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Criteria Governing Information to be Published in Annual Reports of Public Companies(2003.12.30) |
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Article 7
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The contents of an annual report shall include:
1. a report to the shareholders;
2. a company overview: including a company introduction, a section on company organization, and disclosure of the company's capital and shares, corporate bonds, preferred shares, global depository receipts, employee stock option certificates, and any merger & acquisition activities (including mergers, acquisitions, and splits);
3. an overview of business operations;
4. information on implementation of the company's funds utilization plans;
5. an overview of the company's financial status;
6. a review and analysis of the company's financial condition, business performance, and risk management measures;
7. information on the implementation of the company's corporate governance; and
8. other items deserving special mention.
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Article 10
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The section on company organization shall specify the following items:
1. organizational chart: This chart shall specify the company's structure and the tasks of its principal divisions.
2. information on the company's directors, supervisors, president, vice-presidents, assistant vice-presidents, and the chiefs of all the company's divisions and branches:
(1) directors and supervisors: names; principal work experience and academic qualifications; position(s) held concurrently in the company and/or in any other company, date on which current position was assumed; term of contract; the commencement date of the first term, shares held by directors/supervisors and their spouses, children of minor age, other persons holding shares in their name; compensation for the most recent fiscal year; professional knowledge; whether they are independent directors/supervisors. For directors and supervisors acting as the representative of institutional shareholders, this section shall indicate the names of the institutional shareholders, and shall further indicate the names of those institutional shareholder that hold a stake of greater than ten percent or rank among the company's ten largest shareholders (see Table 1).
(2) president, vice-presidents, assistant vice-presidents, and the chiefs of all the company's divisions and branches: names; principal work experience and academic qualifications; date on which current position was assumed; term of contract; and shares held by directors/supervisors and their spouses, children of minor age, and other persons holding shares in their name (see Table 2).
3. equity transfers and equity pledges (or changes thereto) during the preceding fiscal year or in the current fiscal year up to the date of printing of the annual report, involving equity interests belonging to directors, supervisors, managers, and shareholders with a stake of 10 percent or more in the company. Where the recipient of the equity transfer or equity pledge is an affiliated person of the company, the recipient's name shall be disclosed along with a note explaining: (a) the nature of his or her affiliation to the company, to any directors or supervisors, and to any shareholders with a stake of 10 percent or more; and (b) the number shares that he or she has received or been pledged (see Table 3).
4. the total number of shares and total equity stake held in any single enterprise by the company, its directors and supervisors, managers, and any companies controlled either directly or indirectly by the company (see Table 4).
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Article 17
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The overview of business operations shall include the following:
1. a description of the business:
(1) scope of business: the company's major lines of business and the relative weight of each, current products (services), and new products (services) planned for development;
(2) an overview of the industry: the current status and development of the industry, the links between the upstream, midstream, and downstream segments of the industry supply chain, and development trends and competition for the company's products;
(3) an overview of the company's technologies and its research and development work: a listing of research and development expenditures as well as technologies and/or products successfully developed during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report;
(4) the company's long- and short-term business development plans.
2. an analysis of the market as well as the production and marketing situation, including:
(1) market analysis: analysis of the geographic areas where the main products (services) of the company are provided (supplied), the company's market share, demand and supply conditions for the market in the future, the market's growth potential, the company's competitive niche, positive and negative factors for future development, and the company's response to such factors.
(2) usage and manufacturing processes for the company's main products;
(3) supply situation for the company's major raw materials;
(4) a list of any suppliers and clients accounting for 10 percent or more of the company's total procurement (sales) amount in either of the two most recent fiscal years, the amounts bought from (sold to) each, the percentage of total procurement (sales) accounted for by each, and an explanation of the reason for increases or decreases in the above figures. Where the company is prohibited by contract from revealing the name of a client, or where a trading counterpart is an individual person who is not a related party, it may use a code in place of the actual name.
(5) an indication of the production volume for the two most recent fiscal years (see Table 17);
(6) an indication of the volume of units sold for the two most recent fiscal years (see Table 18);
3. the number of employees employed for the two most recent fiscal years, and during the current fiscal year up to the date of printing of the annual report, their average years of service, average age, and education levels (including the percentage of employees at each level) (see Table 19);
4. disbursements for environmental protection: total losses (including damage awards) and fines for environmental pollution for the two most recent fiscal years, and during the current fiscal year up to the date of printing of the annual report, and an explanation of the measures (including corrective measures) and possible disbursements to be made in the future (including an estimate of losses, fines, and compensation resulting from any failure to adopt responsive measures, or if it is not possible to provide such an estimate, an explanation of the reason why it is not possible);
5. labor relations:
(1) employee benefit plans, continuing education, training, retirement systems, and the status of their implementation, and the status of labor-management agreements and measures for preserving employees' rights and interests; and
(2) losses resulting from labor disputes during the two most recent fiscal years, and during the current fiscal year up to the date of printing of the annual report, and an indication of the estimated amount of losses which might occur at the present time and in the future, as well as measures to be taken in response;
6. important contracts: the contracting parties, major content, restrictive clauses, and the commencement dates and expiration dates of supply/distribution contracts, technical cooperation contracts, engineering/construction contracts, long-term loan contracts, and other contracts that would affect shareholders' equity, where said contracts were either still effective as of the date of printing of the annual report, or expired in the most recent fiscal year (see Table 20);
7. litigious and non-litigious matters: major litigious, non-litigious or administrative disputes, where said disputes: (1) list as an interested party the company and/or the company's directors, supervisors, president, the person with actual responsibility for the firm, major shareholders holding a stake of greater than 10 percent, and/or any company or companies controlled by the company; and (2) have been concluded by means of a final and unappealable judgment during the past two fiscal years or during the current fiscal year up to the date of printing of the annual report, or were still under litigation as of the date of printing of the annual report. Where such a dispute could materially affect shareholders' equity or the prices of the company's securities, the annual report shall disclose the facts of the dispute, amount under dispute, date of litigation commencement, the main parties to the dispute, and the status of the dispute as of the date of printing of the annual report.
8. Acquisition and/or disposal of assets: all major assets purchased or sold by the company and its subsidiaries in the preceding fiscal year or during the current fiscal year in the period up to the date of printing of the annual report (see Table 21).
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Article 18
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The section on implementation of the company's funds utilization plans shall include the following:
1. a description of the plans: For the period as of the quarter preceding the date of printing of the annual report, with respect to each uncompleted public issue or private placement of securities, and to such issues and placements that were completed in the most recent three years but have not yet fully yielded the planned benefits, the annual report shall provide a detailed description of the plan for each such public issue and private placement. Such descriptions shall include any and all changes to the plan, the source of funds and the manner of their utilization, the reason(s) for any changes to the plan, the benefits yielded by the funds before and after any change to the plan, the date on which the change to the plan was reported at a shareholders' meeting, and the date on which such information was uploaded to the website specified by the SFC for reporting of information.
2. status of implementation: With respect to funds usage under the plans referred to in the preceding subparagraph, the annual report shall (for the period as of the quarter preceding the date of printing of the annual report) analyze the status of implementation and compare actual benefits with expected benefits. Where implementation has failed to yield the expected progress or benefits, the annual report shall provide specific reasons for such failure, explain any effect it might have upon shareholders' equity, and outline the plan for correcting the situation. Where any of the following sub-subparagraphs apply to the funds usage plan descriptions referred to in the preceding subparagraph, the annual report shall further disclose the items set forth in the relevant sub-subparagraph:
(1) If the funds are used to merge, acquire, or purchase another company through share acquisition, to expand fixed assets, or to acquire new fixed assets, the annual report shall compare and explain fixed assets, operating revenues, operating costs, and operating income.
(2) If the funds are invested in another company, the annual report shall describe the condition of the invested company and explain the effect of the investment upon gain or loss from investments.
(3) If the funds are used to strengthen the company's working capital or pay off debts, the annual report shall: (1) note any increase or decrease in the company's current assets, current liabilities, and total liabilities; (2) compare and explain the company's interest expenses, operating revenues, and earnings per share; and (3) analyze the company's financial structure.
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Article 20-1
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A company listed on the stock exchange or an OTC market shall provide the following information relating to the state of its implementation of corporate governance:
1. The state of the company's corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies, and the reason(s) for any such departure (See Table 26).
2. If the company has adopted corporate governance best-practice principles or related bylaws, it shall disclose how these are to be searched.
3. Any other material information that would afford a better understanding of the status of the company's implementation of corporate governance may also be disclosed.
The provisions of the preceding paragraph shall also apply to any securities firm, securities investment trust enterprise, securities investment consulting enterprise, and futures commission merchant that is a public company.
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Article 21
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Special items to be included:
1. information related to the company's affiliates: the consolidated business report, consolidated financial statement, and affiliation report for the most recent fiscal year, compiled in accordance with the SFC's "Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises."
2. information on enforcement of the internal control system shall include the following:
(1) an internal control declaration;
(2) Where a company has retained a CPA to audit its internal control system, the auditor's report issued by the CPA shall be disclosed.
3. Where, during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, some party has expressed a dissenting opinion with respect to a major resolution passed by the board of directors, and said dissenting opinion has been recorded or prepared as a written declaration, the principal content of the dissenting opinion shall be disclosed in the annual report.
4. Where the company has carried out a private placement of marketable securities during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, the annual report shall disclose the amount of the placement, the date on which the placement was approved by the board of directors or by a shareholders' meeting, the amount thus approved, the criteria for the pricing of the placement, the reasons why such pricing was reasonable, the manner in which the specified persons were selected, and the necessity of using the private placement method (see Table 27).
5. holding or disposal of shares in the company by the company's subsidiaries during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report (see Table 28).
6. Major resolutions approved by the company's board of directors or at meetings of its shareholders during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report.
7. Where, during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, any penalties have been imposed in accordance with the law upon the company or its in-house personnel, or the company has taken disciplinary action against its in-house personnel for violations of the company's internal control regulations, the annual report shall describe the principal problem(s) and what it has done to improve the situation.
8. other matters that require additional description.
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