2017 ANNUAL SHAREHOLDERS’ MEETING MEETING HANDBOOK · 1.2016 Business Report The consolidated operating revenue of the company in 2016 was US$ 8,529 million, a decrease of 8.2%

NAN YA PLASTICS CORPORATION

2017 ANNUAL SHAREHOLDERS’ MEETING

MEETING HANDBOOK

(Summary)

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

JUNE 20, 2017

Table of Contents

Meeting Procedure …….…………………………………… Page 2

Meeting Agenda ..………..………………..………………… Page 3

Report Items …..…………………………………………… Page 4

Ratification Items ……………………………………………. Page 17

Discussion Items …………………………………………… Page 19

Appendices ………………………………………………… Page 69

1



PROCEDURE

1. Call Meeting to Order

2. Chairman’s Address

3. Report Items

4. Ratification Items

5. Discussion Items

6. Extraordinary Motions

7. Meeting Adjourned

2



AGENDA

Time: 2:00 p.m., Tuesday, June 20, 2017

Venue: 2F, International Ballroom, Sunworld Dynasty Hotel, Taipei

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

1. Report Items

(1) 2016 Business Report

(2) Audit Committee’ Review Report on the 2016 Financial Statements

(3) Distribution of 2016 Employees Compensation

(4) The Issuance of 2016 Unsecured Straight Corporate Bond

(5) Amendment of the Company’s “Code of Ethical Conduct for

Directors and Managers”

2. Ratification Items

(1) Please approve the 2016 Business Report and Financial Statements

as required by the Company Act.

(2) Please approve the Proposal for Distribution of 2016 Profits as

required by the Company Act.

3. Discussion Items

(1) Amendment to the Rules of Procedure for Shareholders’ Meeting of

the company submitted for discussion

(2) Amendment to the Procedures for Acquisition and Disposal of

Assets of the Company submitted for discussion and resolution.

(3) Amendment to the Procedures for Engaging in Derivatives

Transactions of the Company submitted for discussion and

resolution.

(4) Amendment to the Procedures for Loaning Funds to other Parties of

the Company submitted for discussion and resolution.

(5) Amendment to the Procedures for Providing Endorsements and

Guarantees to other Parties of the Company submitted for discussion

and resolution.

3

Report Items

1. About the Company’s results of operation for fiscal year 2016, please

refer to Business Report for further details (on page 6 of the

Handbook.) which is hereby reported for record.

2. The Company’s Audit Committee members reviewed the 2016

Business Report and Financial Statements and issued their Review

Report according to the applicable laws. Please refer to Audit

Committee’s Review Report (on page 13 of the Handbook.)

3. Distribution of 2016 Employees Compensation

The pre-tax profit prior to deducting employees compensation

distributable for 2016 is NT$51,566,797,960. The company has no

accumulated losses. Adopted by the Board Meeting on March 24, 2017,

0.1% of the profit is allocated as employees’ compensation in

accordance with Article 25 of the Articles of Incorporation. The total

allocated amount is NT$51,566,798, which shall be distributed in cash.

The above is hereby reported for record.

4. The Issuance of 2016 Unsecured Straight Corporate Bond

(1)To raise funds to pay off loans, the Board of Directors resolved on

Mar. 24, 2016 to issue unsecured ordinary bonds of

NT$5,000,000,000 in 2016. The company successfully issued the

bonds on Aug. 16, 2016 to satisfy its capital needs.

(2)The coupon rate of the aforementioned bonds issued is the fixed

annual rate of 0.68%. The period of issue is five years. Interest

shall be paid as simple interest rate every year. Half of the principal

shall be repaid upon the end of the fourth year and the fifth year,

respective from the date of issue. The above is hereby reported for

record.

5. Amendment of the Company’s “Code of Ethical Conduct for

Directors and Managers”

To comply with the regulations of the competent authority in charge

4

of securities affairs, the Company has established Audit Committee in

lieu of Supervisor. The Board of Directors approved the amendment

of the “Code of Ethical Conduct for Directors and Managers” of the

Company on June 23, 2016. Please refer to page 15 through page 17

of the Handbook for the amended “Code of Ethical Conduct for

Directors and Managers.”

5


1.2016 Business Report

The consolidated operating revenue of the company in 2016 was US$

8,529 million, a decrease of 8.2% from US$9,287 million in 2015. The

consolidated profit before taxes was US$1,668 million, an increase of

23.4% from US$1,352 million in the previous year.

In 2016, the growth of global trade and the capital market slowed

down. International economic institutions continuously decreased the

global economic outlook. Even the better U.S.’s economic growth was not

as strong as expected. Mainland China has actively carried out the

structural reform of its supply side but was slow to reduce excess capacity

and the economic growth continued to slow down, thus imposing a

significant impact on not only Asia’s economy but also the world’s

economy.

Facing such a harsh external economic environment, our company has

been striving to expand both domestic and foreign markets, increase sales

volume and capacity utilization, commit to whole production and be sold

out, develop differentiated and high-value products and improve the

percentage of those products, all of which have significantly contributed to

a growth in profits in plastic processing products and electronic materials.

Despite the effective market expansion of petrochemicals, falling oil prices

and the decreased intention to buy in the first three quarters of 2016

resulted in profit reduction compared to the same periods in 2015.

Nevertheless, increased investment return from Formosa Petrochemical

Corporation and the disposal of Inotera Memories, Inc. shares ultimately

allowed our company to gain 23.4% more profit before taxes than last

year.

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Our company mainly has four kinds of products: plastic processing

products, petrochemicals, electronic materials, and polyesters.

With regard to plastic processing products, most three-stage plastic

processing companies in Taiwan have moved their manufacturing plants to

mainland China and Southeast Asia and purchase cheaper raw materials

from local suppliers, which has significantly decreased the demand for

domestic two-stage plastic processing products. In addition to shifting part

of our traditional product lines to subsidiary companies overseas to supply

our clients with required materials, our parent company in Taiwan has

continued to actively implement overall industrial transformation, such as

accelerating the development of featured products with “new functions,

new materials, and eco-friendliness”, expanding new niche markets, and

increasing the sales proportions of differentiated and high-value products.

By adjusting the production and marketing combination in Taiwan,

mainland China, and the U.S. in accordance with overall market

characteristics, we aim to bring the advantages of transnational business

into full play and accelerate e-commerce and network marketing, as well

as expand the emerging markets with demand potential. Thanks to a

variety of efforts, we gained a more profit growth than in the previous

year.

Regarding petrochemical products, in response to the vertical

integration of the sixth naphtha cracker plant in Mailiao District, our

petrochemical products, including EG, BPA, 1,4BG, DEHP, PA, 2EH, and

EPOXY, were manufactured to support development in such downstream

industries as the polyester, electronics, and plastic processing industries.

By vertically integrating upstream and downstream products, we formed a

complete supply chain. In the first three quarters of 2016, due to low

global oil prices, the prices of petrochemical products also remained low.

Due to the decreased demand, high prices of ethylene, and partially

reduced production, EG generated decreasing profits. However, in the

fourth quarter, EG showed increasing profits due to the rising utilization

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rate of the polyester industry and the increasing demand for antifreeze, but

the overall annual profits still declined. BPA and DEHP were met with

operational difficulties, such as excessive supply in mainland China and

high prices of raw materials. However, sales performance has begun

improving since the company started promoting market expansion.

Although petrochemical products are intrinsically vulnerable to increasing

prices of raw materials, our company continues to be devoted to making

improvements through optimizing processes, fully grasping market

conditions, effectively adjusting production, sales and inventory,

expanding markets in regions besides mainland China, and diversifying

market risks to strive for the best operating performance.

With regard to polyester products, both sales of international brands

being not as expected and adjustments in inventory have contributed to

fierce competition in polyester market this year. Fortunately, stable sales of

differentiated and high-value products made from polyester staple fiber

and filament have contributed to getting profits this year. Our PET chips

and industrial film production experienced overcapacity and decreasing

prices, which resulted in great challenges on our business operations.

Facing such negative external factors, our company has been proactively

developing differentiated, functional, and eco-friendly products and

segmenting the market and expanding the sales fields through extensive

applications of polyester filament and film. In addition, by cooperating

with other brand names, we aim to create more business opportunities and

increase sales to maintain the stable profit.

Regarding electronic materials, due to changes in end use, the demand

for traditional personal computers and laptops has declined significantly,

while the sales volume of mobile communication devices like smartphones

and tablets has also slowed down. Cloud servers and automotive

electronics are the only products that have shown stable growth this year.

However, as new energy policies, like electric cars, have been promoted in

mainland China, Europe, and the U.S., a significant demand has been

8

placed on upstream lithium battery copper foil and related materials,

leading to the supply and demand tensions in the copper foil industry in

the second half of the year and further increasing the demand and prices of

the overall industry. Our company has adjusted our production and sales

strategies over time through vertical integration and transformation,

adapted to respond to market trends to promote high density

Interconnection CCL(HDI), high layer count CCL(HLC), automotive

electronics CCL, ultrathin glass fiber cloth, high frequency copper foil,

and thick copper foil to increase the sales proportion of high-value and

highly functional niche products. We strive to bring overall production

capacity into full play and adjust production and sales operations in

manufacturing plants on both sides of the strait, we have committed to

improving our operating revenue and profits in the future.

Nan Ya Printed Circuit Board Corporation, in which we have invested,

has continuously developed and manufactured a variety of products like

high-end PCB and IC substrates. In 2016, operations were not as good as

expected because the operating performance did not meet its target. Nan

Ya Printed Circuit Board Corporation is actively reviewing and improving

its capability for R&D and equipment manufacturing, material costs, and

employee performance in order to enhance its operating constitution. To

continuously meet clients’ requirements, Nan Ya Printed Circuit Board

Corporation has introduced advanced SiP board production techniques and

has developed various products designed for new uses like communication

networks and automotive electronics. In the future, the company expects to

strive for more orders for niche products, expand its new client base, and

strictly control costs in order to enhance its overall business

competitiveness.

Nanya Technology Corporation, another company in which we have

invested, is dedicated to developing, manufacturing, and selling DRAM

(dynamic random-access memory). To reduce operational risks and follow

market trends, Nanya Technology Corporation has focused on

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manufacturing consumer and mobile niche DRAM products in mainland

China and Asia-Pacific markets. In 2016, Nanya Technology Corporation

continued to improve its 30 nanometer technology production

effectiveness to increase output. Nanya Technology Corporation is also

introducing 20 nanometer manufacturing process technologies to further

reduce product costs and increase competitiveness. With a stable DRAM

industrial environment, Nanya Technology Corporation can maintain

certain profits, in addition to the sale of Inotera Memories, Inc. shares, to

contribute to a lot of investment returns for our company,.

In addition to selling Inotera Memories, Inc. shares to Micron

Technology, Inc., Nanya Technology Corporation also participated in

subscribing to Micron Technology, Inc. unlisted shares and became a

shareholder of Micron Technology, Inc. Furthermore, Nanya Technology

Corporation also obtained the option of its 10 nanometer technology and

products to be licensed. With years of stable partnership, Nanya

Technology Corporation will form a new strategic alliance with Micron

Technology, Inc. through this transaction, resulting in a win-win situation

and having a positive impact on both technology and industry

communication.

2.2017 Business Outlook

Looking toward 2017, complicated and uncertain factors have impeded

global economic recovery, including the significant overturn and change in

political and economic policies after the election of Trump as president of

the U.S. If such policies are put into practice, they will certainly have an

impact on global economic growth.

Mainland China will be undergoing industrial structural transformation

and upgrade for a long time as mainland China moves from an

investment-oriented country to a consumption-oriented country. However,

negative factors that affect the economy, such as low demands and

overcapacity, continue to remain, causing the economic growth to slow

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down year by year. Mainland China has continuously promoted

localization in its industry chains, which has resulted in severe threats and

increasing export restrictions on Taiwan, which relies heavily on mainland

Chinese markets. Furthermore, stagnant progresses in ECFA negotiation

and the participation in regional economic integration agreements have left

Taiwan out of the global value chain, causing long-term economic growth

to become stagnant or decline. Both the government and industries must

make extra efforts to avoid the adverse trend of the economic downturn.

Global economic changes have grown more unpredictable. An unstable

global environment and uncertain risks can severely impact economic

development. Faced with adversity and these challenges, our company will

persist the belief that “the truth shall be sought from facts” and that “where

there is a will, there is a way” in the pursuit of constant improvement and

management rationalization. We aim to recycle resources and create the

greatest economic benefits by promoting process optimization, increasing

production performance, and developing circular economic activities

through reduction and reuse. With the efforts made by the production, sales,

and technology departments, we continue to reinforce R&D, expand niche

product sales, and raise the sale proportions of differentiated and

high-value products. By making Taiwan the center of our business

operations, we have applied rich experience in diversification and vertical

integration, adjusted resources from domestic and foreign companies in

which we have invested in order to locate the best combination of

production and sales, increase our overall competitiveness, and achieve

more returns for our shareholders.

In our ongoing capital expenditure programs, in addition to increasing

capacity and effectiveness by improvements in process optimization, in

Taiwan, we have increased the number of production equipment for

high-value pepa synthetic paper as well as started the study on an

expansion plan for a new copper foil plant. In mainland China, high

value-added plastic leather production equipment has been set up for

volume production in Nantong. In the US, new EG plants are now under

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expansion. Among those newly increased factories, the new copper foil

factory is aimed for product differentiation by making copper foil for use

in the power and energy storage applications to make a more complete

product lineup. The EG plants in Texas is designed to utilize locally

available cheap resources such as natural gas as part of the largest

expansion plan in recent years. The new plant is scheduled to go into

production in three years, which is expected to contribute new operation

momentum to our company and increase our business growth.

Chairman: Chia Chau, Wu

President: Ming Jen, Tzou

In-charge Accountant: Li Ta, Pai

12


Audit Committee’ Review Report

The Board of Directors has prepared the Company’s 2016 Business Report,

Financial Statements and Proposal for Profits Distribution. The CPA firm

of KPMG was retained to audit Nan Ya Plastics Corporation’s Financial

Statements and has issued an audit report relating to Financial Statements.

The Business Report, Financial Statements, and Proposal for Profits

Distribution have been reviewed and determined to be correct and accurate

by the Audit Committee members of Nan Ya Plastics Corporation.

According to Article 14-4 of the Securities and Exchange Act and Article

219 of the Company Act, we hereby submit this report. Please be advised

accordingly.

Nan Ya Plastics Corporation

Chairman of the Audit Committee: Chih-Kang, Wang

March 24, 2017

13


Code of Ethical Conduct for Directors and Managers

Amended by Board of Directors on June 23, 2016

Chapter 1 General Principles

Article 1: The Code of Ethical Conduct (the “Code”) of Nan Ya Plastics Corporation (the “Company”) is established to stipulate rules for Directors and managers (including President, Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Chief Financial Officer, Chief Accounting Officer, and other persons authorized to manage affairs and sign documents on behalf of the Company) to abide by in terms of ethical conduct when engaging in business activities within the scope of their authority, to prevent unethical conduct or any conduct that may damage the interest of the Company and its shareholders.

Chapter 2 Content of the Code

Article 2: Directors and managers shall conduct corporate affairs on the basis of integrity, faithfulness, compliance with laws, fairness and righteousness and with an ethical, self-disciplined attitude.

Article 3: Directors and managers shall avoid any conflicts of interest arising when their personal interest intervenes, or is likely to intervene in the overall interest of the Company, including but not limited to unable to perform their duties in an objective and efficient manner, or taking advantage of their position in the Company to obtain improper benefits for either themselves or their spouse, parents, children, or relatives within the second degree of kinship. To prevent conflicts of interest, any matters pertaining to lending funds, providing guarantees, and major asset transactions between the Company and the above-mentioned persons or their affiliated enterprise thereof shall be submitted to the Board of Directors for its approval in advance. The corresponding purchase (or sale) of goods shall be dealt with the best interest of the Company.

Article 4: When the Company has an opportunity for profit, the Directors and managers have the responsibility to conserve

14

the reasonable and lawful benefits that can be obtained by the Company. The Directors and managers shall not obtain personal gain by using the Company property or information or taking advantage of their positions. Unless otherwise stipulated in the Company Act or Articles of Incorporation, they shall not engage in activities that compete with the business of the Company.

Article 5: The Directors and managers shall be bound by the obligation to maintain the confidentiality of any information regarding the Company itself or its suppliers and customers, except when authorized or required by law to disclose such information. Confidential information includes any undisclosed information that, if exploited by a competitor or disclosed, could result in damage to the Company or the suppliers and customers.

Article 6: The Directors and managers shall treat all suppliers and customers, competitors, and employees fairly, and may not obtain improper benefits through manipulation, nondisclosure, or misuse of the information learned by virtue of their positions, or through misrepresentation of important matters, or through other unfair trading practices.

Article 7: The Directors and managers shall have the responsibility to safeguard the Company’s assets, to use the assets for official business purpose properly, and to avoid any impact on the Company’s profitability resulting from theft, negligence in care or waste of the assets.

Article 8: The Directors and managers shall comply with applicable laws and the Company’s regulations.

Article 9: When a director or manager is found by employee to have committed a violation of a law, regulation or the Code, the employee shall report to the Audit Committee, their direct managers, president office personnel, chief internal auditor, or other appropriate personnel with sufficient evidence. Once the misconduct is confirmed, the Company will reward the above-mentioned employee in accordance with the Company's rules for employment management. The Company shall handle the above-mentioned report properly and confidentially. The Company also shall use its best efforts to ensure the safety of the conscientious reporter

15

and protect him/her from all kinds of reprisals. Article 10: Where a director or manager is verified to have violated the

Code, in addition to being subject to punishment under the Company's rules for employment management, the Company shall report the violation to the Board of Directors. The person involved in the violation shall be liable for civil, criminal or administrative responsibilities required by law and the Company shall disclose the violation on the Market Observation Post System (“MOPS”) immediately, including: the date of the violation, description of the violation, the provisions of the Code violated, and the disciplinary actions taken.

Chapter 3 Procedures for Exemption

Article 11: Where a Director or manager is to be exempted from the Code due to special circumstances, such exemption shall be approved by an majority vote at a meeting of the Board of Directors attended by over two-third of the Directors in person or through representation. The Company shall immediately disclose on the MOPS, including: date of exemption granted by the Board of Directors, any opposing or qualified opinion expressed by the independent directors, and the period of, reasons for, and the provisions of the Code behind the application of the exemption for shareholders to evaluate the appropriateness and to safeguard the interests of the Company.

Chapter 4 Method of Information Disclosure

Article 12: The Company shall disclose the Code on the Company’s website, annual reports, prospectuses, and the MOPS. Any amendment is subject to the same procedure.

Chapter 5 Additional Provision

Article 13: The Code shall be implemented after approval by the Board of Directors and shall be reported to a shareholders meeting. Any amendment is subject to the same procedure.

16

Ratification Items Proposal 1

Proposal: For approval of the 2016 Business Report and Financial

Statements as required by the Company Act.

Proposed by the Board of Directors

Explanation:

1. The preparation of the Company’s 2016 Consolidated and Individual

Financial Statements were completed and the same were approved by

the Board Meeting on March 24, 2017 ,and audited by independent

auditors, Ms. Hsin-Yi, Kuo and Mr. Chi-Lung, Yu, of KPMG. The

aforesaid Financial Statements together with the Business Report were

reviewed by the Audit Committee, which the Audit Committee’ Review

Report is presented.

2. For the aforementioned Business Report, please refer to page 6 through

page 12 of the Meeting Handbook. As for the Financial Statements,

please refer to page 60 through page 67 of the Handbook. Please

approve the Business Report and the Financial Statements.

Resolution:

17

Ratification Items Proposal 2

Proposal: For Approval of the Proposal for Distribution of 2016 Profits as

required by the Company Act.


Attachment:

Please refer to page 68 of the Handbook for the Statement of Profits

Distribution, which has been reviewed by the Audit Committee members

of Nan Ya Plastics Corporation and approved by the Board of Directors.

Resolution:

18

Discussion Items Proposal 1 Proposal: Amendment to the Rules of Procedure for Shareholders’

Meeting of the company submitted for discussion.


Explanation:

To comply with the regulations of the competent authority in charge of

securities affairs, the Company has established Audit Committee in lieu

of Supervisor. As such, the Company’s “Rules of Procedure for

Shareholders’ Meeting of the Company” shall be amended accordingly.

The corresponding comparison table for the articles before and after the

amendment is attached. Please discuss and resolve.

Article Article before Amendment Article after Amendment

Article 3 (Above Omitted)

To convene a shareholders’

meeting, the Company shall

prepare a meeting handbook.

The Company shall prepare

electronic versions of a

shareholders’ meeting notice

and proxy forms, and causes

of and explanatory materials

relating to all proposals,

including proposals for

ratification, matters for

deliberation, or the election or

dismissal of directors or

supervisors, and upload them

to the MOPS no later than 30

days prior to the scheduled

Annual Shareholders’

Meeting date or no later than

15 days prior to the scheduled

Special Shareholders’

(Above Omitted)

To convene a shareholders’

meeting, the Company shall

prepare a meeting handbook.



shareholders’ meeting notice

and proxy forms, and causes

of and explanatory materials

relating to all proposals,

including proposals for

ratification, matters for

deliberation, or the election or

dismissal of directors, and

upload them to the MOPS no

later than 30 days prior to the

scheduled Annual

Shareholders’ Meeting date or

no later than 15 days prior to

the scheduled Special

Shareholders’ Meeting date.

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Meeting date. The Company

shall prepare electronic

versions of a shareholders’

meeting handbook and

supplemental meeting

materials and upload them to

the MOPS no later than 21

days prior to the scheduled

Annual Shareholders’

Meeting date or no later than

15 days prior to the scheduled

Special Shareholders’

Meeting date. In addition, the

Company shall also have

prepared a shareholders’

meeting handbook and

supplemental meeting

materials and made them

available for review by

shareholders at any time no


scheduled Shareholders’

Meeting date. The Meeting

Agenda and supplemental

materials shall also be

displayed at the Company and

at the professional

shareholder services agent

engaged by the Company as

well as being distributed

on-site at the meeting place.

The reasons for convening a

shareholders’ meeting shall



shareholders’ meeting

handbook and supplemental

meeting materials and upload

them to the MOPS no later

than 21 days prior to the

scheduled Annual

Shareholders’ Meeting date or

no later than 15 days prior to

the scheduled Special

Shareholders’ Meeting date.

In addition, the Company

shall also have prepared a

shareholders’ meeting

handbook and supplemental

meeting materials and made

them available for review by

shareholders at any time no


scheduled Shareholders’

Meeting date. The Meeting

Agenda and supplemental

materials shall also be

displayed the Company and at

the professional shareholder

services agent engaged by the

Company as well as being

distributed on-site at the

meeting place.

The reasons for convening a


be specified in the meeting

20

be specified in the meeting

notice and public

announcement. With the

consent of the addressee, the

meeting notice may be given

in electronic form.

Election or dismissal of

directors or supervisors,

amendments to the Articles of

Incorporation, the dissolution,

merger, or demerger of the

corporation, or any matter

under paragraph 1 of Article

185 of the Company Act or

Articles 26-1 and 43-6 of the

Securities and Exchange Act,

Articles 56-1 and 60-2 of

Regulations Governing the

Offering and Issuance of

Securities by Securities

Issuers shall be set out in the

causes in the notice to

convene the shareholders’

meeting. None of the above

matters may be raised by an

extraordinary motion.

(Below Omitted)

notice and public

announcement. With the

consent of the addressee, the

meeting notice may be given

in electronic form.

Election or dismissal of

directors, amendments to the

Articles of Incorporation, the

dissolution, merger, or

demerger of the corporation,

or any matter under paragraph

1 of Article 185 of the

Company Act or Articles

26-1 and 43-6 of the

Securities and Exchange Act,

Articles 56-1 and 60-2 of

Regulations Governing the

Offering and Issuance of

Securities by Securities

Issuers shall be set out in the

causes in the notice to

convene the shareholders’

meeting. None of the above

matters may be raised by an

extraordinary motion.

(Below Omitted)

Article 6 (Above Omitted)

The Company shall furnish

attending shareholders with

the meeting agenda book,

annual report, attendance

card, speaker's slips, voting

(Above Omitted)

The Company shall furnish

attending shareholders with

the meeting agenda book,

annual report, attendance

card, speaker's slips, voting

21

slips, and other meeting

materials. Where there is an

election of directors or

supervisors, pre-printed

ballots shall also be furnished.

(Below Omitted)

slips, and other meeting

materials. Where there is an

election of directors,

pre-printed ballots shall also

be furnished.

(Below Omitted)

Article 7 (Above omitted)

It is advisable that

shareholders’ meetings

convened by the Board of

Directors be chaired by the

Chairman, that a majority of

the Directors and at least one

supervisor attend in person,

and that at least one member

of each functional committee

attend as representative.

Attendance details should be

recorded in the Shareholders

Meeting minutes. If a

shareholders’ meeting is

convened by a party having

the convening right but other

than the Board of Directors,

the convening party shall

chair the meeting. When there

are two or more such

convening parties, they shall

mutually select a chair from

among themselves.

(Below omitted)

(Above omitted)

It is advisable that

shareholders’ meetings

convened by the Board of

Directors be chaired by the

Chairman, that a majority of

the Directors attend in person,

and that at least one member

of each functional committee

attend as representative.

Attendance details should be

recorded in the Shareholders

Meeting minutes. If a

shareholders’ meeting is

convened by a party having

the convening right but other

than the Board of Directors,

the convening party shall

chair the meeting. When there

are two or more such

convening parties, they shall

mutually select a chair from

among themselves.

(Below omitted)

Article 14 The election of directors or

supervisors at a shareholders’

The election of directors at a


22

meeting shall be held in

accordance with the

applicable election and

appointment rules adopted by

the Company, and the voting

results shall be announced

on-site immediately,

including the names of those

elected as directors and

supervisors and the numbers

of votes with which they were

elected.

(Below Omitted)

be held in accordance with

the applicable election and

appointment rules adopted by

the Company, and the voting

results shall be announced

on-site immediately,

including the names of those

elected as directors and the

numbers of votes with which

they were elected.

(Below Omitted)

Resolution:

23

Discussion Items Proposal 2

Proposal: Amendment to the Procedures for Acquisition and Disposal of

Assets of the Company submitted for discussion and resolution.


Explanation:


securities affairs, the Company has established Audit Committee in lieu

of Supervisor, and to comply with the requirements provided in the

order Jin-Guan-Zheng-Fa-Zi No. 1060001296 dated February 9, 2017

by the Financial Supervisory Commission, certain articles of the

Procedures for Acquisition and Disposal of Assets provided by the

company have been amended. The comparison table for articles before

and after amendment is hereby attached. Please determine whether the

amendments are reasonable.


Article 6 Where an acquisition or

disposition of assets of the

Company shall be approved

by the Board of Directors

according to the Procedures or

other relevant laws, if any

director expresses dissent and

such dissent is recorded in the

meeting minutes or made by a

written statement, the

Company shall submit the

dissenting opinions to each

supervisor. Where the

Company has established the

position of independent

director, the independent

directors' opinions specifically

Where an acquisition or

disposition of assets of the

Company shall be approved

by the Board of Directors

according to the Procedures

or other relevant laws, the

independent directors'

opinions specifically

expressing dissent or

reservations about any matter

shall be included in the

minutes of the Board of

Directors meeting.

A major asset transaction or a

derivatives transaction shall

be approved by more than

half of all audit committee

24





Directors meeting.

Where an audit committee has

been established, a major

asset transaction or a

derivatives transaction shall

be approved by more than half

of all audit committee

members and submitted to the

Board of Directors for a

resolution. If approval of

more than half of all audit

committee members is not

obtained, the procedures may

be implemented if approved

by more than two-thirds of all

Directors, and the resolution

of the Audit Committee shall

be recorded in the minutes of

the Board of Directors

meeting.

members and submitted to the


resolution. If approval of


committee members is not

obtained, the procedures may

be implemented if approved

by more than two-thirds of all





meeting.

Article 7 In acquiring or disposing of

real property or mechanical

equipment where the

transaction amount reaches 20

percent of the company's

paid-in capital or NT$300

million or more, the

Company, unless transacting

with a government agency,

In acquiring or disposing of

real property or equipment

where the transaction amount

reaches 20 percent of the

company's paid-in capital or

NT$300 million or more, the


with a government institution,

engaging others to build on its

25

engaging others to build on its

own land, engaging others to

build on rented land, or

acquiring or disposing of

equipment for business use,

shall obtain an appraisal

report prior to the date of

occurrence of the event from a

professional appraiser and

shall further comply with the

following provisions:

(Below Omitted)

own land, engaging others to

build on rented land, or


equipment for business use,

shall obtain an appraisal

report prior to the date of

occurrence of the event from

a professional appraiser and

shall further comply with the

following provisions:

(Below Omitted)

Article

8-1

(Added)

In acquiring or disposing of

membership cards or

intangible assets where the


percent or more of the

company's paid-in capital or

NT$300 million or more, the


with a government institution,

shall obtain a CPA’s opinion

on the reasonableness of the

transaction price prior to the

date of occurrence of the

event. The CPA shall comply

with the provisions of

Statement of Auditing

Standards No. 20 published

by the Accounting Research

and Development Foundation.

Article

8-2

The calculation of the

transaction amounts referred



26

to in the preceding two

articles shall be done in

accordance with paragraph 2

of Article 26, herein, and

"within the preceding year" as

used herein refers to the year

preceding the date of

occurrence of the current

transaction. Items for which

an appraisal report from a

professional appraiser or a

CPA's opinion has been

obtained need not be counted

toward the transaction

amount.

to in the preceding three

articles shall be done in

accordance with paragraph 2

of Article 26, herein, and

"within the preceding year"

as used herein refers to the

year preceding the date of


transaction. Items for which

an appraisal report from a


CPA's opinion has been

obtained need not be counted

toward the transaction

amount.

Article 12 When the Company intends to

acquire or dispose of real

property from or to a related

party, or when it intends to

acquire or dispose of assets

other than real property from

or to a related party and the


percent or more of paid-in

capital, 10 percent or more of

the Company's total assets, or

NT$300 million or more,

except in trading of

government bonds or bonds

under repurchase and resale

agreements, or subscription or

redemption of domestic

money market funds, the

When the Company intends to

acquire or dispose of real

property from or to a related

party, or when it intends to

acquire or dispose of assets

other than real property from

or to a related party and the



capital, 10 percent or more of

the Company's total assets, or

NT$300 million or more,

except in trading of



agreements, or subscription or

repurchase of money market

funds issued by domestic

27

Company may not proceed to

enter into a transaction

contract or make a payment

until the following matters

have been approved by the

Board of Directors and

recognized by the supervisors:

1.The purpose, necessity and

anticipated 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 property

from a related party,

information regarding

appraisal of the

reasonableness of the

preliminary transaction

terms in accordance with

Article 13 through 15.

4.The date and price at which

the related party originally

acquired the real property,

the original trading

counterparty, and that

trading counterparty's

relationship to the

Company and the related

party.

5.Monthly cash flow forecasts

securities investment trust

enterprises, 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 of Directors :

1. The purpose, necessity and

anticipated benefit of the


assets.

2. The reason for choosing the

related party as a trading

counterparty.

3. With respect to the

acquisition of real property

from a related party,

information regarding

appraisal of the

reasonableness of the

preliminary transaction

terms in accordance with

Article 13 through 15.

4. The date and price at which

the related party originally

acquired the real property,

the original trading

counterparty, and that

trading counterparty's

relationship to the

Company and the related

party.

5. Monthly cash flow

28

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


CPA's opinion obtained in

compliance with the

preceding article.

7.Restrictive covenants and

other important stipulations

associated with the

transaction.



to in the preceding paragraph

shall be made in accordance

with paragraph 2 of Article 26

herein, and "within the

preceding year" as used herein

refers to the year preceding

the date of occurrence of the

current transaction. Items that

have been approved by the

Board of Directors and

recognized by the Supervisors

need not be counted toward

the transaction amount.

With respect to the acquisition

or disposal of business-use

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


CPA's opinion obtained in

compliance with the

preceding article.

7. Restrictive covenants and

other important stipulations

associated with the

transaction.



to in the preceding paragraph

shall be made in accordance


herein, and "within the

preceding year" as used

herein refers to the year

preceding the date of


transaction. Items that have

been approved by the Board

of Directors need not be

counted toward the

transaction amount.

With respect to the

29

equipment between the

Company and its parent or

subsidiaries, the Company's

Board of Directors may

pursuant to Article 10

delegate the Chairman to

decide such matters when the

transaction is within a certain

amount and have the

decisions subsequently

proposed to and ratified by the

next Board of Directors

meeting.

Where the position of

independent director has been

established, when a matter is

proposed for discussion by the

Board of Directors pursuant to

paragraph 1 of this Article,

the independent Directors'






Directors meeting.


been established, the matters

for which paragraph 1

requires approved by the

Supervisors shall first be

approved by more than half of

all audit committee members


business-use equipment

between the Company and its

parent or subsidiaries, the

Company's Board of

Directors may pursuant to

Article 10 delegate the

Chairman to decide such

matters when the transaction

is within a certain amount and

have the decisions

subsequently proposed to and

ratified by the next Board of

Directors meeting.

When a matter is proposed for

discussion by the Board of

Directors pursuant to

paragraph 1 of this Article,

the independent Directors'






Directors meeting.

The matters for which

paragraph 1 requires

submitted to the Board of

Directors for a resolution

shall first be approved by


committee members. If the

approval by more than half of

30

and submitted to the Board of

Directors for a resolution. If

the approval by more than


members is not obtained, the

aforesaid matter may be

implemented if approved by

more than two-thirds of all





meeting.


is not obtained, the aforesaid

matter may be implemented if

approved by more than

two-thirds of all Directors,

and the resolution of the

Audit Committee shall be

recorded in the minutes of the

Board of Directors meeting.

Article 16 Where the Company acquires

real property from a related

party and the results of

appraisals conducted in

accordance with Article 13

through 15 are uniformly

lower than the transaction

price, the following steps shall

be taken:

1. A special earnings reserve

shall be set aside in

accordance with paragraph


Securities and Exchange

Act against the difference

between the real property

transaction price and the

appraised cost, and such

difference may not be

distributed or used for

Where the Company acquires


party and the results of

appraisals conducted in


through 15 are uniformly

lower than the transaction

price, the following steps

shall be taken:

1. A special earnings reserve

shall be set aside in

accordance with paragraph


Securities and Exchange

Act against the difference

between the real property

transaction price and the

appraised cost, and such

difference may not be

distributed or used for

31

capital increase by issuance

of new shares. Where the

Company uses the equity

method to account for its

investment in another

company, then the special

earnings reserve called for

under paragraph 1 of

Article 41 of the Securities

and Exchange Act shall be

set aside pro rata in a

proportion consistent with

the share of public

company's equity stake in

the other company.

2. Supervisors shall supervise

the Company’s execution

of in accordance with the

Article 218 of the Company

Act.

3. Actions taken pursuant to

subparagraph 1 and

subparagraph 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 having set

aside a special earnings

reserve under the preceding

paragraph may not utilize the

capital increase by issuance

of new shares. Where the

Company uses the equity

method to account for its

investment in another

company, then the special

earnings reserve called for

under paragraph 1 of

Article 41 of the Securities

and Exchange Act shall be

set aside pro rata in a

proportion consistent with

the share of public

company's equity stake in

the other company.

2. Audit Committee shall

supervise the Company’s

execution of the aforesaid

matter.

3. Actions taken pursuant to

subparagraph 1 and

subparagraph 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 having set

aside a special earnings

reserve under the preceding

paragraph may not utilize the

special earnings reserve until

32

special earnings 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

securities competent authority

has given its consent.

When the Company obtains


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.

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 securities

competent authority has given

its consent.

When the Company obtains


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.

Article 18 The Company that conducts a

merger, demerger, acquisition,

or assignment of shares shall,

prior to convening the Board

of Directors to resolve on the

matter, engage a CPA,

attorney, or securities

underwriter to give an opinion


share exchange ratio,

acquisition price, or

The Company that conducts a

merger, demerger, acquisition,

or assignment of shares shall,

prior to convening the Board

of Directors to resolve on the

matter, engage a CPA,

attorney, or securities

underwriter to give an opinion


share exchange ratio,

acquisition price, or

33

distribution of cash or other

property to shareholders, and

propose the opinion to the

Board of Directors for

deliberation and approval.

distribution of cash or other

property to shareholders, and

propose the opinion to the

Board of Directors for

deliberation and approval.

However, the requirement of

obtaining an aforesaid

opinion on reasonableness

issued by an expert may be

exempted in the case of a

merger by the company of a

subsidiary in which it directly

or indirectly holds 100

percent of the issued shares or

authorized capital, and in the

case of a merger between

subsidiaries in which the

Company directly or

indirectly holds 100 percent

of the respective subsidiaries’

issued shares or authorized

capital.

Article 26 Under any of the following

circumstances, the Company


assets shall publicly

announce and report the

relevant information on the

securities competent

authority's designated website

in the appropriate format as

prescribed by regulations

within 2 days commencing

Under any of the following

circumstances, the Company


assets shall publicly

announce and report the

relevant information on the

securities competent

authority's designated

website in the appropriate

format as prescribed by

regulations within 2 days

34

immediately from the date of

occurrence of the event:

1. Acquisition or disposal of

real property from or to a

related party, or acquisition

or disposal of assets other

than real property from or

to a related party where the

transaction amount reaches

20 percent or more of

paid-in capital, 10 percent

or more of the Company's

total assets, or NT$300

million 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, demerger,

acquisition, or assignment of

shares.

3.Losses from derivatives

trading reaching the limits

on aggregate losses or losses

on individual contracts set

out in the procedures

adopted by the Company.

4.Where an asset

transaction other than any

of those referred to in the

commencing immediately

from the date of occurrence

of the event:

1.Acquisition or disposal

of real property from or to a

related party, or acquisition

or disposal of assets other

than real property from or to

a related party where the



paid-in capital, 10 percent or

more of the Company's total

assets, or NT$300 million or

more; provided, this shall

not apply to trading of



agreements, or subscription

or repurchase of money

market funds issued by

domestic securities

investment trust enterprises.

2.Merger, demerger,

acquisition, or assignment of

shares.

3.Losses from derivatives

trading reaching the limits

on aggregate losses or losses

on individual contracts set

out in the procedures

adopted by the Company.

4.Where the type of asset

35

preceding three

subparagraphs, a disposal

of receivables by a

financial institution, or an

investment in the Mainland

China area reaches 20


capital or NT$300 million;

provided, this shall not

apply to the following

circumstances:

(1) Trading of government

bonds.

(2) Trading of bonds under

repurchase/resale

agreements, or

subscription or

redemption of domestic

money market funds.

(3)Where the type of asset

acquired or disposed is

equipment/machinery for

business use, the trading

counterparty is not a related

party and the transaction

amount is less than NT$500

million.

(4) Where land is acquired

under an arrangement on

engaging others to build on

the company's own land,

joint construction and

allocation of housing units,

acquired or disposed is

equipment/machinery for

business use, the trading

counterparty is not a related

party, and the transaction

amount is more than NT$1

billion.

5.Where land is acquired

under an arrangement on


the company's own land,


rented land, joint

construction and allocation

of housing units, joint

construction and allocation

of ownership percentages, or


separate sale, and the

amount the Company

expects to invest in the

transaction is more than

NT$500 million.

6. An asset transaction

other than any of those

referred to in the preceding

five subparagraphs, a

disposal of receivables by a

financial institution, or an

investment in the mainland

China area where the



36


allocation of ownership

percentages, or joint

construction and separate

sale, and the amount the

company expects to invest

in the transaction is less

than NT$500 million.

(Below Omitted)

paid-in capital or NT$300

million or more, provided

this shall not apply to the

following circumstances:

(1)Trading of

government bonds.

(2)Trading of bonds

under repurchase/resale

agreements or the

subscription or

repurchase of money

market funds issued by

domestic securities

investment trust

enterprises.

(Below Omitted)

Article 27 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.

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 from the date

when is the Company

becomes aware of the error or

omission.

Article 33 If there is an audit committee

established by the Company,

the provision of Article 6,

Article 12 and Article 34 of

(Deleted)

37

this Procedures regarding the

Supervisor shall apply mutatis

mutandis to the audit

committee; in addition,

subparagraph 2 of paragraph 1

of Article16 of this

Procedures shall apply mutatis

mutandis to the Independent

Directors of the audit

committee.

Article 35 After the Procedures are

approved by the Board of

Directors, the Procedures

shall be submitted to each

supervisor and the

Shareholders Meeting for

approval before its

implementation. Any

amendment is subject to the

same procedure. Where any


it is contained in the minutes

or a written statement, the











After the Procedures are



shall be submitted to the


approval before its

implementation. Any


same procedure. The







Directors meeting.








38


Directors meeting.


been established, the adoption

or amendment of this

Procedures shall be approved

by more than half of all audit

committee members and



approval of more than half of


is not obtained, the procedures

may be implemented if



and the resolution of the Audit

Committee shall be recorded

in the minutes of the Board of

Directors meeting.



is not obtained, the

procedures may be







meeting.

Resolution:

39


Proposal: Amendment to the Procedures for Engaging in Derivatives

Transactions of the Company submitted for discussion and resolution.


Explanation:


securities affairs and in response to the Company has established Audit

Committee in lieu of Supervisor, the Company’s “Procedures for

Engaging in Derivatives Transactions of the Company” shall be

amended accordingly. The corresponding comparison table for the

articles before and after the amendment is attached. Please discuss and

resolve.


Article 5 The total contract amount of

derivatives transactions of the

Company shall not exceed

50% of the Company’s net

worth, and the maximum loss

limit is 10% of the contract

amount for all contracts in

aggregate or for any individual

contract. The content of

individual derivatives contract

shall be approved by high-level

manager(s), who is authorized

by the Board of Directors.

The total contract amount of

derivatives transactions of

the Company shall not

exceed 50% of the

Company’s net worth, and

the maximum loss limit is

10% of the contract amount

for all contracts in aggregate

or for any individual

contract. The content of

individual derivatives

contract shall be approved by

high-level manager(s), who

is authorized by the Board of

Directors.

Major derivatives

transactions of the Company

requires approved by more

than half of all audit

40














meeting.

Article 9 When the Company’s

subsidiaries are not domestic

public companies and are

participating in derivatives

transactions, the Company

shall follow the requirements

of Article 8.

When the Company’s

subsidiaries are not domestic

public companies and are

participating in derivatives

transactions, the Company

shall follow the requirements

of Article 8 hereof to report

and make public

announcements on behalf of

its subsidiaries.

Article 18 The derivatives trading

positions of the Company shall

be evaluated at least once a

week by the in-charge

department, but the hedging

transactions made for business

purposes shall be evaluated at

least twice a month. The

manager of the in-charge

The derivatives trading

positions of the Company

shall be evaluated at least

once a week by the in-charge

department, but the hedging

transactions made for

business purposes shall be

evaluated at least twice a

month. The manager of the

41

department shall pay attention

to the risk control and

monitoring of derivatives

transactions from time to time,

and periodically supervise and

evaluate the derivatives

transactions to check whether

they are conducted in

accordance with the related

procedures formulated by the

Company hereof and whether

the attendant risk of these

transactions is within the

capability of the Company. The

foresaid evaluation reports

shall be given to a high-level

manager(s) authorized by the

Board of Directors for review.

If there is any abnormal

situation highlighted in the

market evaluation reports (e.g.

the holding position has

reached the maximum loss

limit), the Company shall

immediately take necessary

measures to deal with the

situation and report to the

Board of Directors. Where the


positions of independent

director, there shall be

independent directors attending

the Board of Directors meeting

in-charge department shall

pay attention to the risk

control and monitoring of

derivatives transactions from

time to time, and periodically

supervise and evaluate the

derivatives transactions to

check whether they are

conducted in accordance

with the related procedures

formulated by the Company

hereof and whether the

attendant risk of these

transactions is within the

capability of the Company.

The foresaid evaluation

reports shall be given to a

high-level manager(s)

authorized by the Board of

Directors for review. If there

is any abnormal situation

highlighted in the market

evaluation reports (e.g. the

holding position has reached

the maximum loss limit), the

Company shall immediately

take necessary measures to

deal with the situation and

report to the Board of

Directors. There shall be

independent directors

attending the Board of

Directors meeting and

42

and expressing their opinions. expressing their opinions.

Article 19 The Company shall establish a

log book to record all its

derivatives transaction

information, including types

and amounts of derivatives

transactions, and matters to be

evaluated cautiously in


hereof. The Company's internal

audit personnel shall be in

charge of periodically

assessing the appropriateness

of the internal control

regarding the derivatives

transactions, and take the

responsibility of auditing the

trading department's

compliance with the

Procedures, analyzing the

transaction cycle, preparing the

monthly auditing report and

submitting the auditing report

to the high-level management

personnel authorized by the

Board of Directors. If any

material violation is

discovered, all supervisors

shall be notified in writing and

the Company should,

depending on the status of such

material violation, penalize the

relevant personnel in

The Company shall establish

a log book to record all its

derivatives transaction

information, including types

and amounts of derivatives

transactions, and matters to

be evaluated cautiously in


hereof. The Company's

internal audit personnel shall

be in charge of periodically

assessing the appropriateness

of the internal control

regarding the derivatives

transactions, and take the

responsibility of auditing the

trading department's

compliance with the

Procedures, analyzing the

transaction cycle, preparing

the monthly auditing report

and submitting the auditing

report to the high-level

management personnel

authorized by the Board of

Directors. If any material

violation is discovered, the


notified in writing and the

Company should, depending

on the status of such material

violation, penalize the

43

accordance with the Human

Resources Management

Policies.

relevant personnel in

accordance with the Human

Resources Management

Policies.



Directors, the Procedures shall

be submitted to each

supervisor and the


approval before its

implementation. Any


same procedure. Where any


it is contained in the minutes or

a written statement, the








expressing assent or dissent

and their reasons for dissent



Directors meeting.






approval before its

implementation. Any


same procedure.

The independent directors'






Directors meeting.








approval by more than half

of all audit committee





44





meeting.

Resolution:

45


Proposal: Amendment to the Procedures for Loaning Funds to other

Parties of the Company submitted for discussion and resolution.


Explanation:




Loaning Funds to other Parties of the Company” shall be amended

accordingly. The corresponding comparison table for the articles before

and after the amendment is attached. Please discuss and resolve.


Article 3 When making loans to the

company/firm having business

relationship with the Company,

the Company shall comply


hereof. As to loaning funds to a

company/firm, which has no

business relationship with the

Company, for short term

financing needs, the borrower

shall be:

1. Affiliates of the Company

which a short-term financing

facility is necessary to meet

their business needs.

2. Companies/firms other than

affiliates of the Company

which need short term

financing for materials

purchase, working capital,

When making loans to the

company/firm having


Company, the Company shall

comply with subparagraph 2

of Article 4 hereof. As to

loaning funds to a

company/firm, which has no


Company, for short term

financing needs, the borrower

shall be:

1. Affiliates of the Company

which a short-term

financing facility is

necessary to meet their

business needs.

2. Companies/firms other

than affiliates of the

Company which need short

46

or general business needs. term financing for

materials purchase,

working capital, or general

business needs.

Article 5 Before the Company makes

loans to a funds borrower, the

Company shall do an

investigation and assessment

of the following aspects: the

purposes of the borrowing, the

terms of the security for the

borrowing, and the impact on

the Company’s operational

risks, financial conditions and

shareholders’ rights and

interests. The limit or

maximum amount of lending,

tenor and interest calculation

terms shall be determined

based on these findings, and

then submitted to the Board of

Directors for approval.

Before the Company makes

loans to a funds borrower, the

Company shall do an

investigation and assessment

of the following aspects: the

purposes of the borrowing,

the terms of the security for

the borrowing, and the impact

on the Company’s operational

risks, financial conditions and

shareholders’ rights and

interests. The limit or

maximum amount of lending,

tenor and interest calculation

terms shall be determined

based on these findings, and

then submitted to the Board

of Directors for approval.







Directors meeting.

When the Company making

major loans to others, it



47














meeting.

Article 10 The Company's internal

auditors shall audit the

Procedures for Loaning Funds

to other Parties and the

implementation thereof no less

frequently than quarterly and

prepare written records

accordingly. During the

auditing, the internal auditor

shall immediately correct

violation(s) upon finding any

violation. If any material

violation is found, in addition

to notifying all the Supervisors

promptly in writing, the

personnel who violate the

Procedures shall be penalized

in accordance with the related

rules of the Company.

The Company's internal


Procedures for Loaning Funds

to other Parties and the

implementation thereof no

less frequently than quarterly

and prepare written records

accordingly. During the

auditing, the internal auditor


violation(s) upon finding any

violation. If any material


to notifying the Audit

Committee promptly in

writing, the personnel who

violate the Procedures shall

be penalized in accordance

with the related rules of the

48

Company.

Article 11 If, as a result of a change in

circumstances, an entity for

which an

endorsement/guarantee is made

does not meet the requirements

of the Procedures or the loan

balance exceeds the limit, the

Company shall adopt

rectification plans and submit

the rectification plans to the

Board of Directors for its

approval and then to all the

supervisors, and shall complete

the rectification according to

the timeframe set out in the

plan.

If, as a result of a change in

circumstances, an entity for

which an

endorsement/guarantee is

made does not meet the

requirements of the

Procedures or the loan

balance exceeds the limit, the

Company shall adopt



Audit Committee for its

approval and then to the


resolution, and shall complete



plan.



Directors, the Procedures shall

be submitted to each

supervisor and the


approval before its

implementation. Any


same procedures. Where any


it is contained in the minutes or

a written statement, the







approval before its

implementation. Any


same procedures. The






49


supervisor and for discussion

by the Shareholders' Meeting.

Where the Company has

established the position of

independent director, the

independent directors' opinions

specifically expressing assent

or dissent and their reasons for

dissent shall be included in the


Directors' meeting.


Directors meeting.


















Resolution:

50


Proposal: Amendment to the Procedures for Providing Endorsements and

Guarantees to other Parties of the Company submitted for discussion

and resolution.


Explanation:




Providing Endorsements and Guarantees to other Parties of the

Company” shall be amended accordingly. The corresponding

comparison table for the articles before and after the amendment is

attached. Please discuss and resolve.


Article 3 The Company may make

endorsements/guarantees for

the following companies：

1. A company with which it

does business.

2. A company in which the

Company directly and

indirectly holds more than

50 percent of the voting

shares.

3. A company that directly

and indirectly holds more

than 50 percent of the

voting shares in the

Company.

4. Companies in which the

parent company holds,

directly or indirectly, 90%

The Company may make


the following companies：

1. A company with which it

does business.

2. A company in which the

Company directly and

indirectly holds more than

50 percent of the voting

shares.

3. A company that directly

and indirectly holds more

than 50 percent of the

voting shares in the

Company.

4. Where the Company

fulfills its contractual

obligations by providing

51

or more of the voting

shares, and the amount of

endorsements/guarantees

may not exceed 10% of the

net worth of the parent

company, provided that this

restriction shall not apply

to endorsements/guarantees

made between companies

in which the parent

company holds, directly or

indirectly, 100% of the

voting shares.

5. Where the Company

fulfills its contractual

obligations by providing

mutual


for another company in the

same industry or for joint

builders for purposes of

undertaking a construction

project.

6. Where all capital

contributing shareholders

make endorsements/

guarantees for their jointly

invested company in

proportion to their

shareholding percentages.

Capital contribution

referred to in the paragraph

shall mean capital

mutual


for another company in the

same industry or for joint

builders for purposes of

undertaking a construction

project.

5. Where all capital

contributing shareholders

make endorsements/

guarantees for their jointly

invested company in

proportion to their

shareholding percentages.

Capital contribution

referred to in the paragraph

shall mean capital

contribution directly by the

Company, or through a

subsidiary in which the

Company holds 100% of

the voting shares.

Companies in which the

Company holds, directly or

indirectly, 90% or more of the

voting shares may make


each other, and the amount of

endorsements/guarantees may

not exceed 10% of the net

worth of the Company,

provided that this restriction

shall not apply to

52

contribution directly by the

Company, or through a

subsidiary in which the

Company holds 100% of

the voting shares.


made between companies in

which the Company holds,

directly or indirectly, 100% of

the voting shares.

Article 4 The ceiling on the total

outstanding amount of

making endorsements or

guarantees of the Company or

the Company and its

subsidiaries:

1. The aggregate amount of


guarantees shall not exceed

1.3 times of the net value

of the Company.

2. For any one endorsee or

guarantee, the amount shall

not exceed 50% of the

aggregate amount above.

3. The total outstanding

amount of endorsement to

each of the companies,

which has a business

relationship with the

Company, shall not exceed

the total transaction amount

between the two parties.

The foresaid “total

transaction amount” shall

be the total purchasing or

selling amount or contract

price, whichever is highest,

The ceiling on the total

outstanding amount of


guarantees of the Company or

the Company and its

subsidiaries:

1. The aggregate amount of


guarantees shall not exceed

1.3 times of the net value

of the Company.

2. For any one endorsee or

guarantee, the amount shall

not exceed 50% of the

aggregate amount above.

3. The total outstanding

amount of endorsement to

each of the companies,

which has a business

relationship with the

Company, shall not exceed

the total transaction amount

between the two parties.

The foresaid “total

transaction amount” shall

be the total purchasing or

selling amount or contract

price, whichever is highest,

53

provided that the highest

amount shall in no event

exceed the amount set forth

in the preceding item.

Where the Company needs to

exceed the limits set out in

the Procedures to satisfy its

business needs, it shall obtain

approval from the Board of

Directors and half or more of

the directors shall act as joint

guarantors for any loss that

may be caused to the

Company by the excess

endorsement or guarantee. It

shall also amend the

Procedures accordingly and

submit the same to the


ratification. If the

shareholders meeting does not

give consent, the Company

shall adopt a plan to discharge

the amount in excess within a

given time limit.

Where the amount of making

endorsements or guarantees

exceeds the limits because of

the change of the calculation

bases or endorsees or

guarantees later become

unqualified under Article 3,

the Company shall discharge

provided that the highest

amount shall in no event

exceed the amount set forth

in the preceding item.

Where the Company needs to

exceed the limits set out in

the Procedures to satisfy its

business needs, it shall obtain

approval from the Board of

Directors and half or more of

the directors shall act as joint

guarantors for any loss that

may be caused to the

Company by the excess

endorsement or guarantee. It

shall also amend the

Procedures accordingly and

submit the same to the


ratification. If the

shareholders meeting does not

give consent, the Company

shall adopt a plan to discharge

the amount in excess within a

given time limit.

Where as a result of changes

of condition the entity for

which an

endorsement/guarantee is

made no longer meets the

requirements of the

Procedures, or the amount of

endorsement/guarantee

54

the amount exceeding the

limits or the endorsements or

guarantees amount on the

date the agreement term

expires or within a designated

period pursuant to an internal

plan. The above timeframe

shall be reported to the Board

of Directors for its approval

and then to the supervisors of

the Company for their review.

exceeds the limit, the

Company shall adopt



Audit Committee and to the


resolution, and shall complete



plan.

Article 5 Any endorsement/guarantee

provided by the Company

shall be approved in advance

by the Board of Directors,

provided that the Board of

Directors can authorize the

chairman to approve, in

advance, any endorsement or

guarantee within a certain

amount without the approval

of the Board of Directors.

After that, the chairman needs

to submit the results for

ratification by the Board of

Directors.

When the Company provide

endorsements or guarantees to

the other companies in which

the same parent company

directly or indirectly holds

more than ninety percent

(90%) of their total

Any endorsement/guarantee


shall be approved in advance

by the Board of Directors,

provided that the Board of

Directors can authorize the

chairman to approve, in

advance, any endorsement or

guarantee within a certain

amount without the approval

of the Board of Directors.

After that, the chairman needs

to submit the results for

ratification by the Board of

Directors.







Directors meeting.

55

outstanding shares with

voting rights in accordance

with Paragraph 4 of Article 3,

the prior approval from the

Board of Directors of the

parent company shall be

required; provided that this

restriction does not apply to

companies in which the

Company’s parent company

directly or indirectly hold one

hundred percent (100%) of

their total outstanding shares

with voting rights.

Major endorsement/guarantee

















meeting.

Before making any


pursuant to Article 3,

paragraph 2, a subsidiary in


directly or indirectly, 90% or

more of the voting shares

shall submit the proposed

endorsement/guarantee to the

Company’s Board of

Directors for a resolution,

provided that this restriction

shall not apply to


made between companies in

56


directly or indirectly, one

hundred percent (100%) of

their total outstanding shares

with voting rights.

Article 8 The Company's internal


execution of the


operation thereof no less



accordingly. The internal

auditor, during the auditing,


violation(s) upon finding of

any violation. If any material


to notifying all the

supervisors promptly in




with the employee

management rules of the

Company.

The Company's internal


execution of the


operation thereof no less



accordingly. The internal

auditor, during the auditing,


violation(s) upon finding of

any violation. If any material


to notifying the Audit

Committee promptly in




with the employee

management rules of the

Company.

Article 12 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

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

57

report pursuant to the

paragraphs of Article 11. The

percentage of the balance of

endorsements/guarantees over

the net worth of the Company

under the preceding

paragraph shall be calculated

by the ratio of the subsidiary's

balance of

endorsements/guarantees to

the Company's net worth.

report pursuant to the

subparagraphs of Article 11.

The percentage of the balance

of endorsements/guarantees

over the net worth of the

Company under the preceding

paragraph shall be calculated

by the ratio of the subsidiary's

balance of

endorsements/guarantees to

the Company's net worth.



Directors, the same shall be

submitted to each supervisor

and for approval by the

shareholders meeting before

its implementation. Any


same procedures. Where there

any director expresses dissent

and it is contained in the

minutes or a written

statement, the Company shall

submit the dissenting

opinions to each supervisor

and to the shareholders

meeting for discussion.

Where the Company has

established the position of

independent director, the





Directors, the same shall be

submitted for approval by the

shareholders meeting before

its implementation. Any


same procedures.







Directors meeting.








58

expressing assent or dissent

and the reasons for dissent



Directors meeting.











Resolution:

59

60

61

62

63

64

65

66

67

NAN YA PLASTIC

S CORPORATIO

N

Statement of Profits Distribution

For the year of 2016

Unit：

NT$

Items

Amount

Items

Amount

Explanation

Available for

Distribution:

(1) Unap

pro

priated

retain

ed ear

nin

gs

of pre

vio

us yea

rs

(2) Net Inco

me of

2016

(3) Chan

ge in

retained

earn

ings re

sultin

g

from O

ther

Compre

hen

sive

Inco

me

(4) Rev

ersa

l of Spec

ial

rese

rve

10,281,613,978

48,840,267,056

-1,077,288,464

557,090

Distribution Items:

(1) Appro

priatio

n of Leg

al

rese

rve (1

0%

of th

e Net

Inco

me)

(2) Appro

priatio

n of

Spec

ial re

serv

e (u

nre

alized

inves

ting pro

fit under

equity m

ethod)

(3) Norm

al and E

xtra

Div

iden

ds in

cas

h ($4.5 per

shar

e)

(4) Unap

pro

priated

retained

earn

ings

4,884,026,706

6,670,914,042

35,688,697,151

10,801,511,761

1.

The pro

pose

d div

iden

d is $4.5 in cas

h per

shar

e, includin

g norm

al div

iden

d of

$2.152 and extra div

iden

d of $2.348.

2.

The to

tal div

iden

ds am

ount to

$35,688,697,151; all of which are

fro

m

net inco

me of 2016.

3.

The ca

sh div

iden

d distrib

ution w

ill be

rounded

to the nea

rest dollar

for ea

ch

indiv

idual shar

ehold

er.

4.

Chan

ge in

retained

ear

nin

gs re

sultin

g

from O

ther

Compre

hen

sive In

come is the

rem

easu

remen

t of def

ined

ben

efit

obligatio

n.

5.

Rev

ersa

l of Spec

ial re

serv

e is to rev

ert

the Spec

ial re

serv

e fo

rmer

ly appro

priated

from the as

set re

valuatio

n incr

emen

ts as

the re

levan

t as

sets are

dispose

d.

Total

58,045,149,660

Total

58,045,149,660

68

69

70

71

72

73

74

75

76

77

Information regarding the Proposed Employees and Directors’

Compensation to Adopted by the Board of Directors of the Company:

1. Amounts of employees’ cash compensation, stock compensation, and

Directors’ compensation:

Employees Cash Compensation NT$ 51,566,798

Employees Stock Compensation NT$ 0

Directors Compensation NT$ 0

2. Share amount of the employees’ stock compensation and the

percentage of the share amount to that of all stock dividend:

Share amount of employees’ stock compensation 0 share

percentage of the share amount to that of all

stock dividend

0%

The above-listed amount of employees’ cash compensation is consistent

with the proposed amount adopted by the Board of Directors of the

Company.

Effect upon Business Performance and Earnings Per Share of the

Company by the Stock Dividend Distribution Proposed at the 2017

Annual Shareholders’ Meeting:

Not applicable since the Company does not propose the stock dividend

distribution at the 2017 Annual Shareholders’ Meeting and does not

required to prepare financial forecast information.

78


Shareholdings of Directors

Title Name Shareholding

(share)

Chairman Chia Chau, Wu 79,030

Managing Director Wen Yuan, Wong 66,206,752

Managing Director Wilfred Wang

Representative of Formosa

Petrochemical Corporation

179,214,423

Managing Director Ruey Yu, Wang 19,052,421

Managing Director

(Independent

Director)

Chih Kang, Wang 0

Independent Director Yi Fu, Lin 0

Independent Director Yun Peng, Chu 1,199

Director Ming Jen, Tzou 188,742

Director Kuei Yung, Wang 11,164,271

Director

Chin Jen, Wu


Plastics Corporation 783,356,865

Director Shen Yi, Lee


Chemicals & Fibre Corporation 413,327,750

Director Fong Chin, Lin 25,458

Director Zo Chun, Jen 303,377

Director Sin Yi, Huang 806

Director Ching Cheng , Chang

Representative of Freedom

Internation Enterprise

Company

3,287,472

79

Note: According to Article 26 of the Securities and Exchange Act, the

minimum shareholdings of the Company’s Directors are

126,893,146 shares. As of April 22, 2017, the actual shareholdings

of the Company’s Directors are 1,476,208,566 shares.

80

Documents

2017 ANNUAL SHAREHOLDERS’ MEETING MEETING HANDBOOK · 1.2016 Business Report The consolidated operating revenue of the company in 2016 was US$ 8,529 million, a decrease of 8.2%