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Criteria Governing Information to be Published in Annual Reports of Public Companies(2004.12.21) |
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Article 2
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With the exception of banks, bills finance companies, financial holding companies, and other entities for which the competent authority has adopted other regulations, a public company shall include in its annual report all the items set forth in these Criteria, and may also use as reference the Criteria Governing Information to be Published in Public Offering and Issuance Prospectuses. In addition, public companies shall also include a table of contents indicating page number for each item in the report. Where the company has nothing to report with respect to a particular item, or where the company is exempted from reporting requirements with respect to a particular item by order of the Financial Supervisory Commission (FSC), the annual report may carry a note indicating that the item in question is "not applicable" or "omitted."
Where the same information is required in more than one item of the annual report, the company may record the information in only one place, while in the other place(s) directing the reader to the page where the information is recorded.
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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 risks;
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 set forth the following items:
1. An 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, general manager, assistant general managers, assistant vice general managers, and the chiefs of all the company's divisions and branches, as follows:
(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; 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) The general manager, vice general managers, assistant vice general managers, 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) Compensation paid during the most recent fiscal year to directors, supervisors, the general manager, and vice general managers (see Table 2-1 and Table 2-2).
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 11
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The section on capital and shares shall specify the following items:
1. source of capital: The annual report shall disclose the types of shares issued by the company during the preceding fiscal year and in the current fiscal year up to the date of the printing of the report (see Table 5).
2. shareholder structure: statistics on the ratios between the various types of shareholders (see Table 6).
3. equity diffusion: The annual report shall include a table that groups shareholders according to the number of shares held, and that further indicates the percentage of shares held by each different group (see Table 7).
4. list of principal shareholders: The annual report shall list all shareholders with a stake of 5 percent or greater, or shall list the top ten shareholders, specifying the number of shares and stake held by each shareholder on the list (see Table 8).
5. share prices for the past two fiscal years, together with the company's net worth per share, earnings per share, dividends per share, and related information (see Table 9).
6. company's dividend policy and implementation thereof: The annual report shall disclose the dividend policy adopted in the company's articles of incorporation, as well as the dividend distributions proposed at the most recent shareholders' meeting.
7. effect upon business performance and earnings per share of any stock dividend distribution proposed or adopted at the most recent shareholders' meeting.
8. employee dividends and compensation of directors and supervisors:
(1) the percentages or ranges with respect to employee dividends and director/supervisor compensation, as set forth in the company's articles of incorporation.
(2) information on any employee dividend distribution proposals adopted at shareholders' meetings:
(i) distribution of cash dividends or stock dividends to employees, and compensation for directors and supervisors.
(ii) the number of shares in any proposed distribution of employee stock dividends, and the size of such a distribution as a percentage of capital increase paid out of earnings.
(iii) The annual report shall assess the effect upon imputed earnings per share of any proposed distribution of employee dividends and director/supervisor compensation.
(3) use of earnings in the preceding fiscal year for distribution of employee dividends and director/supervisor compensation: The annual report shall disclose: (i) actual distributions of employee dividends and director/supervisor compensation at the time of the preceding fiscal year's earnings distributions; (ii) the amount of such distributions as set forth in the proposal adopted at the director's meeting; and (iii) the degree of discrepancy between the two.
9. share repurchases: Where a company has applied in the preceding fiscal year or during the current fiscal year up to the date of printing of the annual report, to repurchase its own shares, the company shall explain the purpose, period, and price range of the repurchase, the types, quantity, and total value of shares repurchased, the number of shares retired or resold, the quantity of total treasury stock holdings, and total treasury stock holdings as a percentage of total shares issued (see Table 10).
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Article 15
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The section on employee share subscription warrants shall specify the following matters:
1. The annual report shall disclose unexpired employee subscription warrants issued by the company in existence as of the date of printing of the annual report, and shall explain the effect of such warrants upon shareholders' equity. Any privately placed employee subscription warrants shall be prominently identified as such (see Table 14).
2. The annual report shall disclose the names of top-level company executives holding employee share subscription warrants and the cumulative number of such warrants exercised by said executives as of the date of printing of the annual report. The annual report shall also disclose the names of the ten employees holding employee subscription warrants authorizing purchase of the most shares where the purchase price of such shares is NT$30 million or greater, along with the cumulative number of warrants exercised by these ten employees, as of the date of printing of the annual report (see Table 15).
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Article 16
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The section on mergers, acquisitions, and issuance of new shares due to acquisition of shares of other companies shall specify the following matters:
1. Where, during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, the company has completed a merger, acquisition, or issuance of new shares due to acquisition of shares of other companies, the annual report shall specify the following matters:
(1) For companies whose shares are listed on a stock exchange ("listed companies") or whose shares have been approved for trading on an over-the-counter market in accordance with the provisions of Article 3 or Article 3-1 of the GreTai Securities Market Criteria Governing Review of Securities Traded on Over-the-Counter Markets ("a company listed on an OTC market"), the annual report shall include a clear opinion prepared by the managing underwriter concerning any merger, acquisition, or issuance of new shares due to acquisition of shares of other companies within the past quarter.
(2) In addition to requirements set forth in the preceding sub-subparagraph, the annual report shall also disclose the state of implementation of the aforementioned matters during the most recent quarter. If the progress or benefits of such implementation were not as good as expected, the annual report shall explain specifically how the situation is likely to affect shareholders' equity, and shall put forward a plan for corrective action.
2. Where the board of directors has, during the most recent fiscal year or during the current fiscal year up to the date of printing of the annual report, adopted a resolution approving a merger, acquisition, or issuance of new shares due to acquisition of shares of other companies, the annual report shall disclose the state of the plan's implementation together with the basic identifying information of the company (or companies) to be merged, acquired, and/or purchased through acquisition of shares (see Table 16). Where a merger, acquisition, or issuance of new shares due to acquisition of shares of other companies is currently in progress, the annual report shall disclose the state of the plan's implementation and its effect upon shareholders' equity.
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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);
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Article 19
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The overview of the company's financial status shall include the following:
1. abbreviated balance sheets and income statements for the past five fiscal years, showing the name of the certified public accountant and the auditor's opinion given thereby (see Table 22).
2. financial analyses for the past five years: including information on the company's financial structure, solvency, operating performance, profitability, cash flow, and leverage (see Table 23).
3. supervisors' report for the most recent year's financial statement.
4. financial statement for the most recent fiscal year, including an auditor's report prepared by a certified public accountant, a two-year comparative balance sheet and income statement, statement of changes in shareholders' equity, cash flow chart, and any related footnotes or attached tables.
5. a consolidated financial statement for the parent company and its subsidiaries for the most recent year, certified by a CPA.
6. If the company or its affiliates have experienced financial difficulties in 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 explain how said difficulties will affect the company's financial situation.
The term "affiliates" as used in Paragraph (6) above refers to entities meeting the requirements set forth under Article 369-1 of the Company Act.
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Article 20
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The company shall review and analyze its financial condition and business performance, and shall assess its risks. In this regard, the annual report shall cover the following points:
1. financial condition: The annual report shall list the main reasons for any material change in the company's assets, liabilities, or shareholders' equity during the past two fiscal years, and describe the effect thereof. Where the effect is of material significance, the annual report shall describe the measures to be taken in response.
2. business performance: The annual report shall list the main reasons for any material change in operating revenues, operating income, or income before tax during the past two fiscal years, provide a sales volume forecast and the basis therefor, and describe the effect upon the company's financial operations as well as measures to be taken in response.
3. cash flow: The annual report shall describe and analyze any cash flow changes during the most recent fiscal year, describe corrective measures to be taken in response to illiquidity, and provide a liquidity analysis for the coming year.
4. The annual report shall describe the effect upon financial operations of any major capital expenditures during the most recent fiscal year.
5. The annual report shall describe the company's reinvestment policy for the most recent fiscal year, the main reasons for the profits/losses generated thereby, the plan for improving re-investment profitability, and investment plans for the coming year.
6. The section on risks shall analyze and assess the following matters during the most recent fiscal year and as they stood on the date of printing of the annual report:
(1) The effect upon the company's profits (losses) of interest and exchange rate fluctuations and changes in the inflation rate, and response measures to be taken in the future.
(2) The company's policy regarding high-risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future.
(3) Research and development work to be carried out in the future, and further expenditures expected for research and development work.
(4) Effect on the company's financial operations of important policies adopted and changes in the legal environment at home and abroad, and measures to be taken in response.
(5) Effect on the company's financial operations of developments in science and technology as well as industrial change, and measures to be taken in response.
(6) Effect on the company's crisis management of changes in the company's corporate image, and measures to be taken in response.
(7) Expected benefits and possible risks associated with any merger and acquisitions.
(8) Expected benefits and possible risks associated with any plant expansion.
(9) Risks associated with any consolidation of sales or purchasing operations.
(10) Effect upon and risk to the company in the event a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands.
(11) Effect upon and risk to company associated with any change in governance personnel or top management.
(12) Litigious and non-litigious matters (the annual report shall list major litigious, non-litigious or administrative disputes that: (1) involve the company and/or any company director, any company supervisor, the general manager, any person with actual responsibility for the firm, any major shareholder 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, or are still under litigation. 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 of money at stake in the dispute, the 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.
(13) Other important risks.
7. Other important matters.
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