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Article 28
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A securities firm shall provide information on its business conditions in accordance with the following:
- 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.
- Remuneration to directors, supervisors, general manager, and assistant general managers, and to chairmen of the board and general managers who are rehired as consultants after retiring from the securities firm or its affiliated enterprises:
- 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, directly or indirectly, by one single person.
- In any of the following circumstances, the securities firm shall disclose the remuneration paid to each individual director, supervisor, general manager, assistant general manager, and consultant, provided that this rule does not apply if it is a non-public company whose issued voting shares are all held, directly or indirectly, by one single person:
- The securities firm's most recent capital adequacy ratio, whether unaudited, CPA-reviewed, or adjusted following FSC examination, is lower than 150 percent.
- There has been an after-tax deficit in the parent company only or individual financial report within the most recent 3 financial years. The preceding provision does not apply if the parent company only or individual financial report for the most recent fiscal year shows net income after tax, which is sufficient to make up the accumulated deficits.
- 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.
- 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.
- If the total amount of remuneration received by all of the directors and supervisors of the securities firm in their capacity as directors or supervisors of all the companies listed in the financial reports exceeds 2 percent of the net income after tax, and the remuneration received by any individual director or supervisor exceeds NT$15 million, the securities firm shall disclose the remuneration paid to that individual director or supervisor, provided that this rule does not apply if it is a non-public securities firm whose issued voting shares are all held, directly or indirectly, by one single person.
- If a securities firm listed on the TWSE or the TPEx is ranked in the lowest tier in the corporate governance evaluation for the most recent fiscal year, or in the most recent fiscal year or up to the date of publication of the financial report for that year, the securities firm's securities have been placed under an altered trading method, suspended from trading, delisted from the TWSE or the TPEx, or the Corporate Governance Evaluation Committee has resolved the securities firm shall be excluded from evaluation, the securities firm shall disclose the remuneration paid to each individual director and supervisor.
- If the average annual salary of the full-time non-supervisory employees in a TWSE or TPEx listed securities firm is less than NT$500,000 in the most recent fiscal year, the securities firm shall disclose the remuneration paid to each individual director and supervisor.
- If the circumstance in subitem "b" of item B or item F applies to a securities firm listed on the TWSE or the TPEx, it shall disclose the individual remuneration paid to each of its top five management personnel.
- Number of employees in non-supervisory positions, average annual employee benefit expenses for the fiscal year, and difference compared to those of the preceding year.
- Labor-management relations:
- Indicate each item of 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.
- List the loss sustained as a result of labor disputes in the most recent financial year, 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.
- List any violations of the Labor Standards Act found during a labor inspection, including the disposition date, disposition reference number, the provisions breached, description of the violation, and the disposition.
- The following items shall be disclosed with respect to the implementation of the internal control system:
- Statement of the internal control system.
- If a CPA has been engaged to carry out a project audit of the internal control system, the CPA audit report shall be disclosed.
- The term "affiliated enterprises" in this article refers to those conforming with Article 369-1 of the Company Act.
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Article 31
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A securities firm shall disclose the following information regarding its CPA:
- 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 the following information:
- 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, the amounts of both audit and non-audit fees and the details of the non-audit services shall be disclosed. "Audit fees" 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.
- 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 of the audit fees before and after the change and the reason shall be disclosed.
- When the audit fees paid for the current financial year are lower than those paid for the immediately preceding financial year by 10 percent or more, the amount and percentage of and reason for the reduction in audit fees shall be disclosed.
- 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:
- Regarding the former CPA:
- 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.
- 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.
- Indicate whether there were any disagreements between the securities firm and the former CPA on accounting principles or practices, financial report disclosure, and 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 such above-mentioned disagreements), and the final results.
- Indicate whether the former CPA advised the securities firm that it lacked the sound internal controls necessary to develop reliable financial reports.
- Indicate whether 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.
- Indicate whether 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.
- Indicate whether 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.
- Regarding the successor CPA:
- Names of the successor accounting firm and CPA, and date of engagement.
- 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 principles 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.
- 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.
- The securities firm shall by letter provide the former CPA with a copy of the disclosures it is making in response to item A and item B (c), 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.
- Where 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 auditing CPAs or at an affiliated enterprise of such accounting firm, the name and position of the person, and the period during which the position was held, shall be disclosed. The term "affiliated enterprise" of the accounting firm of the auditing CPAs means an enterprise in which CPAs of the accounting firm to which the auditing CPAs belong hold more than 50 percent of the shares, or of which they hold more than half of the directorships, or any company or institution listed as an affiliated enterprise in the external publications or printed materials of the accounting firm of the auditing CPAs.
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