T.S.M.C. — AGM Information 2019

Jul 5, 2019

General Meeting of Shareholders, 2019

Meeting Minute

June 28, 2019

Address: No. 7, Indstrial 1 Rd., Linyuan Dist., Kaohsiung City (Kaohsiung Factory of the Company)

Taiwan Styrene Monomer Corporation General Meeting of Shareholders, 2019 Meeting Minute Content

1、Meeting Procedure 2
2、Meeting Agenda 3
3、Acknowlegment6
4、Discussion8
5、Proposal 10
6、Adjourn 10
7、Appendices 11
(1) 2018 Business Report 12
(2) Auditor Committee 2018 Closing Account 15
(3) Ethical Corporate Management Best Practice Principles Amendment Comparison	16
(4) 2018 Financial Statement 22
(5) 2018 Earning Distribution 47
(6) Procedures for Acquisition or Disposal of Assets Amendment Comparison 48
(7) Operational Procedures for Loaning Funds to Others Amendment Comparison	91
(8) Management of Endorsement and Guarantees Amendment Comparison 101
(9) Procedures for Election of Directors Amendment Comparison 109
8、Appendices113
(1) Corporation Articles 114
(2) Meeting Regulations 122
(3) Procedures for Acquisition or Disposal of Assets(Before amendment) 125
(4) Operational Procedures for Loaning Funds to Others (B efore amendment) 146
(5) Management of Endorsement and Guarantees (B efore amendment) 153
(6) Procedures for Election of Directors and supervisors (B efore amendment) 160
(7) Shareholding Status of the DIrectors 163
(8) 2017 Compensation Infos 164
(9) 2018 Compensation Infos 165
(10) The impact of share allotment on company operation and EPS 166

1、Meeting Procedure

Taiwan Styrene Monomer Corporation General Meeting of Shareholders, 2019

Time:AM 09:30 Jun.28, 2019

Place: No.7, Industry-1 Rd., Linyuan Dist., Kaohsiung City

(Kaohsiung Plant)

Agenda:

• 1、Announce(By president)
• 2、President speech
• 3、Report
• (1) 2018 Business Report
• (2) 2018 closing account
• (3)2018 co mpensation infos
• (4)Ethical Procedure Report
• 4、Acknowledgment
• (1)2018 business report
• (2)2018 earning distribution
• 5、Discussion
• (1)Procedures for Acquisition or Disposal of Assets Discussion
• (2)Operational Procedures for Loaning Funds to Others Discussion
• (3)Management of Endorsement and Guarantees Discussion
• (4)Procedures for Election of Directors and supervisors Discussion
• 6、Proposal
• 7、Adjourn

2. Reporting Items

Case 1 Subject: Business Report 2018, please check. Description: Please refer to Attachment 1, Page 12.

Case 2

Subject: Financail Statements 2018 reviewed by the Audit Committee, please check.

Description: Financail Statements 2018 reviewed by the Audit Committee, please refer to Attachment 2, Page15

Case 3

• Subject: Distribution Report for the Compensation of Employees, Directors and Supervisors 2018, please check.
• Description: This case shall be handled according to Sec. 1 and Sec. 2, Article 31 of the terms and conditions of the company. It is planned to take the income before tax in 2018 and draw 2.5% of it as the compensation for the directors and supervisors, and 2% of it as the compensation for the employees. All the compensation shall be distributed in cash as described in the following form:

	Unit: NT\$
Item	Amount
Profit before tax and before the deduction of the compensation for employees,
directors and supervisors
(i.e. the profit consists of the profit before tax before the deduction of the	1,642,929,758
compensation for employees, directors and supervisors)
2.5% of it was allocated to the directors and supervisors as compensation	41,073,000
2% of it was allocated to the employees as compensation	33,086,131
Net profit before tax	1,568,770,627

Case 4

Subject: Revision Report of Guidelines for Operation in Good Faith, please check. Description:

• 1. The "Guidelines for Operation in Good Faith" of the Company is planned to be made according to related laws and regulations and by the audit committee established by the Company.
• 1. The comparison form for the revision of part of the provisions in the "Guidelines for Operation in Good Faith" is provided. Please refer to Attachment 3, on page 16.

3. Items for Approval

Case 1: Proposal by the Board

Subject: Please review and approve the case for approval of the Operational Report and Financial Statements 2018.

Description: The financial statements 2018 of the Company were auditted and approved by Baker Tilly Clock & CO, and the audit committe also reviewed them.

For the Operational Report, please refer to Attachment 1, on page 12.

For the Financial Statements, please refer to Attachment 4, on page 22.

Case 2: Proposal by the Board

Subject: Please review and approve the case for approval of the Earnings Distribution Plan 2018. Description: 1. The income after tax of the Company in 2018 was 1,216,400,943 TWD, and

• the distributable earnings were $2,127,643,174$ TWD.
• 1. The abovementioned distributable earnings are planned to be distributed as follows:
• (1) The legal reserve of 121,640,094 TWD and special capital reserve of 421,857,342 TWD were listed according to the Company Act.
• (2) It is planned to distribute a cash dividend of 2.0 TWD for each shares held by shareholders, and the total of which will be 1,055,739,528 TWD. The number was calculated according to the share holding ration on the name book of shareholders by the basic day of interest removal.
• 1. The balance after the distribution will be 528,406,210 TWD, and it will be kept as the retained earnings to be distributed.
• 1. The distribution of earnings will be performed before the basic day of interest removal. If the share capital of the Company changes and affects the number of issued shares, causing the change in the dividend rate for shareholders and the need for revision, it is planned to have the general meeting authorize the chairperson to handle the problem according to the Compant Act or other related regulations.
• 1. The smallest cash dividend shall be 1 TWD. The total of any dividend of an odd lot of less than 1 TWD will be returned to the retained earnings to be distributed.
• 1. For the Earnings Distribution Form of the Company 2018, please refer to Attachment 5 on Page 47.

Case 1: Proposed by the Board

Subject: Discussion for the revisions of Operating Procedure for the Acquisition and Disposal of Assets, please discuss.

Description:

1. It is planned to revise part of the provisions of "Operating Procedure for the Acquisition and Disposal of Assets" of the Company according to related laws and regulations and by the audit committee established by the Company.

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1. We attach the comparison form for the revisions of the "Operating Procedure for the

Acquisition and Disposal of Assets", please refer to Attachment 6, Page 48 Decision:

Case 2: Proposal by the Board

Subject: Operational Procedures for Loaning Funds to OthersDisscussion, please review and approve.

Description:

1 Set up Auditor Committee and revise the Loan to Others Procedure.

2 Present Operational Procedures for Loaning Funds to Others amendement comparison, please refer to Attachment 7, Page 91

Case 3 By the Board

Subject: Management of Endorsement and GuaranteesDiscussion Description:

• 1 Set up Auditor Committee and revise Management of Endorsement and Guarantees.
• 2 · Present 「Management of Endorsement and Guarantees」 amendement comparison, please refer to Attachment 8, Page 101

Decision:

Case 4 By the Board

Subject: Procedures for Election of Directors and supervisors Discussion Description:

• 1 Set up Auditor Committee and revise Directors and Supervisors Election SOP.

• 2 · Present Procedures for Election of Directors Comparison, please refer to Attachment 9, Page 109

• New proposals during the meeting

• Dismissal

7 · Appendices

(1) 2018 Business Report

(2) 2018 Closing Account

(3) Ethical code Comparison

(4) 2018 Financial Statement

(5) 2018 earning distribution

(6) Procedures for Acquisition or Disposal of Assets Comparison

(7) Operational Procedures for Loaning Funds to Others Comparison

(8) Management of Endorsement and Guarantees Comparison

(9) Procedures for Election of Directors and supervisors Comparison

Attachment 1

Taiwan Styrene Monomer Corporation 2018 Business Report

$(1)$ Result

The company produce Styren 358,636 tons this year and complete the sales of 355,708 tons, in a value of TWD: 13.9 billion and 90.99 million dollars, with the value added by side product, the sales reaches TWD 14.8 billion 6.54 million dollars. The net profit after tax is TWD 1.2 billion 16.4 million dollars.

(2) Budget implementation

		Unit: NT\$ 10,000
Item		Actual amount in 2018 Budget amount in 2018
Net value of operating income	1,480,654	1,250,683
Gross profit	197,697	115,198
Operating profit	169,572	91,854
Income before tax	156,877	87,484
Income after tax	121,640	72,040

(3) Earning power analysis

Analysis item	2018
Earning (loss) per share after tax/dollor	2.30
Rate of income after tax $(\% )$	8.22%
Return on total assets $(\% )$	12.56%
Return on equity for shareholders $(\%)$	16.49%
Ratio of income before tax in paid-in capital $(\%)$	29.72%

$(4)$ R&D

The core business of the company is the manufacturing and sales of Styrene and the aim of the company is to promote new application to ensure the add value and the business transformation.

A. Develop the material used on electronic products and medical equipment, develop the poeder raw material used on professional coating machine. The company has applied the patents of the products in Tiawan, China, America, and Japan and our products has been tested by international companies with reputation.

B. Except for the development of the above-mentioned raw material, the company also probe into the processing of applied products. The products proposed in 2018 has met the requirement of the 2D flexible big size PCB companies and has been established sales contacts from them.

C. Develop the advanced material to be applied in the field of battery and heat dissipation for special industry and hi-end customer. We also focus on the market differmiating, devoting to the R&D on process refinement.

(5) Our vision

Looking ahead to this 2019 year, the International Monetary Fund (IMF) reported this spring that the tightening of financial regulation on shadow banks, the intensification of U.S.-China trade, the decline in Chinese economic growth, the less than expected economic momentum in the TWD region, and the impact of Japan's economic growth on natural disasters. The IMF expects global economic growth rate this year from 3.7% to 107 in October, to 3.3%. In addition, the expansion of SM capacity in mainland China is 2.5 million tons and 3.64 million tons respectively, which will also have an impact on the SM market.

To this end, the company will strengthen profession, the SM Bottleneck project, in order to reduce production costs. In conjunction with the new four-light expansion plan of CNOOC, the SM expansion assessment work was carried out to enhance the competitiveness. In addition, at the same time, the slimming program, will be rectified to invest in the business body, to strengthen the overall competitive. The SM market is expected to remain afloat this year as IHS predicts that global SM demand is still 2.5% that most of the mainland's SM expansion is in production by the end of this year, and that this year's focus in the SM plant in Northeast Asia is concentrated in the second quarter. Therefore, the company's production and marketing strategy this year is still to set "full-production full sales" as the goal, SM manufacturing target of 359,240 tons, sales target at 359,000 tons. Production management to "industrial and security first, environmental priority" as the goal.

Chairperson: Wen-Yuan Lin Manager: Pao-Yuan Chen Accounting manager: Jason Chou

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Verification Report by Auditor Committee

The Board has prepared the 2018 Business Report, Financial Statement (separate and consolidated) and the earning distribution proposal. The financial statement has been verified by Baker Tilly Clock $\&$ CO. and the others has been reviewed by the Auditors Committee of the Company. They've concluded that the documents has been well prepared according to related Laws.

Taiwan Styrene Monomer Corporation Convenor: Jin-Chen Chien,

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9

Attachement 3

Taiwan Styrene Monomer Corporation
Ethical Corporate Management Best Practice Principles Amendment Comparison

Proposed on Jan.2,2019 on Board Meeting

Article	Original	Amendment	Reason
$\overline{c}$	Unethical conduct is	Unethical conduct is	Cooperate with the 14
	prohibited	prohibited	session of the company's
	When engaging in	When engaging in	board of directors to
	commercial activities,	commercial activities,	implement the Audit
	directors, supervisors,	directors, managers,	committee, delete the
	managers,	employees of the Company	supervisor text.
	employees of the Company	or persons having substantial
	or persons having substantial control over the
	control over the	Company (Substantial
	Company (Substantial	Controllers) shall not
	Controllers) shall not	directly or indirectly offer,
	directly or indirectly offer,	promise
	promise	to offer, request or accept
	to offer, request or accept	any improper benefits, nor
	any improper benefits, nor	commit unethical acts
	commit unethical acts	including breach of ethics,
	including breach of ethics,	illegal acts, or breach of
	illegal acts, or breach of	fiduciary duty (Unethical
	fiduciary duty (Unethical	Conduct) for purposes of
	Conduct) for purposes of	acquiring or maintaining
	acquiring or maintaining	benefits.
	benefits.	Parties referred to in the
	Parties referred to in the	preceding paragraph include
	preceding paragraph include	civil servants, political
	civil servants, political	candidates, political parties
	candidates, political parties	or members of political
	or members of political	parties, state-run or
	parties, state-run or	private-owned businesses or
	private-owned businesses or	institutions, and the
	institutions, and the	directors, managers,
	directors, supervisors,	employees or substantial
	managers,	controllers or other
	employees or substantial	interested parties.
	controllers or other
	interested parties.

10	Bribery is prohibited	Bribery is prohibited	Cooperate with the 14
	When conducting business,	When conducting business,	session of the company's
	the Company and its	the Company and its	board of directors to
	directors, supervisors,	directors, managers,	implement the Audit
	managers,	employees and Substantial	committee, delete the
	employees and Substantial	Controllers, shall not directly	supervisor text.
	Controllers, shall not directly or indirectly offer,
	or indirectly offer,	promise to offer, request or
	promise to offer, request or	accept any improper
	accept any improper	benefits, including rebates,
	benefits, including rebates,	commissions, grease
	commissions, grease	payments, or offer or accept
	payments, or offer or accept	improper benefits in other
	improper benefits in other	ways
	ways	to or from clients, agents,
	to or from clients, agents,	contractors, suppliers, public
	contractors, suppliers, public	servants, or other
	servants, or other	interested parties, unless the
	interested parties, unless the	laws of the territories where
	laws of the territories where	the companies operate
	the companies operate	permit so. However, if the
	permit so. However, if the local government of the	local government of the
	business area regulates	business area regulates
	otherwise different than	otherwise different than
	preceding articles, the local	preceding articles, the local laws shall govern.
	laws shall govern.
11	Illegal political donation is	Illegal political donation is	Cooperate with the 14
	prohibited	prohibited	session of the company's
	When directly or indirectly	When directly or indirectly	board of directors to
	offering a donation to	offering a donation to	implement the Audit
	political parties or	political parties or	committee, delete the
	organizations	organizations	supervisor text.
	or individuals participating	or individuals participating
	in political activities, the	in political activities, the
	Company and its directors, supervisors, managers,	Company and its directors,
	employees and Substantial	managers, employees and
		Substantial Controllers, shall
	Controllers, shall comply with	comply with
	the Political Donations Act	the Political Donations Act and its own relevant internal
	and its own relevant internal	operational procedures,
	operational procedures,	and shall not make such
	and shall not make such	donations in exchange for
	donations in exchange for	commercial gains or
	commercial gains or	business
	business	advantages.
	advantages.

12	Improper donation or	Improper donation or	Cooperate with the 14
	sponsorship is prohibited	sponsorship is prohibited	session of the company's
	When making or	When making or	board of directors to
	offering donations and	offering donations and	implement the Audit
	sponsorship, the Company	sponsorship, the Company	committee, delete the
	and their directors,	and their directors,	supervisor text.
	supervisor,	managers, employees,
	managers, employees,	mandataries, and substantial
	mandataries, and substantial	controllers shall comply with
		controllers shall comply with relevant laws and regulations
	relevant laws and regulations and internal operational
	and internal operational	procedures, and shall not
	procedures, and shall not	surreptitiously engage in
	surreptitiously engage in	bribery.
	bribery.
13	Unreasonable presents,	Unreasonable presents,	Cooperate with the 14
	hospitality or	hospitality or	session of the company's
	other improper benefits are	other improper benefits are	board of directors to
	prohibited The Company and their	prohibited	implement the Audit
	directors, supervisors,	The Company and their	committee, delete the
	managers, employees,	directors, managers, employees, mandataries, and	supervisor text.
	mandataries, and substantial	substantial
	controllers shall not directly	controllers shall not directly
	or indirectly offer or accept	or indirectly offer or accept
	any unreasonable presents,	any unreasonable presents,
	hospitality or other improper	hospitality or other improper
	benefits to establish business	benefits to establish business
	relationship or influence	relationship or influence
	commercial transactions.	commercial transactions.
15	Compliance requirement to	Compliance requirement to	Cooperate with the 14
	conduct business	conduct business	session of the company's
			board of directors to
	The Company and its	The Company and its	implement the Audit
	directors, supervisors,	directors, managers,	committee, delete the
	managers, employees,	employees, mandataries, and	supervisor text.
	mandataries, and substantial	substantial
	controllers shall comply with controllers shall comply with
	laws and regulations and the	laws and regulations and the
	prevention programs when	prevention programs when
	conducting business	conducting business

$\sim 10^{11}$

16	Conflict of interest	Conflict of interest	Cooperate with the 14
	avoidance-Directors, Supervisors, and Managers	avoidance-Directors, and Managers	session of the company's board of directors to
			implement the Audit
		When a proposal at a given	committee, delete the
	When a proposal at a given	board of directors meeting	supervisor text.
	board of directors meeting	concerns the personal
	concerns the personal interest	interest
	of, or the interest of the	of, or the interest of the juristic person represented
	juristic person represented	by, any of the directors,
	by, any of the directors,	managers,
	supervisors, managers,	and other stakeholders
	and other stakeholders	attending or present at board
	attending or present at board	meetings of the Company,
	meetings of the Company, the	the
	concerned person shall state	concerned person shall state
	the important aspects of the	the important aspects of the relationship of interest at
	relationship of interest at	the given board meeting. If
	the given board meeting. If	his or her participation is
	his or her participation is	likely to prejudice the
	likely to prejudice the	interest of
	interest of	the company, the concerned
	the company, the concerned person may not participate in discussion of or voting on	person may not participate in
	discussion of or voting on	the proposal and shall recuse
	the proposal and shall recuse himself or herself from the
	himself or herself from the	discussion or the voting, and
	discussion or the voting, and	may not exercise voting
	may not exercise voting	rights as proxy for another
	rights as proxy for another	director. The directors shall
	director. The directors shall practice	practice
	self-discipline and must not	self-discipline and must not support one another in
	support one another in	improper dealings.
	improper dealings.	The Company's directors,
	The Company's directors,	managers, employees,
	managers, employees,	mandataries, and substantial
	mandataries, and substantial	controllers shall not take
	controllers shall not take	advantage of their positions
	advantage of their positions or influence in the company	or influence in the company to
	to	obtain improper benefits for
	obtain improper benefits for	themselves, their spouses,
	themselves, their spouses,	parents, children or any other
	parents, children or any other person.
	person.

18	Procedures and guidelines	Procedures and guidelines	Cooperate with the 14
	The company shall establish	The company shall establish	session of the company's board of directors to
	operational procedures and	operational procedures and	implement the Audit
	guidelines in accordance	guidelines in accordance	committee, delete the
	with	with	supervisor text.
	Article 6 hereof to guide	Article 6 hereof to guide
	directors, managers,	directors, supervisor,
	employees, and substantial	managers, employees, and
	controllers	substantial controllers
	on how to conduct business.	on how to conduct business.
	The procedures and	The procedures and
	guidelines should at least	guidelines should at least
	contain the	contain the
	following matters:	following matters:
	1. Standards for determining	1. Standards for determining
	whether improper benefits	whether improper benefits
	have been offered or	have been offered or
	accepted.	accepted.
	2. Rules for avoiding work-related conflicts of	2. Rules for avoiding
		work-related conflicts of
	interests and how they should be	interests and how they should be
	reported and handled.	reported and handled.
	3. Rules for keeping	3. Rules for keeping
		confidential trade secrets and confidential trade secrets and
	sensitive business	sensitive business
	information	information
	obtained in the ordinary	obtained in the ordinary
	course of business.	course of business.
	4. Regulations and	4. Regulations and
	procedures for dealing with	procedures for dealing with
	suppliers, clients and	suppliers, clients and
	business	business
	transaction counterparties	transaction counterparties
	suspected of unethical	suspected of unethical
	conduct.	conduct.
	5. Handling procedures for	5. Handling procedures for
	violations of these	violations of these
	Principles.	Principles.
	6. Disciplinary measures on	6. Disciplinary measures on
	offenders.	offenders.

19	Training and Performance	Training and Performance	Cooperate with the 14
	appraisal system	appraisal system	session of the company's
		The Company shall	board of directors to
	The Company shall	periodically organize	implement the Audit
	periodically organize	training and awareness	committee, delete the
	training and awareness	programs for directors,	supervisor text.
	programs for directors,	supervisors,
	supervisors,	managers, employees,
	managers, employees,	mandataries, and substantial
	mandataries, and substantial	controllers and invite the
	controllers and invite the	companies' commercial
	companies' commercial	transaction counterparties so
	transaction counterparties so	they understand the
	they understand the	companies'
	companies'	resolve to implement ethical
	resolve to implement ethical	corporate management, the
	corporate management, the	related policies, prevention
	related policies, prevention	programs and the
	programs and the	consequences of committing
	consequences of committing unethical conduct.	unethical conduct.
		The Company shall apply
	The Company shall apply the policies of ethical	the policies of ethical
	corporate management when	corporate management when creating
	creating	its employee performance
	its employee performance	appraisal system and human
	appraisal system and human	resource policies to establish
	resource policies to establish	a clear and effective reward
	a clear and effective reward	and discipline system.
	and discipline system.
22	Ethical corporate	Ethical corporate	Cooperate with the 14
	management policies and	management policies and	session of the company's
	measure	measure	board of directors to
	for better implementation	for better implementation	implement the Audit
	The Company shall at	The Company shall at	committee, delete the
	all times monitor the	all times monitor the	supervisor text.
	development of relevant	development of relevant
	local and	local and
	international regulations	international regulations
	concerning ethical corporate	concerning ethical corporate
	management and encourage	management and encourage
	their directors, supervisors,	their directors, managers,
	managers, and employees to	and employees to make
	make suggestions, based on	suggestions, based on which
	which the	the
	adopted ethical corporate	adopted ethical corporate
	management policies and measures taken will be	management policies and measures taken will be
	reviewed	reviewed
	and improved with a view to	and improved with a view to
	achieving better	achieving better
	implementation of ethical	implementation of ethical
	management.	management.

$\overline{23}$	Implement	Opinion of Independent	New article.
	The code of Practice on good Director		In cooperation with the
	faith shall be implemented	When the company will	competent authorities
	after the adoption of the	report the code of good faith	announced the "Listed
	Board of directors, and shall	to the board for discussion, it cabinet company integrity
	be sent to a supervisor and a	shall give full consideration	Management Code" added
	report to the shareholders'	to the views of the	this article. Reference has
	meeting, as amended.	independent directors and	been taken to the versions of
		make its objections or	other listed companies.
		reservations heard in the
		proceedings of the Board of
		Directors; if the independent
		director is unable to attend
		the board to express
		objections or reservations in
		person, he shall, unless
		justified, issue a written
		opinion in advance and set
		out.
24	Establishment	Implement	Clause no. adjustment.
	The procedure was	The code of Practice on good
	established on Aug. 11, 2014.	faith shall be implemented
		after the adoption of the
		Board of directors, and shall
		be sent to a supervisor and a
		report to the shareholders'
		meeting, as amended.
25	New article	Establishment	Clause no. adjustment.
		The procedure was	Add revision history.
		established on Aug.11, 2014.
		Revised on Jan.2, 2019

Attachment 4

Accountant's Audit Report

$(-)$ No. 00101070A

To Taiwan Styrene Monomer Corporation:

Opinion

I have audited the separate financial statements of Taiwan Styrene Monomer Corporation, which comprise the separate statements of financial position as at 31 December 2018 and 31 December 2017, the separate statements of profit or loss and other comprehensive income from 1 January to 31 December 2018 and from 1 January to 31 December 2017, separate changes in equity and separate cash flows for the year then ended, and notes to to the separate financial statements (including a summary of significant accounting policies).

In my opinion and based on my audit results and the audit reports by other accountants (please refer to the section of Others), the accompanying financial statements are properly drawn up in accordance with the provisions of the Regulations Governing the Preparation of Financial Reports by Securities Issuers so as to give a true and fair view of the financial position of the Taiwan Styrene Monomer Corporation as at 31 December 2018 and 31 December 2017 and of the financial performance, changes in equity and cash flows of Taiwan Styrene Monomer Corporation from 1 January to 31 December 2018 and from 1 January to 31 December 2017.

Basic for opinion

I conducted my audit in accordance with Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards. My responsibilities under those standards are further described in the 'Accountant's responsibilites for the audit of the financial staements' section of our report. I am independent of Taiwan Styrene Monomer Corporation in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Coduct and Ethics for Public Accountants and Accounting Entities, and I have fulfilled my other ethical

responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key audit matters

The key audit matters refer to the most important matters in the audit of the 2018 separate financial statements of Taiwan Styrene Monomer Corporation based on professional accounting judgments. These matters have been dealt with in the process of checking the overall consolidated financial statements and forming a review opinion. The accountant does not express a separate opinion on these matters.

The key audit items of the 2018 separate financial statements of Taiwan Styrene Monomer Corporation are described as follows:

Impairment of Investments Accounted for Using Equity Method

Description for critical audit items

By Dec. 31, 2018, the net value of the Investments Accounted for Using Equity Method on the Separate Statement of Financial Position was 3,422,973,000 TWD. For related information, please refer to the Note 4, 5 and 14 of the Separate Financial Report. The management handled the process in accordacne with Article 36 "Impairment of Assets" of IFRSs, and expects the collectible amount is more than the book value. Therefore, the recognized income from the reversal of impairment of Taiwan Styrene Monomer Corporation in 2018 was 19,834,000 TWD. When the management perform the evaluation of impairment, for that the amount of collectible accounts involved subjective jedgement and belonged to accounting estimation of high uncertainty, they then have it be one of the critical item for review this year.

Correspondence to the Audit Procedure

The accountant mainly perform the follwoing audit procedures:

• 1. To acquire the Asset Impairment Evaluation Form made by every cash generating unit in the Company;
• 1. To evaluate the reasonability of the traces of impairment identified by the management of Taiwan Styrene Monomer Corporation and consult them, and to review the

sensibility of the assumption made by them, including the division of cash generating units, cash flow prediction and discount rate.

Impairment of Property, Plant and Equipment

Description for critical audit items

By Dec. 31, 2018, the Property, Plant and Equipment on the Separate Statement of Financial Position was 2,667,126, 000 TWD. For related information, please refer to Note 4, 5 and 15 of the Separate Financial Statements. For the large amount of the Property, Plant and Equipment and the industry which Taiwan Styrene Monomer Corporation belong to is easy to be affected by factors such as international oil market, so the evaluation of the impairment of Property, Plant and Equipment is very important. The process of evaluation includes the identification of cash generating units, desicion on evaluation methods, selecting important assumption and calculating the collectible amount. As it involved the subjective judgement of the management and belonged to accounting estimation of high uncertainty, the management then have it be one of the critical item for review this year.

Other issue(s)

Responsibilities of management and directors for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Regulations Governing the Preparation of Financial Reports by Securities Issuers, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition.

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

The responsibilities of the governing body (including supervisors) include overseeing Taiwan Styrene Monomer Corporation's financial reporting process.

Auditors' responsibilities for the audit of the financial statements

$\overline{\mathbf{4}}$

My 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 my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SSAs 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 in the basis of these financial statements.

As part of an audit in accordance with SSAs, I exercise professional judgement and maintain professional skepticism throughout the audit. I also:

• 1. 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 controls.
• 1. Obtain an understanding of internal controls 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 Taiwan Styrene Monomer Corporation's internal controls.
• 1. Assess the appropriateness of management's use of accounting policies and the reasonability of the accounting estimate and relevant disclosure.
• 1. 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 Taiwan Styrene Monomer 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 auditor's 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 Taiwan Styrene Monomer Corporation to cease to continue as a going concern.
• 1. Evaluate the overall presentation, structure and content of the financial statements (including

the relevant notes), and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

1. Obtain sufficient and appropriated audit evidence of the financial information from the individual entity within Taiwan Styrene Monomer Corporation as well as express opinions towards financial statements. We are in charge of the directing, supervision, and execution on the audit cases for the group as well as concluding audit opinions on Taiwan Styrene Monomer Corporation.

We communicate with the governing body regarding, among other matters, the planned scope and timing of the audit and significant audit findings (including any significant deficiencies in internal controls that we identify during our audit).

We determined the key audit matters that we would like to executed on Taiwan Styrene Monomer Corporation's consolidated financial statements in 2018 from the communication with the governing unit. We clearly stated the related matters on the audit report unless it is the specific matter that is not allowed to be disclosed to the public according to laws, or under a very rare situation that we decided not to communicate specific matters on the audit report because we can reasonably anticipate the negative influence generated by the communication will be greater than the public interests increased.

Baker Tilly Clock & CO

Accountant: Yin-Lai Chou

Accountant: Hsin-Liang Wu Approval Document No.: (80) Tai Tsai Cheng (6) No.53585 Chin Kuan Cheng Liu Tzu No.09600000880

March 11, 2019

Separate Balance Sheet

Dec. 31, 2018 and Dec. 31, 2017

Unit: NT\$ 1,000

$\tilde{\pi}$

	Asset		Dec. 31, 2018			Dec. 31, 2017
Code	Accounting items	Note	Amount	%		Amount	%
	Current assets
1100	Cash and cash equivalents	6	\$ 1,605,546	16	\$	443,681	5
1110	Financial assets - current at Fair Value through Profit or Loss	7	103,820	$\mathbf{1}$
1125	Available-for-sale financial assets - current	8				84,725
1170	Net accounts receivable	9	900,261	9		1,240,864	13
1200	Other accounts receivable	29	47,947	$\mathbf{1}$		1,410
130x	Inventory	10	641,276	7		609,106	6
1410	Payments in advance	11	86,182	$\mathbf{1}$		706,256	8
1478	Construction refundable deposits			$\overline{\phantom{0}}$		10,000	$\overline{\phantom{0}}$
11xx	Total of current assets		3,385,032	35		3,096,042	32
	Non-current assets
1517	Financial assets measured at fair value through other comprehensive income - non-current	12	181,577	$\overline{2}$
1543	Financial Assets Carried at Cost - non-current	13				117,264	1
1550	Investments Accounted for Using Equity Method	14	3,430,836	35		3,709,567	38
1600	Property, Plant and Equipment	15	2,667,126	27		2,724,081	28
1780	Intagible assets	16	9,266	$\overline{\phantom{0}}$		10,574	---
1840	Deferred income tax assets	27	18,560	$\frac{1}{2}$		18,622
1920	Refundable deposits		3,962	$\overline{\phantom{000000000000000000000000000000000000$		3,962
1995	Other non-current assets - Other	17	38,183	$\mathbf{1}$		51,246	$\mathbf{1}$
15xx	Non-Total of current assets		6,349,510	65		6,635,316	68
1xxx	Totoal of assets		9,734,542 \$	100	\$	9,731,358	100

(The notes attached are part of the separate financial report.)

Separate Balance Sheet (continued)

Dec. 31, 2018 and Dec. 31, 2017

Unit: NT\$ 1,000

	Liabilities and equity	Note	Dec. 31, 2018		Dec. 31, 2017
Code	Accounting items		Amount %		Amount	%
	Current liabilities
2130	Contractual liability-current		\$ 97,508	$\mathbf{1}$	\$
2150	Notes payable				5,834
2170	Accounts payable		1,204,490	12	1,104,735	11
2200	Other accounts payable	18	272,002	3	206,054	$\mathbf{2}$
2230	Income tax liability		238,236	$\mathbf{2}$	186,856	$\overline{2}$
2310	Advance Receipts				7,830
2320	Long term liabilities due within one year	20	88,880	1	223,826	3
2399	Other current liabilities- Other	19	3,509		3,752	$\overline{\phantom{000000000000000000000000000000000000$
21xx	Total of current liabilities		1,904,625	19	1,738,887	18
	Non-current liabilities
2540	Long-term loan	20	111,100	1	438,110	5
2570	Deferred incom tax liabilities	27	173,509	$\overline{2}$	173,509	$\overline{2}$
2640	Net defined benefit liability - non-current	21	74,126	$\mathbf{1}$	92,921
2650	Credit Balance of Investments Accounted for Using Equity Method	14	7,863
25xx	Total of non-current liabilities		366,598	$\overline{4}$	704,540	$\tau$
2xxx	Total of liabilities		2,271,223	23	2,443,427	25
3100	Stock capital	22(1)	5,278,698	54	5,278,698	54
3200	Capital reserve	22(2)	60,415	$\mathbf{1}$	68,142	$\mathbf{1}$
3300	Retained earnings		2,546,063	26	1,843,580	19
3310	Legal reserve	22(3)	409,609	$\overline{\mathcal{L}}$	307,466	$\overline{3}$
3320	Special capital reserve	22(4)	8,811		157,923	$\mathbf 2$
3350	Retained earnings to be distributed		2,127,643	22	1,378,191	14
3400	Other equity	20(6)	(421, 857)	(4)	97,511	$\mathbf{1}$
3410	Exchange differences on translating the financial statements of foreign operations		(2,298)		(3,754)
3420	Unrealized Gain or Loss Measured at Fair Value through Profit or Loss		(419, 559)	(4)
3425	Unrealized Gain or Loss on Available-for-sale Financial Assets				101,265	1
3xxx	Total of Equity		7,463,319	77	7,287,931	75
	Total of liabilities and equity		\$ 9,734,542	100	\$ 9,731,358	100

(The notes attached are part of the separate financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jasom Chou

Separate Statement of Comprehensive Income

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017 Unit: NT\$ 1,000

Code	Item	Note	2018		2017
			Amount	$\%$	Amount	%
4000	Operating income		\$ 14,806,544	100	$\sqrt{\frac{2}{5}}$ 14,015,626	100
5000	Operating cost		(12,829,579)	(87)	(12, 373, 093)	(88)
5950	Net value of gross profit (loss)		1,976,965	13	1,642,533	12
6000	Operating expenses		(281, 249)	(2)	(224, 302)	(2)
6100	Marketing expenses		(52,089)		(33,261)
6200	Administration expenses		(185, 250)	(2)	(160, 863)	(2)
6300	R&D Expense		(43, 865)		(30, 178)
6450	Expected credit imparment loss		(45)
6900	Operating profit (loss)		1,695,716	11	1,418,231	10
7000	Non-operating income and expenses		(126, 945)		(107,984)	(1)
7010	Other income	24	22,274		18,781
7020	Other profit and loss	25	(69, 513)		39,138
7050	Financial costs	26	(7,508)		(13,207)
7070	Shares of the profit and loss of subsidiaries and affiliates recognized using equity method		(72, 198)		(152, 696)	(1)
7900	Net profit before tax (net loss)		1,568,771	11	1,310,247	$\overline{9}$
7950	Income tax (expense) income	27	(352, 370)	(2)	(254, 498)	(2)
8200	Net income (loss) of this term		1,216,401	9	1,055,749	7
	Other comprehensive income
8310	Items which are not re-classified into profit or loss
8311	Remeasurement of defined benefit plans	21	20,931		(34,989)
8316	Unrealized valuation of profit or loss of investment in equity instruments measured at fair value through other comprehensive income		(5,050)
8330	Shares of other comprehensive income of subsidiaries and affiliates recognized using equity method - Items which are not re-classified into profit or loss		(193, 922)	(2)	377
8349	Income tax related to items which are not going to be re-classified.		(3,249)		5,948
8360	Following items which might be reclassified into profit or loss
8361	Exchange differences on translating the financial statements of foreign operations		1,453		(3, 588)
8362	Unrealized gains (losses) on available-for-sale financial assets				771
8380	Shares of other comprehensive income of subsidiaries and affiliates recognized using equity method - Items which might be reclassified into profit or loss		3		249,441	$\overline{2}$
8300	Net value of other comprehensive income		(179, 834)	(2)	217,960	2
8500	Net value of the comprehensive income this term		\$ 1,036,567	$\tau$	$\mathbf{\hat{S}}$ 1,273,709	9
9750	Basic earnings per share (loss)	28	2.30 TWD		2.00 TWD
9850	Diluted earnings per share (loss)	28	2.30 TWD		1.99 TWD

(The notes attached are part of the separate financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jasom Chou

Taiwan Styrene Monomer CorporationSeparate Statement of Stockholders Equity

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017

Unit: NT\$ 1,000

				Retained earnings			Other equity items
Item	Stock capital	Capital reserve	Legal reserve	Special capital reserve	Retained earnings to be distributed	Exchange differences on translating the financial statements of foreign operations	Unrealized gains (losses) on available-for-sale financial assets	Unrealized valuation of profit (loss) offinancial assets measured at fair value through other comprehensive income	Total
Balance on Jan. 1, 2017	5,278,698 \$	70,339 \$	$167.155$ \$	$\overline{284,751}$ \$	$1,531,537$ \$	8.967	$(158,080)$ \$		7,183,36
Legal reserves			140,311	$\overline{\phantom{000000000000000000000000000000000000$	(140,311)	$\overline{\phantom{000000000000000000000000000000000000$
Common stock cash dividends					(1,161,314)				(1,161,314)
Special capital reserve allowance				(126, 828)	126,828
Change in the affiliates and joint-ventures		357			(5,655)		-		(5,298)
recognized using equity method
Difference between the share prices and book		(296)					$\overline{\phantom{0}}$		(296)
values of actually acquired or diposed subsidiaries Change in the equity of the ownership of
subsidiaries		(2,258)							(2,258)
Net income
Other comprehensive income	-		$\overline{\phantom{m}}$		1,055,749				1,055,749
Total of comprehensive income	÷				(28, 664)	(12, 721)	259,345		217,960
Other		--	$\qquad \qquad$	$\overline{\phantom{000000000000000000000000000000000000$	1,027,085	(12, 721)	259,345	$\overline{\phantom{a}}$	1,273,709
Balance on Dec.31, 2017	5,278,698				21				21
Amount affected by retrospective applications and		68,142	307,466	157,923	1,378,191	(3,754)	101,265	$\overline{\phantom{0}}$	7,287,931
re-classification				-	281,392	$\overline{\phantom{a}}$	(101,265)	(190, 286)	(10, 159)
Balance after adjustment on Jan. 1, 2018	5,278,698	68,142	307,466	157,923
Legal reserves			102,143		1,659,583	(3,754)	$\overline{\phantom{m}}$	(190, 286)	7,277,772
Common stock cash dividends					(102, 143) (844, 592)		$\overline{\phantom{m}}$
Special capital reserve allowance				(149, 112)	149,112				(844, 592)
Change in the affiliates and joint-ventures		(1,073)			1,272		-
recognized using equity method									199
Difference between the share prices and book		(6, 654)					-
values of actually acquired or diposed subsidiaries									(6, 654)
Disposal of equity instruments measured at fair					30,336		-	(30, 336)
value through other comprehensive income
Net income			$\overline{\phantom{000000000000000000000000000000000000$		1,216,401		$\overline{\phantom{a}}$		1,216,401
Other comprehensive income			$-$	$\overline{\phantom{000000000000000000000000000000000000$	17,647	1.456	$\overline{\phantom{m}}$	(198, 937)	(179, 834)
Total of comprehensive income Other	$\overline{\phantom{000000000000000000000000000000000000$	$\overbrace{\phantom{1232211}}$	--	$\overline{\phantom{0}}$	1,234,048	1,456	$\overline{\phantom{m}}$	(198, 937)	1,036,567
				$\overline{\phantom{0}}$	27		$\overline{\phantom{000000000000000000000000000000000000$		27
Balance on Dec. 31, 2018	5,278,698 \$	$60,415$ \$	$409,609$ \$	$8,811$ \$	$2,127,643$ \$	(2, 298)	$\overline{15}$ $\overline{\phantom{m}}$	(419.559)	7.463.319

Note: From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017, a employee of the company respectively had the compensation of NT\$ 33,086 and NT\$ 27,440, and the compensation for directors

and supervisors were respectively NT\$ 41,073 and 41,073 34,430. The compensations were respectively deducted from the consolidated income statement.

(The notes attached are part of the separate financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jason Chou

Separate Statement of Cash Flows

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017

Unit: NT\$ 1,000

Item	2018	2017
	Amount	Amount
Net cash flow from operating activities :
Net profit before tax	\$ 1,568,771	\$ 1,310,247
Items of adjustment:
Depreciation expense	193,468	182,874
Amortization fee	57,990	64,261
Expected credit imparment loss	45
Net loss on financial asses measured at Fair Value through Profit or Loss	49,084
Interest expense	7,508	13,207
Interest income	(4,168)	(706)
Dividend income	(7,881)	(1,678)
Shares of the profit and loss of subsidiaries and affiliates recognized using equity method	72,198	152,696
Amount of Property, Plant and Equipment listed as expenses		34,849
Gain on disposal of investment	21,204	(6, 757)
Impairment loss of financial assets		16,000
Loss which does not belong to the impairment loss of financial assets	(19,312)	4,000
Loss on inventory price falling, retirement and obsolescence (gain from price recovery)	3,567	(436)
Change in assets/liabilities related to operating activities
Increase/decrease of financial assets forced to be measured at Fair Value through Profit or Loss	(68, 179)
Decrease (increse) in accounts receivable	340,558	(346, 567)
Decrease (increse) in other accounts receivable	(28, 897)	(407)
Decrease (increse) in inventory	(59,750)	(131,310)
Decrease (increse) in payments in advance	605,461	48,547
Decrease (increse) in other financial assets		(10,000)
Decrease (increse) in contract liabilities	97,508
Decrease (increse) in notes payable	(5,835)	577
Decrease (increse) in accounts payable	99,757	(581, 204)
Other decrease (increse) in accounts payable	66,508	(62,073)
Decrease (increse) in Advance Receipts	(7, 830)
Decrease (increse) in other current liabilities	(243)	(161)
Increse in net defined benefit liability	2,137	2,049
Cash in flow generated by operating activities	2,983,669	688,008
Interests received	3,900	706
Paid interests	(7,906)	(13, 374)
Paid dividends	(162)	(145)
Income tex returned (paid)	(304, 177)	(220, 147)
Net cash outflow from operating activities	2,675,324	455,048

Separate Statement of Cash Flows (continued)

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017

Unit: NT\$ 1,000

Item	2018	2017
	Amount	Amount
Net cash flow in investing activities:
Acquired financial assets measured at fair value through other comprehensive income	$\mathbf{\hat{S}}$ (71, 690)	$\mathcal{S}$
Returned payment for shares due to capital reduction of financial assets measured at fair value through other comprehensive income	6,273
Acquisition of available-for-sale financial assets		(108, 616)
Disposal of available-for-sale financial assets		31,253
Disposal of Financial Assets Carried at Cost		2,653
Acquisition of Investments Accounted for Using Equity Method		(86,716)
Payment for shares returned due to capital reduction of the invested company accounted for using equity method		92,129
Acquisition of real estate, plant and equipment	(127, 191)	(94, 809)
Refundable deposits (increase)	10,000	(2,000)
Other accounts receivable - decrease (increase) of related parties	(9, 492)
Prepayment for equipment (increase)	(9, 283)	(2,376)
Other payments in advance (increase)	(5, 554)	(5,031)
Dividend received		1,678
Net cash inflow (outflow) in investing activities	(206, 937)	(171, 835)
Cash flows in fundraising activities:
Long-term loan repayment	(461, 956)	(223, 826)
Increase of guarantee deposits		1,140
Issuance of cash dividends	(844, 592)	(1,161,314)
Other financing activities	26	21
Net cash inflow (outflow) in financing activities	(1,306,522)	(1, 383, 979)
Increase (decrease) of cash and cash equivalents	1,161,865	(1,100,766)
Balance of cash and cash equivalents at the beginning of the term	443,681	1,544,447
Balance of cash and cash equivalents at the end of the term	$\mathcal{S}$ $1,605,546$ \$	443,681

(The notes attached are part of the separate financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jasom Chou

Accountant's Audit Report

No. 00101070CA

To Taiwan Styrene Monomer Corporation:

Opinion

I have audited the financial statements of Taiwan Styrene Monomer Corporation, which comprise the statements of financial position as at 31 December 2018 and 31 December 2017, the statements of profit or loss and other comprehensive income from 1 January to 31 December 2018 and from 1 January to 31 December 2017, changes in equity and cash flows for the year then ended, and notes to to the financial statements (including a summary of significant accounting policies).

In my opinion, the accompanying financial statements are properly drawn up in accordance with the provisions of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, explanations and annoucements of explanation approved and announced by the Financial Supervisory Commission so as to give a true and fair view of the financial position of Taiwan Styrene Monomer Corporation as at 31 December 2018 and 31 December 2017 and of the financial performance, changes in equity and cash flows of Taiwan Styrene Monomer Corporation from 1 January to 31 December 2018 and from 1 January to 31 December 2017.

Basic for opinion

I conducted my audit in accordance with Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and Generally Accepted Auditing Standards. My responsibilities under those standards are further described in the 'Accountant's responsibilites for the audit of the financial staements' section of our report. I am independent of Taiwan Styrene Monomer Corporation in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Coduct and Ethics for Public Accountants and Accounting Entities, and I have fulfilled my other ethical responsibilities in accordance with these requirements.I believe

that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion.

Key audit matters

The key audit matters refer to the most important matters in the audit of the 2018 consolidated financial statements of Taiwan Styrene Monomer Corporation and its susidiaries based on professional accounting judgments. These matters have been dealt with in the process of checking the overall consolidated financial statements and forming a review opinion. The accountant does not express a separate opinion on these matters.

The accountant's audit procedures for the above-mentioned mattersinclude:

Investments Accounted for Using Equity Method Impairment Remark

As of the 2018 of the Republic of China, the Investments of Statement of Financial position were merged accounted for use Equity Methodis 1,587,855 TWD, please refer to notes 4 or 5 and 16 of the consolidated financial report for information. Management in accordance with the international accounting quasi-36th financial "asset impairment" provisions, it is expected that its recoverable amount is greater than the book amount, so Taiwan styrene Monomer Corporation and its subsidiaries in 2018 identified a derogation from the rotary interests of 19,834TWD. When management makes a derogation assessment, it is a key Check for the current year because its recyclable amount involves subjective judgement and is a highly uncertain accounting estimate.

Responsibilities of management and directors for the financial statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of the Regulations Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, International Accounting Standards, explanations and annoucements of explanation approved and announced by the Financial Supervisory Commission, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that assets are safeguarded against loss from unauthorised use or disposition.

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

The responsibilities of the governing body (including the audit committee) include overseeing Taiwan Styrene Monomer Corporation's financial reporting process.

Auditors' responsibilities for the audit of the financial statements

My 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 my opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SSAs 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 in the basis of these financial statements.

As part of an audit in accordance with SSAs, I exercise professional judgement and maintain professional skepticism throughout the audit. I also: 1. 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 controls.

• 1. Obtain an understanding of internal controls 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 internal control effectiveness of Taiwan Styrene Monomer Corporation and its subsidiaries.
• 1. Assess the appropriateness of management's use of accounting policies and the reasonability of the accounting estimate and relevant disclosure.
• 1. 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 ability of Taiwan Styrene Monomer Corporation and its subsidiaries to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's 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 Taiwan Styrene Monomer Corporation and its subsidiaries to cease to continue as a going concern.
• 1. Evaluate the overall presentation, structure and content of the financial statements (including the relevant notes), and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• 1. Obtain sufficient and appropriated audit evidence of the financial information from the individual entity within Taiwan Styrene Monomer Corporation and its subsidiaries as well as express opinions towards financial statements. We are in charge of the directing, supervision, and execution on the audit cases for Taiwan Styrene Monomer Corporation and its subsidiaries as well as concluding audit opinions on the group.

We communicate with the governing body regarding, among other matters, the planned scope and timing of the audit and significant audit findings (including any significant deficiencies in internal controls that we identify during our audit).

We determined the key audit matters that we would like to executed on the consolidated financial statements of Taiwan Styrene Monomer

Corporation and its subsidiaries in 2018 from the communication with the governing unit. We clearly stated the related matters on the audit report unless it is the specific matter that is not allowed to be disclosed to the public according to laws, or under a very rare situation that we decided not to communicate specific matters on the audit report because we can reasonably anticipate the negative influence generated by the communication will be greater than the public interests increased.

Baker Tilly Clock & CO

Accountant: Yin-Lai Chou

Accountant: Hsin-Liang Wu Approval Document No.: (80) Tai Tsai Cheng (6) No. 53585 Chin Kuan Cheng Liu Tzu No. 09600000880

M a r c h $1 \quad 1$ $\overline{2}$ $\theta$ $\blacksquare$ 9 $\overline{\phantom{a}}$

Consolidated Balance Sheet

Dec. 31, 2018 and Dec. 31, 2017

Unit: NT\$ 1,000

	Asset			Dec. 31, 2018		Dec. 31, 2017
Code	Accounting Items	Note		Amount %			Amount	%
	Current assets
1100	Cash and cash equivalents	6	\$	2,122,960	20	\$	1,030,344	9
1110	Financial assets measured at Fair Value through Profit or Loss-current	7		141,830	1		67,098	1
1125	Available-for-sale financial assets-current	8					211,805	2
1150	Net value of notes receivable			21			2,308
1170	Net accounts receivable	9		947,584	9		1,329,487	12
1190	Construction contract accounts receivable	10					2,935
1200	Other accounts receivable			35,647	$\qquad \qquad -$		3,852
130x	Inventory	11		709,853	7		675,527	6
1410	Payments in advance	12		154,522	$\overline{2}$		760,081	7
1470	Other current assets			489			1,570
1476	Other financial assets - current	13		16,937	$\overline{\phantom{000000000000000000000000000000000000$		48,721	1
11xx	Total of current assets			4,129,843	39		4,133,728	38
	Non-current assets
1510	Financial assets measured at Fair Value through Profit or Loss - non-current	7		17,144
1517	Financial assets measured at fair value through other comprehensive income - non-current	14		304,917	3
1523	Available-for-sale financial assets - non-current	8					33,400
1543	Financial Assets Carried at Cost - non-current	15					304,956	3
1550	Investments Accounted for Using Equity Method	16		1,587,855	15		1,785,461	17
1600	Property, Plant and Equipment	17		4,133,895	40		4,185,851	38
1760	Net value of investment property	18		144,361	2		231,839	2
1780	Intagible assets	19		16,099			16,518
1840	Deferred income tax assets	33		33,172			32,886
1915	Prepayment for equipment			20,439			16,402
1970	Other long-term investments	20		38,436	—— ———————————————————————————————————		41,477	$\mathbf{1}$
1980	Other financial assets - non-current	13		7,670			37,787
1995	Other non-current assets - Other	21		76,215	$\mathbf{1}$		104,386	$\mathbf{1}$
15xx	Non-Total of current assets			6,380,203	61		6,790,963	62
$1$ x x x	Totoal of assets		$\boldsymbol{\mathsf{S}}$	10,510,046	100	$\pmb{\mathbb{S}}$	10,924,691	100

(The notes attached are part of the consolidated financial report.)

$\hat{\mathcal{A}}$

Consolidated Balance Sheet (continued)

Dec. 31, 2018 and Dec. 31, 2017

Unit: NT\$ 1,000

	Liabilities and equity		Dec. 31, 2018			Dec. 31, 2017
Code	Accounting Items	Note		Amount	$\%$		Amount	%
	Current liabilities
2100	Short-term loans	22	\$	312,885	3	\$	357,500	3
2130	Contractual liability-current			128,851	1
2150	Notes payable			9,678	$\qquad \qquad -$		22,177
2170	Accounts payable			1,229,326	12		1,146,271	11
2200	Other accounts payable	23		344,116	4		291,528	3
2230	Income tax liability			243,073	2		188,106	$\overline{c}$
2310	Advance Receipts						38,605
2320	Long term liabilities due within one year	25		115,164	1		278,443	3
2399	Other current liabilities- Other	24		10,270			20,869
21xx	Total of current liabilities			2,393,363	23		2,343,499	22
	Non-current liabilities
2540	Long-term loan	25		140,902	1		731,921	$\overline{7}$
2570	Deferred incom tax liabilities	33		173,509	2		173,509	1
2640	Net defined benefit liability - non-current	26		74,126	1		92,921	1
2670	Other non-current liabilities- Other	24		10,732	$\overline{\phantom{0}}$		10,579	$\overline{\phantom{0}}$
25xx	Total of non-current liabilities			399,269	$\overline{4}$		1,008,930	9
2xxx	Total of liabilities			2,792,632	27		3,352,429	31
	Equity belongs to the owner of the parent company
3100	Stock capital	27(1)		5,278,698	50		5,278,698	48
3200	Capital reserve	27(2)		60,415	1		68,142	$\mathbf{1}$
3300	Retained earnings			2,546,063	24		1,843,580	17
3310	Legal reserve	27(3)		409,609	$\overline{4}$		307,466	$\mathfrak{Z}$
3320	Special capital reserve	27(4)		8,811	$\overline{\phantom{000000000000000000000000000000000000$		157,923	1
3350	Retained earnings to be distributed			2,127,643	20		1,378,191	13
3400	Other equity	27(6)		(421, 857)	(4)		97,511	$\mathbf{1}$
3410	Exchange differences on translating the financial statements of foreign operations			(2,298)			(3,754)
3420	Unrealized gain or loss on financial assets measured at FVOCI			(419, 559)	(4)
3425	Unrealized Gain or Loss on Available-for-sale Financial Assets						101,265	1
31xx	Equity belongs to the owner of the parent company			7,463,319	71		7,287,931	67
36xx	Non-controlling interest	27(7)		254,095	2		284,331	$\overline{2}$
3xxx	Total of Equity			7,717,414	73		7,572,262	69
	Total of liabilities and equity		\$	10,510,046	100	\$	10,924,691	100

(The notes attached are part of the consolidated financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jasom Chou

Consolidated Statement of Comprehensive Income

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017 Unit: NT\$ 1,000

Code	Item	Note	2018			2017
				Amount	%		Amount	%
4000	Operating income	28	\$	15,382,654	100	\$	14,750,826	100
5000	Operating cost			(13, 405, 660)	(87)		(13,061,610)	(89)
5950	Net value of gross profit (loss)			1,976,994	13		1,689,216	11
6000	Operating expenses			(441, 995)	(3)		(406, 553)	(2)
6100	Marketing expenses			(60, 180)	$\overline{\phantom{000000000000000000000000000000000000$		(46,885)	$\overline{\phantom{0}}$
6200	Administration expenses			(345, 196)	(3)		(329, 941)	(2)
6300	R&D expenses			(36,390)	$\qquad \qquad -$		(29, 727)	$\overline{\phantom{0}}$
6450	Expected credit imparment loss			(229)	—			-
6900	Operating profit (loss)			1,534,999	10		1,282,663	$\mathbf{9}$
7000	Non-operating income and expenses			12,666	$\overline{\phantom{0}}$		(36, 525)	$\overline{\phantom{0}}$
7010	Other income	30		48,808	$\overline{\phantom{0}}$		57,437	$\mathbf{1}$
7020	Other profit and loss	31		(63, 285)	--		(75, 946)	(1)
7050	Financial costs	32		(18,516)	—		(28, 823)
7060	Shares of profit (loss) of the affiliates accounted for using			45,659			10,807
	equity method
7900	Net profit before tax (net loss)			1,547,665	10		1,246,138	9
7950	Income tax (expense) income	33		(360, 871)	(2)		(261, 545)	(2)
8200	Net income (loss) of this term			1,186,794	8		984,593	$\tau$
	Other comprehensive income
8310	Items which are not re-classified into profit or loss
8311	Remeasurement of defined benefit plan	26		20,896			(34, 608)	(1)
	Unrealized gain or loss of invenstment in equity			25,711
8316	instruments
	measured at FVOCI
	Shares of profit (loss) of the affiliates and shares of other			(224, 600)	(1)
8320	comprehensive income of joint ventures accounted for using
	equity method
8349	Income tax related to items which is not going to be re-classified	33		(3,250)			5,948
8360	Following items which might be reclassified into profit or loss
	Exchange differences on translating the financial statements of			1,183
8361	foreign operations						(15,716)
	Unrealized valuation loss on available-for-sale financial						273,410	2
8362	assets
	Shares of profit (loss) of OCI of the affiliates accounted for			(426)			(14, 421)
8370	using equity method
8300	Net value of other comprehensive income			(180, 486)	(1)		214,613	1
8500	Net value of the comprehensive income this term		\$	1,006,308	7	\$	1,199,206	$\,$ 8 $\,$
8600	The net profits belong to the owner of the company
8610	Owner of the parent company		\$	1,216,401	8	\$	1,055,749	$\overline{7}$
8620	Non-controlling interest			(29,607)			(71, 156)	—
			$\sqrt{\ }$	1,186,794	8	\$	984,593	$\overline{7}$
8700	The total amount of comprehensive income belongs to:
8710	Owner of the parent company		\$	1,036,567	7	\$	1,273,709	$\boldsymbol{9}$
8720	Non-controlling interest			(30, 259)			(74, 503)	(1)
			$\mathbb{S}$	1,006,308	$\tau$	\$	1,199,206	8
9750	Basic earnings per share (loss)	34
9710	Net income (loss) of continuing operations			2.30 TWD			$2.00\;\mathrm{TWD}$
9850	Diluted earnings per share (loss)	34
9810	Net income (loss) of continuing operations			2.30 TWD			1.99 TWD

(The notes attached are part of the consolidated financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jasom Chou

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017								Unit: NT\$ 1,000
	The equity belongs to the owner of the parent company
				Retained earnings			Other equity items
								Unrealized gain or loss of
						Exchange	Unrealized gain	Returned payment for
Item	Stock capital	Capital		Special		differences on	or loss of	shares due to capital		Non-controlli	Total of
		reserve	Legal surplus	surplus	Retained	translating the	available-for-sal	reduction of financial	Total	ng equity	equity
			reserve	reserve	earnings	financial	e financial	assets measured at fair
						statements of	assets	value through other
						foreign operations		comprehensive income
Balance on Jan. 1, 2017	5,278,698 \$	$70,339$ \$	$167, 155$ \$	284,751 \$	$1,531,537$ \$	$8,96$ \$	$(158,08)$ \$	$\overline{\phantom{m}}$	7,183,36 \$ S	366,766
Legal reserves			140,311		(140,311)			$\qquad \qquad -$			7,550,133
Common stock cash dividends	--	$\overline{\phantom{m}}$			(1,161,314)				(1,161,314)
Special capital reserve allowance	$\qquad \qquad$	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	(126, 828)	126,828					——	(1,161,314)
Change in shares of profit (loss) of the affiliates	$\overline{\phantom{0}}$	357	$\overline{\phantom{0}}$		(5,655)				(5,298)	$\overline{\phantom{0}}$	(5,298)
accounted for using equity method
Total consolidated profit and loss	-		$\overline{\phantom{000000000000000000000000000000000000$		1,055,749				1,055,749	(71, 156)	984,593
Other comprehensive income	$\qquad \qquad -$	$\overline{\phantom{m}}$	$\overline{\phantom{m}}$		(28, 664)	(12, 721)	259,345	$\overline{\phantom{0}}$	217,960	(3, 347)	214,613
Total of comprehensive income	$\overline{\phantom{0}}$	$\overline{\phantom{000000000000000000000000000000000000$	$\overline{\phantom{0}}$	$\overline{\phantom{m}}$	1,027,085	(12, 721)	259,345	—	1,273,709	(74, 503)	1,199,206
Difference between the share prices and book values	—	(296)	$\overline{\phantom{m}}$						(296)	296
of actually acquired or diposed subsidiaries
Change in the equity of the ownership of subsidiaries	—	(2,258)	--						(2,258)	2,258
Increase or decrease of non-controlling interests
Other			$\overline{\phantom{a}}$							(10, 486)	(10, 486)
Balance on Dec.31, 2017	5,278,698				21				21		21
Amount affected by retrospective applications and		68,142 $\overline{\phantom{000000000000000000000000000000000000$	307,466	157,923	1.378.191	(3, 754)	101,265	$\overline{\phantom{0}}$	7,287,931	284.331	7,572,262
re-classification					281,392		(101, 265)	(190, 286)	(10, 159)	23	(10, 136)
Balance after adjustment on Jan. 1, 2018	5,278,698	68,142	307.466
Legal reserves	---	$\overline{\phantom{0}}$	102,143	157,923	1,659,583	(3,754)	-	(190, 286)	7,277,772	284,354	7,562,126
Common stock cash dividends	$\overline{\phantom{000000000000000000000000000000000000$	$\overbrace{\phantom{123221111}}$			(102, 143)
Special capital reserve allowance	$\overline{\phantom{0}}$	$\overline{\phantom{0}}$	$\overline{\phantom{0}}$	(149, 112)	(844, 592) 149,112				(844, 592)		(844, 592)
Change in the affiliates and joint-ventures	—	(1,073)	$\overline{\phantom{0}}$		1,272
recognized using equity method									199		199
Net income			—	$\overline{\phantom{0}}$	1,216,401
Other comprehensive income	$\overline{\phantom{0}}$	$\overline{\phantom{m}}$	$\qquad \qquad -$	$\overline{\phantom{000000000000000000000000000000000000$	17,647	1,456		(198.937)	1,216,401 (179, 834)	(29,607)	1,186,794
Total of comprehensive income	$\qquad \qquad -$	$\overline{\phantom{000000000000000000000000000000000000$	$\qquad \qquad \longleftarrow$	$\overline{\phantom{m}}$	1,234,048	1,456		(198, 937)	1,036,567	(652)	(180, 486)
Difference between the share prices and book values		(6, 654)	$\overline{\phantom{0}}$						(6, 654)	(30, 259)	,006,308
of actually acquired or diposed subsidiaries											(6, 654)
Disposal of equity instruments measured at fair			$\overline{\phantom{0}}$		30,336			(30, 336)
value through other comprehensive income
Other					27				27		27
Balance on Dec. 31, 2018	5,278,698 \$	$60,415$ \$	$409,609$ \$	$8,811$ \$	$2,127,643$ \$	$(2, 29)$ \$	$\neg$ s	(419, 559)	7,463,31 \$ S.	$254,095$ \$	7,717,414

Taiwan Styrene Monomer Corporation and Its Subsidiaries Consolidated Statement of Stockholders Equity

(The notes attached are part of the consolidated financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jason Chou

Consolidated Statement of Cash Flows

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017

Unit: NT\$ 1,000 $\frac{2018}{ }$ 2017 Item Amount Amount Net cash flow from operating activities : Net profit before tax (net loss) $\mathbf{\hat{S}}$ 1,547,665 $\hat{\mathbf{S}}$ 1,246,138 Items of adjustment: Depreciation expense 266,527 285.909 Amortization fee 78.876 85,484 Expected credit imparment loss 229 Bad debt expenses recognized as income 65 Net loss (inocme) of financial assets and liabilities measured at 83,736 5,811 FVPL Interest expense 18.516 28,823 Interest income $(7,514)$ $(3,346)$ Dividend income $(11, 554)$ $(11,070)$ Shares of loss (profit) of the affiliates accounted for using equity $(39, 280)$ $(16, 729)$ method Loss (profit) on the disposal of Property, Plant and Equipment $(2,048)$ 388 Amount of Property, Plant and Equipment listed as expenses 34,849 Loss (profit) on the diposal of investment property $(7.440)$ Gain on disposal of investment 21,204 $(6,388)$ Impairment loss of financial assets 29,856 Reversal of impairment loss of financial assets $(19, 834)$ Loss which does not belong to the impairment loss of financial 3,858 86,305 lassets Losses on inventory price falling, retirement and obsolescence loss 29,238 12,515 (gain from price recovery) Other items $(10, 116)$ 13,689 Change in assets/liabilities related to operating activities Decrease (increase) of financial assets held for transactions $(68, 120)$ Increase/decrease of financial assets forced to be measured at Fair 69,593 Value through Profit or Loss Decrease (increase) in notes receivable 2,286 $(1,743)$ Decrease (increse) in accounts receivable 381,928 $(313, 418)$ Decrease (increase) in construction contract accounts receivable 2,935 12,180 Decrease (increse) in other accounts receivable $(18, 839)$ 8,102 Decrease (increse) in inventory $(86,730)$ $(144, 301)$ Decrease (increse) in payments in advance 591,392 56,925 Decrease (increase) in other current assets 1,012 $(311)$ Decrease (increse) in other financial assets 21,786 $(5,505)$ Decrease (increse) in contract liabilities 128,851 Decrease (increase) in notes payable $(12.499)$ 643 Decrease (increse) in accounts payable 87,724 $(600, 545)$ Decrease (increase) in construction contract accounts payable $(28)$ Other decrease (increse) in accounts payable 52,277 $(85, 343)$ Increase (decrease) in Advance Receipts $(45, 867)$ $(3,986)$ Increase (decrease) in other current liabilities $(1,440)$ $(5,490)$ Increase (decrease) in increse in net defined benefit liability 2,137 2,049 Cash inflow (outflow) generated by operating activities 3,128,609 643,408 Interests received 8,099 3,424 Dividend received 2,618 Paid interests $(19,665)$ $(29.131)$ Paid dividends $(162)$ $(145)$ Income tex returned (paid) $(309, 370)$ $(227, 841)$ Net cash inflow (outflow) from operating activities 2,810,129 389,715

Taiwan Styrene Monomer Corporation and Its Subsidiaries Consolidated Statement of Cash Flows (continued)

From Jan. 1 to Dec. 31, 2018 and from Jan. 1 to Dec. 31, 2017

		Unit: NT\$ 1,000
	2018	2017
Item	Amount	Amount
Net cash flow in investing activities:
Acquisition of available-for-sale financial assets	\$	\$ (268, 540)
Disposal of available-for-sale financial assets		234,513
Disposal of Financial Assets Carried at Cost		1,188
Payment for shares returned due to capital reducation of Financial Assets Carried at		3,740
Cost
Acquired financial assets measured at fair value through other comprehensive income	(215)
Disposal of financial assets measured at fair value through other comprehensive income	16,262
Returned payment for shares due to capital reduction of financial assets measured at
fair value through other comprehensive income	6,273
Returned payment for shares due to capital reduction of the invested company
accounted for using equity method		39,506
Acquisition of real estate, plant and equipment	(200, 158)	(150, 468)
Disposition of real estate, plant and equipment	2,175	36
Decrease (increase) in refundable deposits	38,997	(1, 838)
Decrease (increse) in other accounts receivable		51,441
Other accounts receivable—decrease (increase) of related parties	(4,934)
Acquisition of intangible assets	(1,905)	(5,829)
Acquisition of investment property		(248)
Disposal of investment property	89,321
Prepayment for equipment (increase)	(14,268)	(14, 595)
Other payments in advance (increase)	(5, 553)	(5,032)
Dividend received	1,054	11,070
Decease (increase) of other investing activities	(1, 553)	(22, 402)
Net cash outflow in investing activities	(74, 504)	(127, 458)
Cash flows in fundraising activities: Increase (decrease) in short-term loans
Long-term loan repayment	(50, 120) (754, 299)	25,000
Increase (decrease) in guarantee deposits	1,120	(275, 033) 7,333
Other accounts payable - Increase (decrease) in related parties		(16, 125)
Increase in other non-current liabilities	190	1,334
Issuance of cash dividends	(844, 592)	(1,161,314)
Acquisition of the shares of subsidiaries		(12, 492)
Change in non-controlling interest		2,006
Other financing activities	27	21
Net cash inflow (outflow) in financing activities	(1,647,674)	(1,429,270)
Impact of change in exchange rate on cash and cash equivalents	(841)	(2, 598)
Increase (decrease) of cash and cash equivalents	1,087,110	(1,169,611)
Balance of cash and cash equivalents at the beginning of the term	1,030,344	2,199,955
Balance of cash and cash equivalents at the end of the term	2,117,454	1,030,344
Bank overdraft	5,506
Cash and cash equivalents recognized in Consolidated Statement of Financial Position	2.122.960 -8	\$. 1 030 344

(The notes attached are part of the consolidated financial report.)

Chairperson: Yi-Ching Wu

Manager: Ching-tien Wu

Accounting manager: Jasom Chou

Disposition of Net Earnings 2018

	Item	Unit: NT\$ Amount
	Retained earnings to be distributed at the beginning of the term	580,568,607
	Amount affected by retained earnings accounted for using IFRSs9	281,392,499
Plus:	Income after tax	1,216,400,943
	Other comprehensive income (actuarial gains and losses on defined benefit plan)	17,646,616
	Change in affiliates and joint ventures accounted for using equity method	1,271,600
	Disposal of financial assets measured at FVOCI	30,336,532
	Cash dividends on returned payment for odd lots	26,377
Total of distributable earnings		2,127,643,174
Legal reserves		(121, 640, 094)
Recognized special capital reserve		(421, 857, 342)
Deduction:	distribution items
	Shareholder bonus (Cash dividends 2 TWD per share)	1,055,739,528
	Retained earnings to be distributed at the end of the term

• Note: 1. The smallest cash dividend shall be 1 TWD. The total of odd lots of which the dividends are respectively less than 1 TWD will be returned to retained earnings.
• 1. According to the provision of Chin-Kuan-Cheng-Fa-Tzu No. 1010012865, after you start to prepare financial statements with the adoption of International Financial Reporting Standards, you shall recognize a special capital reserve from the income and retained earning to be distributed with the same amount as the net value of the deduction items of other recognized shareholder's equity generated in the fiscal year (e.g. the accumulated amount of exchange differences on translating the financial statements of foreign operations, unrealized gain or loss on available-for-sale financial assets, gain or loss on hedge instruments which are effective in cash flow hedges). For the deduction amount of other shareholders' equity accumulated in the last term, you shall recognize the same amount of special capital reserve without distribution from the distributable retained earnings in the last term. However, for a company that has recognized the special capital reserve following the former paragraph, it shall further draw a supplementary special capital reserve which equals to the difference between its recognized amount and the net value of the decution items of other equity. Later when the balance of other shareholders' equity decution items can be reversed, earnings can thus be distributed based on the part of reversal.

Chairperson: Wen-Yuan Lin

Manager: Pao-Yuan Chen

Accounting manager: Jasom Chou

railwan beyrene inonomer corporation
Procedures for Acquisition or Disposal of Assets

			Proposed on Jan.9.2019 at Board Meeting
Article	Original Applicable Scope of Assets:	Amendment	Reason
	(-) Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, asset-backed securities, etc. (=)Real property (including land, houses and buildings, investment properties, rights to use land, and inventories of construction enterprises) and equipment. (三) Memberships. (m) Patents, copyrights, trademarks, franchise rights, and other intangible assets. (五) Derivatives. $(\pi)$ Assets acquired or disposed of in connection with	Applicable Scope of Assets: (-) Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, asset-backed securities, etc. (=)Real property (including land, houses and buildings, investment properties, rights to use land, and inventories of construction enterprises) and equipment. (三) Memberships. (¤) Patents, copyrights, trademarks, franchise rights, and other intangible assets. $(\pm)$ Right of use $(\pi)$ Derivatives.	- Rephrase the phrasing regarding the assets of the right to use acquired by relevant person and included in the specification for the evaluation of the cost of the lower transaction price according to IFFSs no.16. = Move paragraph 5-7 to 6-8.
٦,	mergers, demergers, acquisitions, or transfer of shares in accordance with the applicable laws, rules, and regulations. $(+)$ Other major assets. Terms used in the Regulations are defined as follows:	$(\pm)$ Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with the applicable laws, rules, and regulations. $(\wedge)$ Other major assets.
	contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements. (=)Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law; Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act.	Terms used in the Regulations are defined as follows: (-)Derivatives: Forward contracts, options contracts, futures (-)Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, product value, instrument value, foreign exchange rates. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements. (二)Assets acquired or disposed through mergers, demergers acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156, paragraph 3 of	$ \cdot$ Revise the phrasing according to the regulation IFRSs no.9. = \ According to the amendment of Company Act issued on Aug.1, 2018 and enforced on Nov.1, 2018. The article item of 156-8 is amended as 156-3. $\mathbb{H}\cdot$ Considering the business of Futures merchants, securities investment trusts and securities investment consultants who operate proprietary business, they may invest in securities based on the need for risk aversion or the use of their own funds, often by buying and selling securities, and invoking it into the scope of investment as a professional; the rule no.0920001151 issued by MOF on Mar.21, 2003 was followed and the regulation of foreign structural commodity dealing institution was included.
	$(\equiv)$ Related party and subsidiaries: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (ए) Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment. $(\pm)$ Date of occurrence: Refers to the date of contract signing, date of payment, date of Reg No 289175 2 consignment trade, date of transfer, dates of boards of directors resolutions, or another date that can confirm the counterparty and monetary amount of the transaction, whichever date is the earliest, provided that, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply. $(\pi)$ Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.	the Company Act. $(\equiv)$ Related party and subsidiaries: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers. (19) Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment. $(\pm)$ Date of occurrence: Refers to the date of contract signing, date of payment, date of Reg No 289175 2 consignment trade, date of transfer, dates of boards of directors resolutions, or another date that can confirm the counterparty and monetary amount of the transaction, whichever date is the earliest, provided that, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply. $(\pi)$ Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area. (+) Stock Exchange: A domestic stock exchange means a Taiwan Stock Exchange Limited Company; A foreign stock exchange means any securities trading market organized by the competent securities authority of that country. $(\wedge)$ Securities Merchants Business premises: Domestic securities dealers business premises, refers to the securities Merchants business premises trading Securities management measures to provide for securities dealers dedicated counters to carry out transactions; foreign securities dealers business premises, refers to the foreign securities authorities managed and can operate securities business of the	In order to clearly define the domestic and foreign stock exchanges and securities business premises, to facilitate the company to follow, the article takes into view the securities merchants entrusted with the sale of foreign securities rules 5 and securities commercial premises trading securities management measures of the second provisions, the scope of the stock exchange at home and abroad and securities dealers business premises.
4	Appraisal Procedures $(-)$ Where the Company acquires or disposes of investment in securities or engages in derivative trading, the accounting department shall analyze its related benefits and assess its potential risks. As regards the acquisition or disposal of real estate and other assets, each unit shall draw up a capital expenditure plan in advance and carry out the feasibility evaluation on the purpose of acquisition or disposal and the expected benefits. In the case of acquiring real estate from related parties, the reasonableness of the transaction terms shall be appraised in accordance with the provisions of Chapter 2 hereof.	financial institutions business premises. Appraisal Procedures (-) Where the Company acquires or disposes of investment in securities or engages in derivative trading, the accounting department shall analyze its related benefits and assess its potential risks. As regards the acquisition or disposal of real estate and other assets, each unit shall draw up a capital expenditure plan in advance and carry out the feasibility evaluation on the purpose of acquisition or disposal and the expected benefits. In the case of acquiring real estate from related parties, the reasonableness of the transaction terms shall be appraised in accordance with the provisions of Chapter 2 hereof.	$ \cdot$ The government referred in the article means Taiwan government. The transaction wit the government is highly regulated and free from manipulation. The article is not to exempt the transaction with foreign government for the related mechanism is not clear.

	$(\equiv)$ When acquiring or disposing of securities, the Company shall, prior to the date of occurrence of the event, obtain	$(\equiv)$ When acquiring or disposing of securities, the	$\equiv$ $\cdot$ Rephrase the phrasing regarding the assets of the right to
	financial statements of the issuing company for the most recent period, certified or reviewed by a certified public	Company shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a	use acquired by relevant person and included in the specification for the evaluation of the cost of the lower transaction price according to IFFSs no.16.
	accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction reaches 20 percent of the Company's paid-in capital or NT\$300	certified public accountant, for reference in appraising the $ \equiv \cdot$ Correct phrasing. transaction price, and if the dollar amount of the transaction reaches 20 percent of the Company's paid-in
	million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the	capital or NT\$300 million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion
	reasonableness of the transaction price. If the certified public accountant needs to use the report of an expert as evidence, the certified public accountant shall do so in	regarding the reasonableness of the transaction price. If the certified public accountant needs to use the report of an expert as evidence, the certified public accountant
	accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This	shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the
	requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of then authority in	ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of
charge.	(三) Where the Company acquires or disposes of intangible assets and the transaction amount reaches 20% or more	then authority in charge. $(\equiv)$ Where the Company acquires or disposes of membership or intangible assets and the transaction amount reaches
	of the paid-in capital or NT\$300,000,000 or more, except in transactions with a government agency, the Company shall engage a CPA prior to the date of occurrence of the	20% or more of the paid-in capital or NT\$300,000,000 or more, except in transactions with a government agency, the Company shall engage a CPA prior to the date of
	event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20	occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing
	published by the ARDF. (19) The transaction amounts referred to in the preceding three articles shall be calculated in accordance with	Standards No. 20 published by the ARDF. (P) The transaction amounts referred to in the preceding three articles shall be calculated in accordance with
	paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The	paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The
from the calculation.	amounts due to professional appraisers for the appraisal report and CPA for the CPA's opinions can be excluded	amounts due to professional appraisers for the appraisal report and CPA for the CPA's opinions can be excluded from the calculation.
	$(E)$ The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the	(L)The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the
	board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange	board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange
	ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage.	ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage.
	$(\hat{\tau})$ In addition to taking into account the opinions of professional appraisers, CPAs and other relevant experts	$(\pi)$ In addition to taking into account the opinions of professional appraisers, CPAs and other relevant experts
	in accordance with the aforementioned provisions, the method and reference basis for determining the price of assets acquired or disposed of by the Company shall be	in accordance with the aforementioned provisions, the method and reference basis for determining the price of assets acquired or disposed of by the Company shall be
	handled in accordance with the following circumstances: 1. The securities transacted on a centralized exchange market or OTC market, the prices shall be decided by	handled in accordance with the following circumstances: The securities transacted on a centralized exchange market. or OTC market, the prices shall be decided by the listed
transaction.	the listed price or market price at the time of 2. The securities not transacted on a centralized	price or market price at the time of transaction. 2. The securities not transacted on a centralized exchange market or OTC market, the price decision shall refer to
	exchange market or OTC market, the price decision shall refer to financial statements of the issuing	financial statements of the issuing company for the most recent period, certified or reviewed by a certified public
	company for the most recent period, certified or reviewed by a certified public accountant. 3. The acquisition or disposal of memberships shall	accountant. 3. The acquisition or disposal of memberships shall consider the benefits to be derived therefrom, with reference to the
	consider the benefits to be derived therefrom, with reference to the latest transaction price at that time. The acquisition or disposal of patent right, copyright,	latest transaction price at that time. The acquisition or disposal of patent right, copyright, trademark right, franchise and other intangible assets shall refer to the
	trademark right, franchise and other intangible assets shall refer to the international or market practices, the serviceable life and the impact on the Company's	international or market practices, the serviceable life and the impact on the Company's technology and business. 4. The acquisition or disposal of real estate and other
	technology and business. 4. The acquisition or disposal of real estate and other fixed assets shall refer to the publicly announced	fixed assets shall refer to the publicly announced current value, appraised current value, the actual transaction price or book value of the adjacent real
	current value, appraised current value, the actual transaction price or book value of the adjacent real estate and the supplier's quotation. In the case of the	estate and the supplier's quotation. In the case of the purchase of real property from a related party, a calculation shall be made using the method prescribed
	purchase of real property from a related party, a calculation shall be made using the method prescribed in Chapter 2 hereof to evaluate whether the transaction price is reasonable.	in Chapter 2 hereof to evaluate whether the transaction price is reasonable.
	5. Derivatives trading shall take into account futures market trading conditions, exchange rates, and interest	5. Derivatives trading shall take into account futures market trading conditions, exchange rates, and interest rate trends.
rate trends.	6.zThe nature of business, net value per share, asset value, technology and profitability, productivity and	6.zThe nature of business, net value per share, asset value, technology and profitability, productivity and future growth potential should be taken into account
	future growth potential should be taken into account when conducting a merger, demerger, acquisition, or transfer of shares.	when conducting a merger, demerger, acquisition, or transfer of shares.

$\overline{5}$	Operating Procedures: (-)The degree of authority delegated and the levels	Operating Procedures: $(-)$ The degree of authority delegated and the levels	- Delete the text of supervisor according to the resolution of 14 th board meeting on the establishment of
	to which authority is delegated 1. Securities: The board of directors may authorize	to which authority is delegated	auditor committee. $\equiv$ $\cdot$ Correct punctuation.
	the chairman to approve the amount of a single or	1. Securities: The board of directors may authorize the chairman to approve the amount of a single or
	cumulative transaction of NT\$10 million or less in	cumulative transaction of NT\$10 million or less in
	advance and subsequently report it at the latest	advance and subsequently report it at the latest
	board meeting. A single sum or accumulative sum exceeding NT\$10 million shall be submitted to	board meeting. A single sum or accumulative sum
	the board of directors for approval and recognized	exceeding NT\$10 million shall be submitted to the board of directors for approval and recognized by
	by the supervisors. However, the acquisition or	the supervisors. However, the acquisition or
	disposal of stocks, corporate bonds or privately	disposal of stocks, corporate bonds or privately
	placed securities that are not traded in the centralized securities exchange market or OTC	placed securities that are not traded in the centralized securities exchange market or OTC
	market shall be subject to the resolution of the	market shall be subject to the resolution of the
	board of directors. In addition, investment in	board of directors. In addition, investment in China
	China shall be carried out by the chairmen with	shall be carried out by the chairmen with the
	the consent of the board of directors or authorized by the board of directors, and shall be approved	consent of the board of directors or authorized by the board of directors, and shall be approved by the
	by the Investment Board of the Ministry of	Investment Board of the Ministry of Economic
	Economic Affairs.	Affairs.
	2. Derivatives trading (1) Hedge trades: According to the change of	2. Derivatives trading
	turnover and risk position of the Company, a	(1) Hedge trades: According to the change of turnover and risk position of the Company, a person
	person designated by the chairman may conduct	designated by the chairman may conduct
	transactions in a single or cumulative transaction of less than USD\$3 million (including equivalent	transactions in a single or cumulative transaction of
	currencies). For USD\$3 million or more, it shall	less than USD\$3 million (including equivalent currencies). For USD\$3 million or more, it shall be
	be submitted to the chairman for approval before	submitted to the chairman for approval before
	proceeding with the transaction.	proceeding with the transaction.
	(2) Non-hedge trades: To reduce risk, a single or a cumulative transaction of less than USD\$1	(2) Non-hedge trades: To reduce risk, a single or a cumulative transaction of less than USD\$1 million
	million (including equivalent currencies) shall be	(including equivalent currencies) shall be
	submitted to the chairman for approval, while that	submitted to the chairman for approval, while that
	with USD\$1 million or more shall be approved by the board of directors before relevant transactions	with USD\$1 million or more shall be approved by the board of directors before relevant transactions
	can be carried out.	can be carried out.
	(3) In order for the authorization from the Company	(3) In order for the authorization from the Company to
	to cooperate with the bank's supervision and	cooperate with the bank's supervision and
	management, the authorized trader must inform the bank.	management, the authorized trader must inform the bank.
	(4) Derivatives trading under the aforementioned	(4) Derivatives trading under the aforementioned
	authorization shall be reported to the board of directors afterwards.	authorization shall be reported to the board of
	3. Where the Company acquires real property from a	directors afterwards. 3. Where the Company acquires real property from a
	related party, relevant information shall be prepared in	related party, relevant information shall be prepared in
	accordance with the provisions of Chapter 2 hereof and shall be submitted to the board of directors for	accordance with the provisions of Chapter 2 hereof and
	approval and recognized by the supervisors.	shall be submitted to the board of directors for approval and recognized by the supervisors.
	4. Merger, demerger, acquisition, or transfer of shares:	4. Merger, demerger, acquisition, or transfer of shares:
	Relevant procedures and materials shall be prepared in accordance with Chapter 4 hereof, in which mergers,	Relevant procedures and materials shall be prepared in accordance with Chapter 4 hereof, in which mergers,
	demergers and acquisitions are subject to the adoption	demergers and acquisitions are subject to the adoption
	of a resolution by the shareholders' meeting. Provided, where a provision of another act exempts a company	of a resolution by the shareholders' meeting. Provided,
	from convening a shareholders meeting to approve the	where a provision of another act exempts a company from convening a shareholders meeting to approve the
	merger, demerger, or acquisition, this restriction shall	merger, demerger, or acquisition, this restriction shall
	not apply. In addition, the transfer of shares shall be	not apply. In addition, the transfer of shares shall be
	approved by the board of directors. 5. Other: It shall be handled in accordance with the	approved by the board of directors. 5. Other: It shall be handled in accordance with the
	operating procedures prescribed by the internal control	operating procedures prescribed by the internal control
	system and the decision-making authority. If the	system and the decision-making authority. If the
	transaction amount reaches the public announcement and report standard set forth in Article 5, it shall be	transaction amount reaches the public announcement and report standard set forth in Article 5, if shall be
	approved by the board of directors first. In case of any	approved by the board of directors first. In case of any
	circumstance as set forth under Article 185 of the	circumstance as set forth under Article 185 of the
	Company Act, it shall be adopted by a resolution of the shareholders' meeting.	Company Act, it shall be adopted by a resolution of the shareholders' meeting.
	(=)The units responsible for implementation, and	$(\equiv)$ The units responsible for implementation, and
	transaction process	transaction process
	The Company's units responsible for implementation of investment in long- and short-term securities and	The Company's units responsible for implementation
	derivatives trading are the accounting department and	of investment in long- and short-term securities and derivatives trading are the accounting department and
	personnel designated by the chairman, and are subject	personnel designated by the chairman, and are subject
	to the provisions of Chapter 3 hereof. The units	to the provisions of Chapter 3 hereof. The units
	responsible for implementation of real property and other assets are the use departments and responsible	responsible for implementation of real property and other assets are the use departments and responsible
	departments. The Company acquiring real property	departments. The Company acquiring real property
	from a related party shall be subject to the provisions of	from a related party shall be subject to the provisions
	Chapter 2 hereof. The unit in charge of mergers, demergers, acquisition, or transfers of shares is	of Chapter 2 hereof. The unit in charge of mergers, demergers, acquisition, or transfers of shares is
	appointed by the chairman and governed by the	appointed by the chairman and governed by the
	provisions of Chapter 4 hereof. After the acquisition or	provisions of Chapter 4 hereof. After the acquisition
	disposal of assets is appraised and approved in accordance with the regulations, the unit in charge shall	or disposal of assets is appraised and approved in accordance with the regulations, the unit in charge
	carry out the transaction process such as contracting,	shall carry out the transaction process such as
	receipt and payment, delivery and acceptance, and shall	contracting, receipt and payment, delivery and
	follow the operation procedures related to the internal control system according to the nature of the assets.	acceptance, and shall follow the operation procedures related to the internal control system according to the
		nature of the assets.

第六條	Information disclosure: -)Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in an appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event: Acquisition or disposal of real estate from or to a related party, or acquisition or disposal of assets other than real estate from or to a related party where the transaction amount reaches 20% or more of the paid-in capital, or 10% or more of the Company's total assets, or NT\$300,000,000 or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds. 2. Merger, spin-off, acquisition, or transfer of shares. 3. Losses from derivatives trading reaching the limits of aggregate losses or losses on individual contract set out in the procedures adopted by the Company 4. Where equipment or right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria:	Information disclosure: $(-)$ Under any of the following circumstances, the Company acquiring or disposing of assets shall publicly announce and report the relevant information on the FSC's designated website in an appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event: 1. Acquisition or disposal of real estate or right of use from or to a related party, or acquisition or disposal of assets other than real estate from or to a $\equiv$ related party where the transaction amount reaches 20% or more of the paid-in capital, or 10% or more of the Company's total assets, or NT\$300,000,000 or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds. 2. Merger, spin-off, acquisition, or transfer of shares. 3. Losses from derivatives trading reaching the limits of aggregate losses or losses on individual contract set out in the procedures adopted by the Company. 4. Where equipment or right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria:	· The bods herein refers to domestic government bond, which is exempted from the approval of the board and supervisor for with reasonable credit and easy to access. The foreign bond is not applicable. According to IFRSs no.16, the right of use shall be included. · Rephrase the phrasing regarding the assets of the right to use acquired by relevant person and included in the specification for the evaluation of the cost of the lower transaction price according to IFFSs no.16. The article 1-5 of "Guidelines for the processing of assets acquired or disposed of by the public issuing company" issued by the competent authorities has been declared by the company on behalf of the subsidiary, with the discretion of amendments to the rule of law operation.
	(1) For a public company whose paid-in capital is less than NT\$10 billion, the transaction amount reaches NT\$500 million or more. (2) For a public company whose paid-in capital is NT\$10 billion or more, the transaction amount reaches NT\$1 billion or more. 5. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and the amount the company expects to invest in the transaction reaches NT\$500 million. 6. Any asset transactions other than those referred to in the preceding three subparagraphs, or an investment in the mainland China area with amount reaching 20% or more of the paid-in capital or NT\$300,000,000 or more, excluding the following circumstances: (1) Trading of government bonds. (2) Securities trading by investment management companies on foreign or domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm, either in the primary market or in accordance with relevant regulations. $(\equiv)$ The Company shall compile monthly reports on its assets acquired or disposed of or derivatives trading reaching the standards for public announcement and report or the status of derivatives trading engaged in up to the end of the preceding month by the Company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.	(1) For a public company whose paid-in capital is less than NT\$10 billion, the transaction amount reaches NT\$500 million or more. (2) For a public company whose paid-in capital is NT\$10 billion or more, the transaction amount reaches NT\$1 billion or more. 5. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the company expects to invest in the transaction reaches NT\$500 million. 6. Any asset or right of use transactions other than those referred to in the preceding three subparagraphs, or an investment in the mainland China area with amount reaching 20% or more of the paid-in capital or NT\$300,000,000 or more, excluding the following circumstances: (1) Trading of domestic government bonds. (2) Securities trading by investment management companies on foreign or domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm. either in the primary market or in accordance with relevant regulations. $\Rightarrow$ ) The Company shall compile monthly reports on its assets acquired or disposed of or derivatives trading reaching the standards for public announcement and report or the status of derivatives trading engaged in up to the end of the preceding month by the Company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by
	$(\equiv)$ When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission. (m) Any disclosure shall be updated within 2 days if the following event occurs: 1. The contract has been terminated. 2. The merger or transfer is not completed on the due date. 3. Original disclosure is changed. (If the assets of the subsidiary is below 20% or 10% of the assets of the Company, the paid-in capital amount shall be provided.)	the 10th day of each month. (E)When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission. (四)Any disclosure shall be updated within 2 days if the following event occurs: 1. The contract has been terminated. 2. The merger or transfer is not completed on the due date. 3. Original disclosure is changed. (If the assets of the subsidiary is below 20% or 10% of the assets of the Company, the paid-in capital amount shall be provided.) ( L )The company's subsidiary is not a domestic public offering company, the acquisition or disposition of assets should be announced in the case of the Declaration, by the corporation. Subsidiary declaration standards relating to the amount of capital received 20% or the total assets of 10% provisions, based on the company's paid-in capital or total assets shall prevail.

	Asset assessment: In acquiring or disposing of real estate or equipment where the transaction amount reaches 20% of the Company's paid-in capital or NT\$300,000,000 or more, the Company, unless transacting with a government agency, engaging others to build on its own land, engaging others to build on leased land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of the occurrence of the event from a professional appraiser and shall further comply with the following provisions: The transaction amounts referred to in the preceding three articles shall be calculated in accordance with paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The amounts due to professional appraisers for the appraisal report and CPA for the CPA's opinions can be excluded from the calculation. Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or the CPA opinion.	Asset assessment: In acquiring or disposing of real estate or right of use or equipment where the transaction amount reaches 20% of the Company's paid-in capital or NT\$300,000,000 or more, the Company, unless transacting with a government agency, engaging others to build on its own land, engaging others to build on leased land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of the occurrence of the event from a professional appraiser and shall further comply with the following provisions: The transaction amounts referred to in the preceding three articles shall be calculated in accordance with paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The amounts due to professional appraisers for the appraisal report and CPA for the CPA's opinions can be excluded from the calculation. Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or the CPA opinion.	$ \cdot$ The government referred in the article means Taiwan government. The transaction wit the government is highly regulated and free from manipulation. The article is not to exempt the transaction with foreign government for the related mechanism is not clear. According to IFRSs no.16, include the regulation of right of use in the article.
	-)In the event that due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedures shall apply to any future changes in the terms and conditions of the transaction 二)In the event that the transaction amount is NT\$1 billion or more, appraisals from two or more professional appraisers shall be obtained. E)Any one of the following circumstances applies with respect to the professional appraisers' appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of the Statement of Auditing Standards No. 20 published by the foundation constituted as a juristic person in Taiwan -- Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reasons for the discrepancy and the appropriateness of the transaction price: 1. The discrepancy between the appraisal result and the transaction amount is 20% or more of the transaction amount. The discrepancy between the appraisal results of two or more professional appraisers is 10% or more of the transaction amount. map No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the current land value for the same period announced by Ministry of Interior is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.	$(-)$ In the event that due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedures shall apply to any future changes in the terms and conditions of the transaction $($ = $)$ In the event that the transaction amount is NT\$1 billion or more, appraisals from two or more professional appraisers shall be obtained. $(\equiv)$ Any one of the following circumstances applies with respect to the professional appraisers' appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of the Statement of Auditing Standards No. 20 published by the foundation constituted as a juristic person in Taiwan -- Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reasons for the discrepancy and the appropriateness of the transaction price: 1. The discrepancy between the appraisal result and the transaction amount is 20% or more of the transaction amount. 2. The discrepancy between the appraisal results of two or more professional appraisers is 10% or more of the transaction amount. (四) No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the current land value for the same period announced by Ministry of Interior is used and not more than 6 months have elapsed, an opinion may still be issued by the	$\equiv$ $\cdot$ The article removes the text of machine because the "public offering company acquires or disposes of asset handling guidelines" issued by the competent authority does not limit the equipment to machinery and equipment. थि · Amend the text for compliance.
8	Scope and Amount of Investment In addition to acquiring assets for business use, the Company In addition to acquiring assets or right of use for business and its subsidiaries may also invest in non-commercial real property and securities. The limits of their quotas are as follows. In the calculation under subparagraphs 4 and 5, those engaging in the investment and establishment or holding the position of director and intended to be long-term holders may not be included. (-)The total amount of real estate not for business use shall not exceed 30 percent of the net value of the Company's latest financial statements, while its subsidiary shall not exceed 30 percent of the net value of its latest financial statements. (=)The total amount of securities may not exceed 120 percent of the net value of the Company's most recent financial statements. Its subsidiaries may not exceed 120 percent of the net value of its most recent financial statements. (三)The limit for investing in individual securities shall not exceed 60 percent of the net value of the Company's latest financial statements, and 60 percent of the net value of its subsidiary's latest financial statements. ( $\mathfrak{B}$ )The net investment of the Company and its subsidiaries in a single listed or OTC company shall not exceed 10 percent of the net value of their respective latest financial statements. ( fL )The total investment and shareholding of the Company and its subsidiaries in a single listed or OTC company shall not exceed 10 percent of the total amount of shares issued by such single listed or OTC company.	original professional appraiser. Scope and Amount of Investment use, the Company and its subsidiaries may also invest in non-commercial real property and securities. The limits of their quotas are as follows. In the calculation under subparagraphs 4 and 5, those engaging in the investment and establishment or holding the position of director or supervisor, and intended to be long-term holders may not be included. $(-)$ The total amount of real estate not for business use shall not exceed 30 percent of the net value of the Company's latest financial statements, while its subsidiary shall not exceed 30 percent of the net value of its latest financial statements. $($ = $)$ The total amount of securities may not exceed 120 percent of the net value of the Company's most recent financial statements. Its subsidiaries may not exceed 120 percent of the net value of its most recent financial statements. $(\equiv)$ The limit for investing in individual securities shall not exceed 60 percent of the net value of the Company's latest financial statements, and 60 percent of the net value of its subsidiary's latest financial statements. (19) The net investment of the Company and its subsidiaries in a single listed or OTC company shall not exceed 10 percent of the net value of their respective latest financial statements. $(\pm)$ The total investment and shareholding of the Company and its subsidiaries in a single listed or OTC company shall not exceed 10 percent of the total amount of shares issued by such single listed or OTC company.	$ \cdot$ Rephrase the phrasing regarding the assets of the right to use acquired by relevant person and included in the specification for the evaluation of the cost of the lower transaction price according to IFFSs no.16. = Delete the text of supervisor according to the resolution of 14 th board meeting on the establishment of auditor committee.
	Control procedures for the Acquisition and Disposal of Assets by Subsidiaries (-)The subsidiaries of the Company shall also establish and implement the "Procedures for the Acquisition or Disposal of Assets," which shall be passed by the board of directors of the subsidiaries, sent to the supervisors (otherwise the process can be waived) and submitted to the shareholders' meeting (approval from only the board meeting is allowed for a sole shareholder) for approval, and the same procedures shall apply whenever subscutuent amendments are made.	Control procedures for the Acquisition and Disposal of Assets by Subsidiaries (-)The subsidiaries of the Company shall also establish and implement the "Procedures for the Acquisition or Disposal of Assets," which shall be passed by the board of directors of the subsidiaries, sent to the supervisors (otherwise the process can be waived) and submitted to the shareholders' meeting (approval from only the board meeting is allowed for a sole shareholder) for approval, and the same procedures shall apply whenever subscuuent amendments are made	Delete the text of supervisor according to the resolution of 14 th board meeting on the establishment of auditor committee.

12	(=)The acquisition or disposal of assets by subsidiaries of the Company shall be governed by the respective provisions of the "internal control system" and the Procedure for the Acquisition or Disposal of Assets. They shall notify the Company within the day of occurrence of the event and shall, by the 5th day of each month, submit monthly reports in writing to the Company on where the amount of a single or accumulated transaction of the same nature of assets acquired or disposed of the preceding month reached NT\$10 million or more and on the status of derivatives trading engaged in up to the end of the preceding month. $(\equiv)$ If the subsidiary is not a public company, the Company shall disclose the related information. Resolution: When the Company intends to acquire or dispose of real estate from or to a related party, or when it intends to acquire	$($ The acquisition or disposal of assets by subsidiaries of the Company shall be governed by the respective provisions of the "internal control system" and the Procedure for the Acquisition or Disposal of Assets. They shall notify the Company within the day of occurrence of the event and shall, by the 5th day of each month, submit monthly reports in writing to the Company on where the amount of a single or accumulated transaction of the same nature of assets acquired or disposed of the preceding month reached NT\$10 million or more and on the status of derivatives trading engaged in up to the end of the preceding month. (三)If the subsidiary is not a public company, the Company shall disclose the related information. Resolution: When the Company intends to acquire or dispose of real estate from or to a related party, or when it	$-$ The bods herein refers to domestic government bond, which is exempted from the approval of the board and supervisor for with reasonable credit and easy
	or dispose of assets other than real estate from or to a related party and the transaction amount reaches 20% or more of the paid-in capital, 10% or more of the Company's total assets, or NT\$300,000,000 or more, except in the trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds, subject to mutatis mutandis application of paragraphs 2, 3 and 4 of Article 6, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by the board: $(-)$ The purpose, necessity and estimated benefit of the acquisition or disposal of assets. $(\equiv)$ The reason for choosing the related party as a trading counterparty. $(\equiv)$ With respect to the acquisition of real estate from a related party, information regarding evaluation of the reasonableness of the pre-determined transaction terms in accordance with Articles 15 and 16.	intends to acquire or dispose of assets other than real estate from or to a related party and the transaction amount reaches 20% or more of the paid-in capital, 10% or more of the Company's total assets, or NT\$300,000,000 or more, except in the trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds, subject to mutatis mutandis application of paragraphs 2, 3 and 4 of Article 6, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by more than half of all Audit Committee members, and then submitted to the board of directors for a resolution: $(-)$ The purpose, necessity and estimated benefit of the acquisition or disposal of assets. $(\equiv)$ The reason for choosing the related party as a trading counterparty. ( ≡ ) With respect to the acquisition of real estate from a related party, information regarding evaluation of the reasonableness of the pre-determined transaction terms in accordance with Articles 15 and 16.	to access. The foreign bond is not applicable. According to IFRSs no.16, the right of use shall be included. - Consider that the company and its mother company, subsidiary, or its subsidiaries directly or indirectly owned by each other may with overall plan of the business and may have collective procurement or leasing for business, the article hereby simplify the procedure of acquiring the equipment of business and the related acquisition shall be approved by the chairman.
	(cg) The date and price at which the related party originally acquired the real estate, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party. ( A. )Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization. $(\pi)$ An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article. $(+)$ Restrictive covenants and other major terms associated with the transaction. The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The amounts approved by the board of directors and ratified by the Audit Committee can be excluded from the calculation. With respect to the acquisition or disposal of business-use equipment between the Company and its subsidiaries, the Company's board of directors may pursuant to subparagraph 3, paragraph 1 of Article 7, delegate the chairman to decide such matters and have the decisions subsequently ratified at the next board of directors meeting.	( $\mathfrak{B}$ )The date and price at which the related party originally acquired the real estate, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party. (L)Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization. $(\pi)$ An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article. $(+)$ Restrictive covenants and other major terms associated with the transaction. The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The amounts approved by the board of directors and ratified by the Audit Committee can be excluded from the calculation. With respect to the acquisition or disposal of business-use equipment between the Company and its subsidiaries, the Company's board of directors may pursuant to subparagraph 3, paragraph 1 of Article 7, delegate the chairman to decide such matters and have the decisions subsequently ratified at the next board of directors meeting. The company engages in the following transactions between the parent company, the subsidiary, or its subsidiaries that directly or indirectly hold 100% of the issued shares or total capital, and the Board Shall, in accordance with the first paragraph fifth of article fifth, authorize the Chairman to make a firm decision within a certain amount, and then report to the most recent confirmation of the board of Directors: (-) Acquire or dispose of equipment for business use or the assets for which it is used. Obtain or dispose of assets used for the use of real estate for business. The calculation of the amount of the first two transactions shall be governed by the first provision of regulation sixth and, within the said year, by the date on which the facts of the transaction occurred as the basis, a year of retrospective calculation, which has been submitted to the Board of Auditors and the Board of directors through partial exemption in accordance with this operating procedure. When reporting on the Board's discussions in accordance with the first provision, full consideration shall be given to the views of the independent directors, who may, if they have objections or reservations, be made clear in the proceedings of the Board of Directors.	$\equiv$ $\cdot$ In accordance with the provisions of article sixth, paragraph 8, of the "Organization of audit Committee of the public offering companies" issued by the FSC, which provides that transactions of major stakeholders are the terms of reference of the Board of Auditors and shall be preceded by the approval of the Board of Directors to send a resolution to the board.

13	Evaluation of the Reasonableness of Trading Conditions: The Company that acquires real property from a related party shall appraise the reasonableness of transaction costs by taking the following approaches and engage a CPA to check the appraisal and render a specific opinion, except in the following three situations: 1) The related party acquired the real property through inheritance or as a gift; 2) More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction; and 3) The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the Company's own land or on rented land. (-)Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the Company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance. $($ = $)$ Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70% or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties. (E)Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.	Evaluation of the Reasonableness of Trading Conditions: The Company that acquires real property or right of use from a related party shall appraise the reasonableness of transaction costs by taking the following approaches and engage a CPA to check the appraisal and render a specific opinion, except in the following three situations: 1) The related party acquired the real property through inheritance or as a gift; 2) More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction; and 3) The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the Company's own land or on rented land. (-)Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the Company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance. (-)Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70% or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties. (三) Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the means listed in the preceding paragraph.	Rephrase the phrasing regarding the assets of the right to use acquired by relevant person and included in the specification for the evaluation of the cost of the lower transaction price according to IFFSs no.16. $\equiv$ $\cdot$ Considering that the public offering company and its parent company, subsidiary, or its subsidiaries held directly or indirectly by each other, because of the overall planning of the business, have the possibility of co-leasing real estate, re-subletting, and the risk of unconventional transactions involved. The exclusion of such transactions shall be subject to the provisions of this article to assess the reasonableness of transaction costs (the price at which the person obtains the real estate transaction, or the price paid by the leased real estate).
14	Items to be Done when Transaction Cost is lower than Transaction Price When the results of the Company's appraisal conducted in accordance with the preceding Article reveal that the transaction cost is uniformly lower than the transaction price, the provisions of article 15 shall apply, with the exception of where the following circumstances exist and where objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA. (-)Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions: 1. Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower. 2. Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices. 3. Completed leasing transactions by unrelated parties for other floors of the same property from within the preceding year, where the transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance with standard property leasing market practices. $(\equiv)$ Where the Company acquiring real estate from a related party provides evidence that the terms of the transaction are similar to the terms of transactions completed for the acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year.	Items to be Done when Transaction Cost is lower than Transaction Price When the results of the Company's appraisal conducted in accordance with the preceding Article reveal that the transaction cost is uniformly lower than the transaction price, the provisions of article 15 shall apply, with the exception of where the following circumstances exist and where objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA. $(-)$ Where the related party acquired undeveloped land or right of use or leased land for development, it may submit proof of compliance with one of the following conditions: 1. Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower. 2. Completed transactions by unrelated parties within the preceding year involving other floors of the same property or area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices. $(\equiv)$ Where the Company acquiring real estate from a related party provides evidence that the terms of the transaction are similar to the terms of transactions completed for the acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding vear.	$ \cdot$ To facilitate the operation of the lease of plant, this is to simplify the procedure of the acquisition of the right of use from related party. The reasonable price can refer to the transaction price within 1 year of nearby area. 츠 Incorporate the content of 1-1-2 into 1-1-3 and add the transaction reference according to 1-1-2, 1-2, and 2.
	Completed transactions for neighboring or closely valued parcels of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transaction for similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50% of the property in the planned transaction; within the preceding year refers to the year preceding the date of occurrence of the acquisition of the real estate.	The use of similar area means comparing to other cases, no less than 50% of that; the use of within 1 year means as of the date acquiring the asset and traced back for 1 year.

第十五條
	Where the Company acquires real estate from a related party and the results of appraisals conducted in accordance with Articles 13 and 14 are uniformly lower than the transaction	Where the Company acquires real estate or right of use from a related party and the results of appraisals conducted in	- 1 Rephrase the phrasing regarding the assets of the right to use acquired by relevant person and
	price, the following steps shall be taken:	accordance with Articles 13 and 14 are uniformly lower than the transaction price, the following steps shall be taken:	included in the specification for the evaluation of the cost of the lower transaction price according to
	(-)A special reserve shall be set aside in accordance with	$(-)$ A special reserve shall be set aside in accordance with	IFFSs no.16.
	Article 41, paragraph 1 of the Securities and Exchange Act	Article 41, paragraph 1 of the Securities and Exchange Act	$\equiv$ $\cdot$ Cooperate with the board of directors of the company's
	against the difference between the real estate transaction	against the difference between the real estate or right of use	14 session to implement the Audit committee and
	price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares.	transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus	delete the supervisor text. 三、 Phrasing correction.
	(=)The Supervisors shall comply with Article 218 of the	shares.
	Company Act.	(=)The Supervisors shall comply with Article 218 of the
	(E)Actions taken pursuant to subparagraphs 1 and 2 shall be	Company Act.
	reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any	( ≡ )Actions taken pursuant to subparagraphs 1 and 2 shall be reported to a shareholders meeting, and the details of the
	investment prospectus.	transaction shall be disclosed in the annual report and any
		investment prospectus.
	The Company that has set aside a special reserve under the preceding paragraph may not utilize the special reserve until	The Company that has set aside a special reserve under the
	it has recognized a loss on decline in market value of the	preceding paragraph may not utilize the special reserve until
	assets it purchased at a premium, or they have been disposed	it has recognized a loss on decline in market value of the
	of, or adequate compensation has been made, or the status quo ante has been restored, or there is	assets it purchased at a premium, or they have been disposed of, or adequate compensation has been
	other evidence confirming that there was nothing	made, or the status quo ante has been restored, or there is
	unreasonable about the transaction, and the Financial	other evidence confirming that there was nothing
	Supervisory Commission (FSC) has given its consent.	unreasonable about the transaction, and the Financial Supervisory Commission
	When the Company obtains real estate from a related party, it	(FSC) has given its consent.
	shall also comply with the preceding two paragraphs if there	When the Company obtains real estate or right of use from a
	is other evidence indicating that the acquisition was not an arm's length transaction.	related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the
		acquisition was not an arm's length transaction.
17	Risk management: The Company engaging in derivatives trading shall adopt the	Risk management: The Company engaging in derivatives trading shall adopt the	Phrasing correction.
	following risk management measures:	following risk management measures:
	$(-)$ Consideration of credit risk: the counterparty of	$(-)$ Consideration of credit risk: the counterparty of
	derivatives trading shall be the bank which has a business relationship with the Company or a prominent international	derivatives trading shall be the bank which has a business relationship with the Company or a prominent international
	financial institution which may provide professional	financial institution which may provide professional
	information.	information.
	(=)Market risk: As the potential loss of derivatives due to future market price fluctuations is uncertain, the stop-loss	$($ = $)$ Market risk: As the potential loss of derivatives due to future market price fluctuations is uncertain, the stop-loss
	point should be set strictly after the position is established	point should be set strictly after the position is established
	$(\equiv)$ Liquidity risk: In order to ensure the liquidity of the	$(\equiv)$ Liquidity risk: In order to ensure the liquidity of the
	commodities traded, the trading institutions must have	commodities traded, the trading institutions must have sufficient equipment, information and trading capacity and be sufficient equipment, information and trading capacity and be
	able to trade in any market.	able to trade in any market.
	(cg)Cash flow management: Only invested by self-owned fund and shall consider the currency need in the future.	( $\mathfrak{B}$ )Cash flow management: Only invested by self-owned fund and shall consider the currency need in the future.
	$(\pm)$ Operational risk: The degree of authority delegated and	( fL )Operational risk: The degree of authority delegated and
	process must be observed to avoid operational risk.	process must be observed to avoid operational risk.
	$(\pi)$ Legal risk: Any contractual documents signed with	$(\pi)$ Legal risk: Any contractual documents signed with
	financial institutions shall use international standardization documents as far as possible to avoid legal risks.	financial institutions shall use international standardization documents as far as possible to avoid legal risks.
	( ±)Commodity risk: Internal traders shall have complete and	$(\pm)$ Commodity risk: Internal traders shall have complete and
	correct expertise in dealing with derivatives in order to avoid losses caused by misuse of derivatives.	correct expertise in dealing with derivatives in order to avoid
	$(\wedge)$ Cash delivery risk: The authorized trader shall strictly	losses caused by misuse of derivatives. $(\wedge)$ Cash delivery risk: The authorized trader shall strictly
	abide by the provisions within the authorized limit, and pay	abide by the provisions within the authorized limit, and pay
	attention to the company's cash flow at ordinary times to ensure that there is sufficient cash payment for delivery.	attention to the company's cash flow at ordinary times to ensure that there is sufficient cash payment for delivery.
	$(\Lambda)$ Personnel engaged in derivatives trading may not serve	$(\Lambda)$ Personnel engaged in derivatives trading may not serve
	concurrently in other operations such as confirmation and	concurrently in other operations such as confirmation
	settlement.	and settlement.
	(+) Confirmation personnel shall regularly check accounts with or send a written confirmation request to	(+) Confirmation personnel shall regularly check accounts with or send a written confirmation
	correspondent banks and check from time to time	request to correspondent banks and check from
	whether the total amount of transactions exceeds the upper limit stipulated herein.	time to time whether the total amount of transactions exceeds the upper limit stipulated
	$(+-)$ Risk measurement, monitoring, and control personnel	herein.
	shall be assigned to a different department from the personnel as noted in subparagraph 1) and shall report to	$(+-)$ Risk measurement, monitoring, and control personnel shall be assigned to a different
	the board of directors or senior management personnel	department from the personnel as noted in
	with no responsibility for trading or position	subparagraph 1) and shall report to the board of
	decision-making. $(+\rightleftarrows)$ Derivatives trading positions held shall be evaluated at	directors or senior management personnel with no responsibility for trading or position
	least once per week; however, positions for hedge trades	decision-making.
	required by business shall be evaluated at least twice per month. Evaluation reports shall be submitted to senior	$(+\equiv)$ Derivatives trading positions held shall be evaluated at least once per week; however, positions for hedge trades
	management personnel authorized by the board of	required by business shall be evaluated at least twice per
	directors.	month. Evaluation reports shall be submitted to senior
		management personnel authorized by the board of directors.
18		Internal audit:	Cooperate with the 14th session of the company board to
	Internal audit: (-)The Company's internal audit personnel shall	(-)The Company's internal audit personnel shall periodically examine the appropriateness of	implement the deletion of supervisor.
	periodically examine the appropriateness of internal	internal controls over derivatives trading and
	controls over derivatives trading and conduct a monthly	conduct a monthly audit of the compliance
	audit of the compliance of derivatives trading by the trading department with the procedures, and prepare an	of derivatives trading by the trading department with the procedures, and prepare
	audit report. In the event of any material violations, the	an audit report. In the event of any material
	supervisors and officer designated by Chairman shall be notified in writing.	violations, the auditor committee and officer designated by Chairman shall be notified in
	(=)The auditors of the Company shall include derivatives	writing.
	trading in the audit plan and report the implementation of $ (-)$ The auditors of the Company shall include derivatives
	the annual audit plan of the previous year to the Securities and Futures Bureau before the end of February	trading in the audit plan and report the implementation of the annual audit plan of the previous year to the
	of the next year, and submit the improvement of irregular	Securities and Futures Bureau before the end of
	circumstances to the Bureau for reference no later than the end of May of the next year.	February of the next year, and submit the improvement of irregular circumstances to the Bureau for reference
		no later than the end of May of the next year.

19		Regular Evaluation Methods and Handling of Irregular	$-$ The company has set up an independent director, so
	Regular Evaluation Methods and Handling of Irregular	Circumstances	amend the second text of the third paragraph.
	Circumstances	$(-)$ Regular monthly or weekly evaluation of derivatives	$\equiv$ $\cdot$ The provisions of the "open issuing company acquisition
	(-)Regular monthly or weekly evaluation of derivatives	trading and summary of the current month or	or disposition of assets disposal Guidelines" issued by
	trading and summary of the current month or week's	week's profits and losses and non-hedging trading
	profits and losses and non-hedging trading open positions	open positions shall be presented to senior	the competent authorities have been added to paragraph
	shall be presented to senior management personnel and	management personnel and chairmen authorized by	fourth, and the current paragraph 4 has been moved to
	chairmen authorized by the board of directors as a	the board of directors as a reference for	paragraph 5.
	reference for management performance evaluation and
	risk measurement.	management performance evaluation and risk
		measurement.
	$($ = $)$ Designate senior management personnel to pay	$(\equiv)$ Designate senior management personnel to pay
	continuous attention to monitoring and controlling	continuous attention to monitoring and controlling
	derivatives trading risk. Periodically evaluate	derivatives trading risk. Periodically evaluate
	whether derivatives trading performance is consistent	whether derivatives trading performance is
	with established operational strategy and whether the	consistent with established operational strategy and
	risk undertaken is within the company's permitted	whether the risk undertaken is within the
	scope of tolerance.	company's permitted scope of tolerance.
	$(\equiv)$ Senior management personnel authorized by the	(E)Senior management personnel authorized by
	board of directors shall manage derivatives trading in	the board of directors shall manage derivatives
	accordance with the following principles:	trading in accordance with the following
	1. Periodically evaluate the risk management	principles:
	measures currently employed are appropriate and are	1. Periodically evaluate the risk management
	faithfully conducted in accordance with these	measures currently employed are appropriate and
	Regulations issued by competent authority and the	are faithfully conducted in accordance with these
	procedures for engaging in derivatives trading	Regulations issued by competent authority and the
	formulated by the company.	procedures for engaging in derivatives trading
	2. When irregular circumstances are found in the	formulated by the company.
	course of supervising trading and profit-loss	2. When irregular circumstances are found in the
	circumstances, appropriate measures shall be	course of supervising trading and profit-loss
	adopted and a report immediately made to the board	circumstances, appropriate measures shall be
	of directors; where a company has independent	adopted and a report immediately made to the
	directors, an independent director shall be present at	board of directors; where a company has
	the meeting and express an opinion.	independent directors, an independent director
	( $\varnothing$ ) The company engaging in derivatives trading shall	shall be present at the meeting and express an
	establish a log book in which details of the types and	opinion.
	amounts of derivatives trading engaged in, board of	EQ) A public offering company engaged in the trading of
	directors approval dates, and the matters required to be	derivative commodities shall, in accordance with the
	carefully evaluated in the log book.	provisions of the procedures for processing derivative
		commodity transactions, authorize the relevant
		personnel to be referred to the most recent board of
		directors afterwards.
		$(\pm)$ The company engaging in derivatives trading shall
		establish a log book in which details of the types and
		amounts of derivatives trading engaged in, board of
		directors approval dates, and the matters required to be
		carefully evaluated in the log book.
21	In the event that the Company conducting in a merger,	In the event that the Company participating in a merger,	Word rephrasing.
	spin-off, acquisition, or transfer of shares shall prepare a	spin-off, acquisition, or transfer of shares shall prepare a
	public report to shareholders detailing important contractual	public report to shareholders detailing important contractual
	content and matters relevant to the merger, spin-off, or	content and matters relevant to the merger, spin-off, or
	acquisition prior to the shareholders meeting and include it	acquisition prior to the shareholders meeting and include it
	along with the expert opinion referred to in paragraph 1 of	along with the expert opinion referred to in paragraph 1 of
	the preceding Article when sending shareholders notification	the preceding Article when sending shareholders notification
	of the shareholders meeting for reference in deciding whether	of the shareholders meeting for reference in deciding whether
	to approve the merger, spin-off, or acquisition. Provided,	to approve the merger, spin-off, or acquisition. Provided,
	where a provision of another act exempts a company from	where a provision of another act exempts a company from
	convening a shareholders meeting to approve the merger, spin-off, or acquisition, this restriction shall not apply. Where	convening a shareholders meeting to approve the merger, spin-off, or acquisition, this restriction shall not apply. Where
	the shareholders meeting of any one of the companies	the shareholders meeting of any one of the companies
	participating in a merger, spin-off or acquisition fails to	participating in a merger, spin-off or acquisition fails to
	convene or pass a resolution due to lack of a quorum,	convene or pass a resolution due to lack of a quorum,
	insufficient votes, or other legal restriction, or the proposal is	insufficient votes, or other legal restriction, or the proposal is
	rejected by the shareholders meeting, the companies	rejected by the shareholders meeting, the companies
	participating in the merger, spin-off or acquisition shall	participating in the merger, spin-off or acquisition shall
	immediately publicly explain the reason, the follow-up	immediately publicly explain the reason, the follow-up
	measures, and the preliminary date of the next shareholders	measures, and the preliminary date of the next shareholders
	meeting.	meeting.
27	Professional appraisers and their officers, certified public	Professional appraisers and their officers, certified public	$ \cdot$ To simplify related laws, the competent authority issued
	accounts, attorneys, and securities underwriters that provide	accounts, attorneys, and securities underwriters that provide	order no.0920001151 on Mar.21, 2003 to supplement the
	the Company with appraisal reports, certified public	the Company with appraisal reports, certified public	qualification requirement for assessment officer,
	accountant's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of any party to the	accountant's opinions, attorney's opinions, or underwriter's	accountant, lawyer, and security dealer. In addition,
		opinions shall not be a related party of any party to the	related laws are considered to define the passive
	transaction.	transaction:	qualification related.
		(-) May not have previously received a final and	$\mathrel{\mathop{\perp}}\nolimits$ . Clarify the responsibilities of external experts and make
		unappealable sentence to imprisonment for 1	consideration of the relevant assessment, verification
		year or longer for a violation of the Act, the Company Act, the Banking Act of The Republic	and declaration of the reasonable opinion of the
		of China, the Insurance Act, the Financial	accountant on the valuation report by the financial
		Holding Company Act, or the Business Entity	reporting criteria of the issuer
		Accounting Act, or for fraud, breach of trust,
		embezzlement, forgery of documents, or
		occupational crime. However, this provision
		does not apply if 3 years have already passed
		since completion of service of the sentence, since
		expiration of the period of a suspended
		sentence, or since a pardon was received.
		$(\equiv)$ May not be a related party or de facto related party
		of any party to the transaction. $(\equiv)$ If the company is required to obtain appraisal
		reports from two or more professional appraisers, the different professional
		appraisers or appraisal officers may not be
		related parties or de facto related parties of
		each other.
		When issuing an appraisal report or opinion, the
		personnel referred to in the preceding paragraph shall comply with the following:

$\sim$ $\alpha$

	28	After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing assent or dissent and their reasons for dissent shall be included in the minutes of the board of directors' meeting.	1. Prior to accepting a case, they shall prudently assess their own professional capabilities, practical experience, and independence. 2. When examining a case, they shall appropriately plan and execute adequate working procedures, in order to produce a conclusion and use the conclusion as the basis for issuing the report or opinion. The related working procedures, data collected, and conclusion shall be fully and accurately specified in the case working papers. 3. They shall undertake an item-by-item evaluation of the comprehensiveness, accuracy, and reasonableness of the sources of data used, the parameters, and the information, as the basis for issuance of the appraisal report or the opinion. The declaration shall include such matters as the professionalism and independence of the person concerned, the reasonableness and correctness of the information used in the assessment and compliance with the relevant laws and regulations. The company shall obtain or dispose of significant assets or derivative commodities transactions, with the consent of all 1/2 members of the Board of Auditors, and refer to the resolutions of the Board of directors who, without the consent of all the 1/2 members of the Board of Auditors, have the consent of more than 2/3 of all directors. The resolution of the Board of Auditors shall also be included in the proceedings of the Board of Trustees. The company shall give full consideration to the opinions of independent directors when Uti the board of Directors shall be set out in the proceedings of the Board of Directors if they have objections or reservations.	A significant asset or derivative commodity transaction is provided for in article six, paragraph fifth, of the "Open Issuance Company Audit Committee Organization Code" issued by the FSC. The terms of reference of the audit shall be preceded by the approval of the Board to send a resolution to the board of directors.
	29	After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing asse or dissent and their reasons for dissent shall be included in the minutes of the board of directors' meeting.	After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing assent or dissent and their reasons for dissent shall be included in the minutes of the board of directors' meeting. Those who have set up audit committees in accordance with the provisions of this law and have established or amended the procedures for the processing of the acquisition or disposition of assets shall be subject to the consent of all One-second members of the Board of Auditors and a resolution of the Board of Trustees. If the preceding paragraph does not agree with more than one-second per cent of all members of the Board of Auditors, it shall be agreed by more than two-thirds per cent of all directors, and the Board's resolution should be included in the proceedings of the Board. In the third term, all members of the Board of Auditors and all the directors referred to in the preceding paragraph are calculated in the actual incumbent.	$ \cdot$ In accordance with the provisions of article six, the first paragraph, of the "Organization of audit Committee of the public offering companies" issued by the FSC, we set out or amend the procedures for the acquisition or disposition of assets, the trading of derivative commodities, the loan of funds to others, the endorsement of others or the provision of guarantees of significant financial business conduct. The terms of reference of the audit shall be preceded by the approval of the Board to send a resolution to the board of directors. $\equiv$ $\cdot$ Amended to cooperate with the stock Exchange's "Guidelines on the disposal of assets obtained or disposed of by public offering companies".
	30	The auditors shall be responsible for the management of the endorsement case by the regulation of Public Company Internal Control Procedure. After the audit report is completed, it shall be verified by the supervisors monthly.	The auditors shall be responsible for the management of the endorsement case by the regulation of Public Company Internal Control Procedure. After the audit report is completed, it shall be verified by the independent and auditor committee monthly.	Cooperate with the 14th session of the company board to implement the deletion of supervisor.
31		New article	Revised on Jun.22, 2007. Revised on Jun.19, 2008. Revised on Jun.19, 2009. Revised on Jun.23, 2010. Revised on Jun.24, 2011. Revised on Jun.28, 2012. Revised on Jun.18. 2014. Revised on Jun.11, 2015. Revised on Jun.26, 2018. Revised on Jun.28. 2019.	Revision History

Taiwan Styrene Monomer Corporation
Operational Procedures for Loaning Funds to Others amendment comparison

			Proposed on Jan.9,2019 on board meeting
Article	Original	Amendment	Reason
$\overline{2}$	Entities to which the Company may Loan Funds The Company shall not loan funds to any of its shareholders or any other person except the following: 1 a company which has a business relationship with the Company; or 2. company which has short-term capital needs. "Short-term" of the preceding article paragraph 2 means the period within	Entities to which the Company may Loan Funds The Company shall not loan funds to any of its shareholders or any other person except the following: 1 a company which has a business relationship with the Company; or 2. company which has short-term capital needs. "Short-term" means the period within one-year. In the event that the period of	Wordiness
	one-year. In the event that the period of business cycle is longer than one year, that period shall prevail. Financing is the accumulating balance of the short-term loan provided by the Company.	business cycle is longer than one year, that period shall prevail. Financing is the accumulating balance of the short-term loan provided by the Company.
4	(-) Operating Procedures In processing matters for loaning funds or short-term loans, upon review by the department in charge, loans may be granted after approval by the Chairman or the director authorized by the Chairman or General Manager, and subsequently submission to and approval by the Board of Directors through resolution. Material loans to others shall be approved by the Audit Committee and be submitted to the Board of Directors for approval. When funds are loaned between the Company and its subsidiary or among subsidiaries of the Company, the Chairman may be authorized to proceed with multiple releases of funds or revolving drawdowns with regard to the same borrower within a certain amount authorized by resolution of the Board of Directors and within a one year period. The certain amount mentioned above shall be in compliance with Article 4, paragraph 2. In addition, the authorized amount extended by the Company or its subsidiaries to any single entity shall not exceed 10% of the net worth on the latest financial statements of the Company.	$(-)$ Operating Procedures In processing matters for loaning funds or short-term loans, upon review by the department in charge, loans may be granted after approval by the Chairman or the director authorized by the Chairman or General Manager, and subsequently submission to and approval by the Board of Directors through resolution. Major fund loans shall be reported to the board for resolution. Material loans to others shall be approved by the Audit Committee and be submitted to the Board of Directors for approval. When funds are loaned between the Company and its subsidiary or among subsidiaries of the Company, the Chairman may be authorized to proceed with multiple releases of funds or revolving drawdowns with regard to the same borrower within a certain amount authorized by resolution of the Board of Directors and within a one year period. The certain amount mentioned above $\mathbb{E}$ $\cdot$ As the order no. 1020053112, issued shall be in compliance with Article 4, paragraph 2. In addition, the authorized amount extended by the Company or its subsidiaries to any single entity shall not exceed 10% of the net worth on the latest financial statements of the Company.	$ \cdot$ Cooperate with the 14th session of the company's board of directors to implement the Audit committee, delete the supervisor text. $\equiv$ $\cdot$ Cooperate with the "Public offering" company funds loan and endorsement guarantee processing guidelines" issued by the competent authorities to remove the complicated provisions. $\equiv$ According to article six of the reference example of the "Organization of audit Committee of a limited company" issued by the competent authority, significant funds are credited to the matters of competence of the Board of Auditors, and the resolution on the matter is agreed upon by more than 1/2 of all members of the board. by Dec.31, 2013, and article14-2 of Security Trade Act, financial holding companies, banks, vouchers, insurance, securities investment trusts, integrated securities dealers and listed Futures traders who issue shares under the Securities Exchange Act, and all listed companies that are not part of the financial industry, shall set up independent directors in the provisions of the Articles of association, the number of which shall not be less than 2, and shall not be less than the company has set up independent directors in accordance with the regulations.

$\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\bar{\$

Review Procedures	Review Procedures
1 Application	1Application	$\mathbf{E}$ · Correct punctuation.
For the loans given by the Company, the	For the loans given by the Company, the
company or enterprise applying for the loan	company or enterprise applying for the loan
shall file a written application and attach	shall file a written application and attach
relevant financial information and	relevant financial information and
statements detailing the purpose of the	statements detailing the purpose of the
borrowing.	borrowing.
2Credit assessment	2Credit assessment
(1) Once the Company accepts the	(1) Once the Company accepts the
application, the department in charge shall	application, the department in charge shall
prepare a related written report to be	prepare a related written report to be
submitted to the Board of Directors for	submitted to the Board of Directors for
review and approval after it investigates and	review and approval after it investigates and
evaluates the necessity and reasonableness	evaluates the necessity and reasonableness
of the funds loaned to others, whether the	of the funds loaned to others, whether the
borrower has any direct or indirect business	borrower has any direct or indirect business
	relationship with the Company, the financial relationship with the Company, the financial
status of the business operated, the ability to	status of the business operated, the ability to
repay the debt, credibility, profitability, and	repay the debt, credibility, profitability, and
the purpose of the funds, and consider the	the purpose of the funds, and consider the
impact of the total amount of the loan given by the Company on the Company's	impact of the total amount of the loan given
operational risk, financial status and	by the Company on the Company's operational risk, financial status and
shareholders equity.	shareholders equity.
(2) The assessment shall be conducted every	(2) The assessment shall be conducted every
12 months and if the loan is with greater	12 months and if the loan is with greater
amount, 6 months.	amount, 6 months.
3. Approval	3. Approval
After confirming the credit and usage,	After confirming the credit and
the board may discuss about the loan; if	usage, the board and the auditor
not, the clerk shall reply the borrower	committee may discuss about the
immediately that the Company	loan; if not, the clerk shall reply
disagree to provide the loan.	the borrower immediately that the
	Company disagree to provide the
	loan.

1. Collateral rights setting When processing the loaning of funds or short-term financing facility, the Company shall obtain guarantee notes of equivalent amount, shall create a pledge or mortgage over personal property or real property when necessary, shall evaluate on a quarterly basis if the value of the collateral is equivalent to the balance of the loan, and shall request for additional collateral when 4 necessary. Pertaining to the aforementioned debt guarantee, should the debtor provide personal or corporate guarantee with sufficient financial capability and credibility to replace provision of collateral, the Board of Directors may refer to the review report prepared by the department in charge; where corporate guarantee is provided, it should be noted if the Articles of Incorporation of the borrowing company has stipulated any provision that guarantees may be made. 5. Notification

As the loan is approved, the financial department shall notify the borrower related information and arrange the contract. After the setting of collateral is ready, the loan may be allocated. 6. Contract

$(1)$ The contract signing shall be

conducted after the approval of the Board

(2) After the signing is completed, the clerk may notify the bank to allocate the loan. 7. Insurance

(1)Collateral except for the land and security, shall be insured by borrower, and the coverage shall bot be lower than the loan amount.

(2) The clerk shall notify the borrower to extend the insurance as the overdue.

8.Allocation

After the contract is dully signed, and the collateral is prepared, the loan may be allocated.

1. Collateral rights setting When processing the loaning of funds or short-term financing facility, the Company shall obtain guarantee notes of equivalent amount, shall create a pledge or mortgage over personal property or real property when necessary. shall evaluate on a quarterly basis if the value of the collateral is equivalent to the balance of the loan, and shall request for additional collateral when 4 necessary. Pertaining to the aforementioned debt guarantee. should the debtor provide personal or corporate guarantee with sufficient financial capability and credibility to replace provision of collateral, the Board of Directors may refer to the review report prepared by the department in charge; where corporate guarantee is provided, it should be noted if the Articles of Incorporation of the borrowing company has stipulated any provision that guarantees may be made.

2. Notification As the loan is approved, the financial department shall notify the borrower related information and arrange the contract. After the setting of collateral is ready, the loan may be allocated. 6. Contract

$(1)$ The contract signing shall be conducted after the approval of the Board.

(2) After the signing is completed, the clerk may notify the bank to allocate the loan 7. Insurance

may be allocated.

(1)Collateral except for the land and security, shall be insured by borrower, and the coverage shall bot be lower than the loan amount.

(2) The clerk shall notify the borrower to extend the insurance as the overdue.

8.Allocation After the contract is dully signed, and the collateral is prepared, the loan

$-3-$

17	Consequent management	Consequent management	Cooperate with the 14th session of the
	$(-)$ The financial department shall prepare	$(-)$ The financial department shall prepare	company's board of directors to implement
	record for the information of borrower.	record for the information of borrower,	the Audit committee, delete the supervisor
	amount, and due date according to the	amount, and due date according to the	text.
	procedure.	procedure.
	$($ = $)$ The financial department shall prepare	$($ = $)$ The financial department shall prepare
	the record for tracing back and prepare for	the record for tracing back and prepare for
	the allowance for bad debt. Such record shall be provided to certified accountant for	the allowance for bad debt. Such record
	certification.	shall be provided to certified accountant for certification.
	$(\equiv)$ In order to strengthen the internal	$(\equiv)$ In order to strengthen the internal
	control of the Company, if a loan made by	control of the Company, if a loan made by
	the Company to an entity no longer meets	the Company to an entity no longer meets
	the requirements of the Procedures or the	the requirements of the Procedures or the
	loan balance exceeds the limit as a result of	loan balance exceeds the limit as a result of
	a change in circumstances, the Company	a change in circumstances, the Company
	rectification plans to the Board of Directors	shall adopt rectification plans and submit the shall adopt rectification plans and submit the
	(once the Company establishes the Audit	rectification plans to the Board of Directors and auditor committee and shall complete
	Committee, the plans should be submitted to the rectification according to the timeframe
	the Audit Committee instead) and shall	set out in the plans.
	complete the rectification according to the	$(\mathfrak{W})$ After the disbursement of each loan, the
	time frame set out in the plans.	finance department shall regularly monitor
	( $\mathfrak{B}$ ) After the disbursement of each loan, the	the variation in the financial status, business
	finance department shall regularly monitor	and relevant credit status of the borrower
	the variation in the financial status, business	and its guarantors, and any fluctuation in
	and relevant credit status of the borrower and its guarantors, and any fluctuation in	value of the collateral, and shall make
	value of the collateral, and shall make	written records. In the event that any major changes occur, the Finance Department shall
	written records. In the event that any major	immediately report to the General Manager
	changes occur, the Finance Department shall	and relevant departments in charge for rapid
	immediately report to the General Manager	handling.
	and relevant departments in charge for rapid	$(\pm)$ The executive personnel shall notify the
	handling.	borrower 2 months prior to the due date.
	$(\pm)$ The executive personnel shall notify the borrower 2 months prior to the due date.
	$(\pi)$ When the loan is due or the
	borrower repays the loan before the	$(\pi)$ When the loan is due or the borrower
	due date, the accrued interest should	repays the loan before the due date, the
	be calculated and repaid with the	accrued interest should be calculated
	principal, prior to the returning of	and repaid with the principal, prior to
	promissory notes or mortgages to the	the returning of promissory notes or
	borrower or cancelling the mortgage	mortgages to the borrower or cancelling
	registrations.	the mortgage registrations.
	$(\pm)$ The borrower shall apply for	$(\pm)$ The borrower shall apply for extension
	extension in advance in the event the loan cannot be repaid when the loan	in advance in the event the loan cannot be repaid when the loan matures and
	matures and such extension may be	such extension may be permitted after
	permitted after such application is	such application is reported to, and
	reported to, and approved by, the	approved by, the Board of Directors. If
	Board of Directors. If the borrower	the borrower fails to get such extension,
	fails to get such extension, the	the Company may exercise its rights on
	Company may exercise its rights on	the collateral or guarantor and seek
	the collateral or guarantor and seek	compensation.
	compensation. $(\wedge)$ When the auditors of the Company	$(\wedge)$ When the auditors of the Company
	conduct a check on the subsidiary	conduct a check on the subsidiary
	according to the annual audit plan,	according to the annual audit plan, they shall make a determination of the
	they shall make a determination of the	Operational Procedures for and
	Operational Procedures for and	implementation of loans of funds to
	implementation of loans of funds to	others by subsidiaries. If any defect is
	others by subsidiaries. If any defect is	discovered, they shall keep track of its
	discovered, they shall keep track of its	improvement and report it as a follow-up
	improvement and report it as a	report to the general auditor committee.
	follow-up report to the general supervisor.
	Subsidiary management	Subsidiary management	Dephracing

$\overline{11}$	After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing assent or dissent and their reasons for dissent shall be	After the Operational Procedures have been approved by the board of directors, they shall be submitted to auditor committee, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to auditor committee for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing assent or dissent and their reasons for dissent shall be	Cooperate with the 14th session of the company's board of directors to implement the Audit committee, delete the supervisor text. 2 As the order no. $1020053112$ , issued by Dec.31, 2013, and article14-2 of Security Trade Act, financial holding companies, banks, vouchers, insurance, securities investment trusts, integrated securities dealers and listed Futures traders who issue shares under the Securities Exchange Act, and all listed companies that are not part of the financial industry, shall set up independent directors in the provisions of the Articles of association, the number of which shall not be less than 2, and shall not be less than the company has set up independent directors in accordance with the regulations.
	included in the minutes of the board of directors' meeting.	included in the minutes of the board of directors' meeting.
12	Others The auditors shall be responsible for the management of the endorsement case by the regulation of Public Company Internal Control Procedure. After the audit report is completed, it shall be verified by the supervisors monthly.	Others The auditors shall be responsible for the management of the endorsement case by the regulation of Public Company Internal Control Procedure. After the audit report is completed, it shall be verified by the auditor committee monthly.	Cooperate with the 14th session of the company's board of directors to implement the Audit committee, delete the supervisor text.
13	New article	Established on Jun.24, 2003. Revised on Jun.19, 2009. Revised on Jun.19, 2009. Revised on Jun.23, 2010. Revised on Jun.25, 2013. Revised on Jun.28, 2019.	Revision history

$\mathcal{L}^{\text{max}}_{\text{max}}$

Ġ,

$\mathcal{L}^{\text{max}}{\text{max}}$ and $\mathcal{L}^{\text{max}}{\text{max}}$

Management of Endorsement and Guarantees

Amendment Comparison

Article	Original	Amendment	Proposed on Jan.9,2019 at Board Meeting
5	Procedures for handling	Procedures for handling	Reason 1. In conjunction with the issued by the
	endorsement/guarantee	endorsement/guarantee	competent authority" Guidelines for
	(-)As conducting the endorsement, the	$(-)$ As conducting the endorsement, the	the handling of funds and
		responsible unit shall verify the qualification responsible unit shall verify the qualification	endorsement guarantees for publicly
	and summit the application to the chairman	and summit the application to the chairman	issued companies, removing the
	for approval. If the quota does not exceed	for approval. If the quota does not exceed
	the amount authorized by the board to the	the amount authorized by the board. The	complicated rules and modify some of
	chairman. The approval can be made after	approval can be made after the endorsement	the text. Also in accordance with the
	the endorsement is completed.	is completed. As the major endorsement, the	"Limited Company audit Committee
	$(\square)$ The Finance Unit shall establish and	case shall be reported to auditor committee	organizational procedures" issued by
	maintain a memorandum book for its	and the Board for approval.	the competent authorities, the reference example sixth, a significant
	endorsement/guarantee activities and record	$(\square)$ The Finance Unit shall establish and	endorsement, guarantee for the Audit
	in detail the following information for the	maintain a memorandum book for its	Committee's terms of reference, the
	record: the entity for which the	endorsement/guarantee activities and record	resolution of the matter must be
	endorsement/guarantee is made, the amount, in detail the following information for the		agreed by more than one-second of
	the date of passage by the Board of	record: the entity for which the
	Directors or of authorization by the	endorsement/guarantee is made, the amount,	the Board of Auditors, and refer to the Board resolution, so add a new
	Chairperson of the board, the date the	the auditor committee approval date, the	paragraph.
	endorsement/guarantee is made, and the matters to be carefully evaluated under	date of passage by the Board of Directors or of authorization by the Chairperson of the	2. The endorsement guarantee shall be
	Article 6.	board, the date the endorsement/guarantee is	subject to the approval of the Board of
	$(\equiv)$ The Company' s internal auditors shall	made, and the matters to be carefully	Auditors, thus increasing the date of
	audit the Procedures for Endorsement and	evaluated under Article 6.	consent of the Board of Auditors in
	Guarantee and the implementation thereof at $ (\equiv)$ The Company's internal auditors shall		the memorandum book.
	least every quarter and prepare written	audit the Procedures for Endorsement and	3. Cooperate with the 14 session of the
	records accordingly. They shall promptly	Guarantee and the implementation thereof at	company board to implement the
	notify the supervisors immediately in	least every quarter and prepare written	Audit Committee to remove the
	writing of any major violation found	records accordingly. They shall promptly	supervisor text.
	$(\mathbb{Z})$ The financial officer shall prepare the	notify the supervisors immediately in	5. Cooperate with the 14 session of the
	record of the endorsement and completion	writing of any major violation found	company board to implement the
	matters monthly and shall reveal related	$(\mathbb{Z})$ The financial officer shall prepare the	Audit Committee to remove the
	information every quarter for the	record of the endorsement and completion	supervisor text.
	verification conducted by certified	matters monthly and shall reveal related	7. Under article 2 of the Securities Trading
	accountants.	information every quarter for the	Act and the No.1020053112 orders
	$(\pm)$ If, due to changes of circumstances, the	verification conducted by certified accountants.	stipulating that financial holding
	party to whom the Company provides endorsement and/or guarantee no longer	$(\pm)$ If, due to changes of circumstances, the	companies, banks and tickets that
	satisfies the criteria, a corrective plan shall	party to whom the Company provides	have issued shares in accordance with
	be provided to the supervisors and the	endorsement and/or guarantee no longer	the Securities Exchange Act. The
	proposed correction actions should be	satisfies the criteria, a corrective plan shall	Company shall set up independent
	implemented within the period specified in	be provided to the supervisors and the	directors in the provisions of the
	the plan.	proposed correction actions should be	Constitution, the number of which
	$(\pi)$ The financial officer shall retrieve the	implemented within the period specified in	shall not be less than 2 person, and
	endorsed note on the due date and cancelled	the plan.	not less than the director. The
	the endorsement.	$(\pi)$ The financial officer shall retrieve the	company has set up independent
	(Where the company has established the endorsed note on the due date and cancelled		directors in accordance with the
	position of independent director,	the endorsement.	regulations, so it is revised in
	when it makes endorsements/guarantees	$(\pm)$ When the company makes	accordance with the current situation.
	for others, it shall take into full	endorsements/guarantees for others, it shall
	consideration the opinions of each	take into full consideration the opinions of
	independent director; independent	each independent director; independent
	directors' opinions specifically	directors' opinions specifically expressing assent or dissent and the reasons for dissent
	expressing assent or dissent and the	shall be included in the minutes of the board
	reasons for dissent shall be included of directors' meeting.
	in the minutes of the board of
	directors' meeting.)
7	Procedures for managing	Procedures for managing	Correcting the phrasing.
	endorsement or guarantee by	endorsement or guarantee by
	subsidiaries.	subsidiaries.

8	Hierarchy of decision-making authority and delegation thereof $(-)$ When the Company makes any endorsement and/or guarantee, the Finance Unit shall submit the evaluation results made in accordance with Article 5 and 6, along with comments and opinions provided by other related units, to the Board of Directors for approval. A pre-determined limit of 100 million dollars may be delegated to the Chairperson by the Board of Directors to facilitate execution and such endorsement/guarantee shall be reported to the most coming Board of Directors' Meeting for ratification. The limit shall not exceed the amount that set forth in Article 5 of endorsement/ guarantee provided by the Company. $(\equiv)$ In case the above limits have to be exceeded to accommodate business needs, a resolution of the Board of Directors should be obtained and over half of all the directors should jointly endorse the potential loss that may be brought about by the excess of limits. The Board of Directors should also revise the Procedures and has it ratified at the Shareholders' Meeting. If the revised Procedures are not ratified at the Shareholders' Meeting, the Board of Directors should furnish a plan containing a timetable to withdraw the excess portion. When it makes endorsements / guarantees for others, it shall take into full consideration the opinions of each independent director; independent directors' opinions specifically expressing assent or dissent and the reasons for dissent shall be included in the minutes of the Board of Directors' meeting	Hierarchy of decision-making authority and delegation thereof $(-)$ When the Company makes any endorsement and/or guarantee, the Finance Unit shall submit the evaluation results made in accordance with Article 5 and 6, along with comments and opinions provided by other related units, to the Board of Directors for approval after 1/2 of the members of auditor committee agree to propose. A pre-determined limit of 100 million dollars may be delegated to the Chairperson by the Board of Directors to facilitate execution and such endorsement /guarantee shall be reported to the most coming Board of Directors' Meeting for ratification. The limit shall not exceed the amount that set forth in Article 5 of endorsement/ guarantee provided by the Company. $(\square)$ In case the above limits have to be exceeded to accommodate business needs, a resolution of the Board of Directors should be obtained and over half of all the directors should jointly endorse the potential loss that may be brought about by the excess of limits. The Board of Directors should also revise the Procedures and has it ratified at the Shareholders' Meeting. If the revised Procedures are not ratified at the Shareholders' Meeting, the Board of Directors should furnish a plan containing a timetable to withdraw the excess portion. When it makes endorsements / guarantees for others, it shall take into full consideration the opinions of each independent director; independent directors' opinions specifically expressing assent or dissent and the reasons for dissent shall be included in the minutes of the Board of Directors' meeting.	1. According to article 6 of the reference example of the "Organization of audit Committee of a limited company" issued by the competent authority, the significant endorsement and guarantee is the competence of the Audit Committee, the resolution of the matter is agreed upon by more than One-second of all members of the Board of Auditors, and the Board of Directors shall decide. So as to make an amendment. And cooperate with the company's ninth session of the Board of Directors to implement the Audit Committee to remove the supervisor text. 2. Under article 2 of the Securities Trading Act and the No.1020053112 orders stipulating that financial holding companies, banks and tickets that have issued shares in accordance with the Securities Exchange Act. The Company shall set up independent directors in the provisions of the Constitution, the number of which shall not be less than2Person, and not less than the director. The company has set up independent directors in accordance with the regulations, so it is revised in accordance with the current situation.
9	Procedures for Custody of Corporate Chops $(-)$ The Company shall use the corporate chop registered with the Ministry of Economic Affairs as the dedicated chop for endorsements/guarantees. The chop shall be kept in the custody of a designated person approved by the board of directors, and the same applies when any changes are made. $(\equiv)$ After the endorsement/guarantee is decided by the board of directors or approved by the chairman, the Application for Chop Use shall be filled in and submitted, together with the approval records and the endorsement/guarantee contract or guaranteed bill and other documentation before negotiable instruments can be sealed or issued. $(\equiv)$ The manager shall impress the seal after verifying the approval record. (四) When making a guarantee for a foreign company, the Company shall have the Guarantee Agreement signed by a person authorized by the board of directors.	Procedures for Custody of Corporate Chops $(-)$ The Company shall use the corporate chop registered with the Ministry of Economic Affairs as the dedicated chop for endorsements/guarantees. The chop shall be kept in the custody of a designated person approved by the board of directors, and the same applies when any changes are made. $(\square)$ After the endorsement/guarantee is decided by the board of directors and the auditor committee or approved by the chairman, the Application for Chop Use shall be filled in and submitted, together with the approval records and the endorsement/guarantee contract or guaranteed bill and other documentation before negotiable instruments can be sealed or issued. $(\equiv)$ The manager shall impress the seal after verifying the approval record. $(\mathbb{Z})$ When making a guarantee for a foreign company, the Company shall have the Guarantee Agreement signed by a person authorized by the board of directors.	In accordance with the "Limited Company audit Committee organizational procedures" issued by the competent authorities, as stipulated in article six of the reference example, a significant endorsement, guarantee of the terms of reference of the Audit Committee, the resolution of the matter by more than one-second of the members of the Board of Auditors agreed to, and referred to the Board resolution, so make amendments.

$\cdot$ $\epsilon$

12	Other regulations	Other regulations	In accordance with article six of the
	(-)After the Operational Procedures have	(-)After the Operational Procedures have	reference example of the "Organization of
	been approved by the board of directors,	been approved by the board of directors and	the Audit Committee of a limited company"
	they shall be submitted to each supervisor.	the auditor committee, they shall be	issued by the competent authority, the
	and then to a shareholders' meeting for	submitted to each supervisor, and then to a	establishment or amendment of the internal
	approval before being enforced. If any	shareholders' meeting for approval before	control system in accordance with article 14
	director expresses dissent and it is contained	being enforced. If any director expresses	of the Certificate of Law provides for the
	in the minutes or a written statement, the	dissent and it is contained in the minutes or	competence of the Board of Auditors, which
	Company shall submit the director's	a written statement, the Company shall	is agreed upon by more than One-second of
	dissenting opinion to each supervisor and	submit the director's dissenting opinion to	all members of the Board of Auditors, And
	the shareholders' meeting for a deliberation.	each supervisor and the shareholders'	refer to the Board of Directors resolution, so
	The same applies when the Operational	meeting for a deliberation. The same applies	make amendments.
	Procedures are amended. Where the	when the Operational Procedures are	In accordance with regulation 14 of the
	Company has established the position of	amended. Where the Company has	Securities Trading Act, the financial holding
	independent director, when it submits the	established the position of independent	companies, banks, vouchers, insurance,
	Operational Procedures to the board of	director, when it submits the Operational	securities investment trusts, integrated
	directors for deliberation in accordance with	Procedures to the board of directors for	securities dealers and listed (cabinets)
	the preceding paragraph, it shall take into	deliberation in accordance with the	Futures traders who have issued shares in
	full consideration each independent	preceding paragraph, it shall take into full	accordance with the Securities Exchange
	director's opinions; independent directors'	consideration each independent director's	Law, And all listed (cabinets) companies
	opinions specifically expressing assent or	opinions; independent directors' opinions	that are not part of the financial industry
	dissent and their reasons for dissent shall be	specifically expressing assent or dissent and	shall set up independent directors in the
	included in the minutes of the board of	their reasons for dissent shall be included in	provisions of the Articles of association, the
	directors' meeting.	the minutes of the board of directors'	number of which shall not be less than 2, and shall not be less than directors. The
	$(\square)$ The auditors shall be responsible for the meeting.		company has set up independent directors in
	management of the endorsement case by the	$(\square)$ The auditors shall be responsible for the	accordance with the regulations, so it is
	regulation of Public Company Internal	management of the endorsement case by the	revised in accordance with the current
	Control Procedure. After the audit report is	regulation of Public Company Internal	situation.
	completed, it shall be verified by the	Control Procedure. After the audit report is
	supervisors monthly.	completed, it shall be verified by the
		supervisors monthly.
13	(New article)	The procedure was established on Jun.24, 2003.	Add in revision history
		Revised on Jun.22, 2006.
		Revised on Jun.19, 2019.
		Revised on Jun.23, 2010.
		Revised on Jun.25, 2013.
		Revised on Jun.28, 2019.

Taiwan Styrene Monomer Corporation
Procedures for Election of Directors

			rroposed on the Bourd meeting on $\sin \theta$ , 2017
Title	Procedures for Election of	Procedures for Election of
	Directors and Supervisors	Directors
Article	Original	Amendment	Reason
Article 1	The election of the directors	The election of the directors	The company law requires
	and supervisors shall follow	shall follow this rule	the director to elect from a
	this rule		candidate nomination system,
			as set out in the Articles of
			association. The 21st article
			of the Articles of Association
			stipulates that the directors of
			the company elect the
			nomination system for
			candidates, so this paragraph
			is added. And cooperate with
			the 14th session of the
			company's board of directors
			to implement the audit
			Committee, delete the
			supervisor text.
Article 2	The election of directors and	The election of directors shall Cooperate with the 14
	supervisors shall be	be conducted at the	session of the company's
	conducted at the shareholders shareholders meeting.		board of directors to
	meeting.		implement the Audit
			committee, delete the
			supervisor text.
Article 3	The elected to be a director	Deleted	Article 192 of the company
	or supervisor shall be a		law already expressly
	qualified or capable person		provides that: " the Board of
	for the position.		Directors shall have no fewer
			than three directors, and the
			shareholders ' meeting will anything the person who has
			the capacity to act", and
			therefore delete it.
第四條	The seats of directors and	The seats of directors to be	Cooperate with the 14
	supervisors to be elected	elected shall be determined	session of the company's
	shall be determined	according to the article of the	board of directors to
	according to the article of the	Company.	implement the Audit
	Company.		committee, delete the
			supervisor text.

Elections of the Company Cooperate with the 14 directors and supervisors directors shall be conducted session of the company's shall be conducted in in accordance with the board of directors to accordance with the candidate nomination system implement the Audit candidate nomination system and procedures set out in committee, delete the and procedures set out in Article 192-1 of the supervisor text. Article 192-1 of the Company Act. The Company Company Act. The Company shall review the shall review the qualifications, educational qualifications, educational background, and work background, and work experience, and the existence experience, and the existence of any other matters set forth of any other matters set forth in Article 30 of the Company in Article 30 of the Company Act with respect to nominee Act with respect to nominee directors, and may not directors, and may not arbitrarily add requirements arbitrarily add requirements of other credentials. It shall of other credentials. It shall further provide the results of further provide the results of the review to shareholders for the review to shareholders for their reference, so that their reference, so that qualified directors will be qualified directors will be elected. The Cumulative elected. The Cumulative Voting System shall be Voting System shall be applied to the voting. Every share has notes as the number applied to the voting. Every share has notes as the number of director or supervisors to of director or supervisors to be elected. The votes can be be elected. The votes can be casted on one person or to be divided into multiple casted on one person or to be divided into multiple candidates. The independent directors shall be elected candidates. The independent directors shall be elected either. either.
	$\overline{5}$	Elections of the Company

	Article 21 of the Articles of
	association has stipulated that
	the election of candidates
	should adopt the nomination
	system, so the requirement of
	repetition should be deleted.
	The Articles of association:
	There are 11 to 13 directors
	of the company, and the
	number of directors is
	authorized to be agreed by
	the Board of directors, who
	will be anything by the
	shareholders ' meeting on the
	competent candidates. The term of office of a director is
	three years and is re-elected.
	The nomination system of
	candidates for the election of
	one of the 192 companies in
	the board of directors.
	The preceding directorship
	includes three independent
	directors, the acceptance and
	announcement of the
	nomination of directors and
	independent directors, and
	the provisions of the relevant
	laws of the company law and
	securities trading law.
	Independent directors and
	non-independent directors
	shall conduct elections
	together to calculate the
	number of elected places
	respectively.

$\bar{\beta}$

$\vert 6 \vert$	The number of directors and	The number of directors and	Cooperate with the 14
	supervisors will be as	will be as specified in the	session of the company's
	specified in the Company's	Company's Articles of	board of directors to
	Articles of Incorporation.	Incorporation. The candidates	implement the Audit
	The candidates to whom the	to whom the ballots cast	committee, delete the
	ballots cast represent a	represent a prevailing number	supervisor text.
	prevailing number of voting	of voting rights shall be	Refer to the related
	rights shall be elected as	elected as independent	procedure issued by
	independent directors or	directors or non-independent	authority.
	non-independent directors,	directors, respectively, based
	respectively, based on the	on the results of the election,
	results of the election, in	in descending order. When
	descending order. When two	two or more candidates
	or more candidates receive	receive the same number of
	the same number of voting	voting rights, thus exceeding
	rights, thus exceeding the	the specified number of
	specified number of	positions, they shall draw lots
		positions, they shall draw lots to determine the winner, with
	to determine the winner, with the chair drawing lots on
	the chair drawing lots on	behalf of any candidate not
	behalf of any candidate not	present.
8	present. At the beginning of the
	election, the Chairman shall	At the beginning of the	Cooperate with the 14
	appoint several persons each	election, the Chairman shall appoint several persons each	session of the company's board of directors to
	to check and record the	to check and record the
	ballots.	ballots.	implement the Audit committee, delete the
			supervisor text.
			$\equiv$ $\cdot$ Refer to the related
			procedure issued by
			authority.
13	The ballots should be	The ballots should be	Cooperate with the 14
	calculated during the meeting	calculated during the meeting session of the company's
	right after the vote casting	right after the vote casting	board of directors to
	and the results of the election and the results of the election		implement the Audit
	of directors and supervisors	of directors should be	committee, delete the
	should be announced by the	announced by the Chairman	supervisor text.
	Chairman at the meeting.	at the meeting.
	If litigation occurs regarding	If litigation occurs regarding
	any matter resolved by the	any matter resolved by the
	Board of Directors before the	Board of Directors before the
	above retention period	above retention period
	expires, the relevant audio or	expires, the relevant audio or
	video recordings shall	video recordings shall
	continue to be retained until	continue to be retained until
14	the litigation is concluded. This Company shall issue	the litigation is concluded.
	notifications to the directors	This Company shall issue notifications to the directors	Cooperate with the 14
	and supervisors elected.	elected.	session of the company's board of directors to
			implement the Audit
			committee, delete the
			supervisor text.

16		These Rules and any revision These Rules and any revision Revision History
	thereof shall become	thereof shall become
		effective after approval at the effective after approval at the
	shareholders' meeting.	shareholders' meeting.
		The procedure was
		established on Jun.3, 2002.
		Revised on Jun.15,2006.
		Revised on Jun.11.2015.
		Revised on Jun.28,2019.

$8 \cdot$ Attachment

(1) Taiwan Styrene Monomer Corporation Articles of Incorporation

(2) Taiwan Styrene Monomer CorporationRules of Board Meeting Minutes

(3) Procedures for Acquisition or Disposal of Assets (Before Amendment)

• (4) Operational Procedures for Loaning Funds to Others (Before Amendment)
• (5) Management of Endorsement and Guarantees (Before Amendment)
• (6) Procedures for Election of Directors and supervisors (Before Amendment)
• (7) Shareholding Condition of the Directors
• (8) Related Information About the Compensation of Employees, Directors and Supervisors, 2017
• (9) Related Information About the Compensation of Employees, Directors and Supervisors, 2018
• (10) The impact of free share issuance which is going to be discussed in the general meeting on the operating performance, earnings per share and the return on investment of shareholders of the company

Attachment 1

Taiwan Styrene Monomer Corporation Articles of Incorporation Chapter 1 General rules

Article 1: The Company is organized and named "Taiwan Styrene Monomer Corporation", in accordance with Company Act.

Article 2: The Company's industry classifications are as follows:

(1)C801020 Petrochemical Manufacturing

(2)C801030 Precision Chemical Materials Manufacturing

(3)C801990 Manufacture of Chemical Material

(4)C802990 Other Chemical Products Manufacturing

(5)D101050 Steam and Electricity Paragenesis

(6) D401010 Heat Energy Supplying

(7)F401010 International Trade

(8)G801010 Warehouse

(9)H701010 Residence and Buildings Lease Construction and Development

(10)H701020 Industrial Factory Buildings Lease Construction and Development

(11)H703090 Real Estate Commerce

(12)H703100 Real Estate Rental and Leasing

(13)ZZ99999 All business items that are not prohibited or restricted by law,

except those that are subject to special approval

Article $2-1$ : The total amount of the re-investment made by the Company may not be restricted by article 13 of the Company Act as 40% of the capital.

Article $2-2$ : The company may offer endorsement and guarantee as the need of investment business.

Article 3: Headquarter of the Company is located at Taipei City. The Company can establish branches or manufacturing facility as the need of business operating.

Article $4:$ The news publishing of the Company shall be conducted according to the regulation of Company Act.

Chapter 2 Shares

Article 5: The total capital of the Company is NTD \$9 billion dollars, which is divided into 900 million shares, that is, NTD \$10 dollars per share. The total authorized number of shares are to be issued in installments by the approval of the board.

Article 6: Share certificates of the Company shall be registered and shall be affixed with the

signatures or personal seals of three or more directors and shall be duly certified or authenticated by the competent authority.

• Article $7:$ The seal impression of shareholders shall be filed at the company for the shareholders may exercise his/her rights.
• Article $8:$ As the seal of the shareholder is lost or stolen, the shareholder shall fill the lost notification to the company with ID copy and the new impression card. The new seal shall be issued thereby. If other person is to conduct the preceding procedure for the shareholder, a seal certificate issued by household office shall be attached.
• Article 9: If a shareholder is to transfer the share because of inheritance or give-up, the transfer application shall be sealed and shall be processed though the company. If a share is not properly processed, that may not be used against the Company.
• Article $10$ : If the shares are to be set rights, the concerned parties shall submit the application in writing to the Company.
• Article 11: If the certificate has been lost or stolen, the concerned shareholder shall report the company in writing and apply for reissuance according to related procedures.
• Article $12$ : If a shareholder wishes the company to reissue the share for the original share is damaged, the preceding paragraph shall apply.
• Article 13 : Registration for transfer of shares shall be suspended sixty $(60)$ days immediately before the date of regular meeting of shareholders, and thirty (30) days immediately before the date of any special meeting of shareholders, or within five (5) days before the day on which dividend, bonus, or any other benefit is scheduled to be paid by the Corporation.

Chapter 3 Shareholders Meeting

Article 14:

Shareholders' meeting shall be of the following two kinds:

1. Regular meeting of shareholders: to be held at least once every year.

2. Special meeting of shareholders: to be held when necessary.

Article 15: For a public company, a notice to convene a regular meeting of shareholders shall be given to each shareholder no later than 30 days prior to the scheduled meeting date. In case a public company intends to convene a special meeting of shareholders, a meeting notice shall be given to each shareholders no later than 15 days prior to the scheduled meeting date.

Article 16 : Deleted.

• Article 17: Each shareholder of the Company has one voting right per share, except as otherwise regulated by other laws.
• Article 18: If a shareholder cannot attend the shareholders' meeting due to some reason, he or she may appoint a proxy to attend each shareholders' meeting by providing the proxy form issued by the Company which states the scope of authorization. The rules for a shareholder to appoint a proxy to attend the meeting are in accordance with the "Regulations Governing the Use of Proxies for Attendance at Shareholder Meetings of Public Companies" in addition to Article 177 of the Company's Act.

Article 19:

Unless the Company Act regulates otherwise, the chairman shall be the president of the shareholders meeting. If the chairman is absent, the president shall be the person designated by chairman; if the chairman fails to designate anyone, the president shall be elected among the directors.

Article 20: Resolutions adopted at a shareholders' meeting shall be recorded in the minutes of the meeting, which shall be affixed with the signature or seal of the chairman of the meeting and shall be distributed to all shareholders of the company within twenty (20) days after the close of the meeting. With regard to a company offering its shares to the public, the distribution of the minutes of shareholders' meeting as required in Paragraph One of Article 183 may be effected by means of a public notice.

Chapter 4 Directors

Article 21:

The Board of Directors of our company has 11-13 directors, all with a three-year term. They are capable individuals elected at the Shareholders' Meeting and can be re-elected. As the directors and supervisors are elected, the board may approve to purchase the liability insurance for their business. According to article 14-2 of the Securities and Exchange Act, there should be a minimum of 2 independent directors and cannot account for less than one fifth of the director seats. The independent director shall be elected by the shareholder meeting from the nomination list. The independent director is authorized by the Company to participate the board meeting and express opinions; any opinion of independent directors shall be recorded in the minutes. The qualification, withheld number of shares, concurrent service, nomination and selection process of independent directors should be based on the

$\overline{\mathbf{4}}$

regulations of the competent authority.

Article $21-1$ : Deleted.

• Article 21-2: The Company sets up the auditor committee according to article 14-4 of Security Trade Law. The committee is composed by all the independent directors, enforcing the duty of supervisors.
• Article 22: The board is organized by the directors. The board of directors shall elect a chairman of the board directors from among the directors by a majority vote at a meeting attended by over two-thirds of the directors. The chairman shall externally represent the Company.
• Article 22-1: When the board meeting is convening, the reasons shall be listed and delivered to each director and supervisor 7 days before the meeting. However, if there is an emergency, the meeting may be convened anytime. The notification of convening the board meeting may be made by ways such as fax and email instead of by correspondence.

Article 23:

Unless the Company Act regulates otherwise; the resolution of a board meeting shall be adopted by a majority vote of the directors at a meeting of the board of directors attended by at least a majority of the entire directors of the company. A shareholder may appoint a proxy to attend a shareholders' meeting in his/her/its behalf by executing a power of attorney stating therein the scope of power authorized to the proxy. A shareholder may only execute one power of attorney and appoint one proxy only. In calling a meeting of the board of directors, a notice shall set forth therein the subject(s) to be discussed at the meeting and a notice shall be issued no later than 7 days prior to the scheduled meeting date. In case of emergency, the meeting shall be called anytime. The abovementioned meeting can be called via writing, or fax.

Article 24: The responsibilities of the Board are as follows:

$(-)$ Election of Chairman

$(\equiv)$ Appointment of Manager

$(\equiv)$ Contracting with shareholders

$(\mathfrak{W})$ Determine the operating direction of the company

$(\pm)$ Determine the expanding strategy

$(\pi)$ Review and determine the operating budget

$(\pm)$ Other responsibilities regulated by Company Act

Unless the Company Act regulates otherwise, the board may authorize the board

right to the Chairman:

• $(-)$ The making of governing policy, procedure, and other matters appointed by chairman
• $($ $\equiv$ $)$ Other matters appointed by the board
• Article 25 : Deleted.
• Article $26$ : As the directors and supervisors are elected, the board may approve to purchase the liability insurance for their business. The director shall be compensated and is entitled to the monthly salary based on industry's standard for the position. Chapter 5 Managers
• Article 27: The company establishes the position of manager and the matters of appointment, reassignment, or compensation should be conducted according to the regulation of Company Act.
• Article $28$ : The general manager is responsible for the operating of the company according to the instruction by Chairman; The responsibilities are as follows:

$(-)$ Drafting the company policy

$($ $\equiv$ $)$ Mapping the operating direction and the enforcement

$(\equiv)$ Planning the fund raising

(四) Preparation of operating budget

$(\pm)$ Drafting company organization and the HR related matters

$(\nleftrightarrow)$ Other power appointed by board or shareholders meeting

Chapter 6 Accounting

Article 29:

• At the end of every fiscal year, the board shall submit the papers and lists as below 30 days before the start of shareholder's meeting to the shareholder's meeting for approval.
• (1). Business Report (2). Balance Sheet
• (3). Proposal on distribution of surplus and recovery of losses

Article 30: Deleted.

Article 31: The profit of the company shall be allocated 1-5% as employees' bonus and up to 2.5% as directors' bonus. If the company's balance is insufficient, the profit is to be reserved as make-up.

The board may determine whether the bonus is issued in cash or in shares, and the resolution shall be approved by the shareholders meeting.

The earning of the company shall be allocating for income tax payment,

reserve make-up, and 10% for legal reserve and for special reserve if needed. Then the board may discuss the distribution of retained earnings. In the distribution, the cash dividends shall be no less than 30%; if the EPS is lower than 0.1, then a stock dividend may be issued.

• Article 32: Other procedures of the company shall be made individually.
• Article $33$ : Any other matters not regulated in the article shall be conducted according to Company Act.

Article 134: The article was established on Sep.21, 1979;

The 1^st amendment was made on May 26,1980;

The $2^{nd}$ amendment was made on Jan 26,1981:

The $3^{rd}$ amendment was made on May 5.1981:

The 4^th amendment was made on Aug. 26,1980:

The 5^th amendment was made on Mar. 22,1983:

The $6^th$ amendment was made on Aug. 18,1984;

The $7^th$ amendment was made on Mar. 5,1987;

The 8^th amendment was made on Mar. 22,1989:

The 9^th amendment was made on Mar. 22,1989:

The $10^{th}$ amendment was made on May 31,1990;

The $11^th$ amendment was made on Apr. 16, 1991:

The $12^th$ amendment was made on Mar. 22,1995;

The 13^th amendment was made on Apr. 18,1996;

The 14^th amendment was made on May 14,1998;

The $15^th$ amendment was made on May 24,2000;

The 16^th amendment was made on Jun. 3,2002; The $17^th$ amendment was made on Jun.24,2003; The 18^th amendment was made on Jun.24,2003; The 19^th amendment was made on Jun.15,2005;

The $20^th$ amendment was made on Jun.22,2006; The 21^th amendment was made on Jun.19,2008;

The $22^th$ amendment was made on Jun.15,2009;

The 23th amendment was made on Jun.24,2011;

$\overline{7}$

The $24^th$ amendment was made on Jun.28,2012; The $25^th$ amendment was made on Jun.18,2014; The $26^th$ amendment was made on Jun.11,2015; The $27^th$ amendment was made on Jun.29,2016; The $28^th$ amendment was made on Jun.1,2017; The 29^th amendment was made on Jun.26,2018;

Attachment 2

Taiwan Styrene Monomer Corporation

Rules of Board Meeting Minutes

• 1. The meeting shall be hold as the rule unless otherwise regulated.
• $2 \cdot$ The Company should have the attendance log ready for the signature of the attending shareholders or the shareholder's representative (hereinafter referred to as the Shareholders), or the attending shareholders may have the signature card submitted as an alternative to the signature. The presented shares shall be recorded on the log and shall be calculated manually or electronically.
• $3 \cdot$ The presentation and vote shall be calculated according the amount of shares.
• $4 \cdot$ The shareholders meeting must be held at a location that is suitable and convenient for shareholders to attend. The meeting must not commence any time earlier than 9AM or later than 3PM.
• $5 \cdot$ If the meeting of shareholders is convened by the Board, the Chairman of the Board is to chair the meeting. If the chairman is on leave or is unable to exercise his/her powers for certain reasons, the Vice Chairman is to chair the meeting. If a Vice Chairman is not appointed or the Vice Chairman is also on leave or is unable to perform their duties for certain reasons, the Chairman is to appoint one of the general directors to chair the meeting. If a general director is not appointed, one of the directors is appointed to chair the meeting. If a representative is not appointed by the Chairman, one of the general directors or directors should be elected among the board members to chair the meeting. It is preferable if there is a majority of the board directors attending the shareholders' meeting that is convened by the Board of Directors. If the shareholders' meeting is convened by any authorized party other than the Board of Directors, the convener will act as the meeting chairman. If there are two or more conveners, they shall appoint one among themselves to chair the meeting.
• $6 \cdot$ The Company may summon its lawyers, certified public accountants, and any relevant personnel to the shareholders meeting. The service personnel for the shareholders' meeting shall wear identification badges or armbands.
• The Company should have the entire meeting of shareholders taped in an audio or video $7 \cdot$ recording and stored for at least one year.
• $8 \cdot$ The chairman should announce the commencement of the meeting as soon as it is due. However, if the attendees represent less than half of all outstanding shares, the meeting chairman may announce the postponement of the meeting up to two times, for a period totaling no more than one hour. The chairman may announce the meeting is adjourned if there are still an insufficient number of shareholders to represent two thirds of the shareholding to attend the meeting after two meetings are postponed.

If the shareholdings of the attending shareholders are not more than half of the total number of shares issued after two postponements but more than one third of the total number of shares issued, a pseudo-resolution can be resolved in accordance with Article 174 of the Company Law. Also, shareholders should be informed regarding the pseudo-resolution with another meeting of shareholders to be convened within one month.

1. If the shareholders' meeting is convened by the Board of Directors, its agenda is set by the Board of Directors. The meeting is conducted in accordance with the agenda and it may not be changed without the resolutions reached in the shareholders' meeting. The provision referred to above is applicable even when the shareholders' meeting is convened other than by the Board of Directors.

The Chairman may not announce the meeting is adjourned until a resolution is reached for the two procedures (including motions) referred to above. If the Chairman has announced the meeting adjourned in violation of the procedures, the other board directors shall promptly assist the shareholders present with a majority of balloting rights to elect a chairman to continue the meeting in accordance with the legal procedures.

• 10 Shareholders with over 1% shareholding of the shares issued may have proposals presented in writing to the Company's General Shareholders' Meeting. However, it is limited to one proposal and more than one proposal presented will not be discussed at the meeting. The Board of Directors may not have proposals presented by shareholders that fall within the scope of Article 172-1-4 of the Company Act included for discussion. The shareholder's proposal is limited to 300 words, otherwise it will not be included for discussion. The proposing shareholders must attend the general shareholders' meeting in person or by proxy to participate in the proposal discussion.
• 11 Shareholders who wish to speak during the meeting must produce a Speak Request Form detailing the topics and the shareholder's name and account number (or the attendance ID serial). The order of shareholders' comments will be determined by the meeting chairman.

Shareholders who submit Speak Request Forms without actually speaking are considered to have remained silent. If the shareholder's actual comments differ from those stated in the Speak Request Form, the actual comments shall prevail.

• 12 Seach shareholder may not speak on the same proposal more than twice and not more than 5 minutes each time unless otherwise permitted by the Chairman. However, the Chairman may stop the shareholder from speaking if the speech is in violation of regulations or outside the scope of the proposal.
• 13 The number of representatives attending the shareholders' meeting on behalf of the institutional shareholders, both the government and legal person, is not limited to one person. The number of legal persons entrusted to attend the shareholders' meeting is limited to one person.
• 14 The Chairman may have the speech of the shareholder responded to in person or by the designated personnel.
• 1. The Chairman must give the proposal or the amendment or ad hoc motion proposed by the shareholders an opportunity to be explained and discussed sufficiently until it is ready for balloting and then stop the discussion for balloting.
• 16 Shareholders are entitled to one vote per share, except for shares that are subject to voting restrictions or situations outlined in Paragraph 2, Article 179 of The Company Act.
• 1. The ballot counting will proceed openly during the meeting. The outcome of the vote must be documented and announced on site.
• 18 The chairman at his/her discretion may announce the meeting is in recess.

• 19 Vnless otherwise provided in the Company Act and the Company's Articles of Incorporation, the proposal is passed at the meeting by the shareholders representing a majority of the balloting rights. The chairman or the designated personnel are to announce the total number of balloting rights of the shareholders presented at the time of balloting.

• $20 \cdot$ For a proposal with an amendment or alternative put to vote, the chairman is to have it prioritized for balloting with the original bill enclosed. If any solution is passed, all other proposals shall be deemed rejected and no further voting is necessary.

• 21 The chairman may instruct picketers or security staff to help maintain order at the meeting. While maintaining order at the meeting, all picketers or security staff must wear arm badges which identify their roles as "Staff".
• 22 The procedure and the amendment is approved by the shareholders meeting.

Attachment 3

Taiwan Styrene Monomer Corporation

Procedures for Acquisition or Disposal of Assets (Before Amendment)

Chapter 1 General Principles

1 > Purpose and Legal Basis:

To strengthen asset management and implement information disclosure, the Procedures are hereby amended in accordance with the relevant provisions of the amendments to the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies."

• 2 \ Applicable Scope of Assets:
• (1) Investments in stocks, government bonds, corporate bonds, financial bonds, securities representing interest in a fund, depositary receipts, call (put) warrants, beneficial interest securities, asset-backed securities, etc.
• (2) Real property (including land, houses and buildings, investment properties, rights to use land, and inventories of construction enterprises) and equipment.
• (3) Memberships.
• (4) Patents, copyrights, trademarks, franchise rights, and other intangible assets.
• (5) Derivatives.
• (6) Assets acquired or disposed of in connection with mergers, demergers, acquisitions, or transfer of shares in accordance with the applicable laws, rules, and regulations.
• (7) Other major assets.
• 3 Terms used in the Regulations are defined as follows:
• (1) Derivatives: Forward contracts, options contracts, futures contracts, leverage contracts, and swap contracts, and compound contracts combining the above products, whose value is derived from assets, interest rates, foreign exchange rates, indexes or other interests. The term "forward contracts" does not include insurance contracts, performance contracts, after-sales service contracts, long-term leasing contracts, or long-term purchase (sales) agreements.

• (2) Assets acquired or disposed through mergers, demergers, acquisitions, or transfer of shares in accordance with law: Refers to assets acquired or disposed through mergers, demergers, or acquisitions conducted under the Business Mergers and Acquisitions Act, Financial Holding Company Act, Financial Institution Merger Act and other acts, or to transfer of shares from another company through issuance of new shares of its own as the consideration therefor (hereinafter "transfer of shares") under Article 156, paragraph 8 of the Company Act.

• (3) Related party and subsidiaries: As defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

• (4) Professional appraiser: Refers to a real property appraiser or other person duly authorized by law to engage in the value appraisal of real property or equipment.
• (5) Date of occurrence: Refers to the date of contract signing, date of payment, date of Reg No 289175 2 consignment trade, date of transfer, dates of boards of directors resolutions, or another date that can confirm the counterparty and monetary amount of the transaction, whichever date is the earliest, provided that, for investment for which approval of the competent authority is required, the earlier of the above date or the date of receipt of approval by the competent authority shall apply.
• (6) Mainland China area investment: Refers to investments in the mainland China area approved by the Ministry of Economic Affairs Investment Commission or conducted in accordance with the provisions of the Regulations Governing Permission for Investment or Technical Cooperation in the Mainland Area.
• 4 \ Appraisal Procedures
• (1) Where the Company acquires or disposes of investment in securities or engages in derivative trading, the accounting department shall analyze its related benefits and assess its potential risks. As regards the acquisition or disposal of real estate and other assets, each unit shall draw up a capital expenditure plan in advance and carry out the feasibility evaluation on the purpose of acquisition or disposal and the expected benefits. In the case of acquiring real estate from related parties, the reasonableness of the transaction terms shall be appraised in accordance with the provisions of Chapter 2 hereof.

• (2) When acquiring or disposing of securities, the Company shall, prior to the date of occurrence of the event, obtain financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant, for reference in appraising the transaction price, and if the dollar amount of the transaction reaches 20 percent of the Company's paid-in capital or NT\$300 million or more, the Company shall additionally engage a certified public accountant prior to the date of occurrence of the event to provide an opinion regarding the reasonableness of the transaction price. If the certified public accountant needs to use the report of an expert as evidence, the certified public accountant shall do so in accordance with the provisions of Statement of Auditing Standards No. 20 published by the ARDF. This requirement does not apply, however, to publicly quoted prices of securities that have an active market, or where otherwise provided by regulations of the nauthority in charge.

• (3) Where the Company acquires or disposes of membership or intangible assets and the transaction amount reaches 20% or more of the paid-in capital or NT\$300,000,000 or more, except in transactions with a government agency, the Company shall engage a CPA prior to the date of occurrence of the event to render an opinion on the reasonableness of the transaction price; the CPA shall comply with the provisions of Statement of Auditing Standards No. 20 published by the ARDF.

• (4) The transaction amounts referred to in the preceding three articles shall be calculated in accordance with paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The amounts due to professional appraisers for the appraisal report and CPA for the CPA's opinions can be excluded from the calculation.
• (5) The Company that conducts a merger, demerger, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage.
• (6) In addition to taking into account the opinions of professional appraisers, CPAs and other relevant experts in accordance with the aforementioned provisions, the method and reference basis for determining the price of assets acquired or disposed of by the Company shall be handled in accordance with the following circumstances:
• a. The securities transacted on a centralized exchange market or OTC market, the prices shall be decided by the listed price or market price at the time of transaction.
• b. The securities not transacted on a centralized exchange market or OTC market, the price decision shall refer to financial statements of the issuing company for the most recent period, certified or reviewed by a certified public accountant.
• c. The acquisition or disposal of memberships shall consider the benefits to be derived therefrom, with reference to the latest transaction price at that time. The acquisition or disposal of patent right, copyright, trademark right, franchise and other intangible assets shall refer to the international or market practices, the serviceable life and the impact on the Company's technology and business.
• d. The acquisition or disposal of real estate and other fixed assets shall refer to

the publicly announced current value, appraised current value, the actual transaction price or book value of the adjacent real estate and the supplier's quotation. In the case of the purchase of real property from a related party, a calculation shall be made using the method prescribed in Chapter 2 hereof to evaluate whether the transaction price is reasonable.

• e. Derivatives trading shall take into account futures market trading conditions, exchange rates, and interest rate trends.
• f.zThe nature of business, net value per share, asset value, technology and profitability, productivity and future growth potential should be taken into account when conducting a merger, demerger, acquisition, or transfer of shares.
• 5 Operating Procedures:
• (1) The degree of authority delegated and the levels to which authority is delegated a. Securities: The board of directors may authorize the chairman to approve the amount of a single or cumulative transaction of NT\$10 million or less in advance and subsequently report it at the latest board meeting. A single sum or accumulative sum exceeding NT\$10 million shall be submitted to the board of directors for approval and recognized by the supervisors. However, the acquisition or disposal of stocks, corporate bonds or privately placed securities that are not traded in the centralized securities exchange market or OTC market shall be subject to the resolution of the board of directors. In addition, investment in China shall be carried out by the chairmen with the consent of the board of directors or authorized by the board of directors, and shall be approved by the Investment Board of the Ministry of Economic Affairs.
  • b. Derivatives trading
  • (a) Hedge trades: According to the change of turnover and risk position of the Company, a person designated by the chairman may conduct transactions in a single or cumulative transaction of less than USD\$3 million (including equivalent currencies). For USD\$3 million or more, it shall be submitted to the chairman for approval before proceeding with the transaction.
  • (b) Non-hedge trades: To reduce risk, a single or a cumulative transaction of less than USD\$1 million (including equivalent currencies) shall be submitted to the chairman for approval, while that with USD\$1 million or more shall be approved by the board of directors before relevant transactions can be carried out.
  • (c) In order for the authorization from the Company to cooperate with the bank's supervision and management, the authorized trader must inform

the bank.

• (d) Derivatives trading under the aforementioned authorization shall be reported to the board of directors afterwards.
• 1. Where the Company acquires real property from a related party, relevant information shall be prepared in accordance with the provisions of Chapter 2 hereof and shall be submitted to the board of directors for approval and recognized by the supervisors.
• 1. Merger, demerger, acquisition, or transfer of shares: Relevant procedures and materials shall be prepared in accordance with Chapter 4 hereof, in which mergers, demergers and acquisitions are subject to the adoption of a resolution by the shareholders' meeting. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, demerger, or acquisition, this restriction shall not apply. In addition, the transfer of shares shall be approved by the board of directors.
• 1. Other: It shall be handled in accordance with the operating procedures prescribed by the internal control system and the decision-making authority. If the transaction amount reaches the public announcement and report standard set forth in Article 5, it shall be approved by the board of directors first. In case of any circumstance as set forth under Article 185 of the Company Act, it shall be adopted by a resolution of the shareholders' meeting.
• (2) The units responsible for implementation, and transaction process The Company's units responsible for implementation of investment in longand short-term securities and derivatives trading are the accounting department and personnel designated by the chairman, and are subject to the provisions of Chapter 3 hereof. The units responsible for implementation of real property and other assets are the use departments and responsible departments. The Company acquiring real property from a related party shall be subject to the provisions of Chapter 2 hereof. The unit in charge of mergers, demergers, acquisition, or transfers of shares is appointed by the chairman and governed by the provisions of Chapter 4 hereof. After the acquisition or disposal of assets is appraised and approved in accordance with the regulations, the unit in charge shall carry out the transaction process such as contracting, receipt and payment, delivery and acceptance, and shall follow the operation procedures related to the internal control system according to the nature of the assets.
• 6 · Information disclosure:

(1) Under any of the following circumstances, the Company acquiring or disposing

of assets shall publicly announce and report the relevant information on the FSC's designated website in an appropriate format as prescribed by regulations within 2 days commencing immediately from the date of occurrence of the event:

• a. Acquisition or disposal of real estate from or to a related party, or acquisition or disposal of assets other than real estate from or to a related party where the transaction amount reaches 20% or more of the paid-in capital, or 10% or more of the Company's total assets, or NT\$300,000,000 or more; provided, this shall not apply to trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds.
• b. Merger, spin-off, acquisition, or transfer of shares.
• c. Losses from derivatives trading reaching the limits of aggregate losses or losses on individual contract set out in the procedures adopted by the Company
• d. Where equipment or right-of-use assets thereof for business use are acquired or disposed of, and furthermore the transaction counterparty is not a related party, and the transaction amount meets any of the following criteria:
• (a) For a public company whose paid-in capital is less than NT\$10 billion, the transaction amount reaches NT\$500 million or more.
• (b) For a public company whose paid-in capital is NT\$10 billion or more, the transaction amount reaches NT\$1 billion or more.
• 1. Where land is acquired under an arrangement on engaging others to build on the company's own land, engaging others to build on rented land, joint construction and allocation of housing units, joint construction and allocation of ownership percentages, or joint construction and separate sale, and furthermore the transaction counterparty is not a related party, and the amount the company expects to invest in the transaction reaches NT\$500 million.
• 1. Any asset transactions other than those referred to in the preceding three subparagraphs, or an investment in the mainland China area with amount reaching 20% or more of the paid-in capital or NT\$300,000,000 or more, excluding the following circumstances:
• (a) Trading of government bonds.
• (b) Securities trading by investment management companies on foreign or domestic securities exchanges or over-the-counter markets, or subscription of securities by a securities firm, either in the primary market or in accordance with relevant regulations.
• (2) The Company shall compile monthly reports on its assets acquired or

disposed of or derivatives trading reaching the standards for public announcement and report or the status of derivatives trading engaged in up to the end of the preceding month by the Company and any subsidiaries that are not domestic public companies and enter the information in the prescribed format into the information reporting website designated by the FSC by the 10th day of each month.

• (3) When the Company at the time of public announcement makes an error or omission in an item required by regulations to be publicly announced and so is required to correct it, all the items shall be again publicly announced and reported in their entirety within two days counting inclusively from the date of knowing of such error or omission.
• (4) Any disclosure shall be updated within 2 days if the following event occurs:
• a. The contract has been terminated.
• b. The merger or transfer is not completed on the due date.
• c. Original disclosure is changed.
• (If the assets of the subsidiary is below 20% or 10% of the assets of the Company, the paid-in capital amount shall be provided.)
• 7 \ Asset assessment:

In acquiring or disposing of real estate or equipment where the transaction amount reaches 20% of the Company's paid-in capital or NT\$300,000,000 or more, the Company, unless transacting

with a government agency, engaging others to build on its own land, engaging others to build on leased land, or acquiring or disposing of equipment for business use, shall obtain an appraisal report prior to the date of the occurrence of the event from a professional appraiser and shall further comply with the following provisions:

The transaction amounts referred to in the preceding three articles shall be calculated in accordance with paragraph 2 of Article 30 herein, and "within the preceding year" as used herein refers to the year preceding the date of occurrence of the transaction. The amounts due to professional appraisers for the appraisal report and CPA for the CPA's opinions can be excluded from the calculation. Where the Company acquires or disposes of assets through court auction procedures, the evidentiary documentation issued by the court may be substituted for the appraisal report or the CPA opinion.

(1) In the event that due to special circumstances it is necessary to give a limited price, specified price, or special price as a reference basis for the transaction price, the transaction shall be submitted for approval in advance by the board of directors, and the same procedures shall apply to any future changes in the terms and conditions of the transaction

(2) In the event that the transaction amount is NT\$1 billion or more, appraisals

from two or more professional appraisers shall be obtained.

• (3) Any one of the following circumstances applies with respect to the professional appraisers' appraisal results, unless all the appraisal results for the assets to be acquired are higher than the transaction amount, or the appraisal results for the assets to be disposed of are lower than the transaction amount, a certified public accountant shall be engaged to perform the appraisal in accordance with the provisions of the Statement of Auditing Standards No. 20 published by the foundation constituted as a juristic person in Taiwan -- Accounting Research and Development Foundation (ARDF) and render a specific opinion regarding the reasons for the discrepancy and the appropriateness of the transaction price:
• a. The discrepancy between the appraisal result and the transaction amount is 20% or more of the transaction amount.
• b. The discrepancy between the appraisal results of two or more professional appraisers is 10% or more of the transaction amount.
• (4) No more than 3 months may elapse between the date of the appraisal report issued by a professional appraiser and the contract execution date; provided, where the current land value for the same period announced by Ministry of Interior is used and not more than 6 months have elapsed, an opinion may still be issued by the original professional appraiser.

8 Scope and Amount of Investment

In addition to acquiring assets for business use, the Company and its subsidiaries may also invest in non-commercial real property and securities. The limits of their quotas are as follows. In the calculation under subparagraphs 4 and 5, those engaging in the investment and establishment or holding the position of director or supervisor, and intended to be long-term holders may not be included.

• (1) The total amount of real estate not for business use shall not exceed 30 percent of the net value of the Company's latest financial statements, while its subsidiary shall not exceed 30 percent of the net value of its latest financial statements.
• (2) The total amount of securities may not exceed 120 percent of the net value of the Company's most recent financial statements. Its subsidiaries may not exceed 120 percent of the net value of its most recent financial statements.
• (3) The limit for investing in individual securities shall not exceed 60 percent of the net value of the Company's latest financial statements, and 60 percent of the net value of its subsidiary's latest financial statements.
• (4) The net investment of the Company and its subsidiaries in a single listed or OTC company shall not exceed 10 percent of the net value of their respective

latest financial statements.

• (5) The total investment and shareholding of the Company and its subsidiaries in a single listed or OTC company shall not exceed 10 percent of the total amount of shares issued by such single listed or OTC company.
• 9 Control procedures for the Acquisition and Disposal of Assets by Subsidiaries (1) The subsidiaries of the Company shall also establish and implement the "Procedures for the Acquisition or Disposal of Assets," which shall be passed by the board of directors of the subsidiaries, sent to the supervisors (otherwise the process can be waived) and submitted to the shareholders' meeting (approval from only the board meeting is allowed for a sole shareholder) for approval, and the same procedures shall apply whenever subsequent amendments are made.
• (2) The acquisition or disposal of assets by subsidiaries of the Company shall be governed by the respective provisions of the "internal control system" and the Procedure for the Acquisition or Disposal of Assets. They shall notify the Company within the day of occurrence of the event and shall, by the 5th day of each month, submit monthly reports in writing to the Company on where the amount of a single or accumulated transaction of the same nature of assets acquired or disposed of the preceding month reached NT\$10 million or more and on the status of derivatives trading engaged in up to the end of the preceding month.
• (3) If the subsidiary is not a public company, the Company shall disclose the related information.

$10 \cdot$ Penalty:

Any violation on the procedure or related law shall be punished according to the company policy.

Chapter 2 Related Party Transaction

11 Criteria of Identification

When the Company engages in any acquisition or disposal of assets from or to a related party, in addition to ensuring that the necessary resolutions are adopted and the reasonableness of the transaction terms is appraised, if the transaction amount reaches 10 percent or more of the Company's total assets, the Company shall also obtain an appraisal report from a professional appraiser or a CPA's opinion. The identification of related parties shall be made in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. In addition to legal formalities, the substance of the relationship shall also be considered.

$12 \cdot$ Resolution:

When the Company intends to acquire or dispose of real estate from or to a related party, or when it intends to acquire or dispose of assets other than real estate from or to a related party and the transaction amount reaches 20% or more of the paid-in capital, 10% or more of the

Company's total assets, or NT\$300,000,000 or more, except in the trading of government bonds or bonds under repurchase and resale agreements, or subscription or redemption of domestic money market funds, subject to mutatis mutandis application of paragraphs 2, 3 and 4 of Article 6, the Company may not proceed to enter into a transaction contract or make a payment until the following matters have been approved by more than half of all Audit Committee members, and then submitted to the board of directors for a resolution:

• (1) The purpose, necessity and estimated benefit of the acquisition or disposal of assets.
• (2) The reason for choosing the related party as a trading counterparty.
• (3) With respect to the acquisition of real estate from a related party, information regarding evaluation of the reasonableness of the pre-determined transaction terms in accordance with Articles 15 and 16.
• (4) The date and price at which the related party originally acquired the real estate, the original trading counterparty, and that trading counterparty's relationship to the Company and the related party.
• (5)Monthly cash flow forecasts for the year commencing from the anticipated month of signing of the contract, and evaluation of the necessity of the transaction, and reasonableness of the funds utilization.
• (6) An appraisal report from a professional appraiser or a CPA's opinion obtained in compliance with the preceding article.
• (7) Restrictive covenants and other major terms associated with the transaction.

The calculation of the transaction amounts referred to in the preceding paragraph shall be made in accordance with paragraph 2 of Article 30 herein, and "within the preceding year" as used herein

refers to the year preceding the date of occurrence of the transaction. The amounts approved by the board of directors and ratified by the Audit Committee can be excluded from the calculation.

With respect to the acquisition or disposal of business-use equipment between the Company and its subsidiaries, the Company's board of directors may pursuant to subparagraph 3, paragraph 1 of

Article 7, delegate the chairman to decide such matters and have the decisions subsequently ratified at the next board of directors meeting.

13 Sevaluation of the Reasonableness of Trading Conditions:

The Company that acquires real property from a related party shall appraise the reasonableness of transaction costs by taking the following approaches and engage a CPA to check the appraisal and render a specific opinion, except in the following three situations: 1) The related party acquired the real property through inheritance or as a gift; 2) More than 5 years will have elapsed from the time the related party signed the contract to obtain the real property to the signing date for the current transaction; and 3) The real property is acquired through signing of a joint development contract with the related party, or through engaging a related party to build real property, either on the Company's own land or on rented land.

• (1) Based upon the related party's transaction price plus necessary interest on funding and the costs to be duly borne by the buyer. "Necessary interest on funding" is imputed as the weighted average interest rate on borrowing in the year the Company purchases the property; provided, it may not be higher than the maximum non-financial industry lending rate announced by the Ministry of Finance.
• (2) Total loan value appraisal from a financial institution where the related party has previously created a mortgage on the property as security for a loan; provided, the actual cumulative amount loaned by the financial institution shall have been 70% or more of the financial institution's appraised loan value of the property and the period of the loan shall have been 1 year or more. However, this shall not apply where the financial institution is a related party of one of the trading counterparties.
• (3) Where land and structures thereupon are combined as a single property purchased in one transaction, the transaction costs for the land and the structures may be separately appraised in accordance with either of the

means listed in the preceding paragraph

• 14 Y Items to be Done when Transaction Cost is lower than Transaction Price When the results of the Company's appraisal conducted in accordance with the preceding Article reveal that the transaction cost is uniformly lower than the transaction price, the provisions of article 15 shall apply, with the exception of where the following circumstances exist and where objective evidence has been submitted and specific opinions on reasonableness have been obtained from a professional real property appraiser and a CPA.
• (1) Where the related party acquired undeveloped land or leased land for development, it may submit proof of compliance with one of the following conditions:
  • a. Where undeveloped land is appraised in accordance with the means in the preceding Article, and structures according to the related party's construction cost plus reasonable construction profit are valued in excess of the actual transaction price. The "Reasonable construction profit" shall be deemed the average gross operating profit margin of the related party's construction division over the most recent 3 years or the gross profit margin for the construction industry for the most recent period as announced by the Ministry of Finance, whichever is lower.
  • b. Completed transactions by unrelated parties within the preceding year involving other floors of the same property or neighboring or closely valued parcels of land, where the land area and transaction terms are similar after calculation of reasonable price discrepancies in floor or area land prices in accordance with standard property market practices.
  • c. Completed leasing transactions by unrelated parties for other floors of the same property from within the preceding year, where the transaction terms are similar after calculation of reasonable price discrepancies among floors in accordance with standard property leasing market practices.
• (2) Where the Company acquiring real estate from a related party provides evidence that the terms of the transaction are similar to the terms of transactions completed for the acquisition of neighboring or closely valued parcels of land of a similar size by unrelated parties within the preceding year.

Completed transactions for neighboring or closely valued parcels of land in the preceding paragraph in principle refers to parcels on the same or an adjacent block and within a distance of no more than 500 meters or parcels close in publicly announced current value; transaction for similarly sized parcels in principle refers to transactions completed by unrelated parties for parcels with a land area of no less than 50% of the property in the planned transaction; within

the preceding year refers to the year preceding the date of occurrence of the acquisition of the real estate.

• 15 Where the Company acquires real estate from a related party and the results of appraisals conducted in accordance with Articles 13 and 14 are uniformly lower than the transaction price, the following steps shall be taken:
• (1) A special reserve shall be set aside in accordance with Article 41, paragraph 1 of the Securities and Exchange Act against the difference between the real estate transaction price and the appraised cost, and may not be distributed or used for capital increase or issuance of bonus shares.
• (2) The Supervisors shall comply with Article 218 of the Company Act.
• (3) Actions taken pursuant to subparagraphs 1 and 2 shall be reported to a shareholders meeting, and the details of the transaction shall be disclosed in the annual report and any investment prospectus.

The Company that has set aside a special reserve under the preceding paragraph may not utilize the special reserve until it has recognized a loss on decline in market value of the assets it purchased at a premium, or they have been disposed of, or adequate compensation has been

made, or the status quo ante has been restored, or there is other evidence confirming that there was nothing unreasonable about the transaction, and the Financial Supervisory Commission

(FSC) has given its consent.

When the Company obtains real estate from a related party, it shall also comply with the preceding two paragraphs if there is other evidence indicating that the acquisition was not an arm's length transaction.

Chapter 3 Control of Derivatives Trading

• 16 Trading Principles and Strategies
• (1) Transaction types: The Company may engage in derivatives trading in forward contracts, options, interest rates and exchange rate exchanges, futures, and hybrid contracts combining the above goods.
• (2) Operational or hedging strategies: The Company dealing in derivatives can be divided into hedging-oriented and non-hedging-oriented (i.e. trading-oriented) transactions. The main purpose of the strategy shall be to avoid business risks, and the choice of trading commodities shall focus on avoiding the risks of foreign exchange income, expenditure, assets or liabilities arising from the Company's business operations. If, due to changes in the objective environment, the Company chooses an appropriate time to enter the market to engage in derivatives "non-hedging transactions," it is

expected to increase the Company's non-operating income or reduce its non-operating loss. In addition, the transaction counterparty to be chosen shall be the financial institutions that have business with the Company as far as possible in order to avoid the credit risk. Before trading, transaction patterns such as hedging or financial operations that pursue investment returns must be clearly defined to serve as the basis for accounting entries.

• (3) Transaction limit
• a. Hedge trades: The accumulated open net positions shall not exceed more than one third of the total net position of the company. "The net position of the company" is based on the net assets and liabilities on the company's regular closing statements (before the hedging trading quota has been included), and takes into account the planned projections of the business department and the procurement department.
• b. Non-hedge trades: No more than NT\$ 300 thousand. Before execution, the trader shall submit an analysis report on the trend of foreign exchange, which shall specify the analysis of the trend of foreign exchange markets and the suggested operation mode. Only after approval in accordance with Subparagraph 1, Paragraph 2, Article 4 hereof can trading be made.
• (4) Total and individual contractual loss limit amounts
• a. Hedge trades: The maximum total contractual loss for hedge trades is 20% of the total transaction amount. If exceeding the loss limit, the director of finance and accounting shall report it to the chairman for review of the corresponding measures.
• b. Non-hedge trades: After the establishment of the position, a stop-loss point shall be created to prevent excessive losses. The limit of the stop-loss point shall be no more than 10% of the amount of the transaction contract, and the total accumulated loss shall not exceed NT\$2 million in the whole year.
• (5) Division of responsibility and authority
• a. Traders: implementing personnel of derivatives trading of the Company, who are appointed by the chairman. Responsible for the formulation of trading strategies within the scope of authorization, execution of trading instructions, disclosure of future trading risks, and provision of immediate information to relevant departments for reference.
• b. Accounting division: responsible for the confirmation of transactions, recording and keeping transaction records in accordance with relevant provisions, regularly evaluating the fair market value of the positions held, providing it to transaction specialists, and disclosing related matters of derivatives in financial statements.

c. Financial division: responsible for the delivery of derivatives trading.

• (6) Essentials of performance evaluation
• a. Hedge trades: Based on the performance evaluation of the cost of the exchange (interest) rate on the company's books and the profit and loss arising from engaging in derivative financial transactions, the evaluation shall be conducted at least twice a month, and the performance shall be presented to the management for reference.
• b.Designated-use transactions: Based on the actual profits and losses, the performance evaluation shall be conducted at least once a week, and the performance shall be presented to the management for reference.

17 · Risk management:

The Company engaging in derivatives trading shall adopt the following risk management measures:

• (1) Consideration of credit risk: the counterparty of derivatives trading shall be the bank which has a business relationship with the Company or a prominent international financial institution which may provide professional information.
• (2) Market risk: As the potential loss of derivatives due to future market price fluctuations is uncertain, the stop-loss point should be set strictly after the position is established
• (3) Liquidity risk: In order to ensure the liquidity of the commodities traded, the trading institutions must have sufficient equipment, information and trading capacity and be able to trade in any market.
• (4) Cash flow management: Only invested by self-owned fund and shall consider the currency need in the future.
• (5) Operational risk: The degree of authority delegated and process must be observed to avoid operational risk.
• (6) Legal risk: Any contractual documents signed with financial institutions shall use international standardization documents as far as possible to avoid legal risks.
• (7) Commodity risk: Internal traders shall have complete and correct expertise in dealing with derivatives in order to avoid losses caused by misuse of derivatives.
• (8) Cash delivery risk: The authorized trader shall strictly abide by the provisions within the authorized limit, and pay attention to the company's cash flow at ordinary times to ensure that there is sufficient cash payment for delivery.
• (9) Personnel engaged in derivatives trading may not serve concurrently in other operations such as confirmation and settlement.
• (10) Confirmation personnel shall regularly check accounts with or send a written

confirmation request to correspondent banks and check from time to time whether the total amount of transactions exceeds the upper limit stipulated herein.

• (11) Risk measurement, monitoring, and control personnel shall be assigned to a different department from the personnel as noted in subparagraph 1) and shall report to the board of directors or senior management personnel with no responsibility for trading or position decision-making.
• (12) Derivatives trading positions held shall be evaluated at least once per week; however, positions for hedge trades required by business shall be evaluated at least twice per month. Evaluation reports shall be submitted to senior management personnel authorized by the board of directors (Note: senior management personnel who are not from the unit in charge shall be appointed).

18 · Internal audit:

• (1) The Company's internal audit personnel shall periodically examine the appropriateness of internal controls over derivatives trading and conduct a monthly audit of the compliance of derivatives trading by the trading department with the procedures, and prepare an audit report. In the event of any material violations, the supervisors and officer designated by Chairman shall be notified in writing.
• (2) The auditors of the Company shall include derivatives trading in the audit plan and report the implementation of the annual audit plan of the previous year to the Securities and Futures Bureau before the end of February of the next year, and submit the improvement of irregular circumstances to the Bureau for reference no later than the end of May of the next year.
• 19 · Regular Evaluation Methods and Handling of Irregular Circumstances
• (1) Regular monthly or weekly evaluation of derivatives trading and summary of the current month or week's profits and losses and non-hedging trading open positions shall be presented to senior management personnel and chairmen authorized by the board of directors as a reference for management performance evaluation and risk measurement.
• (2) Designate senior management personnel to pay continuous attention to monitoring and controlling derivatives trading risk. Periodically evaluate whether derivatives trading performance is consistent with established operational strategy and whether the risk undertaken is within the company's permitted scope of tolerance.
• (3) Senior management personnel authorized by the board of directors shall

manage derivatives trading in accordance with the following principles:

• a. Periodically evaluate the risk management measures currently employed are appropriate and are faithfully conducted in accordance with these Regulations issued by competent authority and the procedures for engaging in derivatives trading formulated by the company.
• b. When irregular circumstances are found in the course of supervising trading and profit-loss circumstances, appropriate measures shall be adopted and a report immediately made to the board of directors; where a company has independent directors, an independent director shall be present at the meeting and express an opinion.
• (4) The company engaging in derivatives trading shall establish a log book in which details of the types and amounts of derivatives trading engaged in, board of directors approval dates, and the matters required to be carefully evaluated in the log book.

Chapter 4 Merger, spin-off, acquisition, or transfer of shares

• 20 The Company that conducts a merger, spin-off, acquisition, or transfer of shares, prior to convening the board of directors to resolve on the matter, shall engage a CPA, attorney, or securities underwriter to give an opinion on the reasonableness of the share exchange ratio, acquisition price, or distribution of cash or other property to shareholders, and submit it to the board of directors for deliberation and passage
• $21 \cdot$ In the event that the Company participating in a merger, spin-off, acquisition, or transfer of shares shall prepare a public report to shareholders detailing important contractual content and matters relevant to the merger, spin-off, or acquisition prior to the shareholders meeting and include it along with the expert opinion referred to in paragraph 1 of the preceding Article when sending shareholders notification of the shareholders meeting for reference in deciding whether to approve the merger, spin-off, or acquisition. Provided, where a provision of another act exempts a company from convening a shareholders meeting to approve the merger, spin-off, or acquisition, this restriction shall not apply. Where the shareholders meeting of any one of the companies participating in a merger, spin-off or acquisition fails to convene or pass a resolution due to lack of a quorum, insufficient votes, or other legal restriction, or the proposal is rejected by the shareholders meeting, the companies participating in the merger, spin-off or acquisition shall immediately publicly explain the reason, the follow-up measures, and the preliminary date of the next shareholders meeting.

22 • The company participating in a merger, spin-off, or acquisition shall convene a board of directors meeting and shareholders meeting on the day of the transaction to resolve matters relevant to the

merger, spin-off, or acquisition, unless another act provides otherwise or the competent securities authority is notified in advance of extraordinary circumstances and grants consent. A company participating in a transfer of shares shall call a board of directors meeting on the day of the transaction, unless another act provides otherwise or the competent securities authority is notified in advance of extraordinary circumstances and grants consent. When participating in a merger, spin-off, acquisition, or transfer of shares where shares are listed on an exchange or traded on an OTC market, a full written record of the following information shall be kept for 5 years for reference:

• (1) Basic identification data for personnel: Including the occupational titles, names, and national ID numbers (or passport numbers in the case of foreign nationals) of all persons involved in the planning or implementation of any merger, spin-off, acquisition, or transfer of another company's shares prior to disclosure of the information
• (2) Dates of material events: Including the signing of any letter of intent or memorandum of understanding, the hiring of a financial or legal advisor, the execution of a contract, and the convening of a board of directors meeting
• (3) Important documents and minutes: Including merger, spin-off, acquisition, and transfer of shares plans, any letter of intent or memorandum of understanding, material contracts, and minutes of board of director meetings.

When participating in a merger, spin-off, acquisition, or transfer of shares where shares are listed on an exchange or traded on an OTC market, within 2 days immediately from the date of passage of a resolution by the board of directors, report (in the prescribed format and via the Internet-based information system) the information set out in subparagraphs 1 and 2 of the preceding paragraph shall be sent to the Financial Supervisory Commission (FSC) for review. Where any of the companies participating in a merger, spin-off, acquisition, or transfer of shares where shares are neither listed on an exchange nor traded on an OTC market, the Company(s) so listed or traded shall sign an agreement with such company whereby the latter is required to abide by the provisions of paragraphs 3 and 4.

23 Share Exchange Ratio or Acquisition Price

Any merger, demerger, acquisition, or transfer of shares may not arbitrarily alter the share exchange ratio or acquisition price unless under the below-listed circumstances, and shall stipulate the circumstances permitting alteration in the contract for the merger, demerger, acquisition, or transfer of shares:

• (1) Cash capital increase, issuance of convertible corporate bonds, or the issuance of bonus shares, issuance of corporate bonds with warrants, preferred shares with warrants, stock warrants, or other equity-based securities.
• (2) An action, such as a disposal of major assets that affects the Company's financial operations.
• (3) An event, such as a major disaster or major change in technology that affects shareholder equity or share price.
• (4) An adjustment where any of the companies participating in the merger, spin-off, acquisition, or transfer of shares from another company, buys back treasury stock.
• (5) An increase or decrease in the number of entities or companies participating in the merger, spin-off, acquisition, or transfer of shares.
• (6) Other terms/conditions that the contract stipulates may be altered and that have been publicly disclosed.
• $24 \cdot$ The agreement shall include following terms:

The contract for participation by the Company in a merger, spin-off, acquisition, or of shares shall record the rights and obligations of the companies participating in the merger, spin-off, acquisition, or transfer of shares, and shall also record the following:

• (1) Handling of breach of contract.
• (2) Principles for the handling of equity-based securities previously issued or treasury stock previously bought back by any company that is extinguished in a merger or that is demerged.
• (3) The amount of treasury stock participating companies are permitted under law to buy back after the record date of calculation of the share exchange ratio, and the principles for handling thereof.
• (4) The manner of handling changes in the number of participating entities or companies.
• (5) Preliminary progress schedule for plan execution, and anticipated completion date.
• (6) Scheduled date for convening the legally mandated shareholders meeting if the plan exceeds the deadline without completion, and relevant procedures.
• 25 Mergers, Spin-offs, Acquisitions, and Transfer of Shares
• (1) Every person participating in or privy to the plan for merger, spin-off, acquisition, or transfer of shares shall issue a written undertaking of confidentiality and may not disclose the content of the plan prior to public disclosure of the information and may not trade, in their own name or

under the name of another person, in any stock or other equity security of any company related to the plan for merger, spin-off, acquisition, or transfer of shares.

• (2) After public disclosure of the information, if any company participating in the merger, spin-off, acquisition, or transfer of shares intends further to carry out a merger, spin-off, acquisition, or transfer of shares with another company, all of the participating companies shall carry out anew the procedures or legal actions that had originally been completed toward the merger, spin-off, acquisition, or share transfer; except that where the number of participating companies is decreased and a participating company's shareholders meeting has adopted a resolution authorizing the board of directors to alter the limits of authority, such participating company may be exempted from calling another shareholders meeting to resolve on the matter anew.
• (3) Where any of the companies participating in a merger, spin-off, acquisition, or transfer of shares is not a public company, the Company shall sign an agreement with the non-public company whereby the latter is required to abide by the provisions of the Article and Article 22.

Chapter 5 Other matter

• 26 The Company acquiring or disposing of assets shall keep all relevant contracts, meeting minutes, log books, appraisal reports and CPA, attorney, and securities underwriter opinions at the Company's headquarters, where they shall be retained for 5 years except where another act provides otherwise.
• 27 Professional appraisers and their officers, certified public accounts, attorneys, and securities underwriters that provide the Company with appraisal reports, certified public accountant's opinions, attorney's opinions, or underwriter's opinions shall not be a related party of any party to the transaction.
• 28 \ After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors'

opinions specifically expressing assent or dissent and their reasons for dissent shall be included in the minutes of the board of directors' meeting.

• 29 After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing assent or dissent and their reasons for dissent shall be included in the minutes of the board of directors' meeting.
• 30 The auditors shall be responsible for the management of the endorsement case by the regulation of Public Company Internal Control Procedure. After the audit report is completed, it shall be verified by the supervisors monthly.

Taiwan Styrene Monomer Corporation

Operational Procedures for Loaning Funds to Others (Before amendment)

$1 \cdot$ Purpose

In order to meet the actual needs of business, the Company has specially formulated the Operational Procedures, and matters concerning the loan of funds to others shall be handled in accordance with the provisions of the Operational Procedures unless otherwise stipulated by laws and regulations.

$2 \cdot$ Entities to which the Company may Loan Funds

The Company shall not loan funds to any of its shareholders or any other person except the

following:

• a. a company which has a business relationship with the Company; or
• b. company which has short-term capital needs.

"Short-term" means the period within one-year. In the event that the period of business cycle is longer than one year, that period shall prevail. Financing is the accumulating balance of the short-term loan provided by the Company

3 \ Limits on the aggregate amount of loans and maximum amount permitted to a

single borrower

• (1) The total amount available for loans to others shall not exceed 20 percent of the Net Worth of the Company as stated in its latest audited or reviewed financial statement
• a. Where there are business dealings with the Company, the loan amount given to each single borrower shall not exceed the amount required for procurement of goods or sales of goods during the latest year or during the current year up to the time of the loan, whichever is higher.
• b. Where loaning funds for short-term financing facility is required, the loan amount made to each single borrower shall not exceed 10% of the net worth of the Company as shown in the latest financial statement audited and certified, or reviewed by a certified public accountant.
• c. Where an inter-company or inter-firm short-term financing facility is necessary. (a) The invested company is to repay the Bank Loan, purchase equipment, or to deal with operating shortage.
  • (b) The invested company is the company hold by the Company over 50% and is to repay the Bank Loan, purchase equipment, or to deal with operating

shortage.

(c) Other company with the need to purchasing material or is to deal with operating shortage.

(d)Other loan approved by the board.

• (2) Loans given to overseas companies in which the Company directly and indirectly holds 100% voting shares shall not be subject to the limitation that funds loaned to others shall not exceed 20% of the net worth of the Company as shown in the latest financial statement audited and certified, or reviewed by a certified public accountant.
• (3) The "net worth" shall be as set forth in the most recent financial statements signed or examined by a CPA. If the Company's financial report is prepared in accordance with the International Financial Reporting Standards (IFRS), the net worth referred to herein means that the balance sheet stipulated in the Regulations Governing the Preparation of Financial Reports by Securities Issuers is attributable to the owners' equity of the parent company.
• 4 > Procedures for loaning funds
• (1) Operating Procedures

In processing matters for loaning funds or short-term loans, upon review by the department in charge, loans may be granted after approval by the Chairman or the director authorized by the Chairman or General Manager, and subsequently submission to and approval by the Board of Directors through resolution. Material loans to others shall be approved by the Audit Committee and be submitted to the Board of Directors for approval. When funds are loaned between the Company and its subsidiary or among subsidiaries of the Company, the Chairman may be authorized to proceed with multiple releases of funds or revolving drawdowns with regard to the same borrower within a certain amount authorized by resolution of the Board of Directors and within a one year period. The certain amount mentioned above shall be in compliance with Article 4, paragraph 2. In addition, the authorized amount extended by the Company or its subsidiaries to any single entity shall not exceed 10% of the net worth on the latest financial statements of the Company.

(2) Review Procedures

a.Application

For the loans given by the Company, the company or enterprise applying for the loan shall file a written application and attach relevant financial information and statements detailing the purpose of the borrowing.

b.Credit assessment

• (a) Once the Company accepts the application, the department in charge shall prepare a related written report to be submitted to the Board of Directors for review and approval after it investigates and evaluates the necessity and reasonableness of the funds loaned to others, whether the borrower has any direct or indirect business relationship with the Company, the financial status of the business operated, the ability to repay the debt, credibility, profitability, and the purpose of the funds, and consider the impact of the total amount of the loan given by the Company on the Company's operational risk, financial status and shareholders equity.
• (b) The assessment shall be conducted every 12 months and if the loan is with greater amount, 6 months.
• c. Approval

After confirming the credit and usage, the board may discuss about the loan; if not, the clerk shall reply the borrower immediately that the Company disagree to provide the loan.

d. Collateral rights setting

When processing the loaning of funds or short-term financing facility, the Company shall obtain guarantee notes of equivalent amount, shall create a pledge or mortgage over personal property or real property when necessary, shall evaluate on a quarterly basis if the value of the collateral is equivalent to the balance of the loan, and shall request for additional collateral when 4 necessary. Pertaining to the aforementioned debt guarantee, should the debtor provide personal or corporate guarantee with sufficient financial capability and credibility to replace provision of collateral, the Board of Directors may refer to the review report prepared by the department in charge; where corporate guarantee is provided, it should be noted if the Articles of Incorporation of the borrowing company has stipulated any provision that guarantees may be made.

e. Notification

As the loan is approved, the financial department shall notify the borrower related information and arrange the contract. After the setting of collateral is ready, the loan may be allocated.

f. Contract

(1) The contract signing shall be conducted after the approval of the Board.

• (2) After the signing is completed, the clerk may notify the bank to allocate the loan.

• g. Insurance

• (a)Collateral except for the land and security, shall be insured by borrower, and the coverage shall bot be lower than the loan amount.

• (b) The clerk shall notify the borrower to extend the insurance as the overdue.
• h. Allocation

After the contract is dully signed, and the collateral is prepared, the loan may be allocated.

$5 \cdot$ Due

The duration of any loan provided to borrowers shall be limited to one year.

• $6 \cdot$ Interest
• (1) The interest rate of loans shall not be lower than the capital cost of the Company from its short-term loans with financial institutions. The interest to be collected shall be calculated and paid once a month. Under special circumstances, the calculation and collection may be adjusted, provided that such adjustment has been approved by the Board of Directors.
• (2) Calculated by day.
• (3) Unless otherwise regulated, the interest shall be paid monthly and is payable within 7 days on the due date.
• $7 \cdot$ Consequent management
• (1) The financial department shall prepare record for the information of borrower, amount, and due date according to the procedure.
• (2) The financial department shall prepare the record for tracing back and prepare for the allowance for bad debt. Such record shall be provided to certified accountant for certification.
• (3) In order to strengthen the internal control of the Company, if a loan made by the Company to an entity no longer meets the requirements of the Procedures or the loan balance exceeds the limit as a result of a change in circumstances, the Company shall adopt rectification plans and submit the rectification plans to the Board of Directors (once the Company establishes the Audit Committee, the plans should be submitted to the Audit Committee instead) and shall complete the rectification according to the timeframe set out in the plans.
• (4) After the disbursement of each loan, the finance department shall regularly monitor the variation in the financial status, business and relevant credit status of the borrower and its guarantors, and any fluctuation in value of the collateral, and shall make written records. In the event that any major changes occur, the Finance Department shall immediately report to the General Manager and relevant

departments in charge for rapid handling.

• (5) The executive personnel shall notify the borrower 2 months prior to the due date.
• (6) When the loan is due or the borrower repays the loan before the due date, the accrued interest should be calculated and repaid with the principal, prior to the returning of promissory notes or mortgages to the borrower or cancelling the mortgage registrations.
• (7) The borrower shall apply for extension in advance in the event the loan cannot be repaid when the loan matures and such extension may be permitted after such application is reported to, and approved by, the Board of Directors. If the borrower fails to get such extension, the Company may exercise its rights on the collateral or guarantor, and seek compensation.
• (8) When the auditors of the Company conduct a check on the subsidiary according to the annual audit plan, they shall make a determination of the Operational Procedures for and implementation of loans of funds to others by subsidiaries. If any defect is discovered, they shall keep track of its improvement and report it as a follow-up report to the general supervisor.

8 MInformation 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 and its subsidiaries 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:
• a. 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.
• b. The balance of loans by the Company and its subsidiaries to a single enterprise reaches 10 percent or more of the Company's net worth as stated in its latest financial statement.
• c. 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.
• d. If the subsidiary is not a public company, the related disclosure shall be made by the Company.

The "net worth" shall be as set forth in the most recent financial statements signed or examined by a CPA. If the Company's financial report is prepared in accordance with the International Financial Reporting Standards (IFRS), the net worth referred to herein means that the balance sheet stipulated in the Regulations Governing the Preparation of Financial Reports by Securities Issuers is attributable to the owners' equity of the parent company.

• 9 Subsidiary management
• (1) As the subsidiary of the company is to offer loan, the matter shall be conducted by the related regulations issued by competent authority. Any amendment of the regulation shall be approved by the board and the supervisors.
• (2) The loan offered by the subsidiary of the company shall be conducted by the internal procedures and shall report to the company on every 5^th day of the month for internal audit.
• (3) If the subsidiary of the company is not a public company and the loan amount has reached the threshold of reporting, the Company shall report the loan accordingly on the occurrence date.
• (4) Companies in which the Company holds, directly or indirectly, 90%, or more of the voting shares may make endorsements/guarantees for each other, and the amount of loan may not exceed 10% of the net worth of the Company, provided that this restriction shall not apply to endorsements/guarantees made between companies in which the Company holds, directly or indirectly, 100% of the voting shares.

$10 \cdot$ Penalty

Any managers or personnel-in-charge of the Company who violate the "Regulations Governing Loaning of Funds and Making of Endorsements/Guarantees by Public Companies" or the provisions of the Operational Procedures and thus infringe upon the rights and interests of the Company shall be subject to an assessment report governed by the personnel management regulations and working rules of the competent authority and the Company, and shall be punished according to the seriousness of the incident.

11 \ After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing assent or dissent and their reasons for dissent shall be included in the minutes of the board of directors' meeting.

$12 \cdot$ Others

The auditors shall be responsible for the management of the endorsement case by the regulation of Public Company Internal Control Procedure. After the audit report is completed, it shall be verified by the supervisors monthly.

$\bar{t}$

Taiwan Styrene Monomer Corporation Management of Endorsement and Guarantees (Before amendment)

$1 \cdot$ Purpose

These procedures are promulgated pursuant to Article 36-1 of the Taiwan Securities and Exchange Act and Regulations governing Loaning of Funds to reduce related financial risk. Any other matters not set forth in the Procedures shall be dealt with in accordance with the applicable laws, rules, and regulations.

$2 \cdot$ Scope of endorsements/guarantees

The scope of endorsements/guarantees used herein is as follow:

• (1) Financing endorsements/guarantees:
• a. Bill discount financing.
• b. Endorsements/guarantees for other companies for their financing needs.
• c. Endorsements/guarantees to the notes issued by the Company to nonfinancial institutions and entities for the Company's own financing needs.
• (2) Endorsements/guarantees of custom duties due from the Company or other companies.
• (3) Other endorsements/guarantees that are not classified as prior two types. The lien or mortgage provided by the Company against its assets and properties for guaranteeing another company's loan shall be conducted according to the procedure.
• 3 Entities for which the Company may make endorsement or guarantees

The Company may proved endorsement to the following company, however, in the events of the contractual obligations with peer company or the co-investment made by the paid-in shareholders' shareholding ratio, or the co-guarantee required by related laws, the Company may provide the endorsement regardless of the regulations of the preceding paragraph.

• (1) A company with which the Company does business.
• (2) A company in which the Company directly and indirectly holds more than 50% of the voting shares.
• (3) A company that directly and indirectly holds more than 50% of the voting shares in the Company.
• (4) Companies in which the Company holds, directly or indirectly, 90%, or more of the voting shares may make endorsements/guarantees for each other, and the amount of endorsements or guarantees may not exceed 10% of the net worth of

the Company, provided that this restriction shall not apply to endorsements/guarantees made between companies in which the Company holds, directly or indirectly, 100% of the voting shares.

• 4 The ceilings on amount of endorsement/guarantee
• (1) The aggregate amount of endorsements/guarantees provided by the Company shall not exceed 25% or more of the net worth of the Company and the amount of endorsements/guarantees provided by the Company for any single entity shall not exceed 15% of or more of the net worth of the Company.
• (2) The endorsement or guarantee amount should not exceed past 12 months of total amount of transactions from the company with which the Company does business.
• (3) The aggregate amount of endorsements or guarantees provided by the Company and its Subsidiaries shall not exceed 50 % or more of the net worth of the Company and the amount of endorsements or guarantees provided by the Company and its Subsidiaries for any single entity shall not exceed 20 % or more of the net worth of the Company.
• (4) If the endorsement amount reach 50% of the net worth of the Company, the relation information shall be provided on the shareholders meeting.
• (5) "Subsidiary" and "parent company" as referred to in the Procedures shall be as determined under the Regulations Governing the Preparation of Financial Reports by Securities Issuers of Taiwan.
• (6) The financial statement shall be prepared by international standard; the net worth refers to the equity owned by the company.
• 5 · Procedures for handling endorsement/guarantee
• (1) As conducting the endorsement, the responsible unit shall verify the qualification and summit the application to the chairman for approval. If the quota does not exceed the amount authorized by the board to the chairman. The approval can be made after the endorsement is completed.
• (2) The Finance Unit shall establish and maintain a memorandum book for its endorsement/guarantee activities and record in detail the following information for the record: the entity for which the endorsement/guarantee is made, the amount, the date of passage by the Board of Directors or of authorization by the Chairperson of the board, the date the endorsement/guarantee is made, and the matters to be carefully evaluated under Article 6.
• (3) The Company's internal auditors shall audit the Procedures for Endorsement

$\mathbf{1}$

and Guarantee and the implementation thereof at least every quarter and prepare written records accordingly. They shall promptly notify the supervisors immediately in writing of any major violation found

• (4) The financial officer shall prepare the record of the endorsement and completion matters monthly and shall reveal related information every quarter for the verification conducted by certified accountants.
• (5) If, due to changes of circumstances, the party to whom the Company provides endorsement and/or guarantee no longer satisfies the criteria, a corrective plan shall be provided to the supervisors and the proposed correction actions should be implemented within the period specified in the plan.
• (6) The financial officer shall retrieve the endorsed note on the due date and cancelled the endorsement.

(Where the company has established the position of independent director, when it makes endorsements/guarantees for others, it shall take into full consideration the opinions of each independent director; independent directors' opinions specifically expressing assent or dissent and the reasons for dissent shall be included in the minutes of the board of directors' meeting.)

6 · Procedures for scrutinizing endorsement/guarantee

Any endorsement/guarantee to be provided by the Company shall be examined, evaluated, with a comment made, by the Finance Unit. The evaluation items shall be included:

• (1) The relationship with the Company, usage of the fund and the importance of the operating of that company to our company, and the rationality of the offer.
• (2) The annual statement, financial statement, credit, and risk of the endorsement.
• (3) Analyze the ratio of the endorsement in the net worth of the company, cash flow, and the results of preceding paragraph to assess the risk of the company and the impact on the equity of the shareholders.
• (4) Assess if it's necessary to ask for that company to provide more guarantee. Conduct the assessment every quarter.
• (5) For circumstances in which an entity for which the company makes any endorsement/guarantee is a subsidiary whose net worth is lower than half of its paid-in capital, relevant follow-up monitoring and control measures shall be expressly prescribed.
• (6) 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 subparagraph 5 of the preceding paragraph, the sum of the share capital plus paid-in capital in

excess of par shall be substituted.

• 7 · Procedures for managing endorsement or guarantee by subsidiaries
• (1) As the subsidiary of the company is to offer endorsement, the matter shall be conducted by the related regulations issued by competent authority. Any amendment of the regulation shall be approved by the board and the supervisors.
• (2) The endorsement offered by the subsidiary of the company shall be conducted by the internal procedures and shall report to the company on every 5^th day of the month for internal audit.
• (3) If the subsidiary of the company is not a public company and the endorsement amount has reached the threshold of reporting, the Company shall report the endorsement accordingly on the occurrence date.
• (4) Companies in which the Company holds, directly or indirectly, 90%, or more of the voting shares may make endorsements/guarantees for each other, and the amount of endorsements or guarantees may not exceed 10% of the net worth of the Company, provided that this restriction shall not apply to endorsements/guarantees made between companies in which the Company holds, directly or indirectly, 100% of the voting shares.
• 8 · of decision-making authority and delegation thereof
• (1) When the Company makes any endorsement and/or guarantee, the Finance Unit shall submit the evaluation results made in accordance with Article 5 and 6, along with comments and opinions provided by other related units, to the Board of Directors for approval. A pre-determined limit of 100 million dollars may be delegated to the Chairperson by the Board of Directors to facilitate execution and such endorsement /guarantee shall be reported to the most coming Board of Directors' Meeting for ratification. The limit shall not exceed the amount that set forth in Article 5 of endorsement/ guarantee provided by the Company.
• (2) In case the above limits have to be exceeded to accommodate business needs, a resolution of the Board of Directors should be obtained and over half of all the directors should jointly endorse the potential loss that may be brought about by the excess of limits. The Board of Directors should also revise the Procedures and has it ratified at the Shareholders' Meeting. If the revised Procedures are not ratified at the Shareholders' Meeting, the Board of Directors should furnish a plan containing a timetable to withdraw the excess portion.

3

When it makes endorsements / guarantees for others, it shall take into full consideration the opinions of each independent director; independent directors' opinions specifically expressing assent or dissent and the reasons for dissent shall be included in the minutes of the Board of Directors' meeting.

• 9 · Procedures for Custody of Corporate Chops
• (1) The Company shall use the corporate chop registered with the Ministry of Economic Affairs as the dedicated chop for endorsements/guarantees. The chop shall be kept in the custody of a designated person approved by the board of directors, and the same applies when any changes are made.
• (2) After the endorsement/guarantee is decided by the board of directors or approved by the chairman, the Application for Chop Use shall be filled in and submitted, together with the approval records and the endorsement/guarantee contract or guaranteed bill and other documentation before negotiable instruments can be sealed or issued.
• (3) The manager shall impress the seal after verifying the approval record.
• (4) When making a guarantee for a foreign company, the Company shall have the Guarantee Agreement signed by a person authorized by the board of directors.
• 10 Announcement and Reporting Procedures
• (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:
  • a. The endorsement amount reaches 50% of the bet worth of the Company.
  • b. The balance of endorsements/guarantees by the company and subsidiaries for a single enterprise reaches 20% or more of the Company's net worth as stated in its latest financial statement.
  • c. The balance of endorsements and guarantees of the Company and subsidiaries for a single enterprise reaches NTD 10 million or more and the aggregate balance of its endorsements and guarantees for, long-term investment in, and loans to, such enterprise reaches 30% or more of the Company's net worth as stated in its latest financial statement
  • d. The balance of endorsements and guarantees of the Company and subsidiaries increase to reach 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.

e. The company shall announce and report on behalf of any subsidiary thereof that is not a public company of the Republic of China any matters that such subsidiary is required to announce and report pursuant to subparagraph 4 of the preceding paragraph.

Date of occurrence" as used herein 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.

11 · Penal Provisions

In case any of the Company's personnel handling the acquisition or disposal of assets violates the "Regulations Governing the Acquisition and Disposal of Assets by Public Companies" promulgated by the FSC or the Procedures, he/she shall be subject to internal punishment rules according to the circumstances of his/her violation.

• $12 \cdot$ Other regulations
• (1) After the Operational Procedures have been approved by the board of directors, they shall be submitted to each supervisor, and then to a shareholders' meeting for approval before being enforced. If any director expresses dissent and it is contained in the minutes or a written statement, the Company shall submit the director's dissenting opinion to each supervisor and the shareholders' meeting for a deliberation. The same applies when the Operational Procedures are amended. Where the Company has established the position of independent director, when it submits the Operational Procedures to the board of directors for deliberation in accordance with the preceding paragraph, it shall take into full consideration each independent director's opinions; independent directors' opinions specifically expressing assent or dissent and their reasons for dissent shall be included in the minutes of the board of directors' meeting.
• (2) The auditors shall be responsible for the management of the endorsement case by the regulation of Public Company Internal Control Procedure. After the audit report is completed, it shall be verified by the supervisors monthly.

Taiwan Styrene Monomer Corporation Procedures for Election of Directors (Before amendment)

• Article 1: The election of the directors and supervisors shall follow this rule
• Article 2: The election shall be conducted at the shareholders meeting.
• Article 3: The elected to be a director or supervisor shall be a qualified or capable person for the position.
• Article 4: The seats to be elected shall be determined according to the article of the Company.

Article 5: Elections of the Company directors shall be conducted in accordance with the candidate nomination system and procedures set out in Article 192-1 of the Company Act. The Company shall review the qualifications, educational background, and work experience, and the existence of any other matters set forth in Article 30 of the Company Act with respect to nominee directors, and may not arbitrarily add requirements of other credentials. It shall further provide the results of the review to shareholders for their reference, so that qualified directors will be elected. The Cumulative Voting System shall be applied to the voting. Every share has notes as the number of director or supervisors to be elected. The votes can be casted on one person or to be divided into multiple candidates. The independent directors shall be elected either.

• Article 6: The number of directors will be as specified in the Company's Articles of Incorporation. The candidates to whom the ballots cast represent a prevailing number of voting rights shall be elected as independent directors or non-independent directors, respectively, based on the results of the election, in descending order. When two or more candidates receive the same number of voting rights, thus exceeding the specified number of positions, they shall draw lots to determine the winner, with the chair drawing lots on behalf of any candidate not present.
• Article 7: The voting tickets shall be prepared by the board with the seal of the Company; the voting right details and the shareholders serial no. shall be printed on the ticket.
• Article $8:$ At the beginning of the election, the Chairman shall appoint several persons each to check and record the ballots.
• Article 9: The ballot box used for voting shall be prepared by this Company and checked in public by the person to check the ballots before voting.
• Article 10: If a candidate is a shareholder, a voter must enter the candidate's account name and shareholder account number in the "candidate" column of the ballot; for a non-shareholder, the voter shall enter the candidate's full name and identity card number. However, when the candidate is a governmental organization or juristic-person shareholder, the name of the governmental organization or juristic-person shareholder shall be entered in the column for the candidate's account name in the ballot paper, or both the name of the governmental organization or juristic-person shareholder and the name of its

representative may be entered. When there are multiple representatives, the names of each respective representative shall be entered.

• Article 11: An on-site ballot shall be invalid if determined by all ballot inspectors to fall in any of the following circumstances:
• 1. The ballot cast is not a ballot as prescribed in these Rules.
• $2 \cdot$ The hallot inserted into the hallot box is a blank ballot.
• 3 The handwriting on the ballot is unclear, indecipherable, or has been altered
• 4 The name of the candidates filled in the ballots being the same as another candidate's name and the respective shareholder's numbers (ID numbers) not being indicated to distinguish them.
• 1. The candidate whose name is entered in the ballot is a shareholder, but the candidate's account name and shareholder account number do not conform with those given in the shareholder register, or the candidate whose name is entered in the ballot is a non-shareholder, and a cross-check shows that the candidate's name and identity card number do not match.
• 6 The name of the candidate entered in the ballot is identical to that of another shareholder, but no shareholder account number or identity card number is provided in the ballot to identify such individual.
• 7 Other words or marks are entered in addition to the candidate's account name or shareholder account number (or identity card number) and the number of voting rights allotted.
• 8 The number of candidates filled in the ballot exceeding the number of the seats to be elected.
• 9 The vote right shall be hold by the voters.

Article 12: The difference of the vote right of the voters shall be deemed

as the waiver of the right.

The ballots should be calculated during the meeting right after the vote Article $13$ : casting and the results of the election should be announced by the Chairman at the meeting.

If litigation occurs regarding any matter resolved by the Board of Directors before the above retention period expires, the relevant audio or video recordings shall continue to be retained until the litigation is concluded.

• Article 14: This Company shall issue notifications to the directors and supervisors elected.
• Article 15: All matters not covered by these Rules shall be subject to the direction of the chair, unless otherwise expressly provided by the Company Act, the

Securities and Exchange Act, any other applicable laws or regulations, and the Corporation's Articles of Incorporation, Rules of Procedure for Shareholders' Meetings, and Principles of Corporate Governance.

Article 16: These Rules and any revision thereof shall become effective after approval at the shareholders' meeting.

Shareholding Condition of the Directors

I. The minium amount of shares shall be held be all the directors: 16,891,832 shares. II. By the final day for stock transfer of the shareholders' general meeting this time, the directors listed on the namebook hold the following shares:

Title	Name	Shares held
Chairperson	LIN, WEN-YUAN, the representative of Taiwan Styrene Monomer Corporation	10,000,000
Vice chaiperson	LIU, CHENG-YUAN, the representative of Wonderland Enterprise Co., Ltd.	42,279,209
Director	WANG, CHIUNG-FEN, the representative of Taiwan Styrene Monomer Investment Corporation	10,000,000
Director	CHEN, CHIEN-FU, the representative of Taiwan Styrene Monomer Investment Corporation	10,000,000
Director	LI, SHENG-CHEN, the representative of Chin-Chih-Hung Investment Corporation	1,000,000
Director	CHAO, KUO-SHUAI, the representative of Kai-Chiang Co., Ltd.	200,000
Director	SUN, CHIH-YAO, the representative of An-Ching Development Corporation	200,000
Director	HUANG, PO-HAO, the representative of An-Ching Development Corporation	200,000
Independent director	CHIEN, CHIN-CHENG	$\theta$
Independent director	HSU, KAO-WEI	$\mathbf{0}$
Independent director	CHANG, KUO-CHIN	$\mathbf{0}$
Total	53,679,209

Related Information About the Compensation of Employees, Directors and
Supervisors, 2017

Unit: NT\$

Distribution Item	Distribution Amount (A) decided by the Board	Estimated Amount $(B)$ in the fiscal year	Amount of Difference $(A)$ - $(B)$	Reason of Difference and Condition of Handling
Compensation for employees	27,439,730	27,439,730	$\Omega$
Compensation for directors and supervisors	34,299,663	34,299,663	0

Related Information About the Compensation of Employees, Directors and
Supervisors, 2018

Unit: NT\$

Distribution Item	Distribution Amount (A) decided by the Board	Estimated Amount (B) in the fiscal year	Amount of Difference $(A)$ - $(B)$	Reason of Difference and Condition of Handling
Compensation for employees	33,086,131	33,086,131	$\theta$
Compensation for directors and supervisors	41,073,000	41,073,000	$\Omega$

The impact of free share issuance which is going to be discussed in the general meeting on the operating performance, earnings per share and the return on investment of shareholders of the company: not applicable.