Chapter I General Principles
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| Article 1 | These Regulations are promulgated pursuant to Article 36-1 of the Securities and Exchange Act (“the Act”). |
| Article 2 | A public company shall prepare its financial forecast in accordance with the provisions of these Regulations. Matters on which these Regulations are silent shall be handled in accordance with Statement of Financial Accounting Standards (the “Accounting Standards”) No. 16 issued by the ROC Accounting Research and Development Foundation, except where otherwise provided for by the Securities and Futures Commission, Ministry of Finance (“SFC”), |
| Article 3 | A public company shall plan and prepare its financial forecast in accordance with the following provisions:
1. Establish a comprehensive written budget system stating monthly cash, production, sales, cost, and capital budgets for reference in preparing the financial forecast.
2. Form reasonable and appropriate hypotheses in good faith, and exercise professional due diligence in appropriately disclosing relevant information.
3. Circumspectly and reasonably plan the cash and capital budget for the full fiscal year, addressing such matters as capital increase by issuing shares, issuing corporate bonds, long-term borrowings, or acquisition and disposal of major assets, to serve as a basis for preparing the financial forecast. |
| Article 4 | The financial forecast shall be submitted to the board of directors for approval after it has been fully prepared; provided, if for some reason it cannot be submitted in time to the board of directors for approval, it may be submitted subsequently for ratification. |
Chapter II Scope of Applicability
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| Article 5 | Under any of the following circumstances, a public company shall publicly announce and report a financial forecast (hereinafter, "publish a financial forecast"):
1. Where any the following circumstances applies to a public company whose shares are listed on the stock exchange or traded over-the-counter, except where otherwise provided by the SFC:
(1) Where a company has filed for effective registration (or applied) to offer and issue securities in accordance with the provisions of the Criteria Governing the Offering and Issuance of Securities by Securities Issuers, and has publicly issued the securities; the public company shall furthermore publish a follow-up financial forecast for the fiscal year following the year of the original effective registration or approval.
(2) Where in directors’ elections at the expiry of a term of office or during any given term of office there is a cumulative change of one-third or more of the directors; the public company shall furthermore publish a follow-up financial forecast the following fiscal year. In calculations to determine whether there has been a change of one-third of the directors, any change in the operational authority of a juristic person director shall be deemed a change of director and calculated as such. However,
where a juristic person director has appointed a new representative to the board but there has been no material change in operational authority, such appointment is exempted from inclusion in the calculation of change of directors.
(3) Where any of the circumstances in the subparagraphs of Article 185, paragraph 1 of the Company Act exists; the public company shall furthermore publish a follow-up financial forecast the following fiscal year.
(4) Where there is a merger with another company under the Company Act, Business Mergers and Acquisitions Act or other act; the public company shall furthermore publish a follow-up financial forecast the following fiscal year. However, this does not apply to a merger conducted under paragraph 6 of Article 18, or Article 19, of the Business Mergers and Acquisitions Act, or Article 316-2 of the Company Act.
(5) Where there is an acquisition of another company under the Business Mergers and Acquisitions Act or other act; the public company shall furthermore publish a follow-up financial forecast the following fiscal year. However, this does not apply where new shares that the acquiring company intends to issue for purposes of the acquisition do not exceed 20 percent of the voting shares issued by the acquiring company, and where the total value of the cash or property it intends to pay to the acquired comp
any or its shareholders does not exceed 2 percent of the acquiring company's net worth.
2. When a public company whose shares are not listed on the Taiwan Stock Exchange or traded on the OTC market conducts offering and issuance of securities in accordance with Criteria Governing the Offering and Issuance of Securities by Securities Issuers, and publicly issues the securities.
3. Except where otherwise governed by SFC regulations; a company applying for listing with the Taiwan Stock Exchange Corp. or applying for OTC trading with the GreTai Securities Market shall furthermore publish financial forecasts for three consecutive years beginning from the year following the SFC’s recordation of the contract for listing or OTC trading. |
| Article 6 | Where a public company voluntarily publishes its financial forecast, the preparation and public announcement and reporting of the financial forecast shall be conducted in accordance with these Regulations.
Where a public company provides operating revenue or profit forecast information to news, magazine, radio, television, Internet, or other mass media, or announces such information at a business performance seminar, news conference, or other venue, it shall be deemed voluntary publication of a financial forecast. |
Chapter III Content Preparation
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| Article 7 | In preparing its financial forecast, a public company shall follow the complete format of its past basic financial statements, expressed in individual amounts; financial statements from the two preceding fiscal years and the financial forecast for the current fiscal year shall further be shown side-by-side.
Where a public company files for effective registration (or applies) to offer and issue securities in accordance with the provisions of the Criteria Governing the Offering and Issuance of Securities by Securities Issuers, an additional financial forecast for the following fiscal year must be prepared if the filing (or application) is filed more than nine months after the close of the business year, or if the review period for an application for exchange listing or OTC trading extends beyond September; an
d financial statements from the preceding two fiscal years, the financial forecast for the current fiscal year, and the financial forecast for the following fiscal year shall be shown side-by-side.
When a public company prepares an updated (or corrected) financial forecast, the financial statements from the preceding two fiscal years, the pre-update (or pre-correction) financial forecast, and the post-update (or post-correction) financial forecast shall be shown side-by-side.
When a public company prepares or updates (or corrects) its financial forecast for the current fiscal year, if the financial statement for the preceding year has not yet been completely audited and attested by a certified public accountant (CPA) and self-produced numbers are presented, it shall disclose in prominent lettering that the statement is unaudited. |
| Article 8 | In addition to the forecasted financial statement, the content presented in a financial forecast shall include the following items:
1. Date of completion and purpose of preparation of the financial forecast.
2. Statement that the enterprise's financial forecast is an estimate and may not be completely achieved.
3. Overall explanation of critical accounting policies.
4. Overall explanation of significant basic assumptions.
5. Quarterly forecast figures for operating revenue, operating costs, gross profit, and pre-tax profit or loss. If the company does not publish the financial forecast for the current year until the period has commenced, the information for each quarter preceding the publication date shall be presented in the actual amounts.
If enterprises in a certain industry do not have a "gross profit" account title, "operating profit" shall be substituted.
6. The status of actual achievement of the forecasted income statement included in the previous financial forecast, including:
(1) Comparison of the original forecasted amounts, amended amounts, and actually achieved amounts.
(2) If there is a discrepancy of 20 percent or more in pre-tax profit/loss, an analysis of the reason.
(3) Date the original forecast was announced, date of amendment, reason for amendment, and the amount affected.
7. The status of actual achievement of the financial forecast for the current year up to the end of the quarter preceding the completion of the financial forecast. If the financial statement for the preceding quarter has not yet been completely audited (or reviewed) by a CPA, and self-produced numbers are presented, it shall be disclosed in prominent lettering that the statement has not been audited (or reviewed).
8. Where an updated financial forecast is being prepared, the following additional items shall be included:
(1) Itemized analysis of the circumstances and reasons behind any changes in the basic assumptions before and after the update.
(2) Impact on gross profit, operating profit/loss, pre-tax profit/loss, and earnings per share.
(3) Where there is a discrepancy of 20 percent or more in gross profit following the update, an itemized price-quantity analysis shall be prepared for each of its major products and services.
9. In preparing a corrected financial forecast, the reason and nature of the error, and the affect on gross profit, operating profit/loss, and pre-tax profit/loss of the initial error shall be fully explained.
The content of the forecasted income statement referred to in the preceding paragraph shall contain at the very least operating revenues, operating costs, gross profit, operating expenses, operating profit-loss, non-operating revenues and expenditures, pre-tax profit/loss, income tax, after-tax profit/loss, and earnings per share. |
| Article 9 | The overall explanation of significant basic assumptions disclosed in a financial forecast shall comply Section 23 of Statement of Financial Accounting Standards No. 16, and shall additionally fully disclose the following items:
1. Analysis of those significant basic assumptions that are very sensitive to the forecast results or are have a high likelihood of deviation, such as exchange rates, interest rates, and costs of primary raw materials.
2. The sources of information and relevant percentage figures on which the basic assumptions, such as the sales volumes, sales prices, and costs of the company's products, are based.
3. For forecasted long-term investment profit/loss recognized under the equity method, the name of the invested companies, shareholding percentage, forecasted recognized amount of investment profit/loss, and basis for recognition of the above-said investment profit/loss. Where the recognized amount of the investment profit/loss reaches 20 percent of the forecasted pre-tax profit/loss and the amount involved is NT$10 million or more, the company shall disclose whether the invested company prepared its fin
ancial forecast in accordance with Statement of Financial Accounting Standards No. 16.
4. Where the forecasted profit/loss from disposal of long-term investments or real property reaches 20 percent of the forecasted pre-tax profit/loss, and the amount involved is NT$10 million or more, the company shall disclose the location and book value of the investment item or real property planned for disposal, the basis on which the disposal price was determined, the status of signing of the agreement or formalizing of the purchase, and specific evidence that the income can be recognized in the curr
ent year.
5. A company that plans to carry out an issuance of shares for capital increase, a corporate bond issue, or a private placement of securities shall disclose the key content of the plan such as the source of funds, plan items, preliminary timetable, and anticipated potential benefit, and the effect on relevant items in the financial statement. |
| Article 10 | A public company that publishes a financial forecast may be exempted from preparing a consolidated financial forecast. |
Chapter IV Public Disclosure of Information
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| Article 11 | For a public company duly required to publish a financial forecast, the deadlines for public announcement and reporting are as follows:
1. A company that publishes its financial forecast because it offers and issues securities, applies for listing of its stock on the stock exchange, or applies for over-the-counter trading of its stock pursuant to the Criteria Governing the Offering and Issuance of Securities by Securities Issuers shall publicly announce and report within two days from the filing (application) date.
2. A company that publishes its financial forecast because of a cumulative change of one-third or more of its directors under Article 5, subparagraph 1, item 2, shall publicly announce and report within one month from the date the new directors assume office.
3. A company that publishes its financial forecast because of one of the events set out in paragraph 1 of Article 185 of the Company Act shall publicly announce and report within one month from the date of the shareholders meeting resolution.
4. A company that publishes its financial forecast because it merges with another company shall publicly announce and report within one month from completing the company amendment registration following completion of the merger.
5. A company that publishes its financial forecast because it acquires another company shall publicly announce and report within one month from the completion of the acquisition.
6. A company required to make follow-up publication of its financial forecast under Article 5, paragraph 1, subparagraphs 1 and 3 hereof shall publicly announce and report within four months from the end of the preceding business year under Article 36 of the Act.
7. A company that publishes its financial forecast voluntarily under Article 6 hereof shall publicly announce and report within two days from the disclosure date. |
| Article 12 | The content of the publication of a public company’s financial forecast shall include at least the following items:
1. Date the preparation of the financial forecast was completed.
2. Kind of opinion provided in the CPA's review report; if the CPA has issued a non-standard review report, the explanation and conclusions shall also be included.
3. Financial forecast (including corrected figures and original forecasted figures) and the historical data from the preceding period, including:
(1) Condensed balance sheet
(2) Condensed income statement
4. Statement in prominent lettering that: This information is a forecast and may not be completely achieved; for detailed information, reference should be made to the explanation of the critical accounting policies and the basic assumptions.
5. Where a financial forecast is updated (or corrected) or re-prepared, the reason for doing so and the impact on the forecast information. |
| Article 13 | A company that has published its financial forecast for the current year shall, at the time it publishes its quarterly, semi-annual and annual financial reports, also publish the date of the original forecasted income statement and of any subsequent amendments thereto, as well as the annual achievement rate against the annual forecast figures for the forecasted fiscal year and the quarterly achievement rate against the forecast figures for the forecasted quarter, up to the financial report for the curren
t period. |
Chapter V Assessment and Self-Evaluation
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| Article 14 | In any of the following events, a company that has published its financial forecast shall re-prepare the financial forecast and publicly announce and report it after having it reviewed by a CPA:
1. Where one month or more has elapsed between the date of preparation and the date of public announcement and reporting.
2. Where there has been a change in the attesting CPA; provided, this shall not apply to internal staff adjustments within an accounting firm.
3. Where another financial forecast is required to be published in accordance with the provisions of Article 5; provided, this shall not apply where one month or less has elapsed between the preparation date of the published financial forecast and the filing (or application) date of the offering and issuance of securities.
If the basic assumptions underlying the financial forecast have not changed materially, and the management level of the company has issued a statement that the basic assumptions are effective, and have had a CPA express an opinion regarding whether the basic assumptions have materially changed, and the report has been published within 10 days of the occurrence of the fact, the company may be exempted from the requirement to re-prepare the financial forecast under the preceding paragraph. |
| Article 15 | A company that has published its financial forecast shall evaluate from time to time the impact of any changes in particularly sensitive basic assumptions on the results of the financial forecast. When key elements and basic assumptions underlying the preparation of the financial forecast have changed, causing the pre-tax profit/loss to vary by 20 percent or more and the affected amount is NT$30 million or more and 0.5 percent of the paid-in capital, the company shall duly publicly announce and report th
e updated financial forecast.
If a company experiences any chance event which could not reasonably have been foreseen or planned for at the time of preparation of the financial forecast, such as loss from a major disaster, and the effect of the event on the results of the financial forecast meets the standards requiring the update of the financial forecast as provided in the preceding paragraph, the company shall update the financial forecast in accordance with the prescribed procedure. |
| Article 16 | Where a company that has published a financial forecast discovers an error in the financial forecast that could lead to misguided judgments by users, the financial forecast shall be corrected.
Where, after the publication of a financial forecast prepared by a public company, there is any addition, deletion, or amendment to any matter under Article 3, paragraph 1, subparagraph 3 that could reasonably have been anticipated at the time of preparation, it shall be deemed and handled as an error in the basic assumptions; provided, this shall not apply where the financial forecast has already been updated in a timely fashion when filing the financial report for the most recent period. |
| Article 17 | When a company that has announced a financial forecast discovers a need to re-prepare or to update (or correct) the financial forecast, it shall publicly announce and report, within two days from the discovery, the completion date of the original financial forecast, the date of CPA review, the circumstances of the change in basic assumptions or the error that has rendered the originally announced information unsuitable for use, and the monetary amounts of its effect on each major account in the forecaste
d income statement, and further publicly announce and report a re-prepared or updated (or corrected) financial report, reviewed by a CPA, within 10 days from the discovery.
Where a company that has published a financial forecast does not meet the standards requiring updating but nevertheless elects to update its financial forecast, in addition to complying with the preceding paragraph, it shall also publicly announce and report the reasons for deciding to carry out the non-mandated update. |
| Article 18 | A company that has published its financial forecast shall make a quarterly comparison of the actual and forecasted pre-tax profit/loss figures; if up to the current quarter the discrepancy is 20 percent or greater, the company shall, when filing the financial report for the current quarter, provide an explanation of its basis for not updating the financial forecast and have a CPA issue an opinion as to the reasonableness of the basis for non-revision, and publicly announce and file the explanation and op
inion to the SFC along with the financial report. |
| Article 19 | Within one month from the close of the fiscal year, a public company that has published a financial forecast shall publicly announce and report the status of achievement of the forecasted income statement (including the original financial forecast and all subsequent corrections) and the reason for any discrepancy.
When a company publicly announces and reports the achievement status under the preceding paragraph, if the financial report has not been audited by a CPA, it shall disclose in prominent lettering that the report has not been audited by a CPA; also, if there is any other material uncertainty that may affect the achievement status, each such item shall be listed along with the reasons for and impact of potential discrepancies. |
| Article 20 | When a company that has published a financial forecast publicly announces and reports its annual financial report, if the discrepancy between the actual and forecasted figures for pre-tax profit/loss or in the achievement of the forecasted income statement published under Article 19 is 20 percent or greater and the sum involved amounts to NT$30 million and 0.5 percent of the paid-in capital, the company shall publicly announce and report the amount and the reasons and obtain an opinion from a CPA as to t
he reasonableness of the content of the explanation, both of which shall be published together with the annual financial report and reported to the SFC. The abovementioned explanatory materials shall be incorporated as a part of the business report submitted to the shareholders meeting. |
Chapter VI Supplementary Provisions |
| Article 21 | The financial forecast shall be reviewed by a CPA in accordance with Statement of Auditing Standards No. 19 issued by the Accounting Research and Development Foundation of the ROC.
The financial forecast shall be reviewed by the same CPA that audited and attested the financial report; provided, this restriction shall not apply where the CPA has changed due to internal staff adjustments at an accounting firm. |
| Article 22 | A copy of the public announcement and reporting of the financial forecast shall simultaneously be copied to the Securities and Futures Institute, ROC, where it shall be available for public inspection. If the company's stock is listed and traded on the stock exchange, it shall also be copied to the Taiwan Stock Exchange Corporation and the Chinese Securities Association; if it is traded on over-the-counter markets, it shall also be copied to the GreTai Securities Market and the Chinese Securities Associa
tion. |
| Article 23 | These Regulations shall be enforced from the date of promulgation. |