Chairmen Presentation Ticker: 1310.TT EGM: 31 st Jan, 2019 - - PowerPoint PPT Presentation

Chairmen Presentation

Ticker: 1310.TT EGM: 31st Jan, 2019 Presenters: Wu Yiqing, Lin Wenyuan

TAIWAN STYRENE MONOMER CORPORATION

Company Introduction

2

Styrene Monomer 340k tons per year

95.4%

(operating revenue)

p-Diethylbenzene 7k tons per year

1.8%

Toluene 8.7k tons per year

1.3%

TSMC (1310.TT)

Source: TSMC annual report and company website

Established in 1979, TSMC’s facilities located in Linyuan, Kaohsiung. Petrochemicals amounted to 96%

• f

its

• perating revenue and is mainly derived from SM.

Apart from its core petrochemical business, TSMC has diversified into Construction, Electronics, and Tourism, collectively contributing 5% to total consolidated operating revenue.

Agenda

1

Executive Summary

2

Our Achievements

3

Sun’s Nomination

4

Our Nominations

5

Conclusions

Executive Summary

✓ The board election on Jan 31, 2019 is NOT about Dissident shareholders vs. the Company’s management ✓ This is to fix TSMC’s long-standing corporate governance issue and to further enhance TSMC’s performance

Chairmen presentation

4

January 15, 2019 slidemodel.com 5

Issues traced back to 2010

2010 2013 2016 2019

11th Term: 9 seats 2010.6.23~2013.4.2

• By leveraging TSMC’s cross-holding structure,
• Mr. Sun Tiehan obtained TSMC’s significant

shares via acquiring TSM5C’s subsidiaries – Wonderland, Yuanjie, and Yujie. Mr. Sun controlled 5 seats of the 11th term board.

• During the 3 year term, TSMC experienced 5

chairmen who are all Mr. Sun’s substitutes. Under the 5-chairmen leadership:

• TSMC invested in Tienlai resort & spa in

Yanminshan (Tourism)

• TSMC invested in Jingshuo Construction.

(Construction)

• Both investment were later investigated and

charged by the prosecutors.

• Financial statements of 2002, 2005, 2006 and

2010 were restated, requested by TWSE

• Capital reduction by 13.37% in 2012

12th Term: 9 seats 2013.4.3~2016.4.2

• Mr. Sun controlled 6 seats, and had Mr Lin

Wenyuan served as Chairman

• Mr Lin Wenyuan was expelled on 2016. 3.21

(12 days before the term expired). Under Mr. Lin’s Board leadership:

• TSMC started to review its cost structure and

focus on cost saving.

• The Board approves Cogeneration CHP

initiatives and which was completed in November 2015, operated in 2016 and provided strong foundation to future growth.

Loss Making Turn to Profit making

13th Term: 9 seats 2016.4.3~2019.4.2

• Mr. Sun controlled 4 seats, and had Ms. Wu

Yiqing served as Chairwoman

• Th election to 14th term will be held on Jan 31,

2019 Under Ms. Wu’s Board leadership:

• Focus to manage the investment loss from

various investments.

• The number of subsidiaries was reduced from

45 to 9.

• Chairwoman Wu disagree with Mr. Sun’s

camp in divesting decisions. Mr. Sun’s camp made additional investment without board’s

• approval. The relevant personnel were not

punished since Sun controlled the board.

Continued Profit

6

LIU Zhengyuan

劉正元

.

WU Qingdian

吳清典

.

SD3 SD1

 One of the 5-chairmanship of 11th term  The problematic financial year of 2010 and later restatement asked by TWSE and FSC was under Mr’ Liu’s chairmanship  Assisted Mr. Sun Tiehan to acquired TSMC’s key investment subsidiaries in 2010 which allowed Mr. Sun to leverage TSMC’s cross holding structure to control TSMC. ✓ Has served as board director from 11th to 13th term, representing investment companies controlled by Mr .Sun Tiehan. ✓ Among the three terms, he were replaced twice. 8 months after being elected as 13th term director, but then yielded the seat to Mr. Sun Tiehan and his acting agent. ✓ Assisted Mr. Sun to dismiss Mr. Lin’s chairmanship

11th T erm 12th Term 13th Term Period 2010-2013 2013-2016 2016-2019 Legal Rep for Wonderland美好 Yujie 裕捷 Wonderland美好 Time served on the board 8M 35M 8M

Source: TSMC financial reports and MOPS

So-called “Company management” actually represents Mr. Sun Tiehan’s interests

7

Ownership Comparison

VS We are major shareholders.

TSMC’s subsidiaries , Wonderland, Yuanjie and Yujie, collectively owns 11.4%. Sun’s Camp only

• wns 2.16%, rather than 13.56%

Our Achievements

✓ Cogeneration CHP plant initiatives has built the foundation of future profits ✓ Operating expense has been well controlled ✓ Hiring and overpaying were under review

Chairmen presentation

8

9

Increase overall profitability

LIN enforced cogeneration plant construction in 2014, and mass production in 2015

10

Eliminate unnecessary hiring & overpaying

Average annual salary for last 5 years is 60% lower than the 5 years prior

11

Enforce expense control

Operating expenses reduced significantly compared to under SUN’s period & prior

January 15, 2019 slidemodel.com 12

EPS and Oil Price

1.19 0.1

• 1.71
• 0.88

2.05

• 0.07

1.31 2.67 2 3.31 2.31 1.23 1.92 2.15 0.31 1.62 2.65 3.64 5.19 8.33 5.81 1.25 4.25 1.8 4.72 7.5 9.33

• 2

2 4 6 8 10 2009 2010 2011 2012 2013 2014 2015 2016 2017 TSMC Grand Pacific Petro Formosa Chem. & Fibre

125 100 75 50 25

 Although Grand Pacific Petro and Formosa Chem & Fibre are the common peers, TSMC’s business is more highly correlated with oil price

Sun’s Nomination

The so-called “Company’s nomination”

• nly represents Mr. Sun Tiehan’s interests

Chairmen presentation

13

SUN Tiehan and associates FOUND GUILTY of Violation of Securities Laws Gov Link

COURT CASE No.105 Gim Su 13 / 2018.06.22 / Securities Law and Related SUNTiehan is complicit in 3 counts of Breaching of Trust, sentenced to 2 years and 4 months in prison, 10 months, and 1 year respectively. Prison term to be executed is set at 3 years and 8 months. Any benefit SUNTiehan received through the commission of the offense amounting to NTD 6,315,600 shall be forfeited; or if the whole or a part of such benefit cannot be forfeited, the value thereof shall be collected from the

• ffender.
• A. Judicial Document

TRANSLATION

SFIPC files for Removal of SUN Tiehan as Director by Court Order. Legal Proceedings Underway.

• B. SFIPC (Securities and Futures Investors Protection Center)

CASE No. 107 Gim Su 144 / 2018.12.22

LITIGATIONS CLAIMS Against

• Mr. SUN Tiehan

Source: MOPS

14

Wonderland Enterprise Co., Yuanjie Investment

13th Term

• JIAO Zhisheng
• SUN Tiehan

Returns to Board 2013.11.25

• WU Qingdian
• ZHANG Yongxiang
• SUN Tiehan

Prosecuted by Taipei District Court 2016.6.22 Returns to Board 2017.9.21

2013.04.03 ~ 2016.04.02 2016.04.03 ~ 2019.01.31

12th Term

Wonderland Enterprise, Yuanjie and Yujie assigns Legal Representative Directors to TSMC

Misleading Statements to Media before board election

2016.03.01: SUN Tiehan expresses sentiments regarding returning to TSMC board: “I will not be participating on the TSMC board re-election

• n the EGM on April 1st , l will only participate on TSMC at a

shareholder in the future.”

SUN Tiehan Always Returned to TSMC Board

15

Candidates Concerns WU Qingdian 吳清典 (Anqing Development Co., Ltd)

▪ Assisting SUN Tiehan in returning to the Board of Directors by manipulation of corporate representatives

SUN Tiehan was unable to participate in the election due to the aforementioned legal cases in 2016. In April, 2016. WU Qingdian 吳清典was elected as the representative of Wonderland Enterprise Co., Ltd. Wonderland Enterprise Co., Ltd. changed it representative from WU Qingdian to ZHANG Yongxiang.張永祥 in Dec 2016 and later changed to SUN Tiehan孫鐵漢. in Sep. 2017

▪ Anqing Development Co., Ltd owned by Sun’s sister Sun Lili.

The capital of Anqing Development Co., Ltd. is NT$1 million. Anqing Development Co., Ltd. was founded on December 10, 2018.

▪ Breach of Trust (Criminal Law, Article 342) & (Securities and Exchange Act, Article 171, c)

WU Qingdian was charged on Jan 9,2019 approved by Board meeting. Also was removed all the authorized power as President. He published the announcement without Board and Chairman’s approval.

XU Xiulan 徐秀蘭

▪ Both Ms Xu and Mr Yao have no SM or petrochemical related industry background and

• expertise. Ms. Xu also publicly acknowledged that it is too early to talk about TSMC to tap

into the specialty chemicals industry now. ▪ Affiliated to Mr Sun: SUN Tiehan was once the largest shareholder of Sino-American Silicon Product Inc

(SAS). His sister, SUN Lili, was the former Chairperson of Sino-American Silicon Products Inc. Kaijing Co. (owned by Mr. Sun’s sister) is currently SAS board director.

▪ Xu Xiulian 徐秀蘭 is sitting on more than 31 company boards; YAO Dangliang 姚宕梁 is sitting on more than 19 company boards (According to Sino-American Silicon Products Inc annual

• report. )

YAO Dangliang 姚宕梁

16

• Mr. Sun’s Nomination and Affiliations (1/2)

Candidates Concerns

LIU Zhengyuan 劉正 元 (Wonderland Enterprise Co., Ltd) ▪ Wonderland Enterprise Co., Ltd., is TSMC’s subsidiary but controlled by Mr. Sun ▪ Undergoing litigation: Acting as the Chairman of Yangmingshan Tien Lai Resort & Spa and the Chairman of Jingshuo Construction Co., Ltd.

LIU Zhengyuan and SUN Tiehan were the accused in the receipt of commissions on the share transaction of Yangminshan Tien Lai Resort & SPA and Jingshuo Construction Co., Ltd. financing case (SUN Tiehan was sentenced to imprisonment for 3 years and 8 months, and LIU Zhengyuan was still reviewed by High court).

▪ Accounting and Corporate Governanceissues: When he was the chairman of TSMC, financial

statements of 2002, 2005, 2006 and 2010 were restated with the requests from TWSE and FSC.

ZHAO Guoshuai 趙國 帥 (Kaijiang Co., Ltd) ▪ Kaijiang Co., Ltd is owned by Mr. Sun’s sister. Kaijiang is currently board director as SAS ZHAO is the incumbent INED but prevented TSMC from exercising due personnel punishment on wrongdoings ZHONG Chongguo 仲 崇國 (Anqing Development Co., Ltd) ▪ Anqing Development Co., Ltd owned by Sun’s sister.

The capital of Anqing Development Co., Ltd. is NT$1 million. Anqing Development Co., Ltd. was founded on December 10, 2018.

ZHANG Guoqin 張國 欽 ▪ No relevant background in SM-related industries or financial/accounting expertise ZHANG is the incumbent INED but prevent TSMC from exercising due personnel punishment on wrongdoings with ZHAO. ZHENG Jixiong 鄭繼 雄 ▪ Issue of Independence. Former SAS CEO and SAS is associated with Mr. Sun

TSMC has many reinvestment, the board would require the professional accounting or Audit expertise. But INED Zheng has Incomplete Master of Accounting

17

• Mr. Sun’s Nomination and Affiliations (2/2)

18

SUN’s Nomination

SUN Tiehan 孫鐵漢

• 3 Counts of Breaching of Trust, Sentenced to 3

years and 8 months

• Fully control on Anqing, Wonderland, Kaijiang
• Kaijiang開疆 is SAS NED

Anqing 安慶 Development Wonderland Enterprise美好 Kaijiang

開疆

Sino-American Silicon

• Capital: NTD 1M
• Founded: 2018.12.10
• SUN Lili 孫俐俐 Owned

AFFILIATED

• WU Qingdian 吳清典
• ZHONG Chongguo

仲崇國

SD1 SD6

Family: SUN Tiehan SUN Lili

• SUN Tiehan 孫鐵漢acquired

control for NTD 455M (NTD 702M Discount)

AFFILIATED

• LIU Zhengyuan 劉正元

SD3

• SUN Lili 孫俐俐 Owned

AFFILIATED

• ZHAO Guoshuai 趙國帥

SD5

• SUN Tiehan 孫鐵漢 was

previously a substantial shareholder of SAS

• SUN Lili 孫俐俐 was previously

Chairwoman of SAS (appendix 3-SAS MOPS)

AFFILIATED

• XU Xiulan 徐秀蘭
• YAO Dangliang 姚宕梁
• ZHENG Jixiong

鄭繼雄

SD2 SD4 SINED2 SUN Tiehan controlled SAS in 1998, YAO was hired as President of SAS, Xu Xiulan was hired Sales VP of SAS

Source: MOPS and Ministry of Economic Affairs company website https://www.moea.gov.tw/

19

Shock resignation of XU Xiulan (HSU Doris) & YAO Dangliang (YAO Tom) as Non-Independent Director

Despite only one day has passed since XU Xiulan (HSU Doris) and YAO Dangliang (YAO Tom) was proposed on the so-called management group’s slate, we have come to learn that directors above have declared they do not seek to take Sun Tiehan’s invitation to serve TSMC’s Board as members. It is rare to see any public directors resign just two weeks’ before the vote to form a new board and raises further doubt about the suitability of the slate proposed by Wonderland Enterprises (Sun Tiehan).

XU Xu Xiulan 徐秀蘭 YAO Dangliang 姚宕梁

SD2 SD4

Source: public news https://udn.com/news/story/7254/3594249

Our Nominations

Candidates’ skills linked to

• ur direction to future TSMC

Chairmen presentation

20

D1

LIN Wenyuan 林文淵

Taiwan Styrene Monomer Investment

CHEN Boyuan 陳柏元

Taiwan Styrene Monomer Investment

D2

PAN Wenyan 潘文炎

Taiwan Styrene Monomer Investment

D3 D4

WU Yuqun 吳裕群

D7

LI Shengchen 李勝琛

Chin-Chih-Hung Investment Corp.

D8

CHEN Jian 陳健

Chin-Chih-Hung Investment Corp.

INED1

JIANG Jincheng 簡金成

Independent Director

YU Shanrong 余珊蓉

Independent Director

D5

SUN Zhengqiang 孫正強

D6

CHEN Jiafu 陳建甫 XU Gaowei 許高威

Independent Director

Taiwan Styrene Monomer Investment Taiwan Styrene Monomer Investment Taiwan Styrene Monomer Investment

Our Nominees List

INED2 INED3

21

Introduction to our nominees

D2 D1 D3 D4 D7 D5 D6 D8 INED1 INED2 INED2 INED3 INED3

22

Nominees

Related Knowledge, Expertise, and Experience

NAME STRATEGIC PLANNING LEADERSHIP PETROCHEMICAL BACKGROUND LEGAL SALES MANAGEMENT FINANCE ACCOUNTING & AUDITING INVESTMENT INTERNATIONAL /CHINA BUSINESS

[D1] 林文淵 LIN Wenyuan

• 陳柏元

CHEN Boyuan

• 潘文炎

PAN Wenyan

• 吳裕群

WU Yuqun

• 孫正強

SUN Zhengqiang

• 陳建甫

CHEN Jianfu

• 李勝琛

LI Shengchen

• 陳健

CHEN Jian

• 簡金成

JIAN Jincheng

• 余珊蓉 (F)

YU Shanrong

• 許高威

XU Gaowei

• Skill Matrix

D1 D2 D3 D4 D5 D6 D7 D8 INED1 INED2 INED3

EDUCATION PAST POSITIONS CURRENT POSITIONS

• Master's degree, Dept. of Civil Engineering,

University of Hawaii

• Deputy Head Commissioner, State-owned Enterprise

Commission, Ministry of Economic Affairs, R.O.C.

• Chairman, China Steel Corporation
• Chairman, Taiwan Cogeneration Corporation
• Chairman, Taiwan Styrene Monomer Corporation
• Chairman, Taiwan Power Company
• Chairman, Eastern Integrated Marketing, Inc.
• Chairman, Eastern Broadcasting Co., Ltd.
• Chairman, Overseas Engineering & Construction Co.,

Ltd.

• Executive Director, Bank of Kaohsiung
• Director, Taiwan Styrene Monomer Corporation
• Director, Gloria Material Technology Corp.
• Independent Director, Chun Yu Group

D1

LIN Wenyuan 林文淵

Taiwan Styrene Monomer Investment Co., Ltd. EDUCATION PAST POSITIONS CURRENT POSITIONS

• Master's degree, Dept. of Chemistry, Illinois Institute
• f Technology
• China Steel Chemical Corporation
• Director, Taiwan Styrene Monomer Corporation

D2

CHEN Boyuan 陳柏元

Taiwan Styrene Monomer Investment Co., Ltd. EDUCATION PAST POSITIONS CURRENT POSITIONS

• Ph.D., Department of Chemistry, University of

Wyoming

• Chairman, Kuo Kuang Power Co., Ltd.
• President and Chairman, CPC Corporation, Taiwan
• Senior Research Engineer, Monsanto Company
• Chairman, CTCI Foundation
• Chairman, Gintech Energy Corporation
• Director, Taiwan Styrene Monomer Corporation

D3

PAN Wenyan 潘文炎

Taiwan Styrene Monomer Investment Co., Ltd.

Our Nomination

24

EDUCATION PAST POSITIONS CURRENT POSITIONS

• EMBA in Public Management, National Taiwan

University

• Secretary General, Securities & Futures Commission,

Ministry of Finance

• Head of Securities and Futures Bureau, Financial

Supervisory Commission, Executive Yuan

• President, Taipei Exchange
• Chairman, Masterlink Securities Group
• Independent Director, Chun Zu Machinery Industry

Co., Ltd.

D4

WU Yuqun 吳裕群

Taiwan Styrene Monomer Investment Co., Ltd. EDUCATION PAST POSITIONS CURRENT POSITIONS

• EMBA from National Chiao Tung University
• MBA from National Chengchi University
• Master of Chemical Engineering, National Taiwan

University

• President, TMP Steel Corporation
• President, Jinzhifu Asset Management Corporation
• President, CDIB Asset Management Co., Ltd.
• Chairman, Ofco Industrial Corp.
• Chairman, Tian-Chuan Investment Co., Ltd.
• Director, QuinTain Steel Co., Ltd.

D5

SUN Zhengqiang 孫正強

Taiwan Styrene Monomer Investment Co., Ltd. EDUCATION PAST POSITIONS CURRENT POSITIONS

• EMBA, Guanghua School of Management, Peking

University

• Bachelor's degree in Mechanical Engineering, the

University of California, Berkeley

• Researcher, Harvard Business School
• Director, Chuan-Pu Investment Holding Co., Ltd.
• Director, Adimmune Corporation
• Director, Han-Hsien Hospitality Co.

D6

CHEN Jianfu 陳建甫

Taiwan Styrene Monomer Investment Co., Ltd.

Our Nomination

25

EDUCATION PAST POSITIONS CURRENT POSITIONS

• Master's degree, Institute of Mainland China Studies,

National Sun Yat-sen University

• Presiding Judge, Taiwan Kaohsiung District Court
• Partner Attorney, Yuan, Chen & Partners Attorneys-

at-Law

• Supervisor, Taiwan Styrene Monomer Corporation
• Independent Director, Taiwan Tea Corporation
• Director, Bank of Kaohsiung
• Supervisor, Synnex Technology International

Corporation

D7

LI Shengchen 李勝琛

Chin-Chih-Hung Investment Corp. EDUCATION PAST POSITIONS CURRENT POSITIONS

• Bachelor's degree from Princeton University
• MBA from the Wharton School of the University of

Pennsylvania

• Executive Director, Goldman Sachs
• Chief Executive Officer and Managing Director,

Lazard Asia Limited

• Argyle Street Management Limited
• Founder and Executive Investment Officer
• Director of TIH Limited
• Non-independent and Non-Executive Director, OUE

Limited

• The ONE Group
• Hospitality,
• Inc. Non-Executive Director

D8

CHEN Jian 陳健

Chin-Chih-Hung Investment Corp.

Our Nomination

26

EDUCATION PAST POSITIONS CURRENT POSITIONS

• Ph.D. in Accounting, Rutgers University
• Professor, National Cheng Kung University
• Independent Director, Gloria Material Technology

Corp.

• Supervisor, Soft-World International Corporation

JIAN Jincheng 簡金成

EDUCATION PAST POSITIONS CURRENT POSITIONS

• Master's degree from Graduate Institute of National

Development, National Taiwan University

• Attorney, Jones Day
• Deputy Manager, Department of Legal Affairs,

Yuanta Financial Holding Co., Ltd.

• Partner Attorney, Zhong Yin Law Firm
• Independent Director, Daily Polymer Corporation

YU Shanrong 余珊蓉 (Female)

EDUCATION PAST POSITIONS CURRENT POSITIONS

• Master's degree in Chemical Engineering, University
• f Washington
• Assistant Researcher, National Chung-Shan Institute
• f Science & Technology
• Senior Engineer, China Petrochemical Development

Corporation

• President, Handy Chemical Corporation, Ltd.

XU Gaowei 許高威

Our Nomination

INED1 INED2 INED3

27

Conclusions

• TSMC’s future directions
• Concluding Remarks

Chairmen presentation

28

1.

• Enact Procurement Strategies
• Reduce Emissions
• Increase Process Efficiencies
• Maintain SM Competitiveness

2.

According to IHS forecasts, SM demand throughout 2018~2021 will increase by 2.2%~2.3% YOY. Demand from Chinese markets will increase 3.5%~3.9% YOY.

3.

• Continue merging and

consolidation of Subsidiaries.

• Search for suitable managers

to guide Subsidiaries.

• Mitigate reliance over single

product market by diversifying FROM core competencies.

FOCUS ON SM INDUSTRY DEVELOP NEW MARKETS FOCUS & CURB INVESTMENTS

Our Directions to TSMC

29

• Mr. Sun Tiehan has controlled TSMC board since 11th term and has been making various

investments not related to TSMC’s core strengths. Some of the investments are already been considered harmful to TSMC by the court. W would like to stop this from having Mr. Sun and his acting agent to sit in the board.

• Governance practice:
• We are to promote the increase of Independent Directors to 4, and more than 1/3 of the

Board.

• Our nomination has shown our commitment to promote gender diversity and

emphasize financial, investment, and legal expertise, to better supervise and advise on TSMC investment initiatives.

• We are to put more effort on non-financial ESG information disclosure, pursue

sustainability, stability and responsibility.

• Our AIM: “Acquire majority of Board, and increase Board share ownership, to promote

management stability.” GOING FOWARD

Concluding Remarks

30

Appendix

I. How Mr. Sun leveraged TSMC’s cross holding structure II. Media report related to Sun’s verdict III. Sun’s association with Sino-American Silicon IV. 2018 disputes V. Little synergy between SAS and TSMC VI. Others

Chairmen presentation

31

HOW DID SUN TIEHAN GAIN TSMC CONTROL (1)

March 2010 GIH

Grand Investment Holdings

TSMC Subsidiary

GFH

Grand Future Holdings Ltd.

TSMC Subsidiary

GPH

Grand Prosperity Holdings Corp

TSMC Subsidiary

Asia Fortune Enterprise Ltd.

AFE AFE Shareholding Structure

1,180,000 Shares 4,500,000 Shares 7,400,000 Shares

Highly Controversial Transaction

50.62% of Wonderland Enterprise

9.02% 34.40% 56.57%

Appendix1 SD3

31st March 2010

When LIU Zhengyuan was pointed to Chairman of TSMC. TSMC immediately sold to SUN Tiehan to gain 100% subsidiary holdings AFE

Source: TSMC 2010 financials reports / MOPS company announcements

Due to controlling stake in AFE, SUN Tiehan also gained control of Wonderland Enterprise, and on the same day nominated LIU Zhengyuan as the legal representative of Wonderland Enterprise. 32

Appendix1

33

HOW DID SUN TIEHAN GAIN TSMC CONTROL (2)

31st March 2010

SUN Tiehan

Reverse Takeover For NTD 455M

Due to controlling stake in AFE, SUN Tiehan only took NTD 455M (4.43%) to control 11.39% shares of TSMC

Source: TSMC 2010 consolidated financials reports / MOPS company announcements

11.39% of TSMC at ONLY NTD 455M NTD 455M = Market Value for 4.43% Market Value for 11.39% = NTD 1.157B = NTD 702M DISCOUNT!

Appendix2

34 31st March 2010 News News

Appendix3

35 31st March 2010 Sino-American Silicon MOPS Announcement

• Board & Chairman
• SUN Lili 孫俐俐 (Sun Tiehan’s

sister ) as Chairman

SD2 SD4 SD3

Considering SUN’s family’s close personal relationship and employment with the nominees related to SAS and the fact that Semiconductor industry is not relevant to TSMC’s future plan and development We recommend to vote Against / Abstain to the Above.

Source: MOPS company announcements / SAS annual reports

SINED2

GlobalWafers Co., Ltd was spin off from SAS in 2011 SAS owns over 70% of Global Wafers ZHENG Jixiong 鄭繼雄 was president of SAS and Existing INED of

Global Wafers

Taiwan Styrene Monomer Corporation (TSMC) YSIC Ltd. Yangmingsha n Tien Lai Aikeru i Lei-Ting Constructio n Jingshuo Construction Asia Carbons & Technology GVISION-USA Datapr

• Yung

Fu

16.19% 10.57% 3.08%

SUBSIDIARY IN VIOLATION

Due to continued losses at Asia Carbons, and a 258 Million debt to the banks, Asia Carbons faced a shortage of cash on June 2018. Board was implementing reduction of capital from losses in investment, the consensus was to stop raising capital for Asia Carbons. But during which subsidiary YSIC procures Asia Carbons’ operational assets, without the approval of the TSMC Board, violates the previous consensus.

Corrupt Asset Procurement (Asia Carbons & YSIC)

To reward Datapro Chairman LIN Junxu’s effort in new product development the successful transition to mass production, Datapro Board decides to issue NTD 3M Bonus to the Chairman, under the prerequisite that Datapro generate some tangible revenue, and through the proper procedures and application through the parent company TSMC. Datapro then converted the “Bonus” into “R&D grant” and was approved by Datapro Chairman LIN Junxu himself, without any regard to the Conflict of Interest at hand. Clear violations of “Supervision and Management of Subsidiaries” Regulations.

Repurposing an R&D grant into a Bonus (Datapro)

Appendix4

36

Chair Directors

• ZHOU Zisheng (TSMC)

TSMC Financial Officer

• LU Zhengxin (TSMC)

TSMC Investment Division Officer

YSIC Ltd. Board Members

Taiwan Styrene Monomer Corporation (TSMC)

Chair Directors

Asia Carbons & Technology Board Members

• SUN Zhiyao (TSMC)

Daughter of SUN Tiehan

• SHENG Shian (Yung Fu)
• ZHOU Gengsheng (YSIC)
• SUN Tiehan (YSIC)
• LIN Junxu (TSMC)
• GUO Rengui (Natural

Person)

Directors are Stakeholders SUN Tiehan lead, breach of duty by ZHOU Zisheng and LU Zhengxin Circumvents TSMC Policy of not increasing further capital in Asia Graphite

2018.12.05 Determination to Clean House TSMC Parent Company Board Meeting Resolution to prosecute related parties in this incident. Neglect of Independent Director Duties TSMC Independent Directors ZHAO Guoshuai and ZHANG Guoqin OPPOSED Resolution!

Appendix4

37

Independent Directors

ZHAO Guoshuai ZHANG Guoqin

Supervisor

• Does it contradict TSMC Reinvestment Policy
• Lack of management and supervision of subsidiaries
• Suggest reviewing and revising and providing more
• versight to governance
• OPPOSED to Resolutions to prosecute related

parties in this incident. LI Shengchen

SUSPICIOUS DEFENCE

13th Term 15th Board Meeting Sale of Asia Graphite Assets and Procurement of TWYS Construction Assets

Independent Directors

ZHAO Guoshuai ZHANG Guoqin

Supervisor

• Violation of Job Authorization related policies
• Serious violation of management and supervision of

subsidiaries

• Workflow Error, Lack of Governance Experience
• Grant was returned, did not incur losses
• No intention of unlawful enrichment or wrongdoing

LI Shengchen

13th Term 19th Board Meeting DataPro Payment of R&D Grant Compensation

RE: Chairman’s R&D grant of NTD 3M w/o TSMC Consent

EVASIVE & FULL OF EXCUSES Appendix4

38

• 1. Analyst’s Take

It is unlikely for polystyrene to be applied as a conductive material for solar panels, as the heat resistance and conductivity pales in comparison to Indium tin oxide and Yttrium tin

• xide. Additionally, Indium tin oxide and

Yttrium tin oxide prices have fallen substantially. With the Company’s current capital and value, it is impulsive to move so quickly into a high risk (and full of already-established companies), with many alternative competitive materials. It is best to assess if it is in the best interest of the Company Shareholders.

• 2. SAS First-Movers

Sino-American Silicon Products (SAS) Already have invested nearly NTD 1B into TSCS(Taiwan Special Chemicals Corporation), and in turn acquired 30% shares, becoming the largest shareholder.

• 3. XU Xiulan’s Sentiments

As XU Xiulan assumes the SAS Chair, XU emphasizes; We will assess future

• pportunities with TSMC, and take it on a step-

by-step basis. But currently she is nominated

• n a personal basis. Regarding TSMC

cooperation, XU states “Currently, it’s too early”.

2018.12.29 Economic Daily News

2018.12.29 Economic Daily News – ZENG Renkai

EXTREMELY UNLIKELY TO HAPPEN

Appendix5

39

Taiwan Styrene Monomer Corporation (TSMC) YSIC Ltd. Yangmingshan Tien Lai Aikerui Lei-Ting Construction Jingshuo Construction Asia Carbons & Technology GVISION-USA Datapro Yung Fu Tien Lai Art Village Asia Graphenes Kun Shan International Grand Capital Tien Lai Industries Kun Shan Yu Fu

100% 66.67% 64.79% 65.07% 99.99% 75.27% 100% 34.76% 89.16% 2.78% 16.19% 9.85% 10.57% 3.08% 24.73% 12.10% 100% 100% 50% 62.03% 97.22% 100%

From 2012.08.14 to date With WU Qingdian as President. SUN Tiehan has spearheaded investment initiatives in:

• Yung Fu
• Asia Carbons & Technology
• Jingshou Consturction
• YSIC Ltd.
• Yangmingshan Tien Lai
• Aikerui
• GVISION-USA
• Datapro
• Asia Graphenes
• Tien Lai Art Village
• Grand Capital
• Kun Shan International
• Kun Shan Yu Fu

Denotes SUN Tiehan’s investments

SUN’s Investment

40

Appendix6

TSMC

Plastified Industry (1 Total) Investment Industry (7 Total) Electronics Industry (4 Total) Tourism, Construction, Education and Others. (9 Total)

REINVESTMENT IN 21 ENTITIES!

TSMC Reinvestment Profit and Loss

• Book value of investments：3.7Billion,

38.12% of Total Assets

• Over 3 consecutive years of losses:

Asia Graphite and 7 other Entities.

• 11 Entities with losses in 2017：
• Asia Graphite亞碳 2015-2017 Losses:

680 Million

EPS

Appendix6

SUN’s Investment

Appendix6

42 31st March 2010 Refer MSCI ESG reports & ISS reports ISS reports recommended Against on all INEDs for SAS in Board election As of the date of this analysis, the company has yet to disclose its FY 2016 annual

• report. Absent the company's annual report, which provides disclosure such as the

latest corporate governance report and shareholding structure, among other updates on the company's business affiliations, shareholders have limited ability to assess the independence and suitability of the independent director candidates. Therefore, a vote AGAINAST the nominees is warranted. We do believe Sino-American Silicon & Global Wafer has a lot of improvement in Corporate Governance

Thank You