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Title：

Regulations Governing the Preparation of Financial Reports by Securities Firms  CH

Amended Date： 2024.01.24 
Article Content Chapter Content Search Article No. Search Legal Basis Amended Article Legislative History Chinese

Title： Regulations Governing the Preparation of Financial Reports by Securities Firms(2011.12.29)
Date： 
   Chapter I General Principles
Article 1    These Regulations are adopted under Article 14, paragraph 2 of the Securities and Exchange Act (the "Act").
Article 2    The financial reports of a securities firm 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) of the Executive Yuan: 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).
Article 3    When a securities firm simultaneously operates two or more of the businesses specified in Article 15 of the Act in accordance with applicable requirements, the accounting matters for each such business shall be handled separately. When a securities firm concurrently operates futures business pursuant to Article 57 of the Futures Trading Act, the accounting matters for its futures segment shall be governed by applicable futures trading laws and regulations. When a securities firm concurrently operates bills finance business pursuant to Article 17 of the Act Governing Bills Finance Business, the accounting matters for its bills finance segment shall be governed by applicable bills finance laws and regulations. When a securities firm concurrently operates specified trust business lines pursuant to Article 3 of the Trust Enterprise Act, the accounting matters for its trust segment shall be governed by applicable trust enterprise laws and regulations.
    When a financial institution concurrently operates securities business pursuant to Article 45, paragraph 2 of the Act, if the treatment of its accounting matters is subject to other applicable financial laws and regulations of the competent authority in charge of that industry, those laws and regulations shall govern. However, accounting matters and financial reports for its securities operations shall still be governed by these Regulations.
Article 4    A securities firm shall establish, and amend when necessary, an accounting system based on the nature of its accounting matters, the actual status and development of its business, and its management needs.
    The accounting system referred to in the preceding paragraph shall, based on the nature of the securities firm's business operations, separately provide a general description of the accounting system, descriptions and uses of accounting items, accounting documents, account books, and accounting reports, and accounting procedures.
Article 5    With the exception of a securities firm concurrently operated by a financial institution, which shall otherwise be subject to other applicable requirements, the appointment and discharge of the principal accounting officer of a securities firm shall be approved by a majority of the directors present at a board of directors meeting attended by a majority of the directors. Within 5 days after appointment or change, the securities firm shall file for registration with the Taiwan Stock Exchange, the GreTai Securities Market, or the relevant securities dealers association, to be forwarded to the FSC for recordation.
Article 6    Except as otherwise approved by the FSC, a securities firm 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$).
    Financial statements shall be presented in thousands of NT dollars.
Article 7    "Financial reports" shall mean financial statements, statements of major accounting items, and any other disclosures and explanatory information 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 securities firm, unless newly established, or under any of the circumstances set out in paragraph 4 herein, or 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 securities firm's chairperson, managerial officer, and principal accounting officer.
    When a securities firm applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial reports, or when it reclassifies items in its financial reports, it shall do so in accordance with paragraphs 10 and 39 of IAS 1.
Article 8    an enterprise from another industry concurrently operates securities business, when preparing financial reports in accordance with the requirements of the competent authority in charge of that industry, it shall additionally disclose a balance sheet, a statement of comprehensive income, and accompanying notes for the independent securities segment prepared in accordance with Chapter II of these Regulations. This requirement does not apply, however, if the enterprise from another industry only concurrently operates proprietary bond trading.
Article 9    Financial reports shall present fairly the financial position, financial performance, and cash flows of a securities firm 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 requiring adjustment to be made, the securities firm shall make the required adjustment and correction. If the adjusted amount reaches the threshold set by the FSC, a corrected financial report shall be publicly disclosed, together with a description of the reasons, items, and amount specified in the FSC notice for adjustment.
Article 10    The following shall apply when a securities firm makes an accounting change:
  1. 1. Change in accounting policy:
    1. (1) When a securities firm 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 the securities firm's 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. Upon approval by the FSC, the securities firm shall publicly disclose and file information on the estimated effect arising from the application of the new accounting policy and the CPA review opinion.
    2. (2) 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 securities firm 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 securities firm shall then follow the procedure described above.
    3. (3) 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 securities firm 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 for adoption by the board of directors, after which they shall be publicly disclosed and filed and 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 the income for the immediately preceding financial year or 5 percent or more of paid-in capital, the securities firm 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 publicly disclosed and filed with the FSC.
    4. (4) 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 submission has been made and approved.
  2. 2. 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 shall also be governed by the provisions of items (1) and (4) of the preceding subparagraph.
    The expression "public disclosure and filing" or "publicly disclose and file" as used in this article means entering the information into the website designated by the FSC for the submission of electronic filings.
Article 11    A securities firm shall prepare consolidated financial reports in accordance with Chapter II of these Regulations and IAS 27, and shall prepare annual parent company only financial reports in accordance with Chapter IV of these Regulations.
    A securities firm that does not have a subsidiary shall prepare individual financial reports in accordance with Chapter II of these Regulations, and when preparing annual financial reports shall follow the provisions of Articles 27 to 32 of these Regulations.
    A securities firm preparing interim financial reports shall follow the provisions of Chapters II and III of these Regulations as well as IAS 34.
Article 12    The meaning of "parent," "subsidiary," and "associate" as used in these Regulations shall be determined in accordance with IAS 27 and IAS 28.
    The meaning of "control," "significant influence," or "joint control" as used in these Regulations shall be determined in accordance with IAS 27, IAS 28, and IAS 31.
Article 13    Unless otherwise required by the FSC, the records retention period for the financial reports identified in these Regulations, or for the accounting documents, journals, ledgers, deeds, vouchers, and books based on which the financial reports are prepared, shall be subject to the Business Accounting Act.
 
   Chapter II Financial Reports
      Section I Balance Sheet
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 statements or disclosed in the notes.
    As a minimum, the balance sheet shall include the following asset line items:
  1. 1. Current assets: A securities firm shall classify an asset as current when it expects to realize the asset, or intends to sell or consume it, in its normal operating cycle; when it holds the asset primarily for the purpose of trading; when it expects to realize the asset within 12 months after the balance sheet date; or when 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.
    1. (1) Cash and cash equivalents: Cash on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
          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. (2) Financial assets at fair value through profit or loss ??current: Financial assets that meet any of the following conditions:
    3. (1) Financial assets held for trading.
      1. (ii) Financial assets that, except for those designated as hedged items under hedge accounting requirements, are designated upon initial recognition as at fair value through profit or loss.
    A financial instrument shall be recorded and classified as a financial asset held for trading, and shall be recorded under the category of broker's investments in securities, open-end funds or money market instruments, securities held for operations, or derivative instruments if:
  1. (1) It is acquired principally for the purpose of sale in the near term.
  2. (2) It is, upon initial recognition, a 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.
  3. (3) It is a derivative financial asset, except for a derivative financial asset that is a financial guarantee contract or a designated and effective hedging instrument.
        Financial assets at fair value through profit or loss shall be measured at fair value.
  4. (3) Available-for-sale financial assets ??current: Financial assets that are not derivative financial assets and that meet any of the following conditions:
    1. (i). Financial assets that are designated as available-for-sale.
    2. (ii). Financial assets that are not:
      1. (a) Financial assets measured at fair value through profit or loss.
      2. (b) Held-to-maturity financial assets.
      3. (c) Financial assets measured at cost.
      4. (d) Bond investments for which no active market exists.
      5. (e) Receivables.
            Available-for-sale financial assets shall be measured at fair value.
  5. (4) Derivative financial assets for hedging ??current: Any derivative financial asset that is a designated and effective hedging instrument under hedge accounting requirements. Any such asset shall be measured at fair value.
  6. (5) Financial assets measured at cost ??current: Financial assets that meet all of the following conditions:
    1. (i) An investment in equity instruments that do not have a quoted price in an active market, or a derivative instrument that is linked to such equity instruments that do not have a quoted price in an active market and that shall settled by delivery of such equity instruments.
    2. (ii) The fair value cannot be reliably measured.
  7. (6) Bond investments for which no active market exists ??current: Bond investments that do not have a quoted price in an active market and with fixed or determinable payments, and that meet all of the following conditions:
    1. (i) Not classified as at fair value through profit or loss.
    2. (ii) Not designated as available-for-sale.
    3. (iii) There are no other reasons except for credit worsening that are likely to cause the holder not being able to recover almost all of the original investments.
          Bond investments for which no active market exists shall be measured at amortized cost.
  8. (7) 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.
  9. (8) Securities margin loans receivable: Margin loans extended to customers by a securities firm conducting securities trading margin purchase and short sale business.
        At each balance sheet date an assessment shall be made of whether there is any uncollectible amount from securities margin loans receivable and an appropriate allowance for doubtful debts shall be made, with the result presented on a net basis.
  10. (9) 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.
  11. (10) 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.
  12. (11) Trade receivables: 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.
        Trade receivables shall be measured at amortized cost using the effective interest method. 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.
        Trade receivables from related parties in significant amounts shall be presented separately.
        At each balance sheet date an assessment shall be made of whether there is any uncollectible amount from trade receivables and an appropriate allowance for doubtful debts shall be made, with the result presented on a net basis.
  13. (12) Prepayments: All prepayments and prepaid expenses.
  14. (13) Other receivables: Receivables other than trade receivables.
        At each balance sheet date an assessment shall be made of whether there is any unrecoverable amount from other receivables and an appropriate allowance for doubtful debts shall be made, with the result presented on a net basis.
  15. (14) 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.
  16. (15) Non-current assets held for sale: 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.
        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.
  17. (16) Other current assets: Current assets not attributable to any of the classes above.
  • 2. Non-current assets: Tangible, intangible and financial assets of a long-term nature, other than assets classified as current.
    1. (1) Held-to-maturity financial assets ??non-current: A non-derivative financial asset with fixed or determinable payments and fixed maturity, and which a securities firm has the positive intention and ability to hold to maturity, excluding the following items:
      1. (i) It is designated, upon initial recognition, as at fair value through profit or loss.
      2. (ii) It is designated as available-for-sale.
      3. (iii) It meets the definition of loans and receivables.
            Held-to-maturity financial assets shall be measured at amortized cost.
    2. (2) Investments accounted for using the equity method: An investment in an associate, or an interest in a jointly controlled entity not recognized by the venturer using proportionate consolidation.
          The valuation and presentation of investments accounted for using the equity method shall be made in accordance with IAS 28 and IAS 31.
          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 significant 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 a CPA determines, pursuant to Statement of Auditing Standards No. 24, 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 Certification of Financial Statements by Certified Public Accountants and generally accepted auditing standards.
          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.
    3. (3) Property and equipment: 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.
          Property and equipment shall be subsequently measured using the cost model and accounted for in accordance with IAS 16.
          Each component of property and equipment that is significant shall be depreciated separately.
          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.
    4. (4) Investment property: Property held, by the owner or by the lessee under a finance lease, to earn rentals, or for capital appreciation, or both.
          Investment property shall be subsequently measured using the cost model and accounted for in accordance with IAS 40.
    5. (5) Intangible assets: An identifiable non-monetary asset without physical substance that meets the definition of identifiability, control by an entity, and existence of future economic benefits.
          Intangible assets shall be subsequently measured using the cost model and accounted for in accordance with IAS 38.
    6. (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. (7) Other non-current assets: Non-current assets not attributable to any of the classes above.
          The items described in the preceding paragraph in relation to financial assets at fair value through profit or loss, available-for-sale financial assets, financial assets measured at cost, bond investment for which no active market exists, held-to-maturity financial assets, derivative 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 accounted for in accordance with IAS 39.
          A securities firm shall assess at each balance sheet date whether there is any objective evidence of impairment for the items described in paragraph 3 in relation to available-for-sale financial assets, financial assets measured at cost, bond investment for which no active market exists, held-to-maturity financial assets, investments in bonds with reverse repurchase agreements, securities margin loans receivable, deposits for securities borrowed, collateral for securities borrowed, trade receivables, other receivables, investments accounted for using the equity method, property and equipment, investment property, and intangible assets. If any such evidence exists, the securities firm shall recognize the amount of any impairment loss in accordance with IAS 39 and IAS 36.
        The items described in paragraph 3 in relation to financial assets at fair value through profit or loss, derivative financial assets for hedging, available-for-sale financial assets, financial assets measured at cost, bond investment for which no active market exists, and held-to-maturity financial assets shall be distinguished as current and non-current based on liquidity.
    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.
        As a minimum, the balance sheet shall include the following liability line items:
    1. 1. Current liabilities: A securities firm shall classify a liability as current when it expects to settle the liability in its normal operating cycle; when it holds the liability primarily for the purpose of trading; when it expects to settle the liability when due 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 when it does not have an unconditional 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 issue of equity instruments do not affect its classification.
      1. (1) Short-term borrowings: Includes short-term borrowings from banks, overdrafts, and other short-term borrowings.
            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. Borrowings from non-financial institutions in accordance with Article 17 of the Regulations Governing Securities Firms shall be presented separately.
      2. (2) Commercial paper payable: Commercial paper issued through financial institutions to acquire funds from the money market.
            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.
            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. (3) Financial liabilities at fair value through profit or loss ??current: Financial liabilities that meet either of the following conditions:
        1. (i) Financial liabilities held for trading.
        2. (ii) Financial liabilities that, except for those designated as hedged items under hedge accounting requirements, are designated upon initial recognition as at fair value through profit or loss.
        A financial instrument shall be classified as a financial liability held for trading, and shall be recorded under the category of investments in bonds with reverse repurchase agreements ??short sale, call (put) warrants, securities borrowed, or derivative instruments, if:
    1. (i) it is incurred principally for the purpose of repurchasing it in the near term;
    2. (ii) it is, upon initial recognition, a 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
    3. (iii) it is a derivative financial liability, except for a financial guarantee contract or a derivative financial liability that is a designated and effective hedging instrument.
          Financial liabilities at fair value through profit or loss shall be measured at fair value.
  • (4) Derivative financial liabilities for hedging ??current: A derivative financial liability that is a designated and effective hedging instrument under hedge accounting requirements. Any such liability shall be measured at fair value.
  • (5) Financial liabilities measured at cost ??current: derivative instrument liabilities that are linked to such equity instruments that do not have a quoted price in an active market and that shall be settled by delivery of such equity instruments, and the fair value cannot be reliably measured.
  • (6) Liabilities for bonds with repurchase agreements: The actual amounts received by a securities firm when engaging in transactions in bonds with repurchase agreements.
  • (7) Short sale margins: Margins received from short selling customers by a securities firm conducting securities trading margin purchase and short sale business.
  • (8) 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.
  • (9) Trade payables: 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.
        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.
        Payables to related parties in significant amounts shall be presented separately.
  • (10) 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 shareholders meeting, the distribution method and scheduled payment date, if determined, shall be disclosed.
  • (11) Current tax liabilities: Unpaid tax for current and prior periods.
  • (12) Provisions ??current: Any liability of uncertain timing or amount.
        Provisions shall be accounted for in accordance with IAS 37.
        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.
        A securities firm shall disaggregate provisions into provisions for employee benefits and other items in the notes to the financial reports.
  • (13) 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.
  • (14) Other current liabilities: Current liabilities not attributable to any of the classes above.
  • 2. Non-current liabilities: Liabilities other than current liabilities.
    1. (1) Bonds payable (including overseas bonds): 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.
          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. (2) Long-term borrowings: For long-term borrowings, the content, maturity date, interest rate, name of collateral, carrying amount, and any other important restriction terms shall be noted.
          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.
          Long-term notes payable and other long-term payables shall be measured at amortized cost using the effective interest method.
    3. (3) Deferred tax liabilities: The amounts of income taxes payable in future periods in respect of taxable temporary differences.
    4. (4) Other non-current liabilities: Non-current liabilities not attributable to any of the classes above.
          The items described in the preceding paragraph in relation to financial liabilities at fair value through profit or loss, financial liabilities measured at cost, derivative 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 IAS 39.
        The items described in paragraph 3 in relation to financial liabilities at fair value through profit or loss, derivative financial liabilities for hedging, financial liabilities measured at cost, and provisions shall be distinguished as current and non-current based on liquidity.
    Article 16    Equity items, their components, and information to be disclosed in the balance sheet are as follows:
    1. 1. Equity attributable to owners of the parent:
      1. (1) Share capital: Capital contributed by shareholders to a securities firm and registered with the competent authority in charge of company registration, but excluding preferred shares in the nature of liabilities.
            For share capital, the classes, par value per share, the number of shares authorized, the number of shares issued and fully paid, 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.
      2. (2) 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.
      3. (3) Retained earnings (or accumulated deficit): Equity resulting from operating activities, including legal reserves, special reserves, and undistributed earnings (or deficit to be offset).
        1. (i) Legal reserve: A fixed-percentage reserve appropriated as required by the Company Act.
        2. (ii) 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.
        3. (iii) Undistributed earnings (or deficit to be offset): Undistributed and unappropriated earnings ("deficit to be offset" is deficit not yet offset).
        4. (iv) An earnings distribution or offsetting of deficit shall not be accounted for unless and until approved by a shareholders meeting. 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.
      4. (4) 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 available-for-sale financial assets, and of the effective portion of gains and losses on hedging instruments in a cash flow hedge.
      5. (5) 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. 2. Non-controlling interest: The equity in a subsidiary not attributable, directly or indirectly, to a parent.
        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.
    		 
          Section II Statement of Comprehensive Income
    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. 1. Income:
      1. (1) 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.
      2. (2) 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.
      3. (3) 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.
      4. (4) 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.
      5. (5) 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.
      6. (6) 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.
      7. (7) 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.
      8. (8) Interest revenue: Interest revenue that a securities firm derives from its margin purchase or money lending business or otherwise related to its business activities.
      9. (9) 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.
      10. (10) 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.
      11. (11) Other operating income: Operating revenues and gains not attributable to any of the items above.
            The recognition and measurement of revenue shall be made in accordance with IAS 18.
    2. 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 Taiwan Stock Exchange or the GreTai Securities Market.
    3. 3. Employee benefits expenses: 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).
          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. 4. Depreciation and amortization expenses: Related depreciation and amortization expenses that IAS16 and IAS38 require to be recognized.
    5. 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. 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. 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 jointly controlled entities that a securities firm recognizes using the equity method according to its share in the associates and jointly controlled entities.
    8. 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. 9. Profit or loss of discontinued operations: 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.
          The presentation and disclosure of profit or loss of discontinued operations shall be made in accordance with IFRS 5.
    10. 10. Profit or loss for the period: Earnings or deficit in the current reporting period.
    11. 11. Other comprehensive income: Each component of other comprehensive income classified by nature, including exchange differences resulting from translating the financial statements of a foreign operation, unrealized gains or losses from available-for-sale financial assets, gains and losses on measuring investments in equity instruments at fair value through other comprehensive income, the effective portion of gains and losses on hedging instruments in a cash flow hedge, and actuarial gains and losses on defined benefit plans.
    12. 12. Share of the other comprehensive income of associates and joint ventures accounted for using the equity method.
    13. 13. Total comprehensive income.
    14. 14. Allocations of profit or loss for the period attributable to non-controlling interest and owners of the parent.
    15. 15. Allocations of total comprehensive income for the period attributable to non-controlling interest and owners of the parent.
    16. 16. 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.
        The calculation and presentation of earnings per share shall be made in accordance with IAS 33.
    		 
          Section III Statement of Changes in Equity
    Article 18    As a minimum, the statement of changes in equity shall include the following:
    1. 1. total comprehensive income for the period, showing separately the total amounts attributable to owners of the parent and to non-controlling interest;
    2. 2. for each component of equity, the effects of retrospective application or retrospective restatement recognized in accordance with IAS 8; and
    3. 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:
      1. (1) net profit (or net loss) for the period;
      2. (2) other comprehensive income; and
      3. (3) 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 per share.
    		 
          Section IV Statement of Cash Flows
    Article 19    A statement of cash flows provides users of financial statements 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.
    		 
          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. 1. Company history and scope of business operations.
    2. 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. 3. The date when the financial reports were authorized for issue and the process involved in authorizing the financial reports for issue.
    4. 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. 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. 6. Significant accounting judgments, estimations, and assumptions, as well as information about the assumptions it makes and other major sources of estimation uncertainty.
    7. 7. Objectives, policies and processes for managing capital, and any change in capital structure, including funding, liability, and equity.
    8. 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. 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. 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. 11. Criteria for classifying assets and liabilities into current and non-current.
    12. 12. Material contingent liabilities and unrecognized contractual commitments.
    13. 13. Information on related financial instruments such as call (put) warrants and hedging transactions.
    14. 14. Financial risk management objectives and policies.
    15. 15. Long-term and short-term borrowings.
    16. 16. The addition, expansion, construction, lease, obsolescence, idling, sale, transfer, or long-term renting of major assets.
    17. 17. Principal investments in other enterprises.
    18. 18. Significant transactions with related parties.
    19. 19. Losses due to major disasters.
    20. 20. Major litigation pending or concluded.
    21. 21. The signing, completion, voidance, or lapse of major contracts.
    22. 22. Information about employee benefits.
    23. 23. Major organizational adjustments and significant management reforms.
    24. 24. Material effects of changes in government laws and regulations.
    25. 25. Segment financial information required to be disclosed in accordance with IFRS 8.
    26. 26. Information on mainland China investments by the securities firm or by its subsidiaries in a third jurisdiction.
    27. 27. In the case of private placement of securities, the type, issue date, and amount shall be disclosed.
    28. 28. Material effects of discontinuance of operations.
    29. 29. Any merger with or transfer of all business operations from or to another securities firm.
    30. 30. The content and monetary amount of trust business activities conducted in accordance with the Trust Enterprise Act.
    31. 31. When subsidiaries hold shares in the parent, the names of the subsidiaries and the shareholdings, amounts, and reasons shall be separately presented.
    32. 32. Supporting information for items presented in the balance sheet and in the statements of comprehensive income, of changes in equity and of cash flows, or other necessary descriptions essential for avoiding misunderstanding by users or for the fair presentation of the financial reports.
    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. 1. Change in capital structure.
    2. 2. Large long-term or short-term borrowings.
    3. 3. The addition, expansion, construction, lease, obsolescence, idling, sale, pledge, transfer, or long-term renting of major assets.
    4. 4. Principal investments in other enterprises.
    5. 5. Losses due to major disasters.
    6. 6. Major litigation pending or concluded.
    7. 7. The signing, completion, voidance, or lapse of major contracts.
    8. 8. Major organizational adjustments and significant management reforms.
    9. 9. Material effects of changes in government laws and regulations.
    10. 10. Other major events or measures capable of affecting future financial position, financial performance, and cash flows.
    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. 1. Information on significant transactions:
      1. (1) Lending funds to others.
      2. (2) Providing endorsements or guarantees for others.
      3. (3) Acquisition of real estate reaching NT$100 million or 20 percent of paid-in capital or more.
      4. (4) Disposal of real estate reaching NT$100 million or 20 percent of paid-in capital or more.
      5. (5) Handling fee discounts on transactions with related parties totaling NT$5 million or more.
      6. (6) Accounts receivable from related parties reaching NT$100 million or 20 percent of paid-in capital or more.
      7. (7) Others: The business relationship between the parent and the subsidiaries and between each subsidiary, and the circumstances and amounts of any significant transactions between them.
    2. 2. Information on investees: If the securities firm directly or indirectly exercises significant influence or control over an investee company, 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, and recognized investment gain or loss.
          The securities firm is exempted from the requirements of items (1) and (2) of the preceding subparagraph when the investee company it controls directly or indirectly is a financial or insurance enterprise.
    3. 3. Information on investments in mainland China:
      1. (1) Information on any investee company in mainland China, showing the name, principal business activities, paid-in capital, method of investment, inward and outward remittance of funds, shareholding ratio, 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 China area.
      2. (2) When the securities firm recognizes investment gain or loss using the equity method or prepares consolidated financial statements with respect to a mainland China investee company, the recognition or preparation shall be based on the investee company's financial reports audited and certified by an international accounting firm having a business cooperation relationship with an ROC accounting 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 accounting firm having a business cooperation relationship with an ROC accounting firm.
    Article 23    A securities firm shall fully disclose information on related party transactions in accordance with IAS 24. 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 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. 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. 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. 3. A person holding the position of manager or higher in the general management office.
    4. 4. A company or institution shown as an affiliated enterprise in the securities firm's publications or public announcements.

    		 
       Chapter III Interim Financial Reports
    Article 24    financial reports shall include interim financial reports for each of the following periods:
    1. 1. Balance sheets as of the end of the current interim period, as of the end of the immediately preceding financial year, and as of the end of the comparable interim periods of the immediately preceding financial year.
    2. 2. Statements of comprehensive income for the current interim period, for the current financial year to the end of the current interim period, for the comparable interim periods of the immediately preceding financial year, and for the immediately preceding financial year to the end of the comparable interim periods.
    3. 3. Statement of changes in equity for the current financial year to date, with a statement of changes in equity for the same period of the immediately preceding financial year.
    4. 4. Statement of cash flows for the current financial year to date, with a statement of cash flows for the same period of the immediately preceding financial year.

    		 
       Chapter IV Parent Company Only Financial Reports
    Article 25    A securities firm preparing parent company only financial reports shall apply accounting treatment conforming to the requirements of Chapter II of these Regulations, except when it has control, significant influence, or joint control over an invested company, in which case it shall value the long-term equity investment using the equity method.
        The profit or loss for the period and other comprehensive income presented in parent company only financial reports shall be the same as the allocations of profit or loss for the period and of other comprehensive income attributable to owners of the parent presented in the financial reports prepared on a consolidated basis, and the owners' equity presented in the parent company only financial reports shall be the same as the equity attributable to owners of the parent presented in the financial reports prepared on a consolidated basis.
    Article 26    A securities firm preparing parent company only financial statements is not required to prepare segment information within the scope of IFRS 8.
    Article 27    A securities firm preparing parent company only financial reports shall prepare statements of major accounting items.
        Titles of statements of major accounting items are as follows:
    1. 1. Statements of assets and liabilities items:
      1. (1) Statement of cash and cash equivalents.
      2. (2) Statement of financial assets at fair value through profit or loss ??current.
      3. (3) Statement of available-for-sale financial assets ??current.
      4. (4) Statement of derivative instruments.
      5. (5) Statement of financial assets measured at cost ??current.
      6. (6) Statement of bond investment for which no active market exists ??current.
      7. (7) Statement of investments in bonds with reverse repurchase agreements.
      8. (8) Statement of securities margin loans receivable.
      9. (9) Statement of trade receivables.
      10. (10) Statement of prepayments.
      11. (11) Statement of other receivables.
      12. (12) Statement of non-current assets held for sale.
      13. (13) Statement of other current assets.
      14. (14) Statement of changes in financial assets at fair value through profit or loss ??non-current.
      15. (15) Statement of available-for-sale financial assets ??non-current.
      16. (16) Statement of held-to-maturity financial assets ??current.
      17. (17) Statement of financial assets measured at cost ??non-current
      18. (18) Statement of bond investment for which no active market exists ??non-current
      19. (19) Statement of changes in investments accounted for using the equity method.
      20. (20) Statement of changes in accumulated impairment of investments accounted for using the equity method.
      21. (21) Statement of changes in property and equipment.
      22. (22) Statement of changes in accumulated depreciation of property and equipment.
      23. (23) Statement of changes in accumulated impairment of property and equipment.
      24. (24) Statement of changes in investment property.
      25. (25) Statement of changes in accumulated depreciation of investment property.
      26. (26) Statement of changes in accumulated impairment of investment property.
      27. (27) Statement of deferred tax assets.
      28. (28) Statement of other non-current assets.
      29. (29) Statement of short-term borrowings.
      30. (30) Statement of financial liabilities at fair value through profit or loss ??current.
      31. (31) Statement of financial liabilities measured at cost.
      32. (32) Statement of liabilities for bonds with repurchase agreements.
      33. (33) Statement of short sale margins.
      34. (34) Statement of payables for short sale collateral received.
      35. (35) Statement of trade payables.
      36. (36) Statement of other payables.
      37. (37) Statement of provisions ??current.
      38. (38) Statement of liabilities directly associated with non-current assets held for sale.
      39. (39) Statement of other current liabilities.
      40. (40) Statement of financial liabilities at fair value through profit or loss ??non-current.
      41. (41) Statement of long-term borrowings.
      42. (42) Statement of provisions ??non-current.
      43. (43) Statement of deferred tax liabilities.
      44. (44) Statement of other non-current liabilities.
    2. 2. Statements of profit or loss items:
      1. (1) Statement of brokerage fee revenue.
      2. (2) Statement of revenue from underwriting business.
      3. (3) Statement of gains (losses) on sale of securities.
      4. (4) Statement of interest revenue.
      5. (5) Statement of finance costs.
      6. (6) Statement of employee benefits, depreciation, amortization, and other operating expenses.
        A securities firm may determine, having regard to the concept of materiality, whether or not to separately present the statements of assets and liabilities items described in subparagraph 1 of the preceding paragraph.
    Article 28    A securities firm shall provide information on its business conditions in accordance with the following:
    1. 1. Significant business matters: The securities firm shall provide information on matters arising over the most recent 5 financial years that have had a significant impact on its business, including acquisitions of or mergers with other companies, demergers, equity investments in affiliated enterprises, reorganization, purchases or disposals of major assets, and significant changes in operation method or business activity.
    2. 2. Information related to investments in overseas enterprises: The securities firm shall provide summary information on any investments in overseas enterprises and offices, and any investments in other enterprises and offices by such overseas investee enterprises, including original investment amount, investment gains or losses, cash dividends, and endorsements, guarantees, or loans extended to outside parties by each such enterprise.
    3. 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. 4. Remuneration and related information on directors, supervisors, general manager, and assistant general managers:
      1. (1) The securities firm shall, in a manner conforming to the following, disclose the remuneration paid to each of the directors, supervisors, general manager, and assistant general managers in the most recent financial year; if a director concurrently serves as a member of management, the remuneration shall be disclosed separately by the position held:
        1. (i) The securities firm may opt either to disclose aggregate remuneration information, with the name(s) indicated for each remuneration range, or to disclose the name of each individual and the corresponding remuneration amount. For a director concurrently serving as a member of management, the remuneration shall be disclosed separately for each position held. The securities firm may adopt the aggregate disclosure method if it is a non-public company whose issued voting shares are all held, either directly or indirectly, by one single person.
        2. (ii) If the securities firm's most recent capital adequacy ratio, whether unaudited, CPA-reviewed, or adjusted following FSC examination, is lower than 150 percent, or if it has had an after-tax deficit for the most recent financial year, it shall disclose the remuneration paid to each of the directors, supervisors, and general manager.
        3. (iii) The securities firm, if a public company that has had an insufficient director shareholding percentage for 3 consecutive months or longer during the most recent financial year, shall disclose the remuneration paid to each of the directors, and, if one that has had an insufficient supervisor shareholding percentage for 3 consecutive months or longer during the most recent financial year, shall disclose the remuneration paid to each of the supervisors.
        4. (iv) The securities firm, if a public company that has had an average ratio of share pledging by directors and supervisors in excess of 50 percent in any 3 months during the most recent financial year, shall disclose the remuneration paid to each of the directors and supervisors having a ratio of pledged shares in excess of 50 percent for each such month.
      2. (2) If the securities firm's chairperson, general manager, or any managerial officer in charge of finance or accounting matters has in the most recent year held a position at the accounting firm of its CPA or at an affiliated enterprise of such accounting firm, it shall disclose the name and position of that person and the period during which the position was held at the accounting firm or affiliated enterprise.
            As used in these Regulations, the expression "affiliated enterprise of the accounting firm of its CPA" means one in which the CPAs at the accounting firm of its CPA hold more than 50 percent of the shares, or of which such CPAs hold more than half of the directorships, or a company or institution shown as an affiliated enterprise in the publications or public announcements of the accounting firm of its CPA.
    5. 5. Labor-management relations:
      1. (1) Indicate any significant employee benefit policies, professional development, training, or retirement programs and the status of their implementation, as well as agreements between labor and management and policies for safeguarding employees' rights and interests.
      2. (2) Provide information on any loss sustained as a result of labor disputes in the most recent 3 financial years, together with the disclosure of an estimate of losses incurred to date or likely to be incurred in the future and the mitigation measures taken or to be taken. If the losses cannot be reasonably estimated, the securities firm shall make a statement to that effect.
    Article 29    A securities firm shall disclose the following financial information for the most recent 5 financial years:
    1. 1. Condensed balance sheet and statement of comprehensive income.
    2. 2. Analysis of key financial ratios.
    3. 3. Other significant information (e.g., impact of changes in commodity prices or exchange rates) that will provide a better understanding of the securities firm's financial position, financial performance, and cash flows or the trend of their changes.
    Article 30    A securities firm shall review its financial position, financial performance, and cash flows and analyze the reason of their changes. The review shall at least cover the following matters, and when necessary may address these matters at the segmental level:
    1. 1. Significant capital expenditures and the source of funds: Provide information on the nature, anticipated benefits, and actual or anticipated source of funds for any significant capital expenditures invested or committed in the most recent 2 financial years, and for any capital expenditures proposed to be invested in the coming 5 years. If material changes are expected in the relative cost of funds or capital for future borrowings or capital increase, or in the securities firm's borrowing or capital increase policy, relevant information shall be provided.
    2. 2. Liquidity: Analyze liquidity in the most recent 2 financial years and the reason for any increase or decrease, and provide information, in terms of operational trends, capital demand, and other significant commitments, transactions, or non-transactions, on the conditions of future changes in operating capital demand, amount of operating capital that can be generated through business operations, and amount of operating capital that needs to be or can be obtained from external sources. If it is discovered that liquidity is or will be materially insufficient, identify the remedial measures taken or to be taken.
    3. 3. Financial performance: Analyze the components of profit or loss from continuing operations in the most recent 2 financial years and describe any significant transactions, non-transactions, or economic changes that affect their increase or decrease. When there is a significant increase or decrease in revenues or expenses, the reason for the change shall be stated. If material changes have occurred or are expected to occur in the operational policies, market conditions, or other internal or external factors, causing a material increase or decrease in revenues or expenses from continuing operations, the fact and their impact shall be stated.
    Article 31    A securities firm shall disclose the following information regarding its CPA:
    1. 1. Information on professional fees: A securities firm may opt to disclose CPA professional fees either by fee range or by disclosure of individual amounts, and, given any of the following conditions, shall disclose information on the professional fees paid to its CPA:
      1. (1) When non-audit fees paid to the CPA, to the accounting firm of the CPA, and to any affiliated enterprise of such accounting firm are equivalent to one quarter or more of the audit fees paid to them, or when non-audit fees reach NT$500,000 or more, the amounts of both audit and non-audit fees and the details of the non-audit services shall be disclosed.
      2. (2) When the securities firm changes its accounting firm and the audit fees paid for the financial year in which the change took place are lower than those paid for the financial year immediately preceding the change, the amount and percentage of and reason for the reduction in audit fees shall be disclosed.
      3. (3) When the audit fees paid for the current financial year are lower than those paid for the immediately preceding financial year by 15 percent or more, the amount and percentage of and reason for the reduction in audit fees shall be disclosed.
            The "audit fees" under item (1) means professional fees paid by the securities firm to its CPA for audits, reviews, and secondary reviews of financial reports, reviews of financial forecasts, and tax certification.
    2. 2. Information on change in CPA: If a securities firm changed its CPA during the most recent 2 financial years or any subsequent interim period, it shall disclose the following information:
      1. (1) Regarding the former CPA:
        1. (i) Date of and reason for the change in CPA, together with a description of whether the CPA or the securities firm terminated or discontinued the engagement.
        2. (ii) If the former CPA issued an audit report during the most recent 2 years containing an opinion other than an unqualified opinion, state the opinion and reason.
        3. (iii) Indicate whether there were any disagreements between the securities firm and the former CPA on any of the following matters:
          1. (a) Accounting policies or practices.
          2. (b) Financial report disclosure.
          3. (c) Auditing scope or procedure.
                If any such disagreements did exist, the securities firm shall describe in detail the nature of each such disagreement, how the securities firm addressed them (including whether the securities firm has authorized the former CPA to respond fully to the inquiries of the successor CPA concerning the subject matter of each of such disagreements), and the final results.
        4. (iv) Disclose the following matters if applicable:
          1. (a) The former CPA advised the securities firm that it lacked the sound internal controls necessary to develop reliable financial reports.
          2. (b) The former CPA advised the securities firm that the CPA was unable to rely on the securities firm's written representations, or was unwilling to be associated with the financial reports prepared by the securities firm.
          3. (c) The former CPA advised the securities firm that the scope of the audit must be expanded, or there was information showing that an expanded audit might impact the reliability of either a previously issued financial report or the financial report to be issued, but due to the change of the CPA or for any other reason, the former CPA did not expand the scope of the audit.
          4. (d) The former CPA advised the securities firm that information has come to the CPA's attention that might impact the reliability of either a previously issued financial report or the financial report to be issued, but due to the change of the CPA or for any other reason, the former CPA did not address the issue.
      2. (2) Regarding the successor CPA:
        1. (i) Names of the successor accounting firm and CPA, and date of engagement.
        2. (ii) If prior to the formal engagement of the successor CPA, the securities firm consulted the new CPA regarding the accounting treatment of or application of accounting policies to a specific transaction, or the type of audit opinion that might be rendered on the securities firm's financial report, the securities firm shall disclose the issues that were the subjects of those consultations and the consultation results.
        3. (iii) The securities firm shall consult and obtain written views from the successor CPA regarding the matters on which the securities firm disagreed with the former CPA, and disclose information on these views.
      3. (3) The securities firm shall by letter provide the former CPA with a copy of the disclosures it is making in response to items (1) and (2) (iii) of subparagraph 2 of this article, and advise the CPA of the need to respond by letter within 10 days should the CPA disagree on any such matters. The securities firm shall disclose the content of the reply letter from the former CPA.
    Article 32    A securities firm preparing and disclosing information on matters specified in Articles 28 through 31 of these Regulations shall request its CPA to issue a review opinion on these matters in accordance with the Directions for Review of Other Disclosures in Financial Reports.
    		 
       Chapter V Consolidated Financial Statements Covering Affiliated Enterprises
    Article 33    A securities firm shall prepare and present consolidated financial statements covering affiliated enterprises in accordance with the Regulations Governing Preparation of Consolidated Business Reports Covering Affiliated Enterprises, Consolidated Financial Statements Covering Affiliated Enterprises, and Reports on Affiliations adopted by the FSC.
        If, pursuant to the Regulations Governing Preparation of Consolidated Business Reports Covering Affiliated Enterprises, Consolidated Financial Statements Covering Affiliated Enterprises, and Reports on Affiliations, the entities that must be included in preparing the consolidated financial statements covering affiliated enterprises are entirely the same as those that IAS 27 requires to be included in preparing the consolidated financial report comprising the parent and its subsidiaries, and if the required disclosures to be made in the consolidated financial statements covering affiliated enterprises are already made in the consolidated financial report comprising the parent and its subsidiaries, then the consolidated financial statements covering affiliated enterprises need not be prepared, provided that a statement to that effect is made and presented on the front page of the consolidated financial report.
    		 
       Chapter VI First-time Adoption
    Article 34    1 applies when a securities firm first adopts IFRS.
        Except when electing to use the deemed cost exemption in accordance with Article 35 below, the securities firm shall apply IAS 40, IAS 16, and IAS 38 retrospectively to investment property, property and equipment not classified as for investment or held for sale, and intangible assets in accordance with the preceding paragraph at the date of transition to IFRS.
    Article 35    A securities firm electing to use the deemed cost exemption described in IFRS 1 shall be subject to the following:
    1. 1. If all items of investment property are used for non-operating purposes in accordance with Article 16 of the Regulations Governing Securities Firms, and there is sufficient evidence that they are continuously being rented out and can generate a stable cash flow in the medium or long term, the securities firm may use the fair value of such an item of investment property as its deemed cost, with the amount estimated from the contractual rent of the investment property using the discounted cash flow method as the cap and the securities firm's weighted average cost of capital as the discount rate.
    2. 2. For an item of investment property that does not fall within the scope of the preceding subparagraph allowing the use of fair value as deemed cost, of property and equipment not classified as for investment or held for sale, or of intangible assets, the securities firm may only elect to use a previous GAAP revaluation of that item as deemed cost at the date of the revaluation.
          The securities firm shall disclose in the notes the election of deemed cost, the assumptions and methodology used to determine the fair value, and the weighted average cost of capital as described in the preceding paragraph.
        When electing to use the fair value of an item of investment property as its deemed cost as described in subparagraph 1, paragraph 1, the securities firm shall obtain the appraisal from a certified ROC real estate appraiser who satisfies the following conditions:
    1. 1. The appraiser must have at least 2 years of experience practicing in the field of real estate appraisal.
    2. 2. The appraiser does not have a record of poor credit in negotiable instruments or debts during the most recent 3 years, or a record of being subject to disciplinary action by a real estate appraiser disciplinary board during the most recent 5 years.
    3. 3. The appraiser may not have a related party or substantive related party relationship with the securities firm.
    4. 4. The appraiser has had appraisal experience relevant to the investment property being appraised, in terms of geographical location and type, during the preceding year.
        The preceding article, and paragraph 1 through the preceding paragraph of this article, shall also apply to subsidiaries of the securities firm. In the case of an overseas subsidiary, if the country where the subsidiary is located has adopted the IFRS, IAS, IFRIC Interpretations and SIC Interpretations, and if the subsidiary's investment property is measured subsequently using the cost model, then when applying IFRS 1 the securities firm may not use fair value as deemed cost and shall also use the cost model for its subsequent measurement.
    Article 35-1    For the financial assets or financial liabilities measured at cost prior to the date of conversion, a securities firm may, on the date of conversion, elect to use the exemption designated by the previously recognized financial instruments pursuant to IFRS 1, or classifies them as financial assets or financial liabilities held for trading on the premises that they meet the conditions for financial assets or financial liabilities held for trading under Article 14 or 15 of these Regulations.
        Financial assets or financial liabilities not included in the preceding paragraph may not be reclassified on the date of conversion.
    		 
       Chapter VII Supplementary Provisions
    Article 36    The format of the statements, schedules, and other documents relating to financial reports as identified in these Regulations shall be determined by the FSC.
    Article 37    The financial reports and related supplementary documents that a securities firm is required to file in accordance with Article 36 of the Act as applied mutatis mutandis under Article 63 thereof shall be filed in accordance with Article 21 of the Regulations Governing Securities Firms, together with a copy to the Securities and Futures Institute for access by the public.
    Article 38    These Regulations shall be enforced from 1 January 2013.