Chapter I General Principles |
| Article 1 | These Regulations are adopted under Article 14, paragraph 2 of the Securities and Exchange Act (the "Act").
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| Article 2 | The financial reports of a stock exchange organized as a company ("company-type stock exchange") shall be prepared in accordance with these Regulations and other applicable laws and regulations. Matters not provided for therein shall be governed by generally accepted accounting principles (GAAP).
The GAAP described in the preceding paragraph shall mean the following, as recognized by the Financial Supervisory Commission (FSC): International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).
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| Article 3 | A company-type stock exchange shall establish an accounting system based on the nature of its accounting matters, the actual conditions and development of its business, and its management needs.
The accounting system referred to in the preceding paragraph shall separately provide the following items, based on the nature of the company-type stock exchange's business operations, and in a way that meets the needs of preparation of the consolidated financial reports and uniformity in the accounting policies of the company-type stock exchange and its subsidiaries:
- A general description of the accounting system.
- A chart of journals and ledgers.
- Descriptions and uses of accounting items, accounting documents, account books, and accounting statements.
- General accounting procedures.
- Other items required by the FSC.
The company-type stock exchange shall see to it that its subsidiaries establish their accounting systems in accordance with the preceding paragraph.
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| Article 4 | The appointment and discharge of the in-charge accountant of a company-type stock exchange shall be approved by a majority of the directors present at a board of directors meeting attended by a majority of the directors, and shall be reported to the FSC for approval or recordation within 5 days after appointment or change.
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| Article 5 | A company-type stock exchange shall use the calendar year as its financial year, with accounts closed on June 30 for the first half of the financial year and on December 31 for the whole financial year.
The accrual basis of accounting shall be used.
Accounts shall be expressed in New Taiwan Dollars (NT$).
The dollar amounts in the financial statements may be presented in thousands of NT dollars rounded to the nearest thousand.
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| Article 6 | "Financial reports" shall mean financial statements, statements of major accounting items, and any other disclosures and explanatory information within the scope of these Regulations that are helpful to the decision making of users.
A complete set of financial statements shall comprise a balance sheet, a statement of comprehensive income, a statement of changes in equity, a statement of cash flows, and their accompanying notes or supplementary schedules.
A company-type stock exchange, unless newly established, or under any of the circumstances set out in paragraph 4 herein, or as otherwise required by the FSC, shall prepare the major financial statements and notes described in the preceding paragraph by presenting comparative information for two consecutive periods. The major financial statements shall also be signed or sealed on each page by the company-type stock exchange's chairperson, managerial officer, and principal accounting officer.
When a company-type stock exchange applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements, it shall do so in accordance with the applicable provisions of IAS 1.
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| Article 7 | Financial reports shall present fairly the financial position, financial performance, and cash flows of a company-type stock exchange without being misleading to an interested party in making judgments and decisions.
If a financial report violates these Regulations or any other applicable requirements, for which the FSC as a result of an audit gives a notice of adjustment, the company-type stock exchange shall make the required adjustment and correction. If the adjusted amount reaches the threshold set forth in Article 6 of the Securities and Exchange Act Enforcement Rules, the financial report shall be restated and submitted to the FSC.
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| Article 8 | The following shall apply when a company-type stock exchange makes an accounting change:
- Change in accounting policy:
- When a company-type stock exchange changes an accounting policy voluntarily in a new financial year in order to produce financial reports that provide reliable and more relevant information about the effects of transactions or other events or conditions on its financial position, financial performance, or cash flows, it shall request a certified public accountant (CPA) to provide an item-by-item analysis and review opinion on the reasonableness of the nature of the change in accounting policy, the reasons why applying the new accounting policy provides reliable and more relevant information, each line item affected and the estimated effect for the financial year preceding the earliest financial year affected by retrospective application of the new accounting policy, and the actual effect on the opening balance of retained earnings for the immediately preceding financial year. These shall be submitted as a proposal for adoption by resolution of the board of directors, after which they shall be submitted to the FSC for approval.
- If, for the voluntary change in accounting policy in the new financial year, it is impracticable to determine either the period-specific effects or the cumulative effect of the change, as described in paragraph 23 of IAS 8, the company-type stock exchange shall calculate the effects in accordance with paragraph 24 of IAS 8 and the preceding item above, and shall request a CPA to provide an item-by-item analysis and review opinion on the reasonableness of the reasons why retrospective application is impracticable and how and from when the change in accounting policy has been applied, and also provide an opinion on the impact on the audit opinion for the financial year preceding the change in accounting policy. The company-type stock exchange shall then follow the procedure described above.
- Unless it is impracticable to determine the effects as described in the preceding item, then within 2 months after the beginning of the financial year in which the new accounting policy is adopted, the company-type stock exchange shall calculate the line items affected and the actual effect for the financial year preceding the earliest financial year affected by retrospective application of the new accounting policy and the actual effect on the opening balance of retained earnings for the immediately preceding financial year, and shall submit those to the board of directors, after which they shall be submitted to the FSC for recordation. If the difference between the actual effect of the change in accounting policy and the original estimated effect is NT$10 million or more, and is also 1 percent or more of net operating revenues for the immediately preceding financial year, or 5 percent or more of paid-in capital, the company-type stock exchange shall analyze the reasons for the difference and request a CPA to provide an opinion on its reasonableness. The analysis and the CPA's opinion shall also be filed with the FSC for recordation.
- Except when applying a new accounting policy to newly purchased assets, in which case the provisions of the preceding items need not be applied, if a change in accounting policy is applied without having been duly filed for approval, the financial reports for the financial year in which the new accounting policy was applied shall be restated, and the new accounting policy may only be applied from the next financial year after a supplementary filing has been made and approved.
- If the shares of a company-type stock exchange have a par value other than NT$10, for the calculation of the 5 percent of paid-in capital under item C, 2.5 percent of the equity attributable to owners of the parent as stated in the balance sheet shall be substituted.
- With respect to any matter among accounting estimates in relation to a change in the useful life or depreciation method of depreciable assets, a change in the amortization period or amortization method of intangible assets, or a change in the residual value of any such assets, in addition to complying with item D of the preceding subparagraph, a company-type stock exchange shall request a CPA to provide an analysis and review opinion on the reasonableness of the nature of the changes in accounting estimates and the reasons why the changes in accounting estimates can provide reliable and more relevant information. Those changes in accounting estimates shall then be submitted as a proposal for adoption by resolution of the board of directors, after which they shall be submitted to the FSC for approval.
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| Article 9 | A company-type stock exchange shall prepare consolidated financial reports in accordance with Chapter II of these Regulations and IFRS 10, and shall prepare annual parent company only financial reports in accordance with Chapter IV of these Regulations.
A company-type stock exchange that does not have a subsidiary shall prepare individual financial reports in accordance with Chapter II of these Regulations, and when preparing annual individual financial reports shall also prepare statements of major accounting items in accordance with Article 25 of these Regulations.
A company-type stock exchange preparing interim financial reports shall follow the provisions of Chapters II and III of these Regulations as well as IAS 34, and when preparing semi-annual financial reports shall also prepare semi-annual parent company only financial reports pursuant to Articles 23 to 25, or semi-annual individual financial reports pursuant to Article 25.
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| Article 10 | The meaning of "parent," "subsidiary," "associate," and "joint arrangement" as used in these Regulations shall be determined in accordance with IFRS 10, IFRS 11, and IAS 28.
The meaning of "control," "significant influence," or "joint control" as used in these Regulations shall be determined in accordance with IFRS 10, IFRS 11, and IAS 28.
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