S t o c k C o d e ２６１７

TAIWAN NAVIGATION CO., LTD.

Handbook for the 2020 Annual Shareholders’ Meeting

Time: June 18, 2020 Place:4F, NO.2-1, Sec.1, Chi-nan Rd.,Taipei.Taiwan (University Alumni Club)

Meeting Procedure ............................................................................................................... 1 Meeting Agenda ................................................................................................................... 3 Reports .................................................................................................................................. 5 Recognitions ........................................................................................................................ 7 Discussions ............................................................................................................................ 9 Questions and Motions ...................................................................................................... 12 Attachments ........................................................................................................................ 13 (1) 2019 Business Report ............................................................................................... 14 (2) The 2019 audit committee’s audit report ............................................................... 20 (3) Independent Auditors’ Report and 2019 Consolidated Financial Statements ...... 21 Independent Auditors’ Report and 2019 Individual Entity Financial Statements .. 31 (4) Comparison Table for the Operational Procedures for Endorsements and Guarantees Before and After Amendment…………………………………………………………..41 (5) Comparison Table for the Operational Procedures for Loaning of Company Funds Before and After Amendment ................................................................................ 43 Appendices .......................................................................................................................... 45 (1) Rules of Procedure for Shareholders’ Meeting ....................................................... 46 (2) Articles of Incorporation .......................................................................................... 49 (3) Operational Procedures for Endorsements and Guarantees .................................. 55 (4) Operational Procedures for Loaning of Company Funds ....................................... 62 (5) Shareholdings of All Directors ................................................................................ 71

Meeting Procedure

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Taiwan Navigation Company Limited Meeting Procedure of the 2020Annual Shareholders’ Meeting

1. Call the meeting to order

2. Chairman remarks

3. Reports

4. Recognitions

5. Discussions

6. Questions and Motions

7. Adjourn

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Meeting Agenda

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Taiwan Navigation Co., Ltd. Meeting Agenda of the 2020 Annual Shareholders’ Meeting

Time: 9:00 am, June 18 (Thu.) 2020

Place: 4F, NO.2-1, Sec.1, Chi-nan Rd.,Taipei.Taiwan

(University Alumni Club)

1. Call the meeting to order

2. Chairman remarks

3. Reports

(1) To report the 2019 business.
(2) The 2019 audit committee’s audit report.
(3) The 2019 directors and employees' remuneration.

4. Recognitions

(1) The 2019 business report and financial statements.
(2) The proposal for distribution of 2019 profits .

5. Discussions

(1) Amendment to the "Operational Procedures for Endorsements and Guarantees " .
(2) Amendment to the "Operational Procedures for Loaning of Company Funds" .
(3) The proposal to release the prohibition on current juristic-person directors from participation in competition business.

6. Questions and Motions

7. Adjournment

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Reports

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Rreports

1. To report the 2019 business

The 2019 Business Report is attached as Attachment 1(P14-19).

2. The 2019 audit committee’s audit report

The 2019 Audit Committee review Report is attached as Attachment 2(P20).

3. The 2019 directors and employees' remuneration

Board proposed to allocate 1% of the profit befor income tax,which is NT$7,815,260 , as

the remuneration of directors . The allocation of the remuneration of employee is the same as direetors . The aforesaid items will be paid in cash.

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Recognitions

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Recognitions

Case 1 Proposed by the Board

Subject: The 2019 business report and financial statements .

Explanation: The 2019 consolidated and individual financial statements have been duly audited

by CPA Ms. Hui-Min Huang and CPA Ms. Shu-Cnuan Yeh of Deloitte & Touche and an unmodified opinion was issued. The 2019 business Report, Financial Statements (consolidated and individual) and Independent Auditors’ report are attached as Attachment 1 (P14-19) and Attachment 3 (P21-40).

Resolution:

Case 2 Proposed by the Board

Subject: The proposal for distribution of 2019 profits .

Explanation: 2019 net profit after tax is NTD601,095,541,please refer to the 2019 Profit Distribution Table as follows:

Taiwan Navigation Co., Ltd.

Profit Distribution Table 2019

2019
	In NT$
Item	Amount
Unappropriated retained earnings of previous year Add:2019 net profit after tax Less: Remeasurement of defined benefit Less: Investment adjusted retained earnings by using equity method Current period net profit plus other profit items Undistributed earnings in the current year Less: 10% legal reserve Less: Special reserve in accordance with the laws and regulations Retained Earnings available for distribution Distribution Item: Cash dividend NT$0.80 per share Unappropriated Retained Earnings at the end of 2019	3,609,818,919 601,095,541 (868,888) (648)
	600,226,005 (60,022,601) (236,506,844)
	3,913,515,479 (333,835,589)
	3,579,679,890

Note1: The earnings distribution was priority distributed the profit of 2019.

Note2: The cash dividends are pro rata and rounded down to the nearest whole dollar with any amount less than NT$1 being forfeited. Less than a dollar fractional totals are adjusted in order from large to small decimal points and shareholders numbers are ordered from first to last to meet the distribution of the cash dividend total. Once resolved at annual shareholders’ meeting, the Chairman is authorized to set the ex-dividend date and to handle the dividend distribution matters accordingly.

Resolution:

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Discussions

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Discussions

Case 1 Proposed by the Board

Subject: Amendment to the "Operational Procedures for Endorsements and Guarantees " Explanation:

Due to the needs arising from the new-bulit vessels and bank loans of TAI SHING MARITIME CO., S. A. ,and to comply with the amendment of “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” , TNC will amend partial provisions of Operational Procedures for Endorsements and Guarantees.
The comparision table for the Operational Procedures for Endorsements and Guarantees before and after amendment and all the provisions before the amendment are attached as Attachment 4 (P41-42) and Appendix 3 (P55-61).

Resolution:

Case 2 Proposed by the Board

Subject: Amendment to the "Operational Procedures for Loaning of Company Funds" Explanation:

(1)In order to comply with amendments of “Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies” and “Paragraph 1 of Article 15 of the company Act “, TNC will amend partial provisions of Operational Procedures for Loaning of Company Funds.
(2)The comparision table for the Operational Procedures for Loaning of Company Funds before and after amendment and all the provisions before the amendment are attached as Attachment 5 (P43-44) and Appendix 4 (P62-70).

Resolution:

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Case 3 Proposed by the Board

Subject: The proposal to release the prohibition on current juristic-person directors from participation in competition business.

Explanation:

1.In accordance with Article 209 of the Company Act: “A director who does anthing for himself or on behalf of another person that is within the scope of the company’s business, shall explain to the shareholders’ meeting the essential contents of such an act and secure its approval.
If current directors have the aforesaid behavior, please submit to the Shareholder’s Meeting for the approval.

Meeting for the approval.	Meeting for the approval.
List of releasing current Directors and their representatives from the competition restriction
name	Service as positions in other companies with the same scope of the company’s business
Representative of Chinese Maritime Transport Ltd. : James Tarng	VP, Shipping Division of Chinese Maritime Transport Ltd.
Representative of Yunn Wang Investment Co., Ltd. : Ho,Hsiu-Chi	Chief Financial Officer and Senior Vice President of Yang Ming Marine Transport Corp. Directors of Yang Ming Line Holding Co. Directors of Yang Ming Line (Singapore) Pte Ltd Directors of Yang Ming Line (B.V.I.) Holding Co., Ltd. Directors of Yang Ming Line N.V. Directors of Yang Ming Line B.V. Directors of Taiwan Foundation International Pte. Ltd. Supervisor of Huan Ming (Shanghai) International Shipping Agency Co., Ltd

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Questions and Motions

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Attachments

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Attachment 1

2019 Business Report

1.The Operation Policy

The policy of our Company’s operation is to make profit for shareholders by maintaining a high quality of fleet based on both the shipping expertise/experience and the strengthened ship management. In business spectrum, there are fifteen owned bulk carriers, incl. supramax and panamax type, trading around the world for carrying solid bulk cargo, one roro ferry sailing between Kaohsiung and Makung, and four tugboats assisting vessels in Taichung harbor. In addition, a container ship is chartered in to provide liner service between Taiwan Strait, and CPC Taiwan’s tankers and tugboats are under our management.

2. The overview of operation

There were 34 vessels in TNC’s operation fleet in 2019, including 23 owned, 1 charted-in, and 10 of them are operating for CPC Taiwan. To have a younger fleet and keep competitive, we disposed of 2 bulk carriers whose age were over 25 years. Moreover, we placed an order for a Kamsarmax bulker of eighty-thousand deadweight at Japanese shipyard, Namura Shipbuilding Co., Ltd., in the end of 2019. So far 7 bulk carriers are under construction and scheduled to be delivered successively in 2021 and 2022. The operation of our bulk carriers is mainly on time Charter.

In 2019 the tonnage growth of the bulker worldwide hit a new high in 6 years by 4%. The reasons behind that were the higher deliveries than last 2 years and the low willingness of Owners to scrap old ships due to the steady freight rate. (The annual ship scraping volume in terms of deadweight is 7 million MT, which is at a relatively low level over the past decades.) As the largest raw material importer in the world, China’s economic trend affect the freight market in bulk shipping. The catastrophic tailings dam failure of Vale S.A., Brazilian iron ore producer, in late January 2019 made its export volume at a six-year low, resulting in iron ore prices reaching the highest level after 2014. The long-haul voyage of shipping iron ore from Brazil to China along with the reduced export amount reins in the tonnage demand apparently, leading the freight rate to nosedive in the first half of last year. Fortunately, the production recovered gradually latter on, along with the import of coal growing over 70% in China and India, sustained the freight rate last year.

With regard to liner service, we maintain only one cross strait liner service because of tonnge oversupply as well as the reshuffle of supply chain caused by the U.S.-China trade

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war. As for ship management, we operate 5 YUN AN tugs and 5 tankers for CPC Taiwan.

3.Performance of Operation Plan

In 2019, Our consolidated operating revenue was NT$3,113,990 thousand, a decrease of 7.5 percent compared to NT$3,367,236 thousand in 2018. Consolidated income before income tax was NT$765,896 thousand, a decrease of 22.5 percent compared to NT$988,635 thousand in 2018.

4. Execution of Operating Revenue and Expenditure Budgets

(1) Operating Revenue

The consolidated operating revenue of 2019 was NT$3,113,990 thousand, a decrease of NT$253,246 thousand compared to NT$3,367,236 thousand in 2018, mainly due to the disposal of five old bulk carriers since the middle of 2018 and suspend TC2 container liner service since the fourth quarter of 2018.

(2) Operating Costs and Expenses

The consolidated operating costs and operating expenses of 2019 was NT$2,510,191 thousand, a decrease of NT$141,637 thousand compared to NT$2,651,828 thousand in 2018, mainly due to the disposal of five old bulk carriers since the middle of 2018 and suspend TC2 container liner service since the fourth quarter of 2018.

5.Analysis of Profitability

2019 Combined financial ratios of the Company were:

Return on Asset: 4.47% Return on Equity: 5.82% Net profit rate: 19.30%

Earnings per share (after tax): 1.44

6.Situation of Research and Development

The Environmental protection concept and goal of our company are energy-saving and carbon, air and marine pollution reduction. Except that we have installed the Ballast Water Management System for two existing ships along with corresponding arrangement in 2019, two of our old ladies, M.V. “Tai Health” and M.V. “Tai Happiness” were sold considering their age and performance.

In September of 2017, we ordered two eco-newbuilding vessels from Oshima shipyard in Japan. Besides, in order to increase the fleet utilization of fuel efficiency and energy saving, we have signed the newbuilding contracts for two more vessels with Oshima shipyard and other three vessels with Namura Shipbuilding in 2019. Totally, there are five new bulk carriers to be delivered. The Diesel engines of two vessels are adopted to International Air

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Pollution Convention in MARPOL NOx emission Tier Ⅲ . In view of energy-saving, carbon and air pollution reduction, we are continuously making effort in environmental protection.

7. The analysis of industry

The industry side: Our revenue is mainly contributed by owned bulk carriers, including Panamax and Supramax. When reviewing the trend of dry bulk shipping industry for last year, it’s the most volitale in past five year. The iron ore accounts for around 27.5% of global dry bulk cargo. The Vale’s tailings dam in Brazil accidentally collapsed in the end of January, 2019, which results in gradual decrease in export since February, 2019. It reached the lowest volume in April, 2019 and slowly recovered in July, 2019. The iron ore export in the past year was also the lowest within last six years. The decrease in demand of mile-tonnage brought down cargo freight in the first half of 2019, and then the export of iron ore from Brazil and Australia went up sharply in the second half of the year. The cargo freight was therefore driven by increasing export and reached the highest in September 2019 since 2014. The volume gradually declined in December 2019 due to season factor and the impact of IMO regulations for low sulphur fuel effective from 2020. The production of steel increased by 8.3% due to the strong demand on infrastructure in China. However, part of the iron ore import was replaced by the domestic production, making the volume of import continuously declined in two years.

Coal import is the second largest in global seaborne demand of dry bulk. The two biggest countries on coal import in the world are China and India. The import in China unexpectedly increased by 7.6% due to the demand of steel refinery on real estate and infrastructure. In India, the import is significantly growing in recent years because the domestic production is not sufficient to meet the increasing demand of electricity use. It’s expected to surpass China in import this year. The demand in Europe was decreasing due to environmental protection issue while Japan and Taiwan remained the same for their requirement. The import in South Korea slightly reduced owing to the control of air pollution. According to the statistics, the global dry bulk seaborne demand was 2.6% higher than the previous year, which is the main factor in maintaining a steady freight of dry bulker in 2019. Grain import is the third largest cargo in global dry bulk seaborne demand. Given the growing world population and the rising demand for feeding livestock, the import volume is showing a steady growth.

As regards world fleet tonnage supply, the deliveries of bulk carriers in 2019 were around 39 million in terms of deadweight, which went up 40% more than last year, at a historical high in past seven years. Because of depressing freight in the first half of the year, the

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demolition was only around 7 million DWT. Though the demolition increases 61% more than last year, it remains at a relatively low level when you look into the past ten years. The world fleet growth also stays at a low level, only increasing 4.0% compared to last year.

In the aspect of the macro economy: In 2019 the world economy grew by 2.9%, compared with the growth rate of 3.6% in 2018, there was a significant decrease of 0.7%, and this was the lowest since the 2008 financial crisis. In terms of performance of major economies, the U.S. economy grew by 2.3%, the Euro zone 1.2%, Japan 1.0%, China 6.1%, and India 4.8% compared to those of 2.9%, 1.9%, 0.3%, 6.6%, and 6.8% respectively in 2018. It is obvious that except for Japan's fiscal policy stimulus, other countries’ economic growth has declined, especially in India (the original expected growth rate was 7.5%). According to general analysis, the main reason for the decline in the world economic growth rate in 2019 is the tariff war waged by the United States against major trading countries, especially the trade war, the most influential, between the United States and China in the past two years. The re-allocation of the manufacturing industry chain affects major exporting countries such as Germany and South Korea. Other reasons include structural factors in various countries such as decreased productivity and aging population in developed countries.

In respect of monetary policy, the Federal Reserve had cut interest rates three times in the second half of last year in response to the U.S.-China trade war and the decline in the world economy. The current federal funds benchmark interest rate is 1.5% to1.75%, and the market expects the interest rate to be maintained this year. In response to the sluggish economic growth, China lowered the deposit reserve of financial institutions by 0.5% at the beginning of this year. It is estimated that more than 800 million Chinese Yuan of long-term funds can be released to reduce the financing cost of the real economy, but in order to avoid the increase of enterprises and local governments’ debit ratio. The reduction of the interest rate is more moderate than the previous monetary policy. In terms of oil price, which fluctuated relatively moderately last year, but the conflict between the United States and Iran caused a brief rise. Due to the poor world economy and sluggish demand, coupled with the continued increase in shale oil production in the United States, oil prices have remained at around US $ 50-60 per barrel.

The Forecast of 2020: According to IMF’s world economic outlook, published in late January, it predicted the economic growth rate would be 3.3% and 3.4% in 2020 and 2021, respectively, which indicated the economy will pick up year by year. It also predicted that economic growth rate of United State would drop from 2.3% to 2.0% in 2020 and 1.7% in

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2021 which mainly reflects that its expansionary fiscal policy in recent years will gradually return to a neutral fiscal stance and the easy financial conditions will be gradually weakened. For China, it estimated that the economic growth rate will be 6.0% in 2020 and 5.8% in 2021. However, this forecast by IMF was made before the outbreak of COVID-19. In which level the epidemic will influence the global economic growth depends on the transmission of COVID-19 in other countries.

United States and China reached a Phase One trade agreement in January, temporarily reining the two-year tariff war between U.S. and China (the US-China trade war). Although the agreement cannot completely end the future trade war between these two countries, it will at least ease the situation of deteriorating trade conflicts. Especially, the agreement stated that China will increase purchases of U.S. manufacturing, energy and agricultural goods and services by at least $200 billion over the next two years on the basis of 2017 and China agreed to buy US$ 40-50 billion in US agricultural products per year, which will be greatly helpful for the dry bulk market. In the first quarter of 2020 in China, for controling the epidemic, many of the cities were in lockdown and the manufacturing activities were delayed which severely affected the consumption no matter for industrial use or consumer use. Generally, it is predicted that the annual growth rate of GDP will decrease for 1%. In the Eurozone, Germany will gradually benefit from the recovery of the world economy and the trade agreement between US-China. The process of Brexit in the UK also appears to be clearer than the past, and the economy is expected to continuously strengthen in the next two years.

India’ s rate of economic growth in 2019 unexpectedly dropped to 4.8% comparied to 6.8% in 2018, mainly due to the limited improvement in reducing the unemployment rate and the insufficient participation rate of labor force, which led to a decline in consumption. In response to the lowest economic growth in a decade, the Modi government, which won its re-election in 2019, announced that corporate tax rate was brought down to 22% from 30% in September 2019, and the government has been following an expansionary fiscal policy since January 2020; to earmark fund for agriculture and to extend tax relief on indivial income are also the measures taken to create more employment opportunities and increase consumption. With their fiscal policies and stable oil prices, the IMF estimated that Indian economic growth in 2020 will gradually rise and stabilize at around 6.0% and 5.8% in 2021.

As for the Association of Southeast Asian Nations (ASEAN), the region's economy is relatively stable. The growth rate is 4.7% in 2019, and is estimated to reach 4.8% and 5.1%

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for the next two years. Up to date the ASEAN has a population of over 600 million people, the overall GDP output value is nearly 3 trillion US dollars and the GDP per capita is around 4,000 US dollars. The livelihood needs and infrastructure of the ASEAN countries such as Vietnam, Thailand and Indonesia, which benefited from the gradual transference of manufacturing from China, are also in a rising stage. In view that the region's population is still young, we can expect the ASEAN to become the region where it has the largest growth in demand for raw materials and commodities.

In terms of tonnage supply of bulk carriers, this year’s delivery volume is estimated to be a new high since 2014. The 210K dwt Newcastlemax has the highest dwt, followed by the 80K dwt Kamsarmax, and the third is the 60K dwt Ultramax. Thus, if the stimulation from the fiscal and monetary policy of countries worldwide are insufficient, the dry bulk freight market may be worse compared to the previous two years. The order of dry bulk newbuildings in 2019 is 17% lower than last year in terms of deadweight tons, the cause in part is from the 2030 and 2050 greenhouse gas reduction target set by the International Maritime Organization (IMO). This may lead some shipowners to remain in a wait-and-see attitude towards new ship specifications. Moreover, given that the volume of current orders which accounts for about 9.1% of the existing tonnage is still at a low level, it shall be conducive to the development of the bulk shipping industry in the long run.

For the demand prospects in seaborne bulk cargo in 2020, because China ’s raw material commodity imports such as iron ore, petroleum oil and copper mine were affected by the Covid-19 pandemic and the flood disaster occurred in iron ore area of Brazil, the BDI published on February 10 has dropped to the lowest point since March 2016. But, in gereal estimate, the pandemic would be gradually abating in April and then the demand would be recovering. Every country also adopts many kinds of economic stimulation policy.

8. The Future development

In the short term, our company is continually making effort in vessels’ maintenance and personnel training in order to reach the zero-accident goal, and to increase the fleet utilization by adopting a well-planed fleet arrangement. In the long term, we will enhance cooperation and keep good relationship with leading Charterers both domestically and abroad, and also seek long-term contract with them in order to reduce the operation risk. We will keep an eye on the shipbuilding trend, expanding the high-performance vessels by replacing the old to maintain competitive the overall fleet when the newbuilding market is relatively low. In the container market, we will also study the pattern of cargo logistics between Taiwan and China, and have strategic cooperation with domestic and foreign ocean carriers and expanse the port services.

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Attachment 2

The 2019 audit committee’s audit report.

Board of Directors has prepared the 2019 Business Report, Consolidated and Individual Financial Statements and Profit Distribution Proposal, the consolidated and individual financial statements have been audited by Hui-Min Huang and Shu-Cnuan Yeh, both CPAs of Deloitte and Touche have issued independent auditors’ reports. The 2019 Business Report, Consolidated and Individual Financial Statements and Profit Distribution Proposal have been audited by the audit Committee and nothing unusual has been found. Pursuant to the relevant requirements of the Securities Exchange Act and the Company Act. We hereby submit this report to the 2020 Shareholders’ Meeting of Taiwan Navigation Co., Ltd.

Taiwan Navigation Co., Ltd. Chairman of Audit Committee

==> picture [186 x 64] intentionally omitted <==

May 13, 2020

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Attachment 3

INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying consolidated financial statements of Taiwan Navigation Co., Ltd. and its subsidiaries (collectively referred to as the “Group”), which comprise the consolidated balance sheets as of December 31, 2019 and 2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the “consolidated financial statements”).

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as of December 31, 2019 and 2018, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements for the year ended December 31, 2019. 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.

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The key audit matters identified in the consolidated financial statements of the Group for the year ended December 31, 2019 are stated as follows:

The Recognition of Gain of Subsidiary’s Disposal of Bulk Carriers

The Group’s subsidiary Tai Shing, primarily engages in bulk carriers transportation service. Tai Shing disposed some of its aging bulk carriers in 2019 in order to replace them with new bulk carriers. Given that the transaction is material to the consolidated financial statements, a gain on disposal of the asset of $182,587 thousand (included in gain on disposal of property, plant and equipment) was material to the Group’s financial statement. We considered occurrence and accuracy of gain on disposal of bulk carriers a key audit matter.

Our main audit procedures performed were as follows:

We understood management’s relevant evaluation processes of disposal of the bulk carriers and verified the implementation of related controls, through appropriate approvals.
We reviewed the transaction contract and the record of remittances and verified the accuracy of the counterparty and the amount received.
We reviewed the bulk carriers’ protocol of delivery and acceptance and verified the accuracy of the timing of recognition of gain on disposal of bulk carriers.
We reperformed the calculation of gain on disposal of bulk carriers and verified the accuracy of amount of recognition.

Other Matter

We have also audited the parent company only financial statements of Taiwan Navigation Co., Ltd. as of and for the years ended December 31, 2019 and 2018 on which we have issued an unmodified 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 the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), IFRIC Interpretations (IFRIC), and SIC Interpretations (SIC) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

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

Those charged with governance including the audit committee, are responsible for overseeing the Group’s financial reporting process.

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Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements for the year ended December 31, 2019 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 Hui-Min Huang and Shu-Cnuan Yeh.

Deloitte & Touche Taipei, Taiwan Republic of China

March 18, 2020

Notice to Readers

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

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

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TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (Notes 4, 7 and 23) Financial assets at fair value through other comprehensive income (Notes 4, 8 and 23) Accounts receivable, net (Notes 4, 9 and 17) Trade receivables from related parties (Notes 4, 9, 17, 23 and 25) Prepayments (Note 23) Other financial assets (Notes 4 and 10) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (Notes 4,8 and 23) Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 4, 12 and 24) Investment properties (Notes 4, 13 and 20) Prepayments for equipment (Note 25) Other non-current assets (Notes 4, 18 and 24) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 14 and 20) Notes and accounts payable Trade payables to related parties (Note 23) Other payables Current tax liabilities (Notes 4 and 18) Advance receipts (Note 20) Current portion of long-term borrowings (Notes 14 and 20) Other current liabilities Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 14, 20 and 24) Deferred tax liabilities (Notes 4 and 18) Net defined benefit liabilities (Notes 4 and 15) Other non-current liabilities (Note 20) Total non-current liabilities Total liabilities EQUITY ATTRIBUTABLE TO OWNERS OF THE CORPORATION (Note 16) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity attributable to owners of the Corporation Total equity TOTAL		2019 Amount % $ 408,216 3 - - 95,244 1 40,971 - 57,389 - 89,714 1 876,113 6 24,876 - 1,592,523 11 321,789 2 109,431 1 10,753,184 71 1,229,337 8 856,587 6 250,899 1 13,521,227 89 $ 15,113,750 100 $ - - 130,310 1 13,448 - 123,121 1 95,921 1 27,929 - 27,674 - 87,345 - 505,748 3 3,799,257 25 363,604 2 67,550 1 136,362 1 4,366,773 29 4,872,521 32 4,172,945 28 334,382 2 1,760,362 12 34,868 - 4,210,047 28 6,005,277 40 (271,375) (2) 10,241,229 68 10,241,229 68 $ 15,113,750 100		2018
				Amount % $ 478,550 3 76,777 - 116,247 1 35,922 - 92,370 1 117,382 1 319,880 2 18,611 - 1,255,739 8 241,601 2 115,001 1 11,863,484 78 1,097,370 7 306,899 2 255,807 2 13,880,162 92 $ 15,135,901 100 $ 557,322 4 137,399 1 26,430 - 144,933 1 4,011 - 29,274 - - - 40,437 - 939,806 6 3,388,005 22 303,556 2 68,813 1 15,729 - 3,776,103 25 4,715,909 31 4,172,945 28 334,382 2 1,664,599 11 242,486 1 4,040,448 27 5,947,533 39 (34,868) - 10,419,992 69 10,419,992 69 $ 15,135,901 100

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

－－ 25

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 13, 17, 23 and 25) OPERATING COSTS (Notes 12, 13, 15 and 23) GROSS PROFIT OPERATING EXPENSES (Notes 12 and 15) PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Interest income (Note 4) Dividend income (Notes 4 and 8) Other income (Note 23) Gain on disposal of property, plant and equipment (Notes 4 and 12) Net gain on foreign currency exchange (Note 27) Share of profit of associates accounted for using the equity method (Notes 4 and 11) Interest expense (Notes 4 and 12) Other expenses Net loss on financial assets at fair value through profit or loss (Note 4) Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 18) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Note 4) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 15) Unrealized loss on investments in equity instruments designated as at fair value through other comprehensive income		2019 Amount % $ 3,113,990 100 2,371,269 76 742,721 24 138,922 5 603,799 19 28,691 1 6,885 - 38,667 1 182,937 6 267 - 6,952 - (93,248) (3) (3,859) - (5,195) - 162,097 5 765,896 24 164,800 5 601,096 19 (869) - (6,397) -		2018
				Amount % $ 3,367,236 100 2,505,063 74 862,173 26 146,765 4 715,408 22 15,450 - 6,885 - 26,450 1 347,950 10 6,685 - 3,663 - (114,496) (3) (4,322) - (15,038) - 273,227 8 988,635 30 31,000 1 957,635 29 (10,142) - (121,969) (4)

(Continued)

－－ 26

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Share of other comprehensive income (loss) of associates accounted for using the equity method (Note 11) Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR NET PROFIT ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: Owners of the Corporation Non-controlling interests EARNINGS PER SHARE (Note 19) Basic Diluted		2019 Amount % (6,268) - (13,534) - (223,842) (7) (237,376) (7) $ 363,720 12 $ 601,096 19 - - $ 601,096 19 $ 363,720 12 - - $ 363,720 12 $ 1.44 $ 1.44		2018
				Amount % 12,034 - (120,077) (4) 257,627 8 137,550 4 $ 1,095,185 33 $ 957,635 28 - - $ 957,635 28 $ 1,095,185 33 - - $ 1,095,185 33 $ 2.29 $ 2.29



		$
		$
		$
		$
		$

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

(Concluded)

－－ 27

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2018 Effect of retrospective application BALANCE AT JANUARY 1, 2018 AS ADJUSTED Appropriation of 2017 earnings Legal reserve Special reserve Cash dividends Net profit for the year ended December 31, 2018 Other comprehensive income (loss) for the year ended December 31, 2018, net of income tax Total comprehensive income (loss) for the year ended December 31, 2018 BALANCE AT DECEMBER 31, 2018 Appropriation of 2018 earnings Legal reserve Cash dividends Reversal of special reserve Net profit for the year ended December 31, 2019 Other comprehensive loss for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 BALANCE AT DECEMBER 31, 2019	Ordinary Shares Shares (In Thousands) Amount Capital Surplus 417,294 $ 4,172,945 $ 334,382 - - - 417,294 4,172,945 334,382 - - - - - - - - - - - - - - - - - - 417,294 4,172,945 334,382 - - - - - - - - - - - - - - - - - - 417,294 $ 4,172,945 $ 334,382		Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 1,617,952 $ - $ 3,674,194 - - - 1,617,952 - 3,674,194 46,647 - (46,647) - 242,486 (242,486) - - (292,106) - - 957,635 - - (10,142) - - 947,493 1,664,599 242,486 4,040,448 95,763 - (95,763) - - (542,483) - (207,618) 207,618 - - 601,096 - - (869) - - 600,227 $ 1,760,362 $ 34,868 $ 4,210,047	Other Equity Exchange Differences on Unrealized Loss on Investments in Financial Assets at Fair Value Through Unrealized Gain (Loss) on Translating Other Available-for- Foreign Comprehensive sale Financial Operations Income Assets $ (131,037) $ - $ (111,449) - (51,523) 111,449 (131,037) (51,523) - - - - - - - - - - - - - 257,627 (109,935) - 257,627 (109,935) - 126,590 (161,458) - - - - - - - - - - - - - (223,842) (12,665) - (223,842) (12,665) - $ (97,252) $ (174,123) $ -	Total Equity $ 9,556,987 59,926 9,616,913 - - (292,106) 957,635 137,550 1,095,185 10,419,992 - (542,483) - 601,096 (237,376) 363,720 $ 10,241,229
	Shares (In Thousands) 417,294 - 417,294 - - - - - - 417,294 - - - - - - 417,294

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

－－ 28

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation and amortization expenses Net loss on fair value change of financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of associates accounted for using the equity method Gain on disposal of property, plant and equipment Unrealized loss on foreign currency exchange, net Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Accounts receivable Trade receivables from related parties Prepayments Other current assets Other financial assets Notes and accounts payable Trade payables to related parties Other payables Advance receipts Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial asset at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of investment properties Increase in other financial assets Increase in other non-current assets Increase in prepayments of equipment Interest received Dividends received Net cash generated from (used in) investing activities	2019 $ 765,896 716,062 5,195 93,248 (28,691) (6,885) (6,952) (182,937) 236 - (5,539) 34,661 26,508 (4) 697 (4,792) (12,855) (20,252) (12,942) 48,782 (2,132) 1,407,304 (12,979) 1,394,325 - (80,178) 428,241 (3,953) (586,084) (1,298) (580,326) 27,807 13,139 (782,652)	2018 $ 988,635 762,789 15,038 114,496 (15,450) (6,885) (3,663) (347,950) 44 32,019 1,620 (25,109) 11,389 (415) (12,399) 1,395 (8,274) 28,394 (5,693) 9,016 (19,386) 1,519,611 (17,387) 1,502,224 (45,750) (65,288) 671,749 - (127,450) (3,611) (155,875) 14,637 10,012 298,424

(Continued)

－－ 29

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Proceeds from in long-term borrowings Repayments of in long-term borrowings Decrease in other non-current liabilities Cash dividends paid Interest paid Net cash used in financing activities EFFECTS OF EXCHANGE RATE CHANGES ON THE BALANCE OF CASH HELD IN FOREIGN CURRENCIES NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ (258,465) 575,000 (355,000) (59) (542,483) (93,969) (674,976) (7,031) (70,334) 478,550 $ 408,216	2018 $ 181,050 181,441 (1,671,307) (432) (292,106) (114,317) (1,715,671) 10,762 95,739 382,811 $ 478,550

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

－－ 30

INDEPENDENT AUDITORS’ REPORT

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

Opinion

We have audited the accompanying financial statements of Taiwan Navigation Co., Ltd. (the “Corporation”), which comprise the balance sheets as of December 31, 2019 and 2018, and the statements of comprehensive income, changes in equity and cash flows for the years then ended, and the notes to the financial statements, including a summary of significant accounting policies (collectively referred to as the “financial statements”).

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Corporation as of December 31, 2019 and 2018, and its financial performance and its cash flows for the years then ended in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Basis for Opinion

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

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended December 31, 2019. 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.

－－ 31

The key audit matters identified in the financial statements of the Corporation for the year ended December 31, 2019 are stated as follows:

The Recognition of Gain of Equity Method Investee’s Disposal of Bulk Carriers

The Corporation’s subsidiary Tai Shing, primarily engages in bulk carriers transportation service. Tai Shing disposed some of its aging bulk carriers in 2019 in order to replace them with new bulk carriers and the Corporation recognized a gain on disposal under investments accounted for using the equity method. Given that the transaction is material to the financial statements, a gain on disposal of the asset of $182,587 thousand was material to the subsidiary Tai Shing’s financial statement. We considered occurrence and accuracy of gain on disposal of bulk carriers recognized under investments accounted for using the equity method a key audit matter.

Our main audit procedures performed was as follows:

We understood management’s relevant evaluation processes of disposal of the bulk carriers and verified the implementation of related controls, through appropriate approvals.
We reviewed the transaction contract and the record of remittances and verified the accuracy of the counterparty and the amount received.
We reviewed the bulk carriers’ protocol of delivery and acceptance and verified the accuracy of the timing of recognition of gain on disposal of bulk carriers.
We reperformed the calculation of gain on disposal of bulk carriers and verified the accuracy of amount of recognition.

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

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

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

Those charged with governance including the audit committee, are responsible for overseeing the Corporation’s financial reporting process.

－－ 32

Auditors’ Responsibilities for the Audit of the Financial Statements

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

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

－－ 33

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the year ended December 31, 2019 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 Hui-Min Huang and Shu-Cnuan Yeh.

Deloitte & Touche Taipei, Taiwan Republic of China

March 18, 2020

Notice to Readers

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

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

－－ 34

TAIWAN NAVIGATION CO., LTD.

BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

ASSETS CURRENT ASSETS Cash and cash equivalents (Notes 4 and 6) Financial assets at fair value through profit or loss (Notes 4, 7 and 23) Financial assets at fair value through other comprehensive income (Notes 4, 8 and 23) Accounts receivable, net (Notes 4, 9 and 17) Trade receivables from related parties (Notes 4, 9, 17, 23 and 25) Prepayments (Note 23) Other financial assets (Notes 4 and 10) Other current assets Total current assets NON-CURRENT ASSETS Financial assets at fair value through other comprehensive income (Notes 4, 8 and 23) Investments accounted for using the equity method (Notes 4 and 11) Property, plant and equipment (Notes 4, 12 and 24) Investment properties (Notes 4, 13 and 20) Other non-current assets (Notes 4, 18 and 24) Total non-current assets TOTAL LIABILITIES AND EQUITY CURRENT LIABILITIES Short-term borrowings (Notes 4 and 20) Notes and accounts payable Trade payables to related parties (Note 23) Other payables Current tax liabilities (Notes 4 and 18) Advance receipts (Note 20) Other current liabilities (Note 4) Total current liabilities NON-CURRENT LIABILITIES Long-term borrowings (Notes 14 and 20) Deferred tax liabilities (Notes 4 and 18) Net defined benefit liabilities (Notes 4 and 15) Other non-current liabilities (Note 20) Total non-current liabilities Total liabilities EQUITY (Note 16) Ordinary shares Capital surplus Retained earnings Legal reserve Special reserve Unappropriated earnings Total retained earnings Other equity Total equity TOTAL		2019 Amount % $ 126,966 1 - - 95,244 1 27,226 - 59,434 1 30,361 - 21,520 - 3,529 - 364,280 3 321,789 3 9,008,154 78 671,086 6 1,229,337 10 11,209 - 11,241,575 97 $ 11,605,855 100 $ - - 37,197 1 13,504 - 85,685 1 95,921 1 14,196 - 30,607 - 277,110 3 520,000 4 363,604 3 67,550 1 136,362 1 1,087,516 9 1,364,626 12 4,172,945 36 334,382 3 1,760,362 15 34,868 1 4,210,047 36 6,005,277 52 (271,375) (3) 10,241,229 88 $ 11,605,855 100		2018
				Amount % $ 119,820 1 76,777 1 116,247 1 23,056 - 93,597 1 32,806 - 105,341 1 4,769 - 572,413 5 241,601 2 8,871,325 77 684,613 6 1,097,370 10 10,240 - 10,905,149 95 $ 11,477,562 100 $ 465,177 4 35,527 - 37,253 1 100,203 1 4,011 - 6,013 - 21,268 - 669,452 6 - - 303,556 3 68,813 - 15,729 - 388,098 3 1,057,550 9 4,172,945 36 334,382 3 1,664,599 15 242,486 2 4,040,448 35 5,947,533 52 (34,868) - 10,419,992 91 $ 11,477,542 100

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

－－ 35

TAIWAN NAVIGATION CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

OPERATING REVENUE (Notes 4, 13, 17, 23 and 25) OPERATING COSTS (Notes 12, 13, 15 and 23) GROSS PROFIT OPERATING EXPENSES (Notes 12 and 15) PROFIT FROM OPERATIONS NON-OPERATING INCOME AND EXPENSES Share of profit of subsidiaries and associates accounted for using the equity method (Notes 4 and 11) Interest income (Note 4) Dividend income (Notes 4 and 8) Other income (Note 23) Gain on disposal of property, plant and equipment Interest expense Other expenses (Note 23) Net gain on foreign currency exchange (Note 27) Net loss on financial assets at fair value through profit or loss Total non-operating income and expenses INCOME BEFORE INCOME TAX INCOME TAX EXPENSE (Notes 4 and 18) NET PROFIT FOR THE YEAR OTHER COMPREHENSIVE INCOME (LOSS) (Note 4) Items that will not be reclassified subsequently to profit or loss: Remeasurement of defined benefit plans (Note 15) Unrealized loss on investments in equity instruments designated as at fair value through other comprehensive income		2019 Amount % $ 1,148,090 100 923,018 80 225,072 20 133,490 12 91,582 8 633,197 55 3,655 - 6,885 1 41,670 4 350 - (4,063) - (3,232) - 1,047 - (5,195) (1) 674,314 59 765,896 67 164,800 14 601,096 53 (869) - (6,397) (1)		2018
				Amount % $ 1,276,210 100 1,105,466 87 170,744 13 141,556 11 29,188 2 924,752 72 3,332 - 6,885 1 38,876 3 - - (3,073) - (3,155) - 6,868 - (15,038) (1) 959,447 75 988,635 77 31,000 2 957,635 75 (10,142) (1) (121,969) (9) (Continued)

－－ 36

TAIWAN NAVIGATION CO., LTD.

STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

Share of other comprehensive income (loss) of associates accounted for using the equity method (Note 11) Items that may be reclassified subsequently to profit or loss: Share of other comprehensive income (loss) of subsidiaries and associates accounted for using the equity method (Note 11) Other comprehensive income (loss) for the year, net of income tax TOTAL COMPREHENSIVE INCOME FOR THE YEAR EARNINGS PER SHARE (Note 19) Basic Diluted		2019 Amount % $ (6,268) - (13,534) (1) (223,842) (20) (237,376) (21) $ 363,720 32 $ 1.44 $ 1.44		2018
				Amount % $ 12,034 1 (120,077) (9) 257,627 20 137,550 11 $ 1,095,185 86 $ 2.29 $ 2.29



		$		$

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

(Concluded)

－－ 37

TAIWAN NAVIGATION CO., LTD.

STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

BALANCE AT JANUARY 1, 2018 Effect of retrospective application BALANCE AT JANUARY 1, 2018 AS ADJUSTED Appropriation of 2017 earnings Legal reserve Special reserve Cash dividends Net profit for the year ended December 31, 2018 Other comprehensive income (loss) for the year ended December 31, 2018, net of income tax Total comprehensive income (loss) for the year ended December 31, 2018 BALANCE AT DECEMBER 31, 2018 Appropriation of 2018 earnings Legal reserve Cash dividends Reversal of special reserve Net profit for the year ended December 31, 2019 Other comprehensive loss for the year ended December 31, 2019, net of income tax Total comprehensive income (loss) for the year ended December 31, 2019 BALANCE AT DECEMBER 31, 2019	Ordinary Shares Shares (In Thousands) Amount Capital Surplus 417,294 $ 4,172,945 $ 334,382 - - - 417,294 4,172,945 334,382 - - - - - - - - - - - - - - - - - - 417,294 4,172,945 334,382 - - - - - - - - - - - - - - - - - - 417,294 $ 4,172,945 $ 334,382		Retained Earnings Unappropriated Legal Reserve Special Reserve Earnings $ 1,617,952 $ - $ 3,674,194 - - - 1,617,952 - 3,674,194 46,647 - (46,647) - 242,486 (242,486) - - (292,106) - - 957,635 - - (10,142) - - 947,493 1,664,599 242,486 4,040,448 95,763 - (95,763) - - (542,483) - (207,618) 207,618 - - 601,096 - - (869) - - 600,227 $ 1,760,362 $ 34,868 $ 4,210,047	Other Equity Exchange Differences on Unrealized Loss on Financial Assets at Fair Value Through Unrealized Gain (Loss) on Translating the Financial Statements of Other Available-for- Foreign Comprehensive sale Financial Operations Income Assets $ (131,037) $ - $ (111,449) - (51,523) 111,449 (131,037) (51,523) - - - - - - - - - - - - - 257,627 (109,935) - 257,627 (109,935) - 126,590 (161,458) - - - - - - - - - - - - - (223,842) (12,665) - (223,842) (12,665) - $ (97,252) $ (174,123) $ -	Total Equity $ 9,556,987 59,926 9,616,913 - - (292,106) 957,635 137,550 1,095,185 10,419,992 - (542,483) - 601,096 (237,376) 363,720 $ 10,241,229
	Shares (In Thousands) 417,294 - 417,294 - - - - - - 417,294 - - - - - - 417,294

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

－－ 38

TAIWAN NAVIGATION CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation and amortization expenses Net loss on fair value change of financial assets at fair value through profit or loss Interest expense Interest income Dividend income Share of profit of subsidiaries and associates accounted for using the equity method Gain on disposal of property, plant and equipment Unrealized loss on foreign currency exchange, net Changes in operating assets and liabilities Financial assets mandatorily classified as at fair value through profit or loss Accounts receivable Trade receivables from related parties Prepayments Other current assets Other financial assets Notes and accounts payable Trade payables to related parties Other payables Advance receipts Other current liabilities Net defined benefit liabilities Cash generated from operations Income tax paid Net cash generated from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of financial asset at fair value through other comprehensive income Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Acquisition of investment properties Decrease in other financial assets Decrease (increase) in other non-current assets Interest received Dividends received Net cash generated from investing activities	2019 $ 765,896 46,591 5,195 4,063 (3,655) (6,885) (633,197) (350) 358 - (4,308) 33,800 2,445 950 2,426 1,765 (23,721) (14,720) (3,637) 9,339 (2,132) 180,223 (12,979) 167,244 - (28,100) 350 (3,953) 81,395 (1,298) 9,945 273,143 331,482	2018 $ 988,635 42,482 15,038 3,073 (3,332) (6,885) (924,752) - 196 32,019 (1,628) (24,936) (1,795) (746) (6,112) 2,535 (28,738) 26,468 (3,077) 80 (16,465) 92,060 (17,387) 74,673 (45,750) (3,020) - - 64,727 4,431 9,071 10,012 39,471

(Continued)

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TAIWAN NAVIGATION CO., LTD.

STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

CASH FLOWS FROM FINANCING ACTIVITIES Increase (decrease) in short-term borrowings Proceeds from in long-term borrowings Repayments of in long-term borrowings Decrease in other non-current liabilities Cash dividends paid Interest paid Net cash used in financing activities NET INCREASE IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR	2019 $ (165,177) 575,000 (355,000) (59) (542,483) (3,861) (491,580) 7,146 119,820 $ 126,966	2018 $ 222,177 - - (432) (292,106) (3,076) (73,437) 40,707 79,113 $ 119,820

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

(Concluded)

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Attachment 4

Comparison Table for the Operational Procedures for Endorsements and Guarantees

Before and After Amendment

	After Amendment	Before Amendment
	Article 4 Limits of endorsements and guarantees 1.The total amount of endorsements and guarantees by the Company must not exceed 2 times the Company'snet worth of latest financial statements.Their total amount of the Company's endorsements and guarantees of a single company must not exceed 2 times the Company'snet worth of latest financial statements. 2.The total amount of endorsements and guarantees by the Company and and its subsidiaries must not exceed 2 times the Company'snet worth of latest financial statements. Their total amount of the Company's endorsem and guarantees of a single company must not exceed 2 times the Company 'snet worth of latest financial statements.	Article 4 Limits of endorsements and guarantees 1.The total amount of endorsements and guarantees by the Company must not exceed 2 times the Company's Paid-in capital. Their total amount of the Company's endorsements and guarantees of a single company must not exceed 2 times the Company's Paid-in capital. 2.The total amount of endorsements and guarantees by the Company and and its subsidiaries must not exceed 2 times the Company and its subsidiaries 's Paid-in capital. Their total amount of the Company's endorsem and guarantees of a single company must not exceed 2 times the Company and its subsidiaries 's Paid-in capital.
	Article 9 Terms and contents of announcement and reporting … 2. The company whose balance of endorsements and guarantees reaches one of the following levels shall announce and report such event within two days commencing immediately from the date of occurrence: … (3) The balance of endorsements and guarantees by the company and its subsidiaries for a single enterprise reaches NT$10 millions or more and the aggregate amount of all endorsements and guarantees for,carrying value of equity method investment in, and balance of loans to, such enterprise reaches 30 percent or more of public company's net worth as stated in its latest financial statement. …	Article 9 Terms and contents of announcement and reporting … 2. The company whose balance of endorsements and guarantees reaches one of the following levels shall announce and report such event within two days commencing immediately from the date of occurrence: … (3) The balance of endorsements and guarantees by the company and its subsidiaries for a single enterprise reaches NT$10 millions or more and the aggregate amount of all endorsements and guarantees for, long-term investment, and balance of loans to, such enterprise reaches 30 percent or more of public company's net worth as stated in its latest financial statement. …

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After Amendment	Before Amendment
`“`Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the endorsement and guarantee,whichever date is earlier.	`“`Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier.
Article 13`：` The Operation Procedure was established initially on May 30, 1997. The 1st amendment on Nov. 19, 1999, 2nd Amendment on May 30,2003, 3rd Amendment on June 23, 2006, 4th Amendment on June 17, 2010, 5th Amendment on June 17, 2013,6th Amendment on June 22, 2015,7th Amendment on June 26, 2018, andthe 8thamendment on June 18, 2020.	Article 13`：` The Operation Procedure was established initially on May 30, 1997. The 1st amendment on Nov. 19, 1999, 2nd Amendment on May 30,2003, 3rd Amendment on June 23, 2006, 4th Amendment on June 17, 2010, 5th Amendment on June 17, 2013,6th Amendment on June 22, 2015, and 7th Amendment on June 26, 2018.

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Attachment 5

Comparison Table for the Operational Procedures for Loaning of Company Funds

Before and After Amendment

After Amendment Before Amendment Article 2 Total amount of funds loaned and Article 2 Total amount of funds loaned and ceilings for individual borrower ceilings for individual borrower … … 3. Ceiling for individual borrower: 3. Ceiling for individual borrower: … … (2) Loan to party with the needs of short (2) Loan to party with the needs of short term financing ： term financing ： .… .…

C. The restriction in paragraph 1, subparagraph 2 shall not apply to inter-company loans of funds between overseas subsidiaries in which the company holds, directly or indirectly, 100% of the voting shares, nor to loans of fund to the company by any overseas subsidiary in which the company holds, directly or indirectly, 100% of the voting shares. However, the subparagraph 2, paragraph 1, Article 2 and Article 3 concerning the setting of the amount limits and the durations of loans shall still apply.
1. When a responsible person of the company violates paragraph 1, subparagraph 1 to 2, the responsible person shall bear joint and several liability with the borrower for repayment; if the company suffers damage, the responsible person also shall be liable for damages.
C. The restriction in paragraph 1, subparagraph 2 shall not apply to inter-company loans of funds between overseas subsidiaries in which the company holds, directly or indirectly, 100% of the voting shares. However, the subparagraph 2, paragraph 1, Article 2 and Article 3 concerning the setting of the amount limits and the durations of loans shall still apply.

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Article 10 Information Disclosure

…

The company shall evaluate the status of its loans of funds and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary auditing procedures.“Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the loan of funds, whichever date is earlier.

Article 13 `：`

The Operation Procedure was established initially on May 30, 1997. The 1st amendment on Nov. 19, 1999, 2nd Amendment on January 2002, 3rd Amendment on May 31, 2003, 4th Amendment on June 17, 2010, 5th Amendment on June 17, 2013,6th Amendment on June 22, 2015, 7th Amendment on June 26, 2018, 8th amendment on June 25, 2019, and 9th amendment on June 18, 2020.

Article 10 Information Disclosure

…

The company shall evaluate the status of its loans of funds and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary auditing procedures.“Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier.

Article 13 `：`

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Appendices

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Appendices 1

TAIWAN NAVIGATION CO., LTD

Rules of Procedure for Shareholders Meetings

Created on May 15, 1998 First amendment was made on June 21, 2002 Second amendment was made on June 22, 2016

Article 1 The shareholders’ Meeting of the Corporation (the “meeting”)shall be conducted in accordance with the Rules.
Article 2 Shareholders as stated in the Rules shall be the shareholder himself/herself or the proxy who is delegated by the shareholder to attend the meeting.
Article 3 The attending shareholders shall 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 sign-in cards handed in plus the number of shares whose voting rights are exercised by electronically.
Article 4 Attendance and voting rights at the meeting shall be calculated based on numbers of shares.
Article 5 The venue for the meeting shall be in headquarters, or in a suitable place . The meeting time may begin no earlier than 9 a.m. and no later than 3 p.m.
Article 6 If the meeting is convened by the board of directors, the chair of the meeting shall be the chairman of the board. When the chairman on leave or for any reason unable to exercise the powers of the chairman, the chairman shall appoint one of the directors to act as the chair. Where the chairman does not appoint the delegate , the directors shall mutually select from among themselves.
If a shareholder meeting is convened by a party with power to convene but other than the board of directors, the convening party shall chair the meeting.
Article 7 This Corporation may appoint its attorneys, certified public accountants, or related persons retained by it to attend the meeting. The personnel handling the shareholders' meeting shall wear a identification card.
Article 8 Corporation shall make an audio recording of the proceedings of the shareholders meeting, and the recorded materials shall be retained for at least 1 year.
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 1 hour, may be made. If the quorum is not met after two postponements and the attending shareholders still represent less than one third of the total number of issued shares, a tentative resolution may be adopted pursuant to Article 175 of the Company Act.
When, prior to conclusion of the meeting, the attending shareholders represent a majority of the total number of issued shares, the chair may resubmit the tentative resolution for a vote by the shareholders meeting pursuant to Article 174 of the Company Act.
Article 10 If the meeting is convened by the board of directors, the meeting agenda shall be set by the board of directors. The meeting shall proceed in the order set by the agenda, which may not be changed without a resolution of the meeting.
The provisions of the preceding paragraph apply mutatis mutandis to the meeting convened by a party with the power to convene that is not the board of directors. The chair may not declare the meeting adjourned prior to completion of deliberation on the meeting agenda of the preceding two paragraphs (including extraordinary motions), except by a resolution of the shareholders meeting. If the chair declares the

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meeting adjourned in violation of the rules of procedure, an agreement of a majority of the votes represented by the attending shareholders, and then continue the meeting. After the meeting is over, the shareholders may not elect the chair to continue the meeting in the same place or in another place.

Article 11 Before speaking, an attending shareholder must specify on a speaker's 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 chair.
A shareholder in attendance who has submitted a speaker's slip but does not actually speak shall be deemed to have not spoken. When the content of the speech does not correspond to the subject given on the speaker's slip, the spoken content shall prevail.
When an attending shareholder is speaking, other shareholders may not speak or interrupt unless they have sought and obtained the consent of the chair and the shareholder that has the floor; the chair shall stop any violation.
Article 12 Except with the consent of the chair, a shareholder may not speak more than twice on the same proposal, and a single speech may not exceed 5 minutes.
If the shareholder's speech violates the rules or exceeds the scope of the agenda item, the chair may terminate the speech.
Article 13 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 the meeting, only one of them may speak on the same proposal.
Article 14 After an attending shareholder has spoken, the chair may respond in person or direct relevant personnel to respond.
Article 15 The discussion of the motion may be terminated at an appropriate time by the chair. If necessary, the chair may announce the discussion closed and call for a vote.
Article 16 Vote monitoring and counting personnel for the voting on a proposal shall be appointed by the chair, provided that all monitoring personnel shall be shareholders of the Corporation.
Article 17 Except as otherwise provided in the Company Act and in the Corporation's 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.
Article 18 When there is an amendment or an alternative to a proposal, the chair shall present the amended or alternative proposal together with the original proposal and decide the order in which they will be put to a vote. When any one among them is passed, the other proposals will then be deemed rejected, and no further voting shall be required.
Article 19 When a meeting is in progress, the chair may announce a break based on time considerations.
Article 20 When a meeting is in progress,if a force majeure event occurs, the chair may rule the meeting temporarily suspended and announce a time when, in view of the circumstances, the meeting will be resumed.
Article 21 The chair may direct the proctors or security personnel to help maintain order at the meeting place. When proctors or security personnel help maintain order at the meeting place, they shall wear an identification card or armband bearing the word "Proctor."
When a shareholder violates the rules of procedure and defies the chair's correction, obstructing the proceedings and refusing to heed calls to stop, the chair may direct the proctors or security personnel to escort the shareholder from the meeting.
Article 22 If the rules are not covered above, should be handled in accordance with the

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provisions of the Company Act, Securities and Exchange Act and other relevant laws or or the Articles of Incorporation.

Article 23 These Rules, and any amendments hereto, shall be implemented after adoption by shareholders meetings.

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Appendices 2

Taiwan Navigation Co., Ltd. Articles of Incorporation

Chapter 1 – General

Article 1 The Corporation shall be incorporated as a company limited by shares under the Company Act and its name should be Taiwan Navigation Co., Ltd.

Article 2 The scope of business of the Corporation shall be as follows:

Operation of domestic and overseas passengers and shipment services;
Operation of domestic and overseas docks and Warehouses:
Businesses accessorial to steamers, docks and warehouses:
Operation of shipping agency business:
Operations of sand pumping, channel dredging and tugboats;
Commissioned building, leasing and selling of residential buildings and commercial buildings.

And the Corporation may engage in any business that is not prohibited or restricted by law, except the business requiring permission.

Article 3 The investment of the Corporation in other entity is not restricted by the limitation on total amount of its reinvestment under the Company Act; however, the amount of each investment shall be subject to the authorization of Board of Directors.
Article 4 For the needs in business operations, the Corporation may provide guarantee and /or providing endorsement pursuant to the Operational Procedures for Endorsements and Guarantees of the Corporation.
Article 5 The headquarter of the Corporation located in Taipei City. If necessary, it may set up or dismiss domestic and overseas branch.
Article 6 The announcement of the Company shall be posted in prevailing daily newspapers, in the significant part, where the Headquarter located. However, this shall not apply if Securities Exchange agency has different requirement.

Chapter 2 – Shares

Article 7 Total capitalization of the Corporation is NTD6 billion, devided into 600 million common shares, with part value of NTD10 per share. The Board of Directors is authorized to issue those un-issued shares in installments.
Article 8 Shares issued by the Corporation may be exempted from printing physical share certificates but shares should be registered with Central Securities Depositiory Institution.

Article 9 (Deleted)

Article 10 Unless otherwise provided for in law or securities rules and / or regulations, the share

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affairs and related matters shall be complying with the Regulations Governing the Administration of Shareholder Services of Public Companies as promulgated by the competent authority.

Chapter 3 – Shareholders’ Meeting

Article 11 Shareholders’ Meetings of the Corporation consist of Regular and Special Shareholders’ Meeting and shall be called by Board of Directors, unless otherwise provided under the Company Act.

General Shareholders’ Meeting shall be convened at least once a year and shall be convened within 6 months after the close of last fiscal year. However, this shall not be applicable under special situation with justifiable cause and approved by competent authority.

The Notice to convence a Regular and Special Shareholders’ Meetings shall be given to each shareholder no later than 30 days and 15 days in advance respectively and such notice shall state the date and place as well as cause of the meeting.

Article 12 A shareholder unable to attend shareholders’ meeting may present a proxy printed by the Corporation stated scope of authorization and delegate an agent to attend.

Except otherwise established by the Corporation, a shareholder attending shareholders’ meeting under proxy shall be complying with the stipulations under Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies.
Article 13 A shareholder of the Corporation has one voting right in respect of each share held; however, this shall not apply to shareholders without voting right or with restrict voting right under law or articles of incorporation.
When electing directors in shareholders’ meeting, each share has number of voting rights equal to the number of directors to be elected, and the voting rights may be consolidated for any one of them or split for several director candidates, and the candidate won the higher number of voting right shall be the director elected.
Article 14 Unless otherwise provided for in the Company Act, resolution of shareholders’ meeting shall be made in a shareholders’ meeting attended with shareholders representing more than one-half of the issued shares and with more than half of voting rights of the attending shareholders.
When number of share attended is less than both the above rated number, but attended with shareholders representing more than 1/3 of issued shares, a pseudo resolution may be made with consent of shareholders representing more than half of the voting right, and the pseudo resolution shall be notified among all shareholders and call the shareholders meeting again within one month.

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Article 15 At time of shareholders’ meeting, the Chairman of Board shall be the chairman; in case the Chairman is prevented from attending, one of the other directors shall be appointed to act as chairman and in the absence of such appointment, rest of directors shall elect among them, one director to act as chairman.

In case of shareholders’ meeting calling by person other than member of directors meeting, chairman of such shareholders’ meeting shall be the one with right to call such shareholders’ meeting. If there are more than one person with the right to call such meeting, one of them shall be elected by them to act as chairman.

Chapter 4 – Directors, Audit Committee and Duties

Article 16 The Company shall install 7 to 9 directors each of them shall have tenure of 3 years and may be elected. Generation of candidates shall be by nomination and shareholders shall elect from list of candidates. The shareholdings of the entire pack of directors shall be complying with the requirements under Regulation Governing the Shareholdings of Directors and Supervisors as well as the Audit.

Among the above shareholders, independent directors shall be no less than 3 and shall not be less than 1/5 of total number of directors.

The Company organized Audit Committee, formed with all independent directors and is responsible for performing duties of supervisors provided under Company Act, Securities Exchange Act and other related legislations.

Member of Audit Committee, exercising of rights and duties and all other matters to be complied shall follow related legislations and requirements. The charter of the organization shall be established by Board of Directors separately.

Article 17 Directors shall form Board of Directors and in a Board Meeting attended by more than 2/3 of all the directors shall elect one of the Directors as the Chairman of the Board to represent the Company. The remuneration for the Chairman and other directors shall be determined by Board of Directors under authorization, basis the extend involvement and contribution in the company affairs of each directors as well as the level of the trade.

At the severance or retiring of Chairman of the Board, the land side employee retirement system shall be applied for providing the severance pay or pension.

Article 17-1 In order to spread the legal liability and risk of directors and to promote the ability of company governance, the Company may subscribe liability insurance for all the directors, supervisors and managers for all the directors and the directors, and directors, supervisors and managers dispatched to the invested company of the Company.
Article 18 Board Meeting shall be called every two months. A notice for meeting shall be given to each and every directors 7 days in advance, with the cause of meeting stated; however,

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with emergency, it may be called anytime. In Directors Meeting, directors shall attend in person, but if any of the director is prevented from attending in person, another may be delegate to attend, but one director may be representing only one directors in Directors meeting.

If a directors Meeting is held in form of video conference, director attended in video 。 conference shall be deemed as attended in person.

Article 19 Directors Meeting shall be called by Chairman of the Board. At absence of Chairman and is unable to perform duty, one of the directors shall be appointed to be the deputy, but if without such appointment, one of the directors shall be elected from them to be the deputy.

Article 20 Except otherwise provided under Company Act, the resolution of Board Meeting shall have consent of more than half of the attending directors and when the number of yay and nay are the same, the Chairman shall determine it.

Article 21 Duties of Board of Directors are:

Review and determine business plan;
Review and determine guides for application of funds;
Review and determine budget and final accounting of the Company; ；
Proposing earnings distribution;
Approving setting up and dismissing of branch offices;
Review and approving material rules and regulations;
Approving the appointment and dismissal of important jobs;
Review and determine important contract with other entity;
Review matters submit for approval by the General Manager.
Other duties vested under related legislation and by Shareholders’ Meeting.

Article 22 (Deleted)

Article 23 When the number of directors relieved from office for more than 1/3 or the all the independent director are relieved from office, the Board of Director shall call special shareholders’ meeting to re-elect and the new director’s tenure shall be the tenure left by the relieved directors.
Article 24 The Company is installed with one General Manager and shall be nominated by Chairman of the Board and shall be appointed and /or dismissed with consent of more than half of Directors. In addition, the Company is also installed with one or more Vice General Manager, Assistant General Manager, Manager, General Auditor and Chief. Each of them shall be nominated by the General Manager; however, appointment and dismissal of heads of finance, accounting and internal audit shall have the consent of Audit Committee, and all other important appointment and dismissal may also

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proposed for resolution of Board Meeting directly. All appointments and dismissals of other post of the Corporation shall be at disposal of the General Manager.

Chapter 5 – Accounting

Article 25 Fiscal year of the Company commences from January 1 of a year and ends on December 31 of the same year. At end of each fiscal year, Board of Director shall compile the following books and statement and submit for recognition of Shareholders’ Meeting as required under law.

Operation Report
Financial Statements
Proposal of Profits Distribution or Loss Replenishment.
Article 26 The industry the Corporation is involved is of ever-changing nature and the life cycle of the business is presently at stage of steady growth. With the consideration of needs of operation of the Corporation and maximizing the interests of shareholders, the dividend policy of the Company will be retaining part of earnings from the distributable earnings of the year, subject to capital outlay budget in the future and the needs of funds. Shareholder’s dividends will be distributed in cash preferably, but it may be partly in stock dividend, however, the cash dividend shall not be less than 50% of total dividend of the current year.
Article 27 When the Corporation stands with earnings in a year, no less than 0.5% of the earnings shall be appropriated as bonus for employees. Board of Directors shall decide whether distributed in cash or in stock. The employees eligible for the bonus shall be landside employees of the Corporation and employees of subsidiary meeting certain conditions. From the above earnings, the Corporation may resolve in Board Meeting a remuneration for directors at 1.5 % or less. Bonus for landside employees and remuneration for directors shall be reported in Shareholders’ Meeting. However, if the Corporation is still bearing previous loss, a sum shall be reserve to make up the loss before appropriating the bonus and remuneration at the percentages stated above. $. Before installing Audit Committee, the remuneration for Supervisors shall be distributed in the same percentage as that for directors.
Article 27-1 When the annual accounting of the Corporation is existed with earnings, tax and loss making up shall be appropriated firstly. Thereafter, 10% of it shall be appropriated as legal earning surplus. However, if the accumulated earning surplus reached the amount of total paid capital, the appropriation of legal earnings surplus is not required. The balance of shall be appropriated or reverted to be special earnings surplus. If there are still residual earnings, it shall be joined with the accumulated undistributed earnings as distributable earnings for Board of Directors to propose Earning Distribution Proposal

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and submit for resolution of Shareholders Meeting to be shareholders dividend.

Chapter 6 -- Addendum

Article 28 Organization Cjharter of the Company shall be established by Board of Dirctors.

Article 29 Anything not specifically stated in this Articles of Incorporation shallbe handled pursuant to Company Act and other relate legislations.

Article 30 The Article of Incorporation was established in April, 1954.The 1[st] amendment made on June 27, 1958, 2[nd] amendment made on July 7, 1958, 3[rd] amendment made on Feb. 29, 1960, 4[th] amendment made on Aug. 11, 1961, 5[th] amendment made on July 18, 1967, 6[th] amendment made on Apr. 25, 1969, 7[th] amendment made on Oct. 17, 1969, 8[th] amendment made on Apr. 9, 1971, 9[th] amendment made on July 28, 1972, 10[th] amendment made on Feb. 15, 1974, 11[th] amendment made on Mar. 21, 1975, 12[th] amendment made on Apr. 31, 1976, 13[th] amendment made on July 22, 1977, 14[th] amendment made on Dec. 1, 1978, 15[th] amendment made on Nov. 23, 1979, 16[th] amendment made on Dec. 19, 1980, 17[th] amendment made on Dec. 24, 1982, 18[th] amendment made on July 29, 1983, 19[th] amendment made on Aug. 25, 1989, 20[th] amendment made on June 19, 1992, 21[st] amendment made on May 27, 1994, 22[nd] amendment made on Sept. 26, 1995, 23[rd] amendment made on Apr. 27, 1996, 24[th] amendment made on Oct. 29, 1996, 25[th] amendment made on June 24, 1997, 26[th] amendment made on May 15, 1998, 27[th] amendment made on Aug. 12, 1998, 28[th] amendment made on June 22, 2000, 29[th] amendment made on June 22, 2001, 30[th] amendment made on June 21, 2002, 31[st] amendment made on June 24, 2004, 32[nd] amendment made on May 18, 2005, 33[rd] amendment made on June 23, 2006, 34[th] amendment made on Nov. 15, 2007, 35[th] amendment made on June 19, 2009, 36[th] amendment made on June 22, 2011, 37[th] amendment made on June 18, 2012, 38[th] amendment made on June 22, 2016, 39[th] amendment made on June 20, 2017, 40[th] amendment made on June 26, 2018.

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Appendices 3

Taiwan Navigation Co., Ltd.

Operational Procedures for Endorsements and Guarantees of Company Funds

Article 1 Purpose

In order to ensure the company's guarantee matters regarding external endorsement, the operating procedures have been specially stipulated. If there are any unfinished matters in this operation procedure, it shall be handled in accordance with the relevant laws and regulations.

Article 2 Scope of application

The term “ endorsements and guarantees” as used in these Regulations refers to the following:

Endorsements and guarantees mean bill discount financing, endorsement or guarantee made to meet the financing needs of another company, and issuance of a separate negotiable instrument to a non-financial enterprise as security to meet the financing needs of the company itself.
Customs duty endorsement and guarantee, meaning an endorsement or guarantee for the company itself or another company with respect to customs duty matters.
Other endorsements and guarantees, meaning endorsements or guarantees beyond the scope of the above two subparagraphs.
The company of a pledge or mortgage on its chattel or real property as security for the loans of another company shall also comply with these Regulations.

Article 3

The company may make endorsements and guarantees for the company in which the company directly and indirectly holds more than 50 percent of the voting shares.

Companies in which the company holds, directly or indirectly, 90% or more of the voting shares may make endorsements and guarantees for each other, and the amount of endorsements and guarantees may not exceed 10% of the net worth of the company, provided that this restriction shall not apply to endorsements and guarantees made between companies in which the public company holds, directly or indirectly, 100% of the voting shares.

“ Subsidiary” as referred to in these Operational Procedures shall be

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as determined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

“ Net worth” in these Operational Procedures means the balance sheet equity attributable to the owners of the parent company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 4 Limits of endorsements and guarantees

The total amount of endorsements and guarantees by the Company must not exceed 2 times the Company's Paid-in capital. Their total amount of the Company's endorsements and guarantees of a single company must not exceed 2 times the Company's Paid-in capital.
The total amount of endorsements and guarantees by the Company and and its subsidiaries must not exceed 2 times the Company and its subsidiaries 's Paid-in capital. Their total amount of the Company's endorsem and guarantees of a single company must not exceed 2 times the Company and its subsidiaries 's Paid-in capital.

Article 5 Hierarchy of decision-making authority and delegation thereof.

When the company handles the endorsement and guarantee, it shall sign in accordance with the procedures specified in Article 6, the procedures shall require the approval of one-half or more of all audit committee members, and furthermore shall be submitted for a resolution by the board of directors, the provisions of Article 12, paragraphs 2 and 3.
Before making any endorsement and guarantee pursuant to Article 3, paragraph 2, a subsidiary in which the company holds, directly or indirectly, 90% or more of the voting shares shall submit the proposed endorsement and guarantee to the company’s board of directors for a resolution, the procedures shall require the approval of one-half or more of all audit committee members, and furthermore shall be submitted for a resolution by the board of directors, the provisions of Article 12, paragraphs 2 and 3, shall apply ,provided that this restriction shall not apply to endorsements and guarantees made between companies in which the company holds, directly or indirectly, 100% of the voting shares.

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Article 6
Procedures for endorsements and guarantees
In making endorsements and guarantees, the financial department shall, in accordance with the applications filed by the entity for which the endorsement and guarantee is made, verify item-by-item whether the qualifications and amounts are consistent with the provisions of these procedures and whether any threshold for public announcement and report has been met, evaluate the risk by analyzing the necessity and rationality of endorsements and guarantees, business operations, financial condition and credit ability, and make a record. If required, ask the guaranteed party to provide collateral. After describing reasons of endorsements and guarantees and the result of risk evaluation has been approved by chairman, it shall be approved by more than half of all Audit Committee members and then submitted to the Board of Directors for a resolution, the provisions of Article 12, paragraphs 2 and 3, shall apply.
The financial department shall establish a record book for endorsements and guarantees. After the endorsement and guarantee is approved by the Board of Directors, in addition to filing an application for the use of chops in accordance with the procedure, the financial department shall record the subject of the endorsement and guarantee, the name of the party for whom the endorsement and guarantee was made, the result of the risk evaluation, the amount of the endorsement and guarantee, the content of the Collateral, and the condition and date for discharging the obligation of the endorser and guarantor in detail. Any relevant note or agreement shall also be photocopied and duly maintained.
The financial department shall prepare a schedule of guaranteed undertaken and cancelled in each month in order to control follow up and to file public announcement and reports. Evaluation and provision of contingent loss for endorsements and guarantees shall also be provided on quarterly basis. The information of endorsements and guarantees shall be disclosed in the financial reports and the certifying CPA shall be provided with relevant information.
Before the end of the endorsement and guarantee period, the finance department shall take the initiative to notify the entity for which the endorsement and guarantee is made and take back the guarantee note deposited with the bank or credit institution.

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Contracts related to the endorsement and guarantee shall also be cancelled.

Article 7 Procedures for custody of corporate chops
The Company shall use the company chop (the "Chop") registered with the Ministry of Economic Affairs for the use of endorsement and guarantee, the appointment and amendment of the safekeeper of the chops should be recognized by Board of Directors, and the chops shall be transfered to replacement.
After the endorsement and guarantee is approved with the resolution by the Board of Directors, the Financial Department shall fill out the Chop Application Form, together with the record of approval and the endorsement and guarantee contract or guarantee note, on which the Chop shall be affixed, to the vice president for approval. Then the Chop keeper will affix the seal.
When the Chop keeper uses the Chop, it shall be verified whether there is a record of approval, whether the Chop Application Form has been approved by vice president and whether the documents on which the Chop will be affixed are consistent. After the Chop is used, it should be marked on the memorandum book.
When making a guarantee for an overseas company, a public company shall have the Guarantee Agreement signed by chairman or president authorized by the board of directors.

Article 8 Attention when handling endorsement and guarantee

The company's internal auditors shall audit the Operational Procedures for Endorsements and Guarantees to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify all audit committee members in writing of any material violation found.
Where as a result of changes of condition the entity for which an endorsement and guarantee is made no longer meets the requirements of these Operational Procedures, or the amount of endorsement and guarantee exceeds the limit, the supervisors shall urge Financial Department rectification plans and submit the rectification plans to the Audit Committee, report to board, and shall complete the rectification according to the timeframe set out in the plan.

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Article 9

Terms and contents of announcement and reporting

The company shall announce and report the previous month's balance of endorsements and guarantees of itself and its subsidiaries by the 10th day of each month.
The company whose balance of endorsements and guarantees reaches one of the following levels shall announce and report such event within two days commencing immediately from the date of occurrence:
(1) The aggregate balance of endorsement and guarantees by the company and its subsidiaries reaches 50 percent or more of the company's net worth as stated in its latest financial statement.
(2) The balance of endorsements and guarantees by the company and its subsidiaries for a single enterprise reaches 20 percent or more of the public company's net worth as stated in its latest financial statement.
(3) The balance of endorsements and guarantees by the company and its subsidiaries for a single enterprise reaches NT$10 millions or more and the aggregate amount of all endorsements and guarantees for, long-term investment, and balance of loans to, such enterprise reaches 30 percent or more of public company's net worth as stated in its latest financial statement.
(4) The amount of new endorsements and guarantees made by the public company or its subsidiaries reaches NT$30 million or more, and reaches 5 percent or more of the public company's net worth as stated in its latest financial statement.
The company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to item 4 of the preceding subparagraph.
The company shall evaluate or record the contingent loss for endorsements and guarantees, and shall adequately disclose information on endorsements and guarantees in its financial reports and provide certified public accountants with relevant information for implementation of necessary audit procedures.

The term "announce and report" as used in these operational procedures means the process of entering data to the information

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reporting website designated by the Financial Supervisory Commission.

“ Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the loan of funds or endorsement and guarantee, whichever date is earlier.

Article 10 Procedures for controlling and managing loans of funds to others by subsidiaries

The subsidiary’s internal auditors shall audit the Operational Procedures for endorsement and guarantee to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify the company’s auditing office in writing of any material violation found. The company’s auditing office shall promptly notify all audit committee members in writing of any material violation found.
Subsidiary shall compile detail list of endorsement and guarantee to other person of last month before 10th of the month and submit for review of the Company.
The subsidiary’s internal auditors shall audit the Operational Procedures for Endorsement and Guarantee to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify the audit Committee in writing of any material violation found.
The subsidiary’s internal auditors shall audit the Operational Procedures for Endorsement and Guarantee to Others and the implementation and prepare written records accordingly. They shall promptly notify the Chairman in writing of any material violation found.
The subsidiary’s internal auditors shall audit the Operational Procedures for Endorsement and Guarantee to Others and the implementation and prepare written records accordingly. They shall promptly notify the Chairman in writing of any material violation found.
In the case of a subsidiary with shares having no par value or a par value other than NT$10, for the paid-in capital in the calculation under the operational procedures, the sum of the share capital plus

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paid-in capital in excess of par shall be substituted.

Article 11 Penalty In the event the manager or handling person breach the Operation Procedure shall be put up for appraisal in accordance with the Personnel Management Measures and punished per the situation.

Article 12 Enforcement and Amendment

The adopts or amends of operational procedures shall require the approval of one-half or more of all audit committee members, and furthermore shall be submitted for a resolution by the board of directors and submitted them for approval by the shareholders' meeting.

If the approval of one-half or more of all audit committee members as required in the preceding paragraph is not obtained, the Operational Procedures may be implemented if approved by two-thirds or more of all directors, and the resolution of the audit committee shall be recorded in the minutes of the board of directors meeting.

The terms "all audit committee members" in this article and "all directors" in the preceding paragraph shall be counted as the actual number of persons currently holding those positions.

Article 13 The Operation Procedure was established initially on May 30, 1997. The 1st amendment on Nov. 19, 1999, 2nd Amendment on May 30,2003, 3rd Amendment on June 23, 2006, 4th Amendment on June 17, 2010, 5th Amendment on June 17, 2013,6th Amendment on June 22, 2015, and 7th Amendment on June 26, 2018.

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Appendices 4

Taiwan Navigation Co., Ltd. Operational Procedures for Loaning of Company Funds

Article 1 If for business operation the Company needs to extend loan to other person (hereinafter referred to as borrower), the Company shall comply with these Operation Procedures; provided that where another act or regulation provides otherwise, the provisions of such act shall prevail.

The subsidiary as referred under this Operation Procedure shall be as determined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

The term "announce and report" as used in these Procedures means the process of entering data to the information reporting website designated by the Financial Supervisory Commission.

The net worth as referred in this Operation Procedure means the balance sheet equity attributable to the owners of the company under the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

Article 2 Total amount of funds loaned and ceilings for individual borrower 1. Subjects qualified for the loan:

(1) Company or firm having business transactions with the Company.
(2) Company or firm having necessity of short term funds transactions.
。
1. Loan extended shall not exceed 40% of net worth of the Company
Ceiling for individual borrower:
(1) Loan extended to person having business transaction:
- A. Individual company or firm having business transaction with the Company and applied for loan shall have a ceiling of loan amount of 20% of total transaction amount with the Company in the recent year.
- B. The total amount of loan of this part shall not exceed 10%of net worth of the Company.
(2) Loan to party with the needs of short term financing:
- A. Subsidiary of the Company with whom the Company has

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direct or indirect holding of 100% voting right shares applying for loan, the ceiling of loan shall not exceed 20% of the net worth of the Company.

B. Subsidiary of the Company with whom the Company is holding voting right less than 100% but more than 50%, directly or indirectly, applied for financing due to needs of short-term finance. The total amount loaned shall not be more than 30% of paid up capital of the subsidiary, and individual subsidiary loaned amount shall not exceed paid up capital of the Company.
C. The restriction in paragraph 1, subparagraph 2 shall not apply to inter-company loans of funds between overseas subsidiaries in which the company holds, directly or indirectly, 100% of the voting shares. However, the subparagraph 2, paragraph 1, Article 2 and Article 3 concerning the setting of the amount limits and the durations of loans shall still apply.
The Short Term referred above means one year, however, if the business cycle of the Company is longer than one year, the business cycle shall govern.
The Total Amount of Loan as referred under Item 2 means the accumulated balance of loan between the Company and the overseas subsidiary of the Company to whom the Company is holding directly or indirectly 100% of the voting right shares.

Article 3

Period of Loan and Manner of Interest Accruing

Period of each load shall basically not longer than one year counted from the date of extending the loan; if such loan still needed after maturing of the period, application shall be made again and shall be resolved in Board Meeting.
Interest of loan shall be calculated per day by multiplying total sum of balance of loan (total accumulated amount) by the annual interest rate, then divided by 365 to reach at the amount of interest. The interest of loan shall be negotiated and agreed by parties involved but shall not be lower than average interest rate of short loan of finical institution.
Payment of interest, except otherwise provided, shall be once a month and the borrower shall be notified to pay within one week

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after agreed interest paying date.

Article 4

Review Procedure

1. Application: `：`

(1) Borrower shall provide its basic information and financial information, together with an application describing the purpose for the loan, loan period and amount, and submit to Finance Department of the Company.
(2) If loan is extended for business transaction, the handling person of Finance Department of the Company shall evaluate if the amount of loan and the business transaction amount are in appropriate ratio; if it is necessary for short term financing, the reason for qualifying for the loan and situation, which shall have credit survey conducted; the related data and the loan conditions proposed shall be submitted to the executive of Finance Department and the General Manager.

2. Credit Survey:

(1) First time borrower: Borrower shall provide basic information and financial information for arranging credit survey.
(2) If it’s for subsequent borrower, the credit survey shall be conducted when further borrowing is applied; if for material or emergency matter, the survey shall be conducted any time as the situation dictated.
(3) If the borrower is in good financial stand and the annual financial statements had been commissioned CPA for financing attestation, the survey report younger than one year may be employed to be reference for the loan.
(4) When the Company is conducting credit survey on the borrower, the operation risk, effects on financial situation and shareholders’ equity of the Company in extending the loan shall be evaluated together.
Loan Approval:
(1) When a loan application is to be denied after credit survey and evaluation, the handling person shall prepare the cause for turning down for approval of superior and then

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inform the borrower soonest possible.

  - (2) When a loan application is inclined to grant after credit survey and evaluation, the handling person shall complete opinion of the review, establishing terms and conditions of the loan for review board and when there is more than 50% of the board members agreed on it, the proposal shall then submitted for the resolution of the Board Meeting. When resolved, the provision under Para. 2 and Para. 3 of Article 12 may be applied.

Notifying borrower:
When a loan application is approved, the handling person shall notify borrower in writing, describing in detail the conditions of the loan, including credit line, term, interest rate, collateral and guarantor and ask the borrower to complete necessary formality soonest possible.
Contract signing and Identity Verification:
- (1) Loan case shall have the terms and conditions of the loan drafted by the handling person and submitting for supervisor for approval and arranging contract signing with the borrower.
- (2) Content of contract shall be meeting the terms and conditions of loan approved, and after affixing signatures of borrowers and guarantors on the contract, the handling per son shall conduct identity verification.
Setting of Right on Collateral:

If a loan case requires collateral, borrower shall provide and shall complete pledge or mortgage setting to secure the creditor’s right of the Company.

Insurance:
(1) Except land and marketable securities, all collaterals shall have insurance coverage subscribed, which shall include fire insurance and other related insurance. The insured amount shall be no less than pledged or mortgaged value of collateral basically and the beneficiary on the insurance policy shall be the Company. The title, quantity, place of deposit, insurance conditions and policy endorsement shall

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be conforming to those conditions for approval of loan.

(2) Handling person shall be watching the expiration of insurance and notify the borrower renew the insurance.
Appropriation:

When terms and conditions for the loan are approved and the loan contract is executed by the borrower, setting registration of collaterals are completed and are found in good order, the Finance Department shall apply for appropriation.

Article 5 Reimbursement

After appropriation of a loan, the financial, business and credit conditions of the borrower and the guarantors shall be watched carefully and if collateral is provided, check for any impairment of the collateral, and one month before expiration of the loan, the borrower shall be remind to reimburse the balance of the loan.
When a borrower is reimbursing a loan at expiration, the interest payable shall be calculated and shall be paid together with reimbursement of principal of loan, before return and / or cancel the promissory note and/ or Loan Receipt.
When a borrower request to remove a mortgage, check if any loan balance remains outstanding before agreeing for removal of mortgage.

Article 6 (Deleted)

Article 7 Registration and Custody of Loan Case
The company shall prepare a memorandum book for its fund-loaning activities and truthfully record the following information: borrower, amount, date of approval by the board of directors, date of approval by the audit Committee, lending/borrowing date, and matters to be carefully evaluated under Operational Procedures.
Handling person of a loan case shall, after loan appropriation, place the loan contract/ receipt, promissory notes and other warrant of the creditor’s right, document of the collateral, insurance policy and related correspondence into a custody bag and mark particulars of documents placed inside the bag and name of borrower and submit for inspection of head of Finance

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Department . When it is found in order, the bag shall be sealed and affix signatures and seals of both the handling person and the head of Finance Department in Register of Matters under Custody.

Article 8
Maters to be attended when loaning funds to other person:
Before loaning funds of the Company to other person, it shall be considered carefully if the requirement s under the Operation Procedure is compiled or not. The results of evaluation shall be submitted to Audit Committee for review. When it is agreed by more than1/2 of members of the Committee, it shall then be submitted for resolution of Board of Directors and paragraph 2 and paragraph 3 of Article 12 may be applied and shall not authorize any other to make the decision. The funds loaning transaction between the Company and subsidiary or between subsidiaries shall comply with the above requirements. Chairman of the Board may be authorized to provide the same borrower to appropriate in series or appropriate in revolving within certain credit line as resolved in Board Meeting with loan period no longer than one year. The "certain monetary limit" mentioned in the preceding paragraph shall not exceed 10% of the net worth on the most current financial statements of the lending company.
The company's internal auditors shall audit the Operational Procedures for Loaning Funds to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify the audit Committee in writing of any material violation found.
If, as a result of a change in circumstances, an entity for which an endorsement/guarantee is made does not meet the requirements of these Regulations or the loan balance exceeds the limit, the company shall adopt rectification plans and submit the rectification plans to the audit Committee, and shall complete the rectification according to the timeframe set out in the plan.
Handling person shall compile detail list of Loaning Funds to Other Person of last month before 10[th] of the month and submit for reference of superiors.
After extending a loan, the provisions in the loan contract shall be followed in collecting interest and principal; should the original borrower need funding further, application shall be made as per 。

the Operation Procedure.

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After extending a loan, should a debtor failed in reimbursing principal or paying interest, in addition for calling for reimbursement, shall take any and all necessary securing action, 。

dispose collateral or institute suit according to applicable law.

Article 9 Control Procedure for Subsidiary Extending Loan to Another Person

Where a subsidiary of the company intends to make loans to others, the public company shall instruct it to formulate its own Operational Procedures for Loaning Funds to Others in compliance with these Regulations, and it shall comply with the Procedures when loaning funds.
Such subsidiary shall compile detail list of loaning funds to other person of last month before 10[th] of the month and submit for review of the Company.
The subsidiary of the company's internal auditors shall audit the Operational Procedures for Loaning Funds to Others and the implementation thereof no less frequently than quarterly and prepare written records accordingly. They shall promptly notify the audit Committee in writing of any material violation found
The subsidiary of the company's internal auditors shall audit the Operational Procedures for Loaning Funds to Others and the implementation and prepare written records accordingly. They shall promptly notify the Chairman in writing of any material violation found.

Article 10 Information Disclosure

1.The company shall announce and report the previous month's loan balances of its head office and subsidiaries by the 10th day of each month.
2.The company whose loans of funds reach one of the following levels shall announce and report such event within two days commencing immediately from the date of occurrence:
(1) The aggregate balance of loans to others by the company and its subsidiaries reaches 20 percent or more of the company's net worth as stated in its latest financial statement.
(2) The balance of loans by the company and its subsidiaries to a single enterprise reaches 10 percent or more of the

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company's net worth as stated in its latest financial statement.

(3) The amount of new loans of funds by the company or its subsidiaries reaches NT$10 million or more, and reaches 2 percent or more of the company's net worth as stated in its latest financial statement.
3.The company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to subparagraph 3 of the preceding paragraph.
4.The company shall evaluate the status of its loans of funds and reserve sufficient allowance for bad debts, and shall adequately disclose relevant information in its financial reports and provide certified public accountants with relevant information for implementation of necessary auditing procedures.“Date of occurrence” in these Regulations means the date of contract signing, date of payment, dates of boards of directors resolutions, or other date that can confirm the counterparty and monetary amount of the transaction, whichever date is earlier.

Article 11 Penalty

In the event the manager or handling person breach the Operation Procedure shall be put up for appraisal in accordance with the Personnel Management Measures and punished per the situation.

Article 12 Enforcement and Amendment

The terms "all audit committee members" and "all directors" in the

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preceding paragraph shall be counted as the actual number of persons currently holding those positions.

Article 13 The Operation Procedure was established initially on May 30, 1997. The 1[st] amendment on Nov. 19, 1999, 2[nd] Amendment on January 2002, 3[rd] Amendment on May 31, 2003, 4[th] Amendment on June 17, 2010, 5[th] Amendment on June 17, 2013,6[th] Amendment on June 22, 2015, 7[th] Amendment on June 26, 2018 and 8th amendment on June 25, 2019.

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Appendices 5

Taiwan Navigation Co., Ltd. Shareholdings of All Directors

The paid up capital of the Company is NT$4,172,944,870 and total issued shares of the Company is 417,294,487 shares.
According to Article 26 of the Securities and Exchange Act and Rules and Review Procedures for Director and Supervisor Share Ownership Ratios at Public Companies, the total shareholdings of all the Directors shall not be less than 16,000,000 shares.
According to the roster of shareholders on the book closure data of 2020 Shareholders’ Meeting(April 20)are detailed in the following table..

Title	Name	Date elected	Tenure	Shareholding while elected	Shareholding on the book closure data	Institution represented
Chairman	Liu, Wen-Ching	107.06.26	3 Years	110,436,379	110,436,379	Ministry of Transportation and Communications R.O.C
Director	Chyou, Jong-Lin
Director	Chang, Chen-Yuan
Director	Ho, Hsiu-Chi	107.06.26	3 Years	10,079,000	10,389,000	Yunn Wang Investment Co., Ltd.
Director	James, Tarng	107.06.26	3 Years	31,125,000	31,125,000	Chinese Maritime Transport Ltd.
Director	Lin, Yu-Chin	107.06.26	3 Years	8,374,000	9,536,000	Global Growing International Co., Ltd.
Independent Director	Wang, Chin-San	107.06.26	3 Years	-	-	-
Independent Director	Huang, Wong-Hsiu	107.06.26	3 Years	-	-	-
Independent Director	Lu, Shih-Tong	107.06.26	3 Years	-	-
Total				160,014,379	161,486,379

Note: according to Para. 2, Clause 2 of Public Issue Company Shareholding Ratio Requirements and Checking Standard, when number of elected independent director is 2 or more, required ratio of all directors and supervisors, other than independent director, may be reduced to 80%. As the company has established the audit committee, the minimum shareholding requirements for supervisors do not apply.

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AI assistant

TNC — AGM Information 2020

52171_rns_2020-07-28_53cde16e-878a-4776-9495-9a22798cf5f9.pdf

TAIWAN NAVIGATION CO., LTD.

Table of Contents

Meeting Procedure

Taiwan Navigation Company Limited Meeting Procedure of the 2020Annual Shareholders’ Meeting

1. Call the meeting to order

2. Chairman remarks

3. Reports

4. Recognitions

5. Discussions

6. Questions and Motions

7. Adjourn

Meeting Agenda

Taiwan Navigation Co., Ltd. Meeting Agenda of the 2020 Annual Shareholders’ Meeting

1. Call the meeting to order

2. Chairman remarks

3. Reports

4. Recognitions

5. Discussions

6. Questions and Motions

7. Adjournment

Reports

Rreports

1. To report the 2019 business

2. The 2019 audit committee’s audit report

3. The 2019 directors and employees' remuneration

Recognitions

Recognitions

Taiwan Navigation Co., Ltd.

Discussions

Discussions

Case 2 Proposed by the Board

Questions and Motions

Attachments

Attachment 1

2019 Business Report

1.The Operation Policy

2. The overview of operation

3.Performance of Operation Plan

4. Execution of Operating Revenue and Expenditure Budgets

(1) Operating Revenue

5.Analysis of Profitability

6.Situation of Research and Development

7. The analysis of industry

8. The Future development

Attachment 2

The 2019 audit committee’s audit report.

Attachment 3

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

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

Notice to Readers

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars, Except Earnings Per Share)

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

TAIWAN NAVIGATION CO., LTD. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

INDEPENDENT AUDITORS’ REPORT

Opinion

Basis for Opinion

Key Audit Matters

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

Auditors’ Responsibilities for the Audit of the Financial Statements

Notice to Readers

TAIWAN NAVIGATION CO., LTD.

BALANCE SHEETS DECEMBER 31, 2019 AND 2018 (In Thousands of New Taiwan Dollars)

TAIWAN NAVIGATION CO., LTD.

TNC AGM Information 2020

Article 13 `：`

Article 13 `：`

1. Application: `：`