Chapter II Financial Reports
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Section I Balance Sheet
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| Article 14 | Assets shall be properly classified. Current and non-current assets shall be distinguished.
For each asset line item, the total amount expected to be recovered within 12 months after the balance sheet date and the total amount expected to be recovered more than 12 months after the balance sheet date shall be separately presented in the financial reports or disclosed in the notes.
Current asset means that the securities firm expects to realize the asset, or intends to sell or consume it, in its normal operating cycle; that it holds the asset primarily for the purpose of trading; that it expects to realize the asset within 12 months after the balance sheet date; or that the asset is cash or a cash equivalent, unless the asset is to be used for an exchange or to settle a liability, or otherwise remains restricted, at more than 12 months after the balance sheet date. As a minimum, current assets shall include the following asset line items:
1. Cash and cash equivalents:
A. Cash on hand, demand deposits, and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
B. A securities firm shall disclose the components of cash and cash equivalents and the policy which it adopts in determining the composition of cash and cash equivalents.
2. Financial assets at fair value through profit or loss – current, shall be classified as broker's investments in securities, open-end funds or money market instruments, securities held for operations, or derivative instruments:
A. Financial assets not measured at amortized cost or at fair value through other comprehensive income.
B. Financial assets measured at amortized cost or at fair value through other comprehensive income, which may be designated as financial assets measured at fair value through profit or loss according to IFRS 9.
3. Financial assets measured at fair value through other comprehensive income - current:
A. Debt instrument investment that meet all of the following conditions:
a. The securities firm holds the financial assets within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.
b. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
B. Equity investments not held for trading, for which the securities firm has irrevocably elected at initial recognition to present changes in fair value in other comprehensive income.
4. Financial assets measured at amortized cost – current, meaning that all of the following conditions are met:
A. The securities firm holds the financial assets within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets.
B. The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
5. Financial assets for hedging – current: Any financial asset that is a designated and effective hedging instrument under hedge accounting requirements.
6. Investments in bonds with reverse repurchase agreements: The actual amounts paid by a securities firm when engaging in transactions in bonds with reverse repurchase agreements.
7. Securities margin loans receivable: Margin loans extended to customers by a securities firm conducting securities trading margin purchase and short sale business.
8. Deposits for securities borrowed: Guarantee amounts deposited by a securities firm in Securities Borrowing and Lending transactions, either for borrowing underlying securities from the holders or for short selling on an exchange market.
9. Collateral for securities borrowed: Collateral posted by a securities firm in Securities Borrowing and Lending transactions, either for borrowing underlying securities from the holders or for short selling on an exchange market.
10. Trade receivables, which means the securities firm has an unconditional contractual right to consideration in exchange for services that have been transferred:
A. Claims arising from a securities firm's business operations, including transaction proceeds receivable from the sale of securities held for operations, margin loan interest receivable from proprietary margin trading operations, and receivables from the execution of customer orders to buy or sell securities. The details of such trade receivables shall be disclosed in the notes.
B. Trade receivables shall be measured in accordance with IFRS 9. However, short-term trade receivables with no stated interest rate may be measured at the original invoice amount if the effect of discounting is immaterial.
C. With respect to discounted or transferred trade receivables, an assessment shall be made to determine whether the risks and rewards of the trade receivables, and the control retained over them, will qualify them for derecognition under IAS 39, and the trade receivables shall then be disclosed in accordance with IFRS 9.
D. Trade receivables from related parties in significant amounts shall be presented separately.
E. The securities firm shall disclose an aged analysis of trade receivables.
11. Prepayments: All prepayments and prepaid expenses.
12. Other receivables: Means receivables other than trade receivables.
13. Current tax assets: The portion of the tax amount already paid in respect of current and prior periods that exceeds the amount due for those periods.
14. Non-current assets held for sale:
A. Any non-current asset, or asset included in a disposal group held for sale, that is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups, and whose sale must be highly probable.
B. The measurement, presentation, and disclosure of non-current assets held for sale and disposal groups held for sale shall be made in accordance with IFRS 5.
C. When non-current assets or disposal groups classified as held for sale no longer meet the criteria in IFRS 5, they shall cease to be classified as held for sale.
D. When assets or disposal groups meet the definition of held for distribution to owners, they shall be reclassified from held for sale to held for distribution to owners, and shall be deemed an extension of the original disposal plan, and the classification, presentation, and measurement of the new disposal plan shall apply. When the assets or disposal groups classified as held for distribution to owners no longer meet the criteria in IFRS 5, they shall cease to be classified as held for distribution to owners.
15. Other current assets: Current assets not attributable to any of the classes above.
Non-current assets means tangible, intangible and financial assets of a long-term nature, other than assets classified as current. As a minimum, non-current assets shall include the following asset line items:
1. Investments accounted for using the equity method:
A. The valuation and presentation of investments accounted for using the equity method shall be made in accordance with IAS 28.
B. When investment gain or loss is recognized, if the financial reports prepared by an associate do not conform to these Regulations, those financial reports shall first be adjusted to achieve conformance before they may be used to recognize investment gain or loss. The financial reports of an associate used in applying the equity method shall be prepared as of the same date as that of the investor, and if prepared as of a different date, adjustments shall be made for the effects of material transactions or events that occur between that date and the date of the investor's financial reports. In no case shall there be more than 3 months difference between the balance sheet date of the associate and that of the investor. If the attesting CPAs determine, pursuant to Standards on Auditing 320, that an associate has a material effect on the fair presentation of the financial reports of an investor, the financial reports of the associate shall be audited by a CPA in accordance with the Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants and the Standards on Auditing.
C. If an investment accounted for using the equity method is pledged as collateral or otherwise subject to any restriction or limitation, that fact shall be noted.
2. Property and equipment:
A. Tangible asset items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and that are expected to be used during more than 1 financial year or 1 operating cycle.
B. Property and equipment shall be subsequently measured using the cost model and accounted for in accordance with IAS 16.
C. Each component of property and equipment that is significant shall be depreciated separately. The depreciation method used shall reflect the pattern in which the asset's future economic benefits are expected to be consumed. If that pattern cannot be determined reliably, the straight-line method shall be used. The depreciable amount should be allocated on a systematic basis over the asset's useful life.
D. When items of property and equipment have different useful lives, or provide economic benefits in different ways, or are subject to different depreciation methods or depreciation rates, the notes shall show each class of their material components.
3. Right-of-use assets:
A. Means an asset that represents a lessee's right to use an underlying asset for the lease term.
B. A right-of-use asset shall be accounted for in accordance with IFRS 16.
4. Investment property:
A. Means property that is held by the owner or that is held by the lessee with the right of use, to earn rentals, or for capital appreciation, or both.
B. Investment property shall be accounted for in accordance with IAS 40. If the investment property is subsequently measured at fair value, the valuation model, qualifications of the appraiser, and information disclosure shall comply with Article 9, paragraph 4, subparagraph 4 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
5. Intangible assets:
A. An identifiable non-monetary asset without physical substance that meets the definition of identifiability, control, and existence of future economic benefits.
B. Intangible assets shall be subsequently measured using the cost model and accounted for in accordance with IAS 38.
C. The amortization method used shall reflect the pattern in which the asset’s future economic benefits are expected to be consumed by the securities firm. If that pattern cannot be determined reliably, the straight-line method shall be used. The amortized amount of an intangible asset shall be allocated on a systematic basis over its useful life.
6. Deferred tax assets: The amounts of income taxes recoverable in future periods in respect of deductible temporary differences, the carryforward of unused tax losses, and the carryforward of unused tax credits.
7. Other non-current assets: Non-current assets not attributable to any of the classes above.
The accounting treatment and the recognition and measurement of loss allowances for the items described in the preceding two paragraphs in relation to financial assets at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, financial assets measured at amortized cost, financial assets for hedging, investments in bonds with reverse repurchase agreements, securities margin loans receivable, deposits for securities borrowed, collateral for securities borrowed, trade receivables, and other receivables shall be in accordance with IFRS 9. Loss allowances shall be classified respectively as a deduction from financial assets measured at amortized cost, securities margin loans receivable, trade receivables, and other receivables. If those classifications are further subclassified, the loss allowances thereof shall also be presented respectively in the same manner.
A securities firm shall assess at each balance sheet date whether there is any objective evidence of impairment for the items described in paragraph 4 in relation to investments accounted for using the equity method, property and equipment, right-of-use assets, investment property measured using the cost model, and intangible assets. If any such evidence exists, the securities firm shall recognize the amount of any impairment loss in accordance with IAS 36. If the recoverable amount of non-financial assets is determined on the basis of fair value less costs of disposal, disclose the extra information regarding the fair value measurement, including the level of the fair value hierarchy, the valuation techniques, and the key assumptions. If the recoverable amount is determined on the basis of value in use, disclose the discount rate for value in use measurement.
With respect to the items described in paragraph 3 and paragraph 4 in relation to financial assets at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, financial assets measured at amortized cost, financial assets for hedging, securities margin loans receivable, trade receivables, other receivables, non-current assets held for sale, and investment property, the measurement and disclosure of fair value shall be made in accordance with IFRS 13.
The items described in paragraphs 3 and 4 in relation to financial assets at fair value through profit or loss, financial assets measured at fair value through other comprehensive income, financial assets measured at amortized cost, and financial assets for hedging shall be distinguished as current and non-current based on liquidity. |
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| Article 15 | Liabilities shall be properly classified. Current and non-current liabilities shall be distinguished.
For each liability line item, the total amount expected to be settled within 12 months after the balance sheet date and the total amount expected to be settled more than 12 months after the balance sheet date shall be separately presented in the financial reports or disclosed in the notes.
Current liability means that the securities firm expects to settle the liability in its normal operating cycle; that it holds the liability primarily for the purpose of trading; that the liability is due to be settled within 12 months after the balance sheet date, even if an agreement to refinance or to reschedule payments on a long-term basis is completed after the balance sheet date and before the financial reports are authorized for issue; or that the securities firm on the balance sheet date does not have in substance the right to defer settlement of the liability for at least 12 months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the transfer of the securities firm's own equity instruments do not affect its classification as current or non-current if the securities firm classifies the option as an equity instrument. As a minimum, current liabilities shall include the following liability line items:
1. Short-term borrowings:
A. Includes short-term borrowings from banks, overdrafts, and other short-term borrowings.
B. For short-term borrowing, the nature of the borrowing, the guarantee status, and the interest rate range shall be noted based on the type of borrowing. If collateral is provided, the name and carrying amount of the collateral shall be presented.
C. Borrowings from non-financial, non-insurance institutions in accordance with Article 17 of the Regulations Governing Securities Firms shall be presented separately.
2. Commercial paper payable:
A. Commercial paper issued through financial institutions to acquire funds from the money market.
B. Commercial paper payable shall be measured at amortized cost using the effective interest method. However, short-term commercial paper payable with no stated interest rate may be measured at the original face amount if the effect of discounting is immaterial.
C. For commercial paper payable, the guarantor or accepting institution and the interest rate shall be noted. If collateral is provided, the name and carrying amount of the collateral shall be noted.
3. Financial liabilities at fair value through profit or loss – current: The following financial instruments shall be appropriately recorded under the category of investments in bonds with reverse repurchase agreements – short sale, call (put) warrants, securities borrowed, or derivative instruments:
A. Financial liabilities held for trading:
a. Liabilities that are incurred principally for the purpose of repurchasing them in the near term;
b. Liabilities that, upon initial recognition, are part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking; or
c. Derivative financial liabilities, except for financial guarantee contracts or financial liabilities that are designated and effective hedging instruments.
B. Financial liabilities that are designated as at fair value through profit or loss.
C. Financial liabilities at fair value through profit or loss shall be measured at fair value. However, with respect to a financial liability designated as at fair value through profit or loss, if the amount of change in the fair value of the financial liability is attributable to change in the credit risk, it shall be recognized in other comprehensive income, unless for the purpose of avoiding accounting mismatch or in the case of loan commitments and financial guarantee contracts, under which circumstances the amount of changes in fair value shall be recognized in profit or loss.
4. Financial liabilities for hedging – current: A financial liability that is a designated and effective hedging instrument under hedge accounting requirements.
5. Liabilities for bonds with repurchase agreements: The actual amounts received by a securities firm when engaging in transactions in bonds with repurchase agreements.
6. Short sale margins: Margins received from short selling customers by a securities firm conducting securities trading margin purchase and short sale business.
7. Payables for short sale collateral received: Short sale proceeds (less securities transaction taxes, handling fees for execution of customer orders, and short sale handling fees) received as collateral from short selling customers by a securities firm conducting securities trading margin purchase and short sale business.
8. Trade payables:
A. Payables arising from a securities firm's business operations, including transaction proceeds payable from its purchase of securities held for operations and payables from its execution of customer orders to buy or sell securities. The details of such trade payables shall be disclosed in the notes.
B. Trade payables shall be measured at amortized cost using the effective interest method. However, short-term trade payables with no stated interest rate may be measured at the original invoice amount if the effect of discounting is immaterial.
C. Payables to related parties in significant amounts shall be presented separately.
9. Other payables: Payables other than trade payables, such as tax payable, accrued payroll, and dividends payable. For dividends and bonuses payable passed by resolution of the board of directors or a shareholders meeting in accordance with the Company Act, the distribution method and scheduled payment date, if determined, shall be disclosed.
10. Current tax liabilities: Unpaid tax for current and prior periods.
11. Provisions – current:
A. Any liability of uncertain timing or amount.
B. Provisions shall be accounted for in accordance with IAS 37.
C. A provision shall be recognized when a securities firm has a present obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
D. A securities firm shall disaggregate provisions into provisions for employee benefits and other items in the notes to the financial reports.
12. Liabilities directly associated with non-current assets held for sale: Any liability included in a disposal group held for sale that is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups, and whose sale must be highly probable.
13. Other current liabilities: Current liabilities not attributable to any of the classes above.
Non-current liabilities means liabilities other than current liabilities. Whether the securities firm intends or expects to settle a liability within 12 months after the balance sheet date does not affect the classification of the liability as current or non-current. As a minimum, non-current liabilities shall include the following liability line items:
1. Bonds payable (including overseas bonds):
A. For bonds issued by a securities firm, the total approved amount, interest rate, maturity date, name of collateral, carrying amount, issuing area, and other relevant terms and restrictions shall be noted in the notes to the financial reports. If the bonds are convertible bonds, the method of conversion and amounts already converted shall also be noted.
B. Premiums and discounts on bonds payable are valuations of bonds payable. They shall be presented as an addition to or deduction from bonds payable, and shall also be amortized, as an adjustment to interest expenses, using the effective interest method during the period of bond circulation.
2. Long-term borrowings:
A. For long-term borrowings, the content, maturity date, interest rate, name of collateral, carrying amount, and any other important restriction terms shall be noted.
B. For a long-term borrowing repaid in a foreign currency or in an amount translated at a foreign exchange rate, the name and amount of such foreign currency shall be noted.
C. Long-term notes payable and other long-term payables shall be measured at amortized cost using the effective interest method.
3. Lease liabilities:
A. Means the present value of the lease payments that the lessee has not paid.
B. Lease liabilities shall be accounted for in accordance with IFRS 16.
4. Deferred tax liabilities: The amounts of income taxes payable in future periods in respect of taxable temporary differences.
5. Other non-current liabilities: Non-current liabilities not attributable to any of the classes above.
The items described in the preceding two paragraphs in relation to financial liabilities at fair value through profit or loss, financial liabilities for hedging, liabilities for bonds with repurchase agreements, short sale margins, payables for short sale collateral received, trade payables, and other payables shall be accounted for in accordance with IFRS 9.
With respect to the items described in paragraphs 3 and 4 in relation to financial liabilities at fair value through profit or loss, financial liabilities for hedging, short sale margins, payables for short sale collateral received, trade payables, other payables, bonds payable, and long-term borrowings, the measurement and disclosure of fair value shall be made in accordance with IFRS 13.
The items described in paragraphs 3 and 4 in relation to financial liabilities at fair value through profit or loss, financial liabilities for hedging, lease liabilities, and provisions shall be distinguished as current and non-current based on liquidity. |
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| Article 16 | Equity items, their components, and information to be disclosed in the balance sheet are as follows:
1. Equity attributable to owners of the parent:
A. Share capital:
a. Capital contributed by shareholders to a securities firm, but excluding preferred shares in the nature of liabilities.
b. For share capital, the classes, par value per share, the number of shares authorized, the number of shares issued and fully paid (including shares not yet registered with the competent authority in charge of company registration), a reconciliation of the number of shares outstanding at the beginning and at the end of the period, the rights, preferences and restrictions attaching to each class of share capital, shares in the securities firm held by the securities firm or by its subsidiaries or associates, shares reserved for issue (or for transfer or conversion) under options and contracts for the sale of shares, and special conditions shall be disclosed in the notes.
B. Capital surplus: Means the equity components of financial instruments issued by a securities firm or premiums resulting from share capital transactions between a securities firm and its owners, and typically includes premium in excess of the par value of the shares issued, donated surplus, and others arising as a result of regulatory provisions associated with these Regulations. Capital surpluses shall be presented separately according to their nature; if there is any restriction on their use, the restriction shall be disclosed in the notes.
C. Retained earnings (or accumulated deficit): Equity resulting from operating activities, including legal reserves, special reserves, and undistributed earnings (or deficit to be offset).
a. Legal reserve: A fixed-percentage reserve appropriated as required by the Company Act.
b. Special reserve: A reserve appropriated from earnings in accordance with the requirements of applicable laws and regulations, contracts, or articles of incorporation, or as resolved at shareholders meetings.
c. Undistributed earnings (or deficit to be offset): Undistributed and unappropriated earnings ("deficit to be offset" is deficit not yet offset).
d. An earnings distribution or offsetting of deficit shall not be accounted for unless and until passed by a resolution of the board of directors or a shareholders meeting in accordance with the Company Act. However, when an earnings distribution or offsetting of deficit has been proposed, such shall be disclosed in the notes to the financial reports for the current period.
D. Other equity: Includes the accumulated balances of exchange differences resulting from translating the financial statements of a foreign operation, of unrealized gains or losses from financial assets measured at fair value through other comprehensive income, gains and losses on hedging instruments, and of revaluation surplus.
E. Treasury shares: Treasury shares shall be accounted for using the cost method and presented as a deduction from equity. The number of shares shall be noted.
2. Non-controlling interest:
A. The equity in a subsidiary not attributable, directly or indirectly, to a parent.
B. For each business combination, the components of non-controlling interest in the acquiree shall be measured in accordance with IFRS 3.
C. A securities firm shall disclose information on any subsidiary in which it has a non-controlling interest of materiality and on the non-controlling interest in accordance with IFRS 12.
In the case of an enterprise from another industry that concurrently operates securities business, when preparing financial statements for its securities segment in accordance with Article 8 of these Regulations, it shall separately present the operating capital earmarked for use in the securities segment under equity items.
A securities firm may elect to recognize the remeasurements of defined benefit plans in retained earnings or other equity, and disclose the accounting policy in the notes. Remeasurements of defined benefit plans that have been recognized in other equity may not be reclassified into profit or loss or transferred into retained earnings in a subsequent period. |
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Section II Statement of Comprehensive Income
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| Article 17 | A securities firm shall present all items of income and expense recognized in a period in a single statement of comprehensive income displaying components of profit or loss and components of other comprehensive income.
A securities firm shall present expenses recognized in profit or loss under the preceding paragraph using a classification based on their nature.
When items of income or expense are material, a securities firm shall disclose their nature and amount separately in the statement of comprehensive income or in the notes.
As a minimum, the statement of comprehensive income shall include the following line items, with the related details disclosed in the notes:
1. Income:
A. Brokerage fee revenue: Revenue from handling fees received by a securities firm for executing customer orders, during short sale or securities lending operations, or for the provision of agency services for transactions in emerging stocks.
B. Revenue from underwriting business: Remuneration from underwriting securities on a firm commitment basis, handling fee revenue from underwriting securities on a best-efforts basis, revenue from underwriting processing fees, and revenue from underwriting advisory fees.
C. Net gains (losses) on issuance of call (put) warrants: A securities firm's net gains or losses arising from changes in fair value of liabilities for call (put) warrants and of repurchased call (put) warrants, gains on exercise of call (put) warrants before maturity, and gains on expired call (put) warrants, less related fees incurred by the securities firm for issuing call (put) warrants.
D. Net gains (losses) on sale of securities held for operations: The net amount after offsetting all gains and losses arising from the sale of securities held for operations by the dealing and underwriting segments.
E. Net gains (losses) on measurement at fair value through profit or loss for securities held for operations: The net amount after offsetting all gains and losses arising from the fair value measurement of securities held for operations that are acquired by the dealing and underwriting segments.Realized net gains or losses from debt instrument investments measured at fair value through other comprehensive income: The net amount after offsetting all gains and losses arising from the sale by a securities firm of debt instruments measured at fair value through other comprehensive income.
F. Net gains or losses from reclassification of financial assets: Means gains or losses that meet one of the following conditions in accordance with IFRS 9:
a. Net gains or losses from reclassification from measurement at amortized cost to measurement at fair value through profit or loss.
b. Cumulative net gains or losses from reclassification from measurement at fair value through other comprehensive income to measurement at fair value through profit or loss.
G. Expected credit impairment losses and reversal gains: the amount of expected credit impairment losses (or reversals) recognized in accordance with IFRS 9.
H. Gains or losses arising from derecognition of financial assets measured at amortized cost: Means gains or losses arising when a securities firm derecognizes from its books financial assets measured at amortized cost that it had originally recognized.
I. Net gains (losses) on the covering of securities borrowing and short sales of bonds with reverse repurchase agreements: In the case of a securities firm engaging in securities borrowing or outright sale of government bonds acquired under reverse repurchase agreements, the net amount after offsetting all gains arising from a decline in the market price of the given security when the trade is covered at maturity with all losses arising from an increase in the market price of the given security when the trade is covered at maturity.
J. Net gains (losses) on measurement at fair value through profit or loss for securities borrowing and short sales of bonds with reverse repurchase agreements: In the case of a securities firm engaging in securities borrowing or outright sale of government bonds acquired under reverse repurchase agreements, the net amount after offsetting all gains and losses from measuring relevant items at fair value.
K. Interest revenue: Interest revenue that a securities firm derives from its margin purchase or money lending business or otherwise related to its business activities.
L. Net income from wealth management business: In the case of a securities firm engaging in wealth management business, the net amount of the resultant revenues less related expenditures.
M. Net gains (losses) on derivative instruments: In the case of a securities firm engaging in domestic or foreign derivative instrument business or hedging transactions, the net amount after offsetting the resultant gains and losses.
N. Other operating income: Operating revenues and gains not attributable to any of the items above.
O. The recognition and measurement of revenue from contracts with customers shall be made in accordance with IFRS 15. If a securities firm controls specific services before it transfers the services to its customer, it shall recognize the revenue based on the gross amount; otherwise, it shall recognize the revenue based on the net amount.
2. Handling fee expenses: Includes broker's exchange fees, dealer's exchange fees, and underwriting handling fees that a securities firm is required to pay to the TWSE or the TPEx.
3. Employee benefits expenses:
A. Expenses in relation to employee benefits that IAS19 requires to be recognized, including short-term employee benefits (such as wages, salaries, and labor and national health insurance contributions for employees), post-employment benefits (such as pensions), other long-term employee benefits (such as long-service leave), and termination benefits (such as early retirement incentive programs).
B. If the post-employment preferential deposit interest rate that a securities firm has offered to an employee in accordance with its internal rules or as stipulated in the employment contract is higher than the prevailing interest rate on the market, IAS 19 shall apply to the excess portion of the interest upon the employee's retirement.
4. Depreciation and amortization expenses: Related depreciation and amortization expenses that IAS16 and IAS38 require to be recognized.
5. Finance costs: Include interest expenditures incurred in relation to operating activities and for all classes of liabilities, with the portion eligible for capitalization being deducted.
6. Other operating expenses: Operating expenses required for a securities firm's business management needs and not attributable to any of the items above.
7. Share of the profit or loss of associates and joint ventures accounted for using the equity method: The profit or loss of associates and interests in joint ventures that a securities firm recognizes using the equity method according to its share in the associates and the interests in joint ventures.
8. Tax expense (benefit): The aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
9. Profit or loss of discontinued operations:
A. The post-tax profit or loss of discontinued operations and the post-tax gain or loss recognized on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation.
B. The presentation and disclosure of profit or loss of discontinued operations shall be made in accordance with IFRS 5.
10. Profit or loss during the period: Earnings or deficit in the current reporting period.
11. Other comprehensive income: Means each component of other comprehensive income classified by nature, including share of the other comprehensive income of associates and joint ventures accounted for using the equity method:
A. Items that may be subsequently reclassified into profit or loss: Include exchange differences resulting from translating the financial statements of a foreign operation, unrealized valuation gains or losses from debt instrument investments measured at fair value through other comprehensive income, and gains and losses from hedging instruments.
B. Items not to be reclassified into profit or loss: Include revaluation surplus, unrealized valuation gains and losses from equity instrument investments measured at fair value through other comprehensive income, remeasurements of defined benefit plans, and gains and losses from hedging instruments.
12. Total comprehensive income.
13. Allocations of profit or loss during the period attributable to non-controlling interest and owners of the parent.
14. Allocations of total comprehensive income during the period attributable to non-controlling interest and owners of the parent.
15. Earnings per share:
A. Basic and diluted earnings per share for profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity and for profit or loss attributable to the ordinary equity holders of the parent entity.
B. The calculation and presentation of earnings per share shall be made in accordance with IAS 33. |
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Section III Statement of Changes in Equity
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| Article 18 | As a minimum, the statement of changes in equity shall include the following:
1. Total comprehensive income during the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interest.
2. For each component of equity, the effects of retrospective application or retrospective restatement recognized in accordance with IAS 8.
3. For each component of equity, a reconciliation between the carrying amount at the beginning and the end of the period, separately disclosing changes resulting from:
A. net profit (or net loss) for the period;
B. other comprehensive income; and
C. transactions with owners in their capacity as owners, showing separately contributions by and distributions to owners and changes in ownership interests in subsidiaries that do not result in a loss of control.
A securities firm shall present, either in the statement of changes in equity or in the notes, the amount of dividends recognized as distributions to owners during the period, and the related amount of dividends per share. |
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Section IV Statement of Cash Flows
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| Article 19 | A statement of cash flows provides the primary users of the financial reports with a basis to assess the ability of the securities firm to generate cash and cash equivalents and the needs of the securities firm to utilize those cash flows. Namely, it presents, through inflows and outflows of cash and cash equivalents, a summary report on the securities firm's operating, investing, and financing activities during the period. The presentation and disclosure of cash flow information shall be made in accordance with IAS 7. |
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Section V Notes |
| Article 20 | To meet the objective of presenting full and complete information about the financial position, financial performance, and cash flows of a securities firm, financial reports shall contain explanatory notes disclosing the following:
1. Company history and scope of business operations.
2. A statement that the financial reports comply with these Regulations, applicable laws and regulations (giving the titles of the laws or regulations), as well as IFRS, IAS, IFRIC Interpretations, and SIC Interpretations.
3. The date when the financial reports were authorized for issue and the process involved in authorizing the financial reports for issue.
4. The effect or impact that may arise when it has or has not applied a new or revised IFRS, IAS, IFRIC Interpretation, or SIC Interpretation recognized by the FSC.
5. A summary of significant accounting policies used that are relevant to an understanding of the financial reports, and the measurement basis (or bases) used in preparing the financial reports.
6. Significant accounting judgments, estimations, and assumptions, as well as information about the assumptions it makes and other major sources of estimation uncertainty.
7. Objectives, policies and processes for managing capital, and any change in capital structure, including funding, liability, and equity.
8. If for a special reason there is a change in accounting treatment, thus affecting the comparison of financial data between two successive periods, the reason for the change and its effect on the financial reports shall be noted.
9. If it is necessary to provide the basis of valuation for any amount, financial instrument, or other item presented in the financial reports, the basis of valuation shall be noted.
10. If any item presented in the financial reports is subject to any legal, regulatory, contractual, or other restriction, the circumstances and timing of the restriction and other related information shall be noted.
11. Criteria for classifying assets and liabilities into current and non-current.
12. Material contingent liabilities and unrecognized contractual commitments.
13. Information on related financial instruments such as call (put) warrants and hedging transactions.
14. Financial risk management objectives and policies.
15. Long-term and short-term borrowings.
16. The addition, expansion, construction, lease, obsolescence, idling, sale, transfer, or long-term renting of major assets.
17. Principal investments in other enterprises.
18. Material transactions with related parties.
19. Losses due to material disasters.
20. Material litigation pending or concluded.
21. The signing, completion, avoidance, or lapse of material contracts.
22. Information about financial instruments. The information shall be disclosed in accordance with IFRS 7, including disclosure of the significance of financial instruments for the securities firm's financial position and performance; qualitative and quantitative disclosures describing risk exposures arising from financial instruments.
23. Comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers shall be disclosed in accordance with IFRS 15, including details of revenue recognized from contracts with customers, contract balances, contract performance obligations, significant judgments and changes in the judgments, and any assets recognized from the costs to obtain or fulfil a contract with a customer.
24. Relevant information about leases. The information shall be disclosed in accordance with IFRS 16, including disclosure of information that gives a basis for the primary users of the financial reports to assess the effect that the leases have on the financial position, financial performance, and cash flows of the securities firm, and relevant qualitative and quantitative information about its leasing activities.
25. Information about employee benefits. The information shall be disclosed in accordance with IAS 19, and shall include the influence of defined benefit plans on the amount, timing, and certainty of future cash flows, actuarial losses and gains arising from changes in demographic assumptions and financial assumptions, and the expected contributions in the next reporting period in the following financial year.
26. Segment financial information required to be disclosed in accordance with IFRS 8 including the scope of business, revenue, and gains and losses of each reportable segment.
27. Information on Mainland Area investments by the securities firm or by its subsidiaries in a third jurisdiction.
28. When subsidiaries hold shares in the parent, the names of the subsidiaries and the shareholdings, amounts, and reasons shall be separately presented.
29. In the case of private placement of securities, the type, issue date, and amount shall be disclosed.
30. Material organizational adjustments and material management reforms.
31. Material effects of changes in government laws and regulations.
32. Material effects of discontinuance of operations.
33. Any merger with or transfer of all business operations from or to another securities firm.
34. The content and monetary amount of trust business activities conducted in accordance with the Trust Enterprise Act.
35. Fair value information. The information shall be disclosed in accordance with IFRS 13, and shall include information on recurring or non-recurring fair value measurement of assets and liabilities, inputs such as fair value valuation technique and parameters or assumptions used in fair value measurement, and Level 3 of fair value hierarchy.
36. Foreign-currency-denominated assets and liabilities that have significant influence: Include the amount of risk exposure, currency, and exchange rate for monetary and non-monetary items denominated in foreign currencies, and the foreign exchange gains or losses on monetary items.
37. Regulatory capital adequacy ratio.
38. The basis for calculating the number of shares to be distributed as profit-sharing compensation to employees, and information on profit-sharing compensation to employees, directors, and supervisors:
A. The fixed amount or ratio prescribed in the articles of incorporation (and a statement that this information may be queried on the Market Observation Post System).
B. The basis for the estimated figures for the current period, the basis for calculating the number of shares to be distributed, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure.
C. The actual distribution for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized amount, additionally specify the amount of the discrepancy, the cause, and how it is treated.
39. Supporting information for items presented in the balance sheet and in the statements of comprehensive income, of changes in equity and of cash flows, including material information that could affect the securities firm's future cash flows, or other necessary descriptions essential for avoiding misunderstanding by the primary users or for the fair presentation of the financial reports. |
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| Article 21 | Financial reports shall include explanatory notes on the following subsequent events that occur between the balance sheet date and the date when the financial reports are authorized for issue:
1. Change in capital structure.
2. Large long-term or short-term borrowings.
3. The addition, expansion, construction, lease, obsolescence, idling, sale, pledge, transfer, or long-term renting of major assets.
4. Principal investments in other enterprises.
5. Losses due to material disasters.
6. Material litigation pending or concluded.
7. The signing, completion, voidance, or lapse of material contracts.
8. Material organizational adjustments and material management reforms.
9. Material effects of changes in government laws and regulations.
10. Other material events or measures capable of affecting future financial position, financial performance, and cash flows. |
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| Article 22 | A securities firm shall separately disclose in the notes to the financial reports information on the following events between the securities firm and its subsidiaries during the current period, and on parent-subsidiary transactions:
1. Information on material transactions:
A. Lending funds to others.
B. Providing endorsements or guarantees for others.
C. Acquisition of real estate reaching NT$300 million or 20 percent of paid-in capital or more.
D. Disposal of real estate reaching NT$300 million or 20 percent of paid-in capital or more.
E. Handling fee discounts on transactions with related parties totaling NT$5 million or more.
F. Accounts receivable from related parties reaching NT$100 million or 20 percent of paid-in capital or more.
G. Others: The business relationship between the parent and the subsidiaries and between each subsidiary, and the circumstances and amounts of any material transactions between them.
2. Information on investees: If the securities firm directly or indirectly exercises significant influence or control over, or has a joint venture interest in, an investee company that is not in the Mainland Area, it shall disclose information on the investee company, showing the name, location, principal business activities, original investment amount, shareholding at the end of the period, profit or loss for the period, recognized investment gain or loss, and cash dividends.
3. Information on overseas branches and representative offices: The securities firm shall provide information on its overseas branches and representative offices, disclosing the locations, business activities, inward and outward remittances of operating capital, the branch's profit or loss for the period, and any accounts and transactions with the head office.
4. Information on investments in the Mainland Area:
A. If the securities firm directly or indirectly exercises significant influence or control over, or has a joint venture interest in, an investee company in the Mainland Area , it shall disclose the information on any investee company in the Mainland Area, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, current profit or loss, and recognized investment gain or loss, carrying amount of the investment at the end of the period, repatriated investment gains, and limit on the amount of investment in the Mainland Area.
B. When the securities firm recognizes investment gain or loss using the equity method or prepares consolidated financial statements with respect to a Mainland Area investee company, the recognition or preparation shall be based on the investee company's financial reports audited and attested by an international CPA firm having a business cooperation relationship with an R.O.C. CPA firm, provided that when preparing interim consolidated financial reports, the recognition or preparation may be based on the investee company's financial reports reviewed by an international CPA firm having a business cooperation relationship with an R.O.C. CPA firm.
5. Information on major shareholders: a securities firm whose stock is listed on the TWSE or listed on the TPEx shall disclose the names, numbers of shares held, and shareholding percentages of shareholders who hold 5 percent or more of the securities firm's equity. For this purpose, the securities firm may request the centralized securities depository enterprise to provide relevant information.
If the shares issued by a securities firm have a par value other than NT$10, for the calculation of a transaction amount of 20 percent of paid-in capital under subparagraph 1, items C, D, and F of the preceding paragraph, 10 percent of the equity attributable to owners of the parent as stated in the balance sheet shall be substituted. |
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| Article 23 | A securities firm shall fully disclose information on related party transactions in accordance with IAS 24, and the following provisions shall be complied with:
1. The name and relationship of the related party shall be presented.
2. If the transaction amount or balance of any single related party reaches 10 percent or more of the securities firm's total transaction amount or balance of that type of transaction, the name of each such related party shall be individually presented.
In considering whether a counterparty is a related party, attention shall be directed to the substance of the relationship in addition to the legal form. Unless it can be established that no control, joint control, or significant influence exists, a party falling within any of the following shall be deemed to have a substantive related party relationship, and relevant information shall be disclosed in the notes to the financial reports in accordance with IAS 24:
1. An affiliated enterprise within the meaning given in Chapter VI-I of the Company Act, and any of its directors, supervisors, and managerial officers.
2. A company or institution governed by the same general management office as the securities firm, and any of its directors, supervisors, and managerial officers.
3. A person holding the position of manager or higher in the general management office.
4. A company or institution shown as an affiliated enterprise in the securities firm's publications or public announcements.
5. Another company or institution whose board chairman or president is the same person as, or is the spouse or a relative within the second degree of kinship of, the board chairman or president of the securities firm. |
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