| Title： |
Regulations Governing the Preparation of Financial Reports by Financial Holding Companies(2002.12.30) |
| Date： |
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Article 1
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These Regulations are prescribed in accordance with paragraph 2 of Article 14 of the Securities and Exchange Act.
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Article 2
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The financial reports of a financial holding company shall be prepared in accordance these Regulations. Matters not provided for herein shall be handled in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
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Article 3
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The term "subsidiary" as used herein means a subsidiary according to Article 4, subparagraph 4, of the Financial Holding Company Act or Statements of Financial Accounting Standards Nos. 5 and 7.
The terms "bank subsidiary," "insurance subsidiary," and "securities subsidiary" mean a subsidiary according to Article 4, subparagraph 4, items 1 through 3 of the Financial Holding Company Act.
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Article 4
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A financial holding company created by means of business assignment or share exchange under the Financial Holding Company Act shall prepare its financial reports starting from the date of conversion.
When preparing a financial report for the year of conversion and the next year, the financial holding company shall make footnote disclosure in the financial report of supplementary information to its pro forma comparative financial statements.
The supplementary information to pro forma comparative financial statements referred to in the preceding paragraph shall include a balance sheet and an income statement. The income statement shall at least include operating revenue, gains and losses prior to posting of extraordinary gains and losses, net income (loss), and earnings per share. When such pro forma information is provided, income tax, interest expense, preferred dividends, asset depreciation, and goodwill amortization shall be computed based on an accounting basis assuming that the conversion in question has taken place.
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Article 5
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A financial holding company shall prepare financial reports in the following manners:
1. When preparing annual and semi-annual financial reports, it shall use the equity method to recognize any investment income/loss on a public subsidiary in the period when such income/loss occurs; the financial statements of such subsidiary for the same period shall also be audited by a certified public accountant.
2. When preparing first quarter and third quarter financial reports, it shall use the equity method to recognize any investment income/loss on a public subsidiary in the period when such income/loss occurs; the financial statements for the same period of such subsidiary, if it also falls under Article 4, subparagraph 4 of the Financial Holding Company Act, shall be audited by a certified public accountant.
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Article 6
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A financial holding company shall disclose in notes to the financial report the names of any subsidiaries holding shares in it, number of shares held, dollar amount, reason, limits on distribution of earnings, statutory time limit for disposal, and planned disposal method passed by a board of directors resolution.
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Article 7
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Where a financial holding company is permitted under Article 47, paragraph 4, of the Financial Holding Company Act and other applicable provisions to distribute cash dividends from capital reserve derived from undistributed earnings of the financial institution before conversion, and also is permitted to reallocate it as capital in the year of the conversion without being subject to the limitations imposed by Article 8 of the Securities and Exchange Act Enforcement Rules in relation to capitalization percentage, it shall, in so doing, make footnote disclosure in the financial report, specifying the nature and dollar amount of such distribution or capitalization.
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Article 8
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A financial holding company shall make full disclosure of related party transactions and additional disclosure of any related party transactions by a subsidiary in an amount of NT$100 million or more.
The meaning of "related party" under the preceding paragraph shall be determined in accordance with Statement of Financial Accounting Standards No. 6; to determine whether a trading counterparty is a related party, the substance of the relationship as well as the legal form shall be taken into consideration.
Those to which any of the following circumstances applies shall be deemed a related party, unless proof is produced that it has no ability to control or significant influence:
1. An affiliated enterprise, within the meaning given by Chapter VI-I of the Company Act, and its directors, supervisors, and managers.
2. A director, supervisor, or manager of a subsidiary of the financial holding company.
3. Personnel in the general management division at the level of manager or above of the financial holding company.
4. A company or institution listed as an affiliated enterprise in its external publications or printed materials.
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Article 9
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A financial holding company shall make footnote disclosure of the following matters in its annual and semi-annual financial reports:
1. Its capital adequacy ratio computed on a consolidated basis.
2. Matters required by Article 46 of the Financial Holding Company Act to be published or by relevant requirements of the competent authority in charge of the relevant industry to be disclosed.
3. Such other matters as the competent authority in charge of the relevant industry or the competent authority considers necessary.
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Article 10
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A financial holding company shall make additional footnote disclosure in its financial reports of the following information regarding its subsidiaries:
1. The condensed balance sheets and income statements of its bank, insurance, and securities subsidiaries.
2. Allocation and dollar amount of the revenue, cost, expense, and gain/loss incurred between the financial holding company and a subsidiary or between two subsidiaries in their business interchanges or transactions, joint business promotion, information sharing, and common use in business facilities or premises.
3. Information about a subsidiary's investing in mainland China, significant commitment and contingent liability, loss caused by major disasters, and subsequent events.
4. Such material business information as capital adequacy ratio, asset quality, management information, profitability, liquidity, and the market risk sensitivity of its bank, trust investment, and bills finance subsidiaries.
5. The capital adequacy ratio of its securities subsidiaries.
6. The statutory limitations on financial ratios imposed on its futures commission merchant subsidiaries and the status of implementation thereof.
7. Such other matters as the competent authority in charge of the relevant industry or the competent authority considers necessary.
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Article 11
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A financial holding company shall prepare consolidated financial statements in addition to its annual and interim financial reports. Matters required by Articles 9 and 10 shall be disclosed in the notes to the consolidated financial statements.
When preparing its consolidated financial statements, a financial holding company shall incorporate all bank, insurance, and securities subsidiaries therein and shall comply with Statement of Financial Accounting Standards No. 7.
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Article 12
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The provisions of Article 12, subparagraph 2, of the Regulations Governing Information to be Published in Annual Reports of Financial Holding Companies shall apply mutatis mutandis to the content of key financial ratio analysis in other matters disclosed by a financial holding company in its annual financial reports.
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Article 13
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These Regulations shall enter into force on the date of promulgation.
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