150,000) 98,000 (5,710,000) 5,975,233 - (943,905) 1,039 20,718 (2,230) (2,516,076) 1,422,740 3,118,621 30,535
	1,344,675
	24,000 (36,000) 67,542 (31,832) (2,156,000)
	(2,132,290)
	5,948 542,399 2,519,628
	$ 3,062,027

See accompanying notes to consolidated financial statements.

Stock Code:1722

TAIWAN FERTILIZER CO., LTD.

Parent Company Only Financial Statements

With Independent Auditors ’ Report For the Years Ended December 31, 2020 and 2019

Address: 6F, No.88, Nanjing E. Rd., Sec 2, Taipei City 10457, Taiwan Telephone: (02)2542-2231

The independent auditors’ report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and parent company only financial statements, the Chinese version shall prevail.

Contents 1. Cover Page 2. Table of Contents 3. Independent Auditors’Report 4. Balance Sheets 5. Statements of Comprehensive Income 6. Statements of Changes in Equity 7. Statements of Cash Flows 8. Notes to Financial Statements (1) Company history (2) Approval date and procedures of the financial statements (3) New standards, amendments and interpretations adopted (4) Summary of significant accounting policies (5) Significant accounting assumptions and judgments, and major sources of estimation uncertainty (6) Explanation of significant accounts (7) Related-party transactions (8) Pledged assets (9) Commitments and contingencies (10) Losses Due to Major Disasters (11) Subsequent Events (12) Other (13) Other disclosures (a) Information on significant transactions (b) Information on investees (c) Information on investment in mainland China (d) Major shareholders (14) Segment information 9. List of major account titles		Page
	1 2 3 4 5 6 7 8 8 8～9 10～27 27～28 28～62 63～66 66 66～67 67 67 67～68 69～72 72～73 73 73 73 74～80

Independent Auditors ’ Report

To the Board of Directors of TAIWAN FERTILIZER CO., LTD.:

Opinion

We have audited the financial statements of TAIWAN FERTILIZER CO., LTD.(“the Company”), which comprise the Balance Sheets as of December 31, 2020 and 2019, and the statement of comprehensive income, changes in equity and cash flows for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, based on our audits and the report of other auditors (please refer to Other Matter paragraph), the accompanying financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2020 and 2019, and its financial performance and its cash flows for the year ended December 31, 2020 and 2019 in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards ( “ IFRSs ” ), International Accounting Standards (“IASs”), interpretation as well as related guidance endorsed by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audits in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the 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 Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis of 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, 2020. 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. The key audit matters that, in our professional judgment, should be communicated are as follows:

Impairment assessment of investments in equity method (including goodwill and intangible assets with an indefinite useful life)

Please refer to notes 4(n), 5 and 6(h) for the “recognition of impairment assessment of investments ” “ accounted for by the equity method , assumptions used and uncertainties considered in determining investments accounted for by the equity method, investments for impairment loss and obsolescence” and “balances of impairment loss and obsolescence”, respectively.

3-1

Key audit matters:

As described in Note 6(h) of the accompanying financial statements, the Company acquired control over Taiwan Yes Deep Ocean Water Co., Ltd. (“ Taiwan Yes” ), which was accounted for as acquisition 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, the recoverable amount will be affected and an impairment loss will be incurred should there be any change in the situation. Therefore, the impairment assessment of equity method investments has been identified as a key audit matter.

How the matter was addressed in our audit:

Our principal audit procedures included confirming whether the management have properly assessed the recoverability of goodwill based on the forecasted cash flows within the following 5 years, wherein the assessment have been reviewed by the competent authority; and verifying whether the management has disclosed the impairment of goodwill in the financial statements on a timely manner after identifying such circumstance. In addition, we also assessed the adequacy of the forecasting methods and the discount rate used by the management, and compared the discount rate with external information; verified the management’s assumptions with external relevant information, and evaluated the major assumptions (including the forecast revenue growth rate, discount rate and forecast margin).

Other Matter

We did not audit the financial statements as of and for the years ended December 31, 2020 and 2019, of certain investees in equity method. Those statements were 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, 2020 and 2019, the investments in the aforementioned investees are 12.15% and 12.33% ($9,202,183 thousand and $9,304,896 thousand), of the Corporation’s total assets. For the years ended December 31, 2020 and 2019, the investment income on the above said investees are 20.03% and 30.51% ($593,696 thousand and $751,432 thousand) of the Corporation’s 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 Regulations Governing the Preparation of Financial Reports by Securities Issuers and IFRSs, IASs, interpretation as well as related guidance endorsed 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 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 Company’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 Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

3-2

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 auditor’s 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.

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 Company’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 Company’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 auditor’s report. However, future events or conditions may cause the Company 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 Company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the group audit.

3-3

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 of the current period 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 Kuo-Yang Tseng and Heng-Shen Lin.

KPMG

Taipei, Taiwan (Republic of China) March 25, 2021

Notes to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance and cash flows in accordance with the 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 parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ audit report and the accompanying parent company only financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ audit report and parent company only financial statements, the Chinese version shall prevail.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

December 31, 2020 Amount % $ 2,521,222 3 1,300,013 2 112,566 - 117,543 - 646,808 1 11,523 - 2,774,010 4 285,034 - 900,000 1 7,299 -	December 31, 2020	December 31, 2020
	Amount	%
	1,955,626 3 1,864,243 3
	223,648 - 223,648 - 7,104,724 10 7,089,164 10 136,462 - 164,257 - 14,627,720 19 15,018,003 20 131,319 - 107,486 - 280,161 - 250,609 -
8,676,018 11
2,712,178 4 28,507 - 12,121,677 16 12,421,858 17 1,122,080 2 38,094,155 50 11,724 - 285,570 - 115,396 - 159,188 - 20,020 -
	24,459,660 32 24,717,410 33
	9,800,000 13 9,800,000 13 2,244,652 3 2,244,073 3 3,397,549 5 3,191,153 4 30,823,647 41 31,147,849 41 3,391,695 4 2,994,828 4 1,651,168 2 1,347,150 2
	51,308,711 68 50,725,053 67
67,092,353 89
$ 75,768,371 100	$ 75,768,371 100 75,442,463 100

See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

2020	% 100 (75)	2019	% 100 (76)
Amount $ 9,931,129 (7,458,489)		Amount 12,624,716 (9,640,510)
2,472,640	25	2,984,206	24
(258,061) (959,675) (66,602)	(2) (10) (1)	(255,859) (1,033,241) (66,440)	(2) (8) (1)
(1,284,338)	(13)	(1,355,540)	(11)
1,188,302	12	1,628,666	13
37,684 97,462 1,020,337 (3,581) 623,979	- 1 10 - 7	75,204 76,370 (34,615) (4,089) 721,671	1 1 - - 6
1,775,881	18	834,541	8
2,964,183 511,302	30 5	2,463,207 399,252	21 3
2,452,881	25	2,063,955	18
(35,816) 715,107 10,833 (7,163)	- 7 - -	(4,398) 195,108 2,740 (879)	- 2 - -
697,287	7	194,329	2
(512,377) (101,288)	(5) (1)	(199,912) (39,297)	(2) -
(411,089)	(4)	(160,615)	(2)
286,198	3	33,714	-
$ 2,739,079	28	2,097,669	18
$	2.50		2.11
$	2.50		2.10

See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Share capital		Retained earnings	Retained earnings		Total other equity interest	Total other equity interest	Total other equity interest
					Exchange differences on translation of foreign financial statements	Unrealized gains (losses) on financial assets measured at fair value through other comprehensive income	Total other equity interest
Ordinary shares	Legal reserve	Special reserve	Unappropriate d retained earnings	Total retained earnings
- - - - 2,063,955 2,063,955 - - - 2,063,955 - - - - (779) (779) (160,615) 195,108 34,493 33,714
- - - - 2,063,176 2,063,176 (160,615) 195,108 34,493 2,097,669
- - 228,131 - (228,131) - - - - - - - - - (2,156,000) (2,156,000) - - - (2,156,000) - - - (86,838) 86,838 - - - - - - 438 - - - - - - - 438
9,800,000 2,244,073 3,191,153 31,147,849 2,994,828 37,333,830 (51,551) 1,398,701 1,347,150 50,725,053 - - - - 2,452,881 2,452,881 - - - 2,452,881 - - - - (17,820) (17,820) (411,089) 715,107 304,018 286,198
- - - - 2,435,061 2,435,061 (411,089) 715,107 304,018 2,739,079
- - 206,396 - (206,396) - - - - - - - - - (2,156,000) (2,156,000) - - - (2,156,000) - - - (324,202) 324,202 - - - - - - 579 - - - - - - - 579
$ 9,800,000 2,244,652 3,397,549 30,823,647 3,391,695 37,612,891 (462,640) 2,113,808 1,651,168 51,308,711

See accompanying notes to parent company only financial statements.

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) operating activities: Profit before tax Adjustments: Adjustments to reconcile profit (loss): Depreciation expense Amortization expense Net gain on financial assets or liabilities at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries,associates and joint ventures accounted for using equity method (Gain) loss on disposal of property, plant and equipment, net Gain on disposal of investment properties Unrealized foreign currency exchange loss Loss on disposal of investments Donation expense Total adjustments to reconcile profit (loss) Changes in operating assets and liabilities: Changes in operating assets: Decrease (increase) in notes receivable Decrease (increase) in accounts receivable Decrease (increase) in other receivable Decrease (increase) in inventories Decrease (increase) in prepayments Decrease (increase) in other current assets Total changes in operating assets Changes in operating liabilities: Increase (decrease) in contract liabilities Increase (decrease) in notes payable Increase (decrease) in accounts payable Increase (decrease) in other payable Increase (decrease) in receipts in advance Increase (decrease) in other current liabilities Increase (decrease) in net defined benefit liability Increase (decrease) in deferred credits Total changes in operating liabilities Total changes in operating assets and liabilities Total adjustments Cash inflow generated from operations Interest received Dividends received Interest paid Income taxes refund (paid) Net cash flows from (used in) operating activities	For the years ended December 31 2020 2019 $ 2,964,183 2,463,207 1,024,419 993,158 6,524 6,661 (5,065) (9,926) 3,581 4,089 (37,684) (75,204) (41,776) (41,806) (623,979) (721,671) (1,025) 21 (1,047,961) (15,405) 1,597 624 - 108 10,075 19,532 (711,294) 160,181 76,354 (12,130) 88,973 292,938 4,031 1,562 (380,104) 365,271 (170,435) 415,524 (5,463) 753 (386,644) 1,063,918 (22,745) (60,936) (8,959) 10,019 (153,149) (149,391) 13,260 (105,563) 292,494 9,306 4,016 (3,070) (11,983) (11,159) (390,367) (392,092) (277,433) (702,886) (664,077) 361,032 (1,375,371) 521,213 1,588,812 2,984,420 39,026 75,347 234,284 1,324,413 (3,581) (4,089) (554,572) (674,168) 1,303,969 3,705,923
	2020 $ 2,964,183 1,024,419 6,524 (5,065) 3,581 (37,684) (41,776) (623,979) (1,025) (1,047,961) 1,597 - 10,075
	(711,294)
	76,354 88,973 4,031 (380,104) (170,435) (5,463)
	(386,644)
	(22,745) (8,959) (153,149) 13,260 292,494 4,016 (11,983) (390,367)
	(277,433)
	(664,077)
	(1,375,371)
	1,588,812 39,026 234,284 (3,581) (554,572)
	1,303,969

7-1

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Cash Flows (CONT ’ D)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

Cash flows from (used in) investing activities: Acquisition of financial assets at fair value through other comprehensive income Proceeds from capital reduction of financial assets at fair value through other comprehensive income Acquisition of financial assets designated at fair value through profit or loss Proceeds from disposal of financial assets designated at fair value through profit or loss Acquisition of investments accounted for using equity method Proceeds from disposal of subsidiaries Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Decrease (increase) in refundable deposits Decrease in other receivables Acquisition of intangible assets Acquisition of investment properties Proceeds from disposal of investment properties Decrease (increase) in other financial assets Increase in other non-current assets Net cash flows from (used in) investing activities Cash flows from (used in) financing activities: Increase (decrease) in guarantee deposits received Payment of lease liabilities Cash dividends paid Net cash flows from (used in) financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	2020 (150,000) 98,000 (5,710,000) 5,975,233 (500,000) - (197,718) 1,039 30,514 15,680 (2,230) (2,515,774) 1,422,740 3,225,104 -	2019 - 2,927 (1,826,799) 2,083,118 (10,000) 9,301 (383,438) 225 (785) 129,375 - (1,065,641) 22,826 (994,928) (420) (2,034,239) (24,380) (26,195) (2,156,000) (2,206,575) (534,891) 2,213,249 1,678,358
	1,692,588
	29,552 (27,245) (2,156,000)
	(2,153,693)
	842,864 1,678,358
	$ 2,521,222

See accompanying notes to parent company only financial statements.

Ratification No. 2

Subject: The Company’s 2020 earnings distribution is submitted for ratification,brought forth for your ratification.

Submitted by the Board of Directors

Remark:

I. The Company’s financial statements from January 1, 2020 to December 31, 2020 have been audited by CPAs, and the net profit after tax of the year is NTD 2,452,881,251.
II. The 2020 settled earnings after tax and the undistributed earnings are intended to be distributed as following:
(I) 10% appropriated as legal reserve:
- On the basis of the net profit after tax of the year is NTD 2,452,881,251, the re-measurement of defined benefit plan accounted as retained earnings of NTD 17,819,693 is deducted, and the reversal recognized a special reserves by TIFRS for the first time of NTD 324,201,146 is added. 10% of such balance is appropriated as legal reserve, for NTD 275,926,270.
(II) Bonus disttribution.
- On the basis of the net profit after tax of the year is NTD 2,452,881,251, the undistributed earnings after adjustment of NTD 938,814,049 is added, and the legal reserve of NTD 275,926,270 and the undistributed earnings at the end of the period of NTD 861,769,030 are deducted. The balance of NTD 2,254,000,000 will be distributed as the shareholders’ bonus in cash for NTD 2.3 per share.
III. The proposal has been reviewed by the Audit Committee in the 18th meeting, 1st Term on March 25, 2021, and approved by the Board of Directors in the 27th meeting, 34th Term on March 25, 2021. Upon the approval of the AGM, the Board of Directors is authorized to determine the base date of dividend. In addition, before the base date of dividend distribution to shareholders, in case of any buyback or transfer, conversion, write-off of treasury shares as indicated in Article 28-2 of the Securities and Exchange Act, that affect the total outstanding shares and thus the dividend yield changes, the Board of Directors is fully authorized to handle this.
IV. The aggregation information regarding the actual receivers of employees’ remuneration and the amounts of the previous year (2019) is disclosed in the Company’s annual report and MOPS.
V. As the Company do not prepare financial forecast nor distribute bonus share, the effect of bonus share on the Company’s performance, EPS, and ROI of shareholders are not applicable.
VI. Attached please find the Company’s 2020 earnings distribution table (see later)

Resolution:

Attachment

TAIWAN FERTILIZER CO., LTD. EARNINGS DISTRIBUTION TABLE

2020

Attachment TAIWAN FERTILIZER CO., LTD. EARNINGS DISTRIBUTION TABLE 2020	Attachment TAIWAN FERTILIZER CO., LTD. EARNINGS DISTRIBUTION TABLE 2020	Attachment TAIWAN FERTILIZER CO., LTD. EARNINGS DISTRIBUTION TABLE 2020	Attachment TAIWAN FERTILIZER CO., LTD. EARNINGS DISTRIBUTION TABLE 2020
Unit: NTD＄
Items	Amount		Remarks
I. Intended Distribtuion: Undistributed earnings at the beginning of the period Reversal recognized a special reserves by TIFRS for the first time Remeasurement of defined benefit plan accounted as retained earnings Undistributed earnings after adjustment Net profit after tax of the year Appropriation for legal reserve (10%) Distributable earnings of the period II. Distribution Items: Dividend to shareholders- cash (NTD 2.3 per share X 980,000,000 shares) Undistributed earnings at the end of the period		632,432,596 324,201,146 -17,819,693	Note 1 Note 2
		938,814,049 2,452,881,251 -275,926,270
		3,115,769,030 -2,254,000,000
		861,769,030
Notes: (1) The undistributed earnings at the beginning of the period is the amount of the “undistributed earnings at the end of the period” listed on the 2019 Earnings Distribution Table approved by the 2020 AGM. (2) The earnings of 2020 will be distributed first. (3) The total frictions of cash dividends under NTD 1 will be listed as the other income of the Company.

Note 1: Article 237, paragraph 1, the Company Act

(1) 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 paid-in capital, this provision shall not apply.
(2) When appropriating the legal reserve, it was handled pursuant to the Letter Jing-Shan-Zhi No. 10802432410 and No. 10902005780 by MOEA.

Note 2: Article 25, Paragraph 3, the Articles of Incorporation

In case where the Company have surplus profit after settling the annual accounts, when allocating its surplus profits after having paid all taxes and dues, shall first set aside ten percent of said profits as legal reserve, and appropriate or reverse the special reserves as required by laws. The sum of such balance with the accumulated undistributed earnings from the previous year is deemed the distributable earnings. However, the special reserves may be reserved or appropriated as the operation requires, and the Board of Directors will propose the earnings distribution to the AGM to distributing bonus to shareholders.

Discussion and Election Items 1.

Cause: The amendments to the Company's “Rules of Procedure for Shareholders Meetings” in part, please vote.

Submitted by the Board of Directors

Remark:

I. Amended to cope with the announcement of TWSE with Letter Tai-ZhengZhi-Li-Zhi No. 1100001446, dated January 28, 2021, regarding the “Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings.”
II. The comparison table for amendments to the “Rules of Procedure for Shareholders Meetings of Taiwan Fertilizer Co., Ltd.” in part is enclosed herewith (see Attachment).

Resolution:

34 -

The comparison table for amendments to the “Rules of Procedure for Shareholders Meetings of Taiwan Fertilizer Co., Ltd.” in part is enclosed herewith.1

Amended Provision	Current Provision	Remark
Article 9 The chair shall call the meeting to order at the appointed meeting time, while announcing the related	Article 9 The chair shall call the meeting to order at the appointed meeting time. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one hour, may be made. If the quorum is not met after two postponements, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within one month. 2nd paragraph omitted	Amended to cope with the announcement of TWSE with Letter Tai-Zheng-Zhi-Li-Zhi No. 1100001446, dated January 28, 2021, regarding the “Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings.”
information of shares without
voting rights and attending
shares. However, when the attending shareholders do not represent a majority of the total number of issued shares, the chair may announce a postponement, provided that no more than two such postponements, for a combined total of no more than one hour, may be made. If the quorum is not met after two postponements, but the attending shareholders represent one third or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175, paragraph 1 of the Company Act; all shareholders shall be notified of the tentative resolution and another shareholders meeting shall be convened within one month. 2nd paragraph omitted
Article 17 1st paragraph omitted Matters pertaining to election or discharge of directors and independent	Article 17 1st paragraph omitted Matters pertaining to election or discharge of directors and independent directors,	Amended to cope with the announcement of TWSE with Letter Tai-Zheng-Zhi-Li-Zhi

35 -

	directors, alteration of the Articles of Incorporation, reduction of capital, application for the approval of ceasing its status as a public company, approval of competing with the company by directors, surplus profit distributed in the form of new shares, reserve distributed in the form of new shares, dissolution, merger, spin- off, or any matters as set forth in Paragraph I, Article 185,Article 26-1 and 43-6 of the Securities and Exchanges Act, and Article 56-1 and 60-2 of the Regulations Governing the Offering and Issuance of Securities by Securities Issuershereof, shall be itemized in the causes or subjects to be described and the essential contents shall be explained in the notice to convene a meeting of shareholders, and shall not be brought up as extemporary motions. Omitted hereafter		alteration of the Articles of Incorporation, reduction of capital, application for the approval of ceasing its status as a public company, approval of competing with the company by directors, surplus profit distributed in the form of new shares, reserve distributed in the form of new shares, dissolution, merger, spin-off, or any matters as set forth in Paragraph I, Article 185 hereof shall be itemized in the causes or subjects to be described and the essential contents shall be explained in the notice to convene a meeting of shareholders, and shall not be brought up as extemporary motions; the essential contents may be posted on the website designated by the competent authority in charge of securities affairs or the company, and such website shall be indicated in the above notice. Omitted hereafter	No. 1100001446, dated January 28, 2021, regarding the “Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings.”
	Article 20 Election of directors and independent directors, shall comply with the Company Act, related laws and regulations, and the Company’s procedures of elections. The result shall be announced onsite, including the names of the elected directors and independent directors, and their votes,as well as the names and votes of these directors and independent directors not elected. 2nd paragraph omitted		Article 20 Election of directors and independent directors, shall comply with the Company Act, related laws and regulations, and the Company’s procedures of elections. The result shall be announced onsite, including the names of the elected directors and independent directors, and their votes. 2nd paragraph omitted	Amended to cope with the announcement of TWSE with Letter Tai-Zheng-Zhi-Li-Zhi No. 1100001446, dated January 28, 2021, regarding the “Sample Template for XXX Co., Ltd. Rules of Procedure for Shareholders Meetings.”

36 -

Discussion and Election Items 2.

Cause: The amendments to the Company's “Procedures of Electing Directors and Independent Directors” in part, please vote.

Submitted by the Board of Directors

Description:

Amended to cope with the announcement of TWSE with Letter Tai-ZhengZhi-Li-Zhi No. 1090009468, dated June 3, 2020, regarding the “Sample Template for XXX Co., Ltd. Procedures for Election of Directors.”
The comparison table for amendments to the “Procedures for Election of Directors and Independent Directors of Taiwan Fertilizer Co., Ltd.” (see later).

Resolution:

37 -

The comparison table for amendments to the “Procedures of Electing Directors and Independent Directors,” Taiwan Fertilizer Co., Ltd.

	Amended Provision		Current Provision	Remark
	Article 5 Ballots are printed by the Board of Directors, and each attending shareholder is given one ballot with the attendance card number with the number of voting rights printed on it. Voters specified the name or account nameof the candidate; however, if a governmental agency or institution is a candidate, the name of such governmental agency or institution shall be specified, or the name of governmental agency or institution and the name of the representative. If there are several representatives, each of their name shall be specified.		Article 5 Ballots are printed by the Board of Directors, and each attending shareholder is given one ballot with the attendance card number with the number of voting rights printed on it. Voters specified the name or account nameof the candidate; if the candidate is not a shareholder, the name and the ID number/Uniform number of the candidate shall be specified.However, if a governmental agency or institution is a candidate, the name of such governmental agency or institution shall be specified, or the name of governmental agency or institution and the name of the representative. If there are several representatives, each of their name shall be specified.	Amended to cope with the announcement of TWSE with Letter Tai-Zheng-Zhi-Li-Zhi No. 1090009468, dated June 3, 2020, regarding the “ Sample Template for XXX Co., Ltd. Procedures for Election of Directors.”
	Article 7 A ballot is invalid under any of the following circumstances; the voting rights indicated in the ballot must not counted under the candidate(s) specified in the ballot: 1. Attendance registration is not completed. 2. The ballot was not prepared bya person with the right to convene. 3. The writing is unclear and indecipherable . 4. Candidates specified more than the seats to be elected. 5. The sum of the votes to each candidate is more than the total voting rights. 6. The texts in the ballot are altered, or texts other than the		Article 7 A ballot is invalid under any of the following circumstances; the voting rights indicated in the ballot must not counted under the candidate(s) specified in the ballot: 1. Attendance registration is not completed. 2. The ballot was not prepared bythe Company’s Board of Directors. 3. The writing is unclear and indecipherable . 4. Candidates specified more than the seats to be elected. 5. The sum of the votes to each candidate is more than the total voting rights. 6. The texts in the ballot are altered, or texts other than the	Amended to cope with the announcement of TWSE with Letter Tai-Zheng-Zhi-Li-Zhi No. 1090009468, dated June 3, 2020, regarding the “ Sample Template for XXX Co., Ltd. Procedures for Election of Directors.”

38 -

	required one are included. 7. The ballot is not placed in the ballot box, or the placed ballot is blank. 8. The information of the specified candidate(s) does not conform to thedirector candidate (independent directors included) list.		required one are included. 7. The ballot is not placed in the ballot box, or the placed ballot is blank. 8. The information of the specified candidate(s) arenot specified as required in Article 5,or inconsistent after checking.
	Article 11 These Procedures, and any amendments hereto, shall be implemented after approval by a shareholders meeting.		Article 11 These Procedures, and any amendments hereto, shall be implemented after approval by a shareholders meeting. The deletion of provisions about supervisors referred to herein shall become effective as of the date when the Audit Committee is established.	The Company has established the Audit Committee, and thus adjusted and deleted the content of this Article.

39 -

Discussion and Election Items 3.

Cause: Election of the Company’s 35th Board of Directors (including independent directors). Please elect.

Submitted by the Board of Directors

Description:

The term of office for the directors (independent directors included) of 34th Term will expire on June 30, 2021. Pursuant to the Articles of Incorporation of the Company, the full re-election shall be held in this (2021) General Shareholders’ Meeting.
Pursuant to Article 16 and Article 16-1 of the Articles of Incorporation, the Company establishes nine directors, including three independent directors. The election of directors (independent directors included) adopts the candidate nomination system. Shareholders shall elect from the candidate list, both for directors and independent directors, while the seats of elected are counted separately.
Nine seats of directors (three seats of independent directors included) are intended to be elected in this General Shareholders’ Meeting. The term of office is three years, from July 1, 2021 to June 30, 2024.
The election for directors of 35th Term adopts the candidate nomination system. The candidate list has been approved in the 28th meeting of the Board of Directors of 34th Term, specified as following:
Please elect

Resolution:

40 -

Candidate List of Directors/Independent Directors of Taiwan Fertilizer

Co., Ltd.

Serial No.	Name of Candidate	Name of Candidate	Major Educational and Professional Background	Number of Share Held
1	Director	Council of Agriculture, Executive Yuan Representative: Huang Yao-Hsing	PhD, Department of Materials Science, National Sun Yat-sen University General Manager, Taiwan Fertilizer; Deputy General Manager and Chief of Taichung Factory, Taiwan Fertilizer; Assistant Deputy General Manager of Taiwan Fertilizer; Chief of Sales Dept, Taiwan Fertilizer; Chief of Factory Dept, Chief of Hsin Chu and Miaoli Factory, Taiwan Fertilizer. Current position: Chairman and General Manager, Taiwan Fertilizer Co., Ltd.	235,886,376
2	Director	Council of Agriculture, Executive Yuan Representative: Hu Jong-I	PhD, Agricultural Economics, The University of Tokyo Chief Secretary, Council of Agriculture, Executive Yuan; Chief, Department of Farmer’s Service, Council of Agriculture, Executive Yuan Current position: Director General, Agriculture and Food Agency, Council of Agriculture, Executive Yuan	235,886,376
3	Director	Council of Agriculture, Executive Yuan Representative: Fan Mei-Ling	PhD, Natural Resources Administration, National Dong Hwa University Hualien District Agricultural Research and Extension Station, Council of Agriculture, Executive Yuan; Department of Farmer’s Service, Council of Agriculture, Executive Yuan Current position: Chief Secretary, Council of Agriculture, Executive Yuan	235,886,376
4	Director	Council of Agriculture, Executive Yuan Representative: Tai, Ko-Yuan	Master, Department of Aquaculture, National Pingtung University of Science and Technology Researcher, National	235,886,376

41 -

			Museum of Marine Biology and Aquarium; Chief, Hairy Crab Farm; President of Dalin Branch, Chiayi County Young Farmer Association; Vice President, Chiayi County Young Farmer Association. Current position: Xin Mei Florist
5	Director	Council of Agriculture, Executive Yuan Representative: Hsu, Min-Lin	Department of Tourism, Chinese Culture University Executive Secretary, Employee Welfare Committee, Taiwan Fertilizer; Member of Occupational Safety and Health, Taiwan Fertilizer Current position: Senior Coordinator, Taiwan Fertilizer	235,886,376
6	Director	Tsao, Chi-Hung	Completion, Education Institute, National Kaohsiung Normal University; Department of Russian Language and Literature, Chinese Culture University Chairman, Foundation of Taiwan Sugar Association; Minister, Council of Agriculture, Executive Yuan; County Mayor, Pingtung County; Member of 4th and 5th Term, Legislative Yuan; Convener, Education and Culture Policy Panel of DDP, Legislative Yuan Current position: Chairman, Dawu Mountain Foundation; Independent Director, Sun Rise E&T Corporation	0
7	Independent Director	Lin, Su-Ming	PhD of Accounting, Arizona State University Dean, Department and Institute of Accounting, National Taiwan University; Independent Director, Nan Shan Life Co., Ltd.; Independent Director, Ruentex Industries Limited; Director, iPass Corporation (Representative of National	0

42 -

			Development Fund); Director, China Airlines (Representative of National Development Fund); Consultant, National Federation of CPA Associations of the R.O.C. Current position: Professor, Department of Accounting, National Taiwan University
8	Independent Director	Ho Yen-Sheng	PhD, Department of Real Estate and Built Environment, National Taipei University; PhD Candidate, Institute of Geodesy and Geoinformation, University of Bonn Member, Legal Affairs Committee; Member, Deliberation Panel, Urban Renewal and Dispute Handling, Taipei City; Member, Deliberation Panel, Urban Renewal and Dispute Handling, Taichung City; Member, Realtor Reward and Punishment Committee, Taichung City; Member, Real Estate Dispute Mediation Committee, Taichung City Current position: Associate Professor, Department of Land Management, Feng Chia University	0
9	Independent Director	Weng Ming-Jang	PhD of Economics, Texas A&M University Independent Director, Sheh Fung Screws Co., Ltd; Independent Director, Perfect Medical Ind. Co., Ltd.; Visiting Scholar, Department of Finance and Banking, Universiti Malaya; Chief, Extension Education Center, National Kaohsiung University; Part-Time Associate Professor, Department of Business Administration, National Kaohsiung University of	0

43 -

Science and Technology; Chief, EMBA Center, National Kaohsiung University Current position: Associate Professor, Department of Applied Economics, National Kaohsiung University

44 -

Discussion and Election Items 4

Cause: Proposal to release the institutional shareholder of the 35th term, Council of Agriculture, Executive Yuan, from the non-compete restrictions

Submitted by the Board of Directors

Description:

Pursuant to Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the companys business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
Pursuant to the explanation in the Letter Shang No.89206938 issued by the MOEA on April 24, 2000, and according to Article 27, Item 2 of the Company Act, when an institutional shareholder designated representatives as the elected directors, the designated representatives and the institutional shareholder shall be subject to the non-competition restrictions imposed on directors, to comply with the intention of Article 209 of the Company Act.
Please release the institutional shareholder from the non-competition restrictions for the following business :

restrictions for the following business	:
Name of the institutional shareholder	Council of Agriculture, Executive Yuan
Company concurrently serves in	Taipei Agricultural Products Marketing Co., Ltd.
Position concurrently serves as	Institutional director
Major business	Supermarkets International Trade. Restaurants Parking area Operators Warehousing

The proposal has been approved in the 28th Meeting, Board of Directors of 34th Term, and submitted to the AGM for vote.

Resolution:

45 -

Discussion and Election Items 5.

Cause: Proposal to release the candidate of director of the 35th term, Tsao, Chi-Hung, from the non-compete restrictions. Please vote.

Submitted by the Board of Directors

Description:

Pursuant to Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the companys business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
Please release Tsao, Chi-Hung, the Director of 35th term, from the noncompetition restrictions for the following business :

Director	Tsao, Chi-Hung
Company concurrently serves in	Sun Rise E&T Corporation
Position concurrently serves as	Independent Director
Major business	Wholesale of Chemical Feedstock Retail Sale of Chemical Feedstock International Trade.

The proposal has been approved in the 28th Meeting, Board of Directors of 34th Term, and submitted to the AGM for vote.

Resolution:

46 -

Discussion and Election Items 6

Cause: Proposal to release the candidate of independent director of the 35th term, Lin, Su-Ming, from the non-compete restrictions. Please vote.

Submitted by the Board of Directors

Description:

Pursuant to Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the companys business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
Please release Lin, Su-Ming, the Independent Director of 35th term, from the non-competition restrictions for the following business :

Independent Director	Lin, Su-Ming
Company concurrently serves in	Ruentex Industries Limited
Position concurrently serves as	Independent Director
Major business	Wholesale of Cosmetics Retail Sale of Fertilizer Retail Sale of Environmental Agents Retail Sale of Cosmetics Department Stores Supermarkets International Trade. Restaurants Parking area Operators Warehousing Housing and Building Development and Rental Industrial Factory Development and Rental

47 -
The proposal has been approved in the 28th Meeting, Board of Directors of 34th Term, and submitted to the AGM for vote.

Resolution:

48 -

Discussion and Election Items 7.

Cause: Proposal to release the candidate of independent director of the 35th term, Weng, Ming-Jang, from the non-compete restrictions. Please vote.

Submitted by the Board of Directors

Description:

Pursuant to Article 209 of the Company Act, a director who does anything for himself or on behalf of another person that is within the scope of the companys business, shall explain to the meeting of shareholders the essential contents of such an act and secure its approval.
Please release Weng, Ming-Jang, the Independent Director of 35th term, from the non-competition restrictions for the following business :

Independent Director	Weng, Ming-Jang
Company concurrently serves in	Sheh Fung Screws Co., Ltd	Perfect Medical Ind. Co., Ltd.
Position concurrently serves as	Independent Director	Independent Director
Major business	International Trade.	Wholesale of Alcohol Wholesale of Other Chemical Products Wholesale of Cosmetics Retail Sale of Alcohol Retail Sale of Other Chemical Products Retail Sale of Cosmetics Warehousing Waste Disposing Waste Treatment

49 -
The proposal has been approved in the 28th Meeting, Board of Directors of 34th Term, and submitted to the AGM for vote.

Resolution:

50 -

Appendix

1.Rules of Procedure for Shareholders Meetings of Taiwan Fertilizer Co., Ltd.
2.Articles of Incorporation of Taiwan Fertilizer Co., Ltd.
3.The Procedures for Electing Directors and Independent Directors of Taiwan Fertilizer Co., Ltd.
Code of Ethical Conduct for the Companys Directors and the Highest -level Executives and above of Taiwan Fertilizer Co., Ltd.
Shareholdings by Directors (including Independent Directors) of Taiwan Fertilizer Co., Ltd.
6.The Impact of Stock Dividend Issuance on Business Performance, EPS and Shareholder Return
51 -

Appendix 1 Rules of Procedure for Shareholders’ Meeting

Amended at General Shareholders’ Meeting on June 29, 2018

Article 1 The parliamentary rules for the Companys shareholders meetings, except as otherwise provided by the Company Law, Articles of Incorporation and other related laws, shall be as provided herein.
Article 2 The shareholders referred to herein shall mean the shareholders per se and their proxies.
Article 3 The Company shall specify in its shareholders meeting notices the time during which shareholder attendance registrations will be accepted, the place to register for attendance, and other matters for attention. The time during which shareholder attendance registrations will be accepted, as stated in the preceding paragraph, shall be at least 30 minutes prior to the time the meeting commences. The place at which attendance registrations are accepted shall be clearly marked and a sufficient number of competent personnel assigned to handle the registrations. Shareholders or their proxies (collectively, "shareholders") shall attend shareholders’ meetings based on attendance cards, sign-in cards, or other certificates of attendance. Solicitors soliciting proxy forms shall also bring identification documents for verification. The Company shall furnish the present shareholders with an attendance book to sign, or present shareholders may hand in a sign-in card in lieu of signing in. The number of shares in attendance shall be calculated according to the shares indicated by the attendance book and sign-in cards handed in plus the number of shares whose voting rights are exercised by correspondence or electronically. The Company shall furnish present shareholders with the meeting handbook, annual report, attendance card, speakers slips, voting slips, and other meeting materials. Where there is an election of directors or independent directors, pre-printed ballots shall also be furnished.
Article 4 Attendance and votes at shareholders’ meetings shall be calculated based on numbers of shares. With respect to resolutions of shareholders’ meetings, the number of shares held by a shareholder with no voting rights shall not be calculated as part of the total number of issued shares.
When a shareholder is an interested party in relation to a motion, and there is the likelihood that such a relationship would prejudice the interests of the Company, that shareholder may not vote on that motion, and may not exercise voting rights as proxy for any other shareholder.
The number of shares for which voting rights may not be exercised under the preceding paragraph shall not be calculated as part of the voting rights
52 -

represented by present shareholders.

Article 5 The venue for a shareholders’ meeting shall be the premises of the Company, or a place easily accessible to shareholders and suitable for a shareholders’ meeting. The meeting may begin no earlier than 9 a.m. and no later than 3 p.m.

Article 6 If a shareholders’ meeting is convened by the Board of Directors, the meeting shall be chaired by the Chairman of Board. When the Chairman is on leave or for any reason unable to exercise the powers of the chairperson, the Chairman shall appoint one of the directors to act as chairperson. Where the Chairman does not make such a designation, the directors shall select from among themselves one person to serve as the chairperson.

When a director serves as the chairperson, as referred to in the preceding paragraph, the director shall be one who has held that position for six months or more and who understands the financial and business conditions of the Company. The same shall apply where the chairperson is a representative of a juristic person director.

If a shareholders’ meeting is convened by a party with power to convene but other than the Board of Directors, the convener shall chair the meeting. When there are two or more such conveners, they shall mutually select a chairperson from among themselves.

Article 7 The Company may appoint its attorneys-at-law, certified public accountants, or related persons retained by it to attend a shareholders’ meeting in a non-voting capacity. Staff handling administrative affairs of a shareholders’ meeting shall wear identification cards or arm badges.

Article 8 The Company, beginning from the time it accepts shareholder attendance registrations, shall make an uninterrupted audio and video recording of the registration procedure, the proceedings of the shareholders’ meeting, and the voting and vote counting procedures.

The recorded materials referred to in the preceding paragraph shall be retained for at least 1 year. If, however, a shareholder initiates a legal action pursuant to Article 189 of the Company Law, the materials shall be retained until the conclusion of the litigation.

Article 9 The chairperson shall call the meeting to order at the appointed meeting time. However, when the present shareholders do not represent a majority of the total number of issued shares, the chairperson may announce a postponement, provided that no more than two such postponements, for a combined total of no more than 1 hour, may be made. If the quorum is not met after two postponements, but the present shareholders represent onethirds or more of the total number of issued shares, a tentative resolution may be adopted pursuant to Paragraph 1 of Article 175 of the Company Law, and all shareholders shall be notified of the tentative resolution and another shareholders’ meeting shall be convened within 1 month. When, prior to conclusion of the meeting, the present shareholders represent a majority of the total number of issued shares, the chairperson may
53 -

resubmit the tentative resolution for a vote by the shareholders’ meeting pursuant to Article 174 of the Company Law.

Article 10 The board shall set the agenda for the meetings which it convenes.Relevant motions (including extraordinary motions and amendments to the original motions) shall be decided on a case-by-case basis.
The meeting shall be carried out based on the agenda, and shall not be changed without the resolution of the shareholders.
The provisions of the preceding paragraph apply mutatis mutandis to a shareholders’ meeting convened by a party with the power to convene other than the Board of Directors.
The chairperson may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extemporary motions), except by a resolution of the shareholders’ meeting.
Article 11 Unless the chair violates the rules of procedures, and the other members of the board promptly assist the attending shareholders in electing a new chair in accordance with statutory procedures, and the agreement of a majority of the votes represented by the attending shareholders continues the meeting, a chair shall not be re-elected to hold a meeting at the original or another new venue.
Article 12 When a meeting is in progress, the chairperson may announce a break based on time considerations.
Before speaking, a present shareholder must specify on a speakers slip the subject of the speech, his/her shareholder account number (or attendance card number), and account name. The order in which shareholders speak will be set by the chairperson.
A shareholder in attendance who has submitted a speakers slip but does not actually speak shall be deemed to have not spoken. When the contents of the speech do not correspond to the subject given on the speakers slip, the spoken contents shall prevail.
When a present shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chairperson and the shareholder who gives the speech. The chairperson shall stop any violation.
Article 13 Except with the consent of the chairperson, a shareholder may not speak more than twice on the same motion, and a single speech may not exceed 5 minutes. If the shareholders speech violates the rules referred to in the preceding paragraph or exceeds the scope of the motion, the chairperson may terminate the speech.
Article 14 When the government or a juristic person is a shareholder, it may be represented by more than one representative at a shareholders’ meeting. When a juristic person is appointed to attend as proxy, it may designate only one person to represent it in the meeting.
When a juristic person shareholder appoints two or more representatives to attend a shareholders’ meeting, only one of the representatives so appointed
54 -

may speak on the same motion.

Article 15 After a present shareholder has spoken, the chairperson may respond in person or direct relevant personnel to respond.
Article 16 A shareholder shall be entitled to one vote for each share held, except when the shares are restricted shares or are deemed non-voting shares under Paragraph 2 of Article 179 of the Company Law.
Shareholders may exercise their voting power in correspondence or by electronic transmission in shareholder meetings, and the exercise method shall be specified in the notice of shareholders meetings. Shareholders exercising voting rights by correspondence or electronic means will be deemed to have attended the meeting in person. However, this is also considered to have waived his/her rights with respect to the extraordinary motions and amendments to original proposals of that meeting.
A shareholder intending to exercise voting rights by correspondence or electronic means under the preceding paragraph shall deliver a written declaration of intent to the Company before 2 days before the date of the shareholders meeting. When duplicate declarations of intent are delivered, the one received earliest shall prevail. Except when a declaration is made to cancel the earlier declaration of intent.
After a shareholder has exercised voting rights by correspondence or electronic means, in the event the shareholder intends to attend the shareholders’ meeting in person, a written declaration of intent to retract the voting rights already exercised under the preceding paragraph shall be made known to the Company, by the same means by which the voting rights were exercised, before 2 business days before the date of the shareholders’ meeting. If the notice of retraction is submitted beyond said-noted time limit, the voting rights already exercised by correspondence or electronic means shall prevail. When a shareholder has exercised voting rights both by correspondence or electronic means and by appointing a proxy to attend a shareholders’ meeting, the voting rights exercised by the proxy in the meeting shall prevail.
With the exception of a trust enterprise or a shareholder services agent approved by the competent securities authority, when one person is concurrently appointed as proxy by two or more shareholders, the voting rights represented by that proxy may not exceed 3 percent of the voting rights represented by the total number of issued shares; otherwise, the voting rights in excess of that percentage shall not be included in the calculation.
Article 17 The chairperson must allow for sufficient time to explain and discuss the various motions, amendments or special motions proposed during the meeting. The chairperson may announce discontinuance of further discussions if the issue in question is considered to have been sufficiently discussed to proceed with the voting and arrange sufficient voting time. Election or dismissal of directors and independent directors, changes in the article of incorporation, capital reduction, application for deregistration of equity shares, director non-competition agreement, capitalization of profits,
55 -

capitalization of surplus, company dissolution, merger, split or the clauses in Paragraph 1, Article 185 of the Company Act shall be listed in the purposes for convening the meeting, not proposed as an extraordinary motion. The content may be posted on websites designated by the securities authority or the Company, and the address shall be clearly stated in the notification.

The notification for the convening of shareholder meeting has announced the re-election of directors and independent directors and the inauguration date. After the re-election at the shareholder meeting, the inauguration date shall not be changed by extraordinary motion or other means in the same meeting.

Shareholders may proposal motions for discussion at shareholders general meetings, which will be processed in accordance with Article 172-1 of the Company Act.

Article 18 Unless otherwise provided in the Company Act and in the Companys articles of incorporation, the passage of a proposal shall require an affirmative vote of a majority of the voting rights represented by the attending shareholders. During the voting process, the chair or the designated personnel announce the total number of the eligible voting rights of the attending shareholders case by case and then carry out the voting. On the same day of the meeting, the number of agree, disagree and abstain are entered into the Market Observation Post System.

When there is an amendment or an alternative to a motion, the chairperson shall present the amended or alternative motion together with the original motion and decide the order in which they will be put to a vote. When any one among them is passed, the other motions will then be deemed rejected, and no further voting shall be required.

The scrutineers and counting personnel for the voting on a motion shall be appointed by the chairperson, provided that the scrutineers shall be shareholders of the Company.

Vote counting for shareholders’ meeting motions or elections shall be conducted in public at the venue where the shareholders’ meeting is held. Immediately after vote counting has been completed, the results of the voting, including the statistical tallies of the numbers of votes, shall be announced on-site at the meeting, and a record made of the vote.

The ballots which meet any of the following circumstances shall be held invalid, and the votes represented by the ballots shall not be included into the calculation:

Failure to use the ballot form prepared by the Company.
Failure to cast the ballot into the ballot box.
The ballot remains blank or fails to express option toward the motion.
The ballot contains other irrelevant text in addition to the particulars to be identified.
The ballot is illegible or tampered;.
The proxy uses the ballot in violation of the “Regulations Governing the
56 -

Use of Proxies for Attendance at Shareholder Meetings of Public Companies”.

The voted issues shall be made into a resolution record signed or stamped by the chair and then distributed to each shareholder within twenty days after the meeting. The production and the distribution of the resolution record can be made electronically.

The distribution of the aforementioned resolutions can be entered into the Market Observation Post System to be publicly announced.

The resolution proceedings shall correctly record the year, month, day, venue, name of the chair, voting method, the essentials of the proceedings and the voting results (including the statistical weights). If there is an election of directors and independent directors, the votes received by each nominee shall also be disclosed. These records are to be kept permanently during the Company s existence.

Article 19 For each shareholders’ meeting, a shareholder may appoint a proxy to attend the meeting by providing the proxy form issued by the Company and stating the scope of the proxys authorization.
A shareholder may issue only one proxy form and appoint only one proxy for any given shareholders’ meeting, and shall deliver the proxy form to the Company before 5 days before the date of the shareholders’ meeting. When duplicate proxy forms are delivered, the one received earliest shall prevail unless a declaration is made to cancel the previous proxy.
After a proxy form has been delivered to the Company, if the shareholder intends to attend the meeting in person or to exercise voting rights by correspondence or electronically, a written notice of proxy cancellation shall be submitted to the Company before 2 business days before the meeting date. If the cancellation notice is submitted beyond said-noted time limit, votes cast at the meeting by the proxy shall prevail.
Article 20 The election of directors and independent directors at a shareholders’ meeting shall be held in accordance with the Company Law, related laws, and the applicable election and appointment rules adopted by the Company, and the voting results shall be announced on site immediately, including the names of those elected as directors and independent directors, and the numbers of votes with which they are elected.
The ballots for the election referred to in the preceding paragraph shall be sealed with the signatures of the scrutineer and kept in proper custody for at least 1 year. If, however, a shareholder initiates a legal action pursuant to Article 189 of the Company Law, the ballots shall be retained until the conclusion of the litigation.
Article 21 The chairperson may direct the proctors (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 arm badge bearing the word "Proctor".
At the place of a shareholders meeting equipped with microphone, if a shareholder attempts to speak through any device other than the equipment
57 -

installed by the Company, the chairperson may prevent the shareholder from so doing.

When a shareholder violates the parliamentary rules and defies the chairpersons correction, obstructing the proceedings and refusing to heed calls to stop, the chairperson may direct the proctors or security personnel to escort the shareholder from the meeting.

Any persons attending the shareholders’ meeting are prohibited from bringing any objects sufficient to endanger another persons life, body, freedom and safety of property with them.

Article 22 If a force majeure event occurs, the chairperson 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 before all of the motions (including extemporary 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 The Rules shall be enforced upon approval of the shareholders’ meeting. The same shall apply where the Rules are amended.
58 -

Appendix 2 Articles of Incorporation

Amendment in the regular session of the Shareholders Assembly dated June 25 2013 Amendment in the regular session of the Shareholders Assembly dated June 29 2016 Amendment in the regular session of the Shareholders Assembly dated June 14 2017

Chapter I General Provision

Article I The Company is duly incorporated in accordance with the Company Act and bears the title of TAIWAN FERTILIZER CORPORATION.
Article II The Company is engaged in the following business:
I. C801010 Basic Industrial Chemical Manufacturing
II. C801020 Petrochemicals Manufacturing
III. C801110 Fertilizer Manufacturing
IV. C801990 Other Chemical Materials Manufacturing
V. C802100 Cosmetics Manufacturing
VI. C802170 Poisonous Chemical Material Manufacturing

VII.

C802990 Other Chemical Products Manufacturing
VIII. CC01060 Wired Communication Equipment and Apparatus Manufacturing
IX. CC01080 Electronic Parts and Components Manufacturing
X. CE01030 Photographic and Optical Equipment Manufacturing XI. F102180 Wholesale of Ethanol

XI.

XII. F107050 Wholesale of Manure
XIII. F107060 Wholesale of Virulence Chemical Substance
XIV. F107080 Wholesale of Environment Medicines
XV. F107200 Wholesale of Chemistry Raw Material
XVI. F107990 Wholesale of Other Chemical Products
XVII. F108040 Wholesale of Cosmetics
XVIII. F113070 Wholesale of Telecom Instruments
XIX. F119010 Wholesale of Electronic Materials

XX. F203030 Retail Sale of Ethanol XXI. F207050 Retail Sale of Manure

59 -

XXII. F207060 Retail Sale of Virulence Chemical Materials XXIII. F207080 Retail Sale of Environment Medicine XXIV. F207200 Retail sale of Chemistry Raw Material XXV. F207990 Retail Sale of Other Chemical Products XXVI. F208040 Retail Sale of Cosmetics XXVII. F212011 Gasoline Stations XXVIII. F212990 Retail Sale of Other Fuel in Specialized Stores, Petrochemical Fuel Product XXIX. F214030 Retail Sale of Motor Vehicle Parts and Supplies XXX. F301010 Department Stores XXXI. F301020 Supermarkets XXXII. F401010 International Trade XXXIII. F501060 Restaurants XXXIV. G202010 Parking Garage Business XXXV. G406061 Harbor Cargoes Forwarding Services XXXVI. G801010 Warehousing and Storage XXXVII. H701010 Residence and Buildings Lease Construction and Development XXXVIII. H701020 Industrial Factory Buildings Lease Construction and Development XXXIX. H701040 Specialized Field Construction and Development XL. H701050 Public Works Construction and Investment XLI. H703010 Factory leasing XLII. H703020 Warehouse leasing XLIII. H703030 Office building leasing XLIV. I301010 Software Design Services XLV. I301020 Data Processing Services XLVI. I301030 Digital Information Supply Services XLVII. I401010 General Advertising Services XLVIII. J101030 Waste Disposing XLIX. J101040 Waste Disposing L. J101060 Wastewater (Sewage) Treatment LI. JA01990 Other Automobile Services. LII. ZZ99999 All business items that are not prohibited or restricted by law, except those that are subject to special

60 -

approval. Article III The total direct investment made by the Company shall not exceed the net worth stated in the audited or reviewed financial statements covering the most recent period but is not regulated by Article 13 of the Company Act that the total direct investment cannot exceed 40% of the paid-in capital, where the total direct investment in other industries shall not exceed 100% of the paid-in capital.

Article IV The Company is headquartered in Taipei, and may establish branches at appropriate locations at home and abroad for business needs. The establishment, changes, and dismantle of these branches shall be subject to the resolution of the Board. Article V The Company may make announcement by publishing on eyecatching page of a daily newspaper circulated in the place where the corporate headquarters is located. Unless otherwise required by the competent authority of securities.

Chapter II Shares of Stock

Article VI The Company has authorized capital of NT$9.8 billion evenly split into 980 million shares at NT$10/share and issued in full.
Article VII The Company is exempted in printing physical share certificates for the shares offered and shall register with the central depository of securities.
Article VIII Change in the content of the Shareholders Registry is prohibited in the period of sixty (60) days prior to a scheduled regular session of the Shareholders’ Assembly and thirty (30) days prior to a scheduled special session of the Shareholders’ Assembly, and five (5) days prior to a dividend day or any other day of payment.
Chapter III Shareholders Assembly
Article IX The Shareholders Assembly consists of regular sessions and special sessions A regular session will be convened at the call of the Board once annually within six (6) months after the end of a fiscal year. Unless the Company Act specifies otherwise, special session may be convened at any time to the call of the Board or Independent Directors under law. Shareholders of the Company holding 3% or more of the outstanding shares for more than one (1) year may also call for special session under law by specifying the agenda and the reason for the session.
61 -

Article X

  - Thirty (30) days of notice to the shareholders is required for calling a regular session and fifteen (15) days of notice to the shareholders is required for calling a special session. Information on the date, time, and place shall be inscribed in the notice of meeting. Shareholders holding less than 1,000 shares may be notified to regular session of Shareholders Assembly through announcement thirty (30) days in advance, and to special session of Shareholders’ Assembly fifteen (15) days in advance.

Article XI Where particular shareholder may not be able to attend the session in person, and may use the power of attorney document printed by the Company to appoint a proxy to attend the meeting and specify the scope of authorization, affix the authorized signature or seal thereunto for causing the instrument to become effective.
- The competent authority requires that shareholders of the Company may vote through electronic means. Those who cast votes electronically shall be deemed as being present in the session. Other matters shall be governed by applicable legal rules.
Article XII Shareholders Assembly shall make decisions in a session with the presence of shareholders representing more than half of the outstanding shares and the consent by a simple majority of the shareholders in the session unless the Company Act or other applicable laws specified otherwise.
Article XIII The Board shall call for the sessions of the Shareholders Assembly and the Chairman of the Board shall preside over the sessions. In the absence of the Chairman, a Director designated by the Chairman shall preside over the meeting on behalf of the Chairman, or, a Director shall be nominated among one another to preside over the meeting.
- To be eligible for acting on behalf of and in the name of the Chairman in presiding over the sessions of the Shareholders Assembly, Director must be in office for at least six (6) months and is familiar with the financial position and operation of the Company. The same principle is applicable to institutional directors.

If the session of the Shareholders Assembly is called for by an entitled party other than the Board, such party shall preside over the session. If there are two entitled parties to call for the session, one of

62 -

them shall be nominated as the Chairman of the session between themselves.

Article XIV The holder of each share is entitled to 1 vote.

Article XV The resolutions of the Shareholders Assembly shall be kept as minutes of meeting on record with the date, venue, name of the Chairman, means of resolution, the summary of the motions and the results of the voting, with the signature of the Chairman affixed, and released to the shareholders within twenty (20) days after the session. The release of the aforementioned minutes of meeting on record may be made by announcement.

Chapter IV Directors and Audit Committee Article XVI The Company established nine (9) seats of Directors who shall be elected from persons with legal competence by the Shareholders Assembly. Each Director has tenure of three (3) years and may assume a second term of office if reelected. Independent Directors may not assume office for a term of longer than nine (9) years. The total quantity of registered shares held all Directors of the Company is governed by the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies”.

The Company shall take professional liability insurance for the protection of the Directors and Independent Directors within their term of office and the scope of their professed duties.

Article XVI – I

Three seats of Directors as mentioned in I of the previous article shall be reserved for the Independent Directors.

Directors and Independent Directors shall be elected by a nomination system whereby shareholders shall elect the candidates on the list of nomination at one time. Candidates who earned the majority votes shall be elected to office.

The professional qualification, quantity of shareholding, restriction in holding other positions, the means of nomination and election, and other rules and regulations shall be governed by applicable legal rules of the competent authority.

Article XVI - II

The Company establishes an audit committee which shall be

63 -

composed of the entire number of independent directors. One of them shall be the convener, and at least one of them shall have accounting or financial expertise. The audit committees duties, organizational regulations, exercise of power and other compliance issues are governed by relevant laws of the securities authority.

Article XVI- III

The Company established the Compensation Committee in accordance with Article 14-6 of the Securities and Exchange Act. The Compensation Committee or members of the Compensation Committee shall perform their duties and exercise their authority in accordance with the “Regulations Governing the Appointment and Exercise of Powers by Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter”.

Article XVII The Directors shall be organized into the Board of Directors (the Board) and a Chairman shall be elected among themselves. The Chairman acts on behalf of and in the name of the Company externally, and presides over the sessions of the Shareholders Assembly and the Board; administer all matters of the Company in accordance with the policy set forth by the Board.
Article XVIII The functions of the Board:
I. Approval of the business and financial policies.
II. Approval of the business plan and supervision of the execution of the plan.
III. Approval of budget and account settlement.
IV. Planning of capitalization and decapitalization.
V. Approval of the issuance of corporate bonds.
VI. Planning for the distribution of earnings or write-off loss
VII. Acquisition, assignment, licensing of important contracts and essential specialized technologies and patents, and the approval, amendment and termination of technology joint ventures agreements.
VIII. Planning for the amendment to the Articles of Incorporation of the Company.
IX. Approval of the organization code of the Board and the Company, and important internal rules and regulations.
64 -
X. Discussion and decision of the establishment, change, and dismantle of branches.
XI. The appointment and dismissal of the President and Vice Presidents of the Company.
XII. Appointment and dismissal of the external auditor.
XIII. Acting on behalf of and in the name of the Company in setting the limit of endorsement, guarantee, and acceptance.
XIV. Approval of singificant transactions among related parties (including affiliates).
XV. Calling for sessions of Shareholders Assembly.
XVI. Authority and duties provided by law and the resolutions of the Shareholders Assembly.
Article XIX. In principle, board meetings are held once a month. In case of emergencies or at the request of more than half of the directors, extraordinary meetings may be convened at any time. The chairman should chair the meeting convened by him/her. The chairman is to appoint a director to chair the meeting on his/her behalf if the chairman takes the day off or for any reason cannot exercise the power. In the event that the chairman does not appoint anyone, the directors are to recommend one person among themselves.
- In accordance with Paragraph 4 of Article 203 or Paragraph 3 of Article 203-1 of the Company Act, if the board meeting is convened by directors who receive a majority votes at the shareholders meeting, the directors shall elect one person to be the chairperson of the board meeting.
- If a director cannot attend the board meeting in person, he or she may entrust other directors to attend the meeting.
Article XX. The Board shall make resolutions of the Board in a session with the presence of at least half of the Directors and a simple majority of the Directors in session unless the Company Act or other applicable laws specified for a higher ratio of votes. The minutes of meeting on record shall be affixed with the authorized signature/seal of the Chairman and the rules specified in Article XV of this Chapter shall be applicable.
Article XXI. The remuneration to the Chairman shall be based on 1.25% of the remuneration to the President. The remunerations to other Directors
65 -

and Independent Directors shall not exceed the highest bracket of the salary scale for the employees of the Company.

Chapter V The Managers

Article XXII. The Company shall establish the seat for a President who will follow the policy direction set forth by the Board and the instruction of the Chairman to administer all operations and supervise all employees of the Company. The Company shall establish 2 to 4 seats of Vice President who will assist the President in business operation.
The appointment, dismissal and remunerations to the aforementioned managers shall be governed by Article XXIX of the Company Act. Chapter VI Accounting
Article XXIII. The fiscal period of the Company starts on January 1 and ends on December 31 of each calendar year. Account settlement shall be made at the end of each fiscal year.
Article XXIV. The Company shall compile the following statements at the end of each fiscal year, refer to certified public accountants for auditing, and submit to the Audit Committee thirty (30) days prior to the scheduled date of the regular session of the Shareholders Assembly for ratification.
I. Business Report
II. Financial Statement
III. Proposal for the Distributions of Earnings or Write-Off loss carried forward
Article XXV. If the Company has a surplus in particular fiscal year, appropriates 2.4% as remuneration to the employees and no more than 1.6% as remunerations to the Directors with reference to the actual profit status. If there is loss carried forward, the Company shall appropriate specific amount to write-off the loss from its earnings.
The aforementioned remunerations to the employees and Directors shall be subject to the resolution of the Board in a session with the presence of at least 2/3 of the Directors and a simple majority of the Directors in session, and reported to the Shareholders Assembly.
If there is a surplus after account settlement in a fiscal year, the Company shall appropriate the payment of income tax, followed by the write-off of loss carried forward. If there is still a surplus, the Company shall appropriate 10% as legal reserve, and pool the
66 -

remainder after the appropriation or reversal of special reserve to the undistributed earnings carried forward from the previous year as distributable income. Pending the necessity of the appropriation of retained earnings for business needs or special reserve, the Board shall propose for the distribution of income and present to the regular session of the Shareholders Assembly for the resolution of dividend payment.

A number of factors shall be considered when paying out dividends to shareholders, including the diversity of the business operation and the specific feature of economic change, the life span of products or services, and the cash requirement in the future with proper balance between business development and the rights and interests of the shareholders. The proportion of cash dividend payable to shareholders of the year shall not fall below 10% of the total amount of dividend payment unless there is a major investment program, significant change in financial position, significant change in operation, capacity expansion, or other significant capital spending that huge amount of capital is required. The payment of dividends shall be subject to the approval of the Shareholders Assembly.

Chapter VII Miscellaneous
Article XXVI. The Company may establish its “Procedures for Financing and Endorsement” in accordance with the “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” for business needs and undertakes guarantee in favor of third parties.
Article XXVII. Anything not covered by the Article of Incorporation” shall be governed by the Company Act and other applicable legal rules.
Article XXVIII. The internal code of the Company and related procedures shall be separately instituted.
Article XXIX. The Articles of Incorporation were adopted at the founding meeting on June 4, 1947. Amended at the general meeting on September 1, 1952. Amended at the extraordinary general meeting on June 19, 1953. Amended at the general meeting on April 5, 1954. Amended at the general meeting on March 31, 1955. Amended at the general meeting on April 25, 1958. Amended at the extraordinary general meeting on November 15, 1958. Amended at the general meeting on
67 -

May 14, 1959. Amended at the 1st extraordinary general meeting on May 10, 1960. Amended at the 2nd extraordinary general meeting on October 21, 1960. Amended at the general meeting on April 29, 1961. Amended at the general meeting on March 18, 1963. Amended at the general meeting on March 22, 1964. Amended at the general meeting on March 31, 1965. Amended at the general meeting on August 16, 1967. Amended at the general meeting on August 20, 1969. Amended at the general meeting on September 15, 1970. Amended at the general meeting on October 6, 1972. Amended at the general meeting on March 2, 1974. Amended at the general meeting on July 24, 1976. Amended at the general meeting on May 14, 1982. Amended at the general meeting on May 20, 1983. Amended at the general meeting on May 23, 1986. Amended at the general meeting on May 22, 1987. Amended at the 1st extraordinary general meeting on November 30, 1987. Amended at the general meeting on September 27, 1990. Amended at the general meeting on September 21, 1991. Amended at the general meeting on September 17, 1993. Amended at the general meeting on September 29, 1994. Amended at the 1st extraordinary general meeting on May 20, 1995. Amended at the general meeting on September 30, 1995. Amended at the general meeting on September 30, 1996. Amended at the general meeting on September 27, 1997. Amended at the general meeting on November 10, 1999. Amended at the 1st extraordinary general meeting on May 16, 2000. Amended at the general meeting on June 26, 2001. Amended at the general meeting on June 21, 2002. Amended at the general meeting on June 23, 2003. Amended at the general meeting on June 25, 2004. Amended at the general meeting on June 24, 2005. Amended at the general meeting on June 14, 2006. Amended at the general meeting on June 13, 2007. Amended at the general meeting on June 16, 2009. Amended at the general meeting on June 17, 2010. Amended at the general meeting on June 22, 2011. Amended at the general meeting on June 27, 2012. Amended at the general meeting on June 25, 2013. Amended at the general meeting on June 24, 2014. Amended at the general meeting on June 29, 2016. Amended at the general meeting on June 14, 2017. Amended at the general meeting on June 22, 2020.

68 -

Appendix 3 The Procedures for Electing Directors and Independent

Directors of Taiwan Fertilizer Co., Ltd.

Amended at the General Shareholders’ Meeting on October 30, 1998 Amended at the General Shareholders’ Meeting on June 21, 2002 Amended at the General Shareholders’ Meeting on June 23, 2003 Amended at the General Shareholders’ Meeting on June 24, 2014 Amended at the General Shareholders’ Meeting on June 14, 2017

Article 1. Except as otherwise provided by the Company Act or other laws, the election of Directors and Independent Directors shall be conducted in accordance with the Rules.
Article 2. The election of the Company’s Directors and Independent Directors shall adopt the candidate nomination system under Article 192-1 of the Company Act. The Shareholders shall elect the Directors and Independent Directors from among the nominees listed in the roster of director candidates based on the quota defined under the Company’s Articles of Incorporation.
The number of the Company’s Directors and Independent Directors shall be subject to the quota referred to in the Company’s Articles of Incorporation. Based on the statistic results of electronic communication platforms and ballots, those receiving ballots representing the highest numbers of voting rights will be elected as Directors and Independent Directors sequentially according to their respective numbers of votes. The votes for Directors and Independent Directors shall be calculated separately, and the Directors and Independent Directors shall be elected separately. When two or more persons receive the same number of votes, thus exceeding the specified number of positions, they shall draw lots to determine the winner, and the Chairperson shall draw lots on behalf of any person not in attendance.
Article 2-1. Election and qualifications of the Company’s Independent Directors shall comply with the “Regulations Governing Appointment of Independent Directors and Compliance Matters for Public Companies” and related laws.
Article 3. The single open cumulative voting method shall be used for election of the Company’s Directors and Independent Directors. Each share will have the
69 -

vote in number equal to the Directors and Independent Directors to be elected, and may be cast for a single candidate, or split among multiple candidates, provided that the total of votes shall not exceed the total voting rights.

Article 4. Where any Shareholder appoints a proxy to cast votes on behalf of him/her, except for trust enterprises, or shareholders service agents approved by the competent authority, when a person acts as the proxy for two or more shareholders, the number of voting right represented by him/her shall not exceed 3% of the total number of voting shares of the Company, otherwise, the portion of excessive voting rights shall not be counted.
Article 5. The ballots shall be prepared by the Board of Directors per the attendance card number and affixed with the number of voting rights associated with each ballot. Each of the present Shareholders at the Shareholders’ Meeting shall be given one ballot. The voters shall identify the candidate’s name and Shareholder account number in the “Candidate” section of the ballot. If a candidate is a Shareholder, the voter shall specify the candidates name and ID No., provided that when the candidate is a governmental organization or juristic person, the name of the governmental organization or juristic person or the name of the representative of the governmental organization or juristic person shall be specified. When there are multiple representatives, the names of each respective representative shall be specified.
Article 6. The Chairperson shall designate two voting supervisors from the present Shareholders prior to the election.
Article 7. The ballots which meet any of the following circumstances shall be held invalid, and the votes represented by the ballots shall not be included in the calculation of votes for the given candidate:
Failure to complete the registration procedure;
Failure to use the ballot form prepared by the Company’s Board of Directors;
The ballot is so illegible that it cannot be read;
The number of candidates specified on the ballot exceeds the quota;
The total of votes for various candidates exceed the total voting rights;
The ballot is tampered with or contains other irrelevant text in addition to the particulars to be identified;
Failure to cast the ballot into the ballot box, or the cast ballot remains
70 -

blank;

Failure to specify the information about the candidate as identified in accordance with Article 5 herein, or the information is inconsistent upon verification.
Article 8. Cast votes shall be calculated by the voting supervisors on site immediately after the end of the poll, and the results of the calculation shall be announced by the Chairperson on the site.
Article 9. The Company shall issue the notifications to the Directors and Independent Directors elected separately.
Article 10. Any matters not covered herein shall be implemented in accordance with the Company’s Articles of Incorporation, Company Act and other related laws.
Article 11. The Rules shall be enforced upon approval of a Shareholders’ Meeting. The same shall apply where the Rules are amended. Deletion of the provisions about Supervisors referred to herein shall be effective as of the date when the Audit Committee is established.
71 -

Appendix 4 Code of Ethical Conduct for the Company's Directors and the Highest-level Executives and above of Taiwan Fertilizer Co.,

Ltd.

Instituted by the 29th session of the 30th Board of Directors on March 24 2009 Instituted by the 31th session of the 33th Board of Directors on March 29 2018

Chapter I General Provision

Article I In order to provide the Companys directors and 1st -level executive officer and above (including president, executive vice president, vice president, assistant vice president, and 1st-level executive officer and deputy supervisors of each unit) with guidelines for their conduct and ethics when they engage in business activities for the Company and to enable the Companys stakeholders to better understand the Companys code of ethics, the Code is established accordingly.

Chapter II Ethic Code of Conduct

Article II Honesty and ethical conduct: The directors and 1st-level executive officer and above shall deal with the Companys affairs by upholding the principles focusing on maintenance of the Companys interest, honesty, ethics, observance of laws and regulations, fairness, and compliance with ethics, and be prohibited from engaging in such unethical conduct as deception, fabrication, breach of trust and fraud, etc.
Article III The directors and 1st-level executive officer and above shall avoid the conflicts of interest arising when personal interest intervenes or is likely to intervene in the overall interest of the Company, as for example when they are unable to perform their duties in an objective and efficient manner, or when they take advantage of their positions in the Company to obtain improper benefits for either themselves or their spouses, parents, children, or relatives within the third degree of kinship. In order to prevent the conflict of interest, the loans of funds, provisions of guarantees, and major asset transactions between the Company and said persons or the affiliates in which they work for shall be subject to review and approval by the Board of Directors. The relevant purchase (sale) shall be handled by taking into consideration the Company’s maximum interest.
72 -
Article IV When the Company has an opportunity for profit, it is the responsibility of the directors, 1st-level executive officer and above to maximize the reasonable and proper benefits that can be obtained by the Company.
The directors, 1st-level executive officer and above shall not seek an opportunity to pursue personal gain, or earn personal gain, by using the Company’s property or information or taking advantage of their positions, and shall not engage in any activities competing with the Company, unless it is required by the Company Law or the Company’s Articles of Incorporation.
Article V Confidentiality:
The directors and 1st-level executive officers and above shall be bound by the obligation to maintain the confidentiality of any information regarding the Company itself or its suppliers and customers, except when authorized or required by laws to disclose such information. The confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Company or the customers.
Article VI Fair trade:
The directors and 1st-level executive officers and above shall treat all of the Companys suppliers and customers, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, misconduct, or abuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.
Article VII Protection and fair use of the Company’s assets:
The directors and 1st-level executive officers and above have the responsibility to protect the Company’s assets and to ensure that they can be effectively and lawfully used for official business purposes to prevent the Companys assets from any theft, neglig ence in care, benefit to others, or waste of the assets that will all directly impact the Companys profitability.

Article VIII Legal compliance:

The directors and 1st-level executive officers and above shall comply with the Securities and Exchange Act, other applicable laws and regulations, and the Companys regulations.
Article IX Encouraging reporting on misconduct or any conduct against the Code of Ethical Conduct:
73 -

The Companys employees shall report to the Audit Committee, mangers, internal auditor officers, or other competent persons any misconduct or conduct against the Code of Ethical Conduct committed by any director or 1st-level executive officer and above, upon awareness of the same. Once the reported case is proven true, the Company will reward them pursuant to the relevant requirements.

The Company shall process the reported information as confidential information, and shall make every endeavor to keep in confidence the informants’ identity and protect their safety to prevent them from retaliation and threat in any form.
Article X Disciplinary measures:
When the directors or 1st-level executive officers and above violate the Code of Ethical Conduct, the Company shall verify the truth and report the same to the Board of Directors. The violator shall bear the relevant civil and criminal liabilities, and be disciplined according to the relevant requirements, in the case of 1st-level executive officers and above. The Company shall also without delay disclose on the Market Observation Post System (MOPS) the violator’s job title, name, date of violation, reasons for the violation, the provisions of the Code violated, and the disciplinary actions taken. The violator may seek remedies under the relevant appeal system established by the Company.

Chapter III Procedure for waiver

Article XI Any exemption of directors or 1st-level executive officers and above from compliance with the Code shall be approved upon resolution by the Board of Directors, and the information on the exempted persons job tit le and name, the date on which the Board of Directors adopted the resolution for exemption, period and cause of exemption, and standards applicable to the exemption shall be disclosed without delay on the MOPS, so that the shareholders may evaluate the appropriateness of the resolution and maintain the Companys interest and right.

Chapter IV Means of Disclosures

Article XII This Ethic Code of Conduct shall be disclosed in the annual report and prospectus of the Company, and the MOPS. The same procedures shall be applicable to any amendment thereto.
74 -

Chapter V Miscellaneous

Article XIII The Code shall be enforced upon approval of the Board of Directors and reported to a shareholders’ meeting. The same shall apply where the Rules are amended. The deletion of provisions about supervisors referred to herein shall become effective as of the date when the Audit Committee is established.

75 -

Appendix 5 Shareholdings by Directors (including Independent Directors) of Taiwan Fertilizer Co., Ltd.

The total number of shares issued by the Company is 980,000,000. In accordance with the “Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies” and the Company’s Articles of Incorporation, the total number of shares owned by all directors shall not be fewer than 31,360,000.
The Company has established an Audit Committee. The statutory requirement on the minimum number of shares to be owned by the supervisor(s), therefore, is not applicable to the Company.
According to the shareholder register as at May 1, 2021, the book closure date for the annual general shareholders’ meeting, the number of shares owned by the individual directors (independent directors) and all directors (all independent directors) are respectively as follows:

Position	Name	Number of Shares (units)	Ratio of Share Ownership
Chairman	Council of Agriculture, Executive Yuan Representative: Yao-HsingHuang	235,886,376	24.07%
Director	Council of Agriculture, Executive Yuan Representative: Jong-I Hu
Director	Council of Agriculture, Executive Yuan Representative: Mei-LingFan
Director	Council of Agriculture, Executive Yuan Representative: Chao-fengLi
Director	Council of Agriculture, Executive Yuan Representative: Uang-ShyangSun
Director	YawkuangChen	75,000	0.01%
Independent Director	Horngchang Lin	0	-
Independent Director	Mingshiuan Lee	0	-
Independent Director	Chaochin Hsiao	0	-
Number of shares owned byall directors		235,961,376	24.08%

76 -

Appendix 6

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

77 -

AI assistant

TFC — AGM Information 2021

51902_rns_2021-08-13_3ecb806d-9fe6-44f9-9a3b-d2f9f198f1af.pdf

TAIWAN FERTILIZER CO., LTD.

2021 General Shareholders’ Meeting Meeting Handbook

Table of Contents

TAIWAN FERTILIZER CO., LTD. 2021 General Shareholders’ Meeting Agenda

Report No. 1

Description

Business Report

1. Foreword:

2. Overview of Business:

(I) Production and marketing :

(II) Operating revenue and profit:

1. Parent-only financial statement

(III) Financial structure:

1. Parent-only financial statement

(IV) Investment plan:

III. Outlook

Report No. 2

Audit Report of the Audit Committee

Report No. 3

Report No. 4

Description

Code of Ethical Conduct for the Companys Directors and the - Highest level Executives and above of Taiwan Fertilizer Co., Ltd.

Ratification No. 1

Description

TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Financial Statements

Table of contents

Representation Letter

Independent Auditors ’ Report

Opinion

Basis for Opinion

Key Audit Matters

Key audit matters:

How the matter was addressed in our audit:

Other Matter

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

Auditors ’ Responsibilities for the Audit of the Consolidated Financial Statements

KPMG

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars , Except for Earnings Per Common Share)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (CONT ’ D)

For the years ended December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

TAIWAN FERTILIZER CO., LTD.

Table of contents

Independent Auditors ’ Report

Opinion

Basis for Opinion

Key Audit Matters

Key audit matters:

How the matter was addressed in our audit:

Other Matter

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

Auditors ’ Responsibilities for the Audit of the Financial Statements

Notes to Readers

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Balance Sheets

December 31, 2020 and 2019

(Expressed in Thousands of New Taiwan Dollars)

(English Translation of Parent Company Only Financial Statements Originally Issued in Chinese) TAIWAN FERTILIZER CO., LTD.

Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

TFC AGM Information 2021