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Article 1
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These Regulations are prescribed in accordance with Article 14, paragraph 2, of the Securities and Exchange Act (the "Act").
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Article 2
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The financial reports of a company type securities exchange shall be prepared in accordance with these Regulations and relevant laws and regulations. Matters not provided for therein shall be handled in accordance with generally accepted accounting principles.
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Article 3
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A company type securities exchange shall establish its accounting system based on the nature of its accounting affairs, actual business status and development, and management needs.
The content of the accounting system referred to in the preceding paragraph shall, based on the nature of business operation, provide for the following individual items:
1. A general description;
2. A chart of accounts;
3. Account titles, accounting documents, account books, and accounting reports;
4. Procedures for handling general accounting affairs; 5. Other items required by the Financial Supervisory Commission (FSC) of the Executive Yuan.
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Article 4
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The appointment and discharge of the in-charge accountant of a company-type stock exchange shall be approved by a majority of directors present at a directors meeting attended by a majority of the directors and reported to the FSC for approval and/or recordation within five days after appointment or discharge.
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Article 5
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The fiscal year shall be the calendar year. Closing for the first half of the year shall be made on June 30 and closing for the year shall be made on December 31.
The accounting basis shall be the accrual system.
The bookkeeping unit shall be New Taiwan Dollars.
Dollar amounts in financial statements need only be expressed down to the nearest NT$1000, with sums below that rounded off.
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Article 6
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The financial reports shall mean financial statements, list of significant account titles, and other disclosures and explanations under these Regulations which help the users make decision.
A financial statement shall include balance sheet, income statement, statement of changes in stockholders' equity, statement of cash flows, and footnotes or schedules.
Unless the exchange is newly established or the FSC has issued other requirements, the major statements and the notes thereto as referred to in the preceding paragraph shall be prepared by comparing two consecutive periods, and the company's responsible person, a manager, and the in-charge accountant shall sign or seal each page of such statements.
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Article 7
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The content of a financial report shall fairly present the financial position, results of operation, and cash flows of the company without misleading an interested party in making judgment and decision.
If a financial report violates these Regulations or any other relevant regulations, upon the FSC's notice of adjustment after examination, adjustment and correction shall be made. If the adjusted amount attains the standard set by the FSC, a corrected financial report shall be prepared and submitted to the FSC.
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Article 8
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Changes in accounting procedures at a company-type securities exchange shall be undertaken in accordance with the following provisions:
1. A change in accounting principles:
(1) If there is a legitimate reason for a change in accounting principles, then at the end of the year preceding the one in which the new accounting principles are to be implemented, the attesting CPA shall be requested to provide an item-by-item analysis and review opinion on the rationality of the theoretical basis and the reasons for using both the original accounting principles and the principles to be adopted, concrete evidence for the superiority of the new accounting principles, and the estimated cumulative effect of a change in accounting principles. These shall be submitted as a proposal for passage by the board of directors, after which application for approval shall be submitted to the FSC.
(2) If the cumulative effect of a change in accounting principles cannot be calculated due to practical difficulties as described in Paragraph 12 of the Statements of Financial Accounting Standards No. 8, the attesting CPA shall be requested to provide an item-by-item analysis and review opinion on the rationality of the theoretical basis and the reasons for using both the original accounting principles and the newly adopted accounting principles, the reasons for changing to the new accounting principles, concrete evidence for the superiority of the new accounting principles, and the reason that the cumulative effect of a change in accounting principles cannot be calculated, and after additionally providing an opinion on the impact on the auditing opinion for the fiscal year of the change to the new accounting principles, the matter shall be handled according to the above procedure.
(3) Unless unable to calculate the cumulative effect of a change in accounting principles as referred to in the preceding item, within two months after the beginning of the fiscal year in which the new accounting principles go into effect, the actual cumulative effect of a change in accounting principles shall be calculated, reported to the board of directors, then reported to the FSC for recordation. If the difference between the actual cumulative effect of a change in accounting principles and the original estimated cumulative effect of a change in accounting principles is NT$10 million or more, and if the amount is also one percent or more of net operating revenues for the previous fiscal year or five percent or more of total paid-in capital, an analysis of the reason for the difference shall be given and the attesting CPA shall also be requested to provide an opinion on its rationality. The analysis and the attesting CPA's opinion shall be reported to the FSC.
(4) If the condition in item 2 applies to the company, the company shall, in the notes to its semi-annual and yearly financial reports for the fiscal years in which the new accounting principles begin to be applied, disclose the effect of the change in accounting principles on the profits/losses for those periods.
(5) With the exception of the application of new accounting principles to newly-purchased assets, which may be exempted from handling in accordance with the provisions of the preceding items, when any other change in accounting principles has not been reported for approval prior to its adoption in accordance with regulations, the financial report for the fiscal year in which the change to the new principle was implemented shall be rewritten, and the new accounting principle applied only in the year after a supplementary report has been filed and approved.
2. Any change in accounting estimates in relation to the useful life of depreciable assets or the utility period of intangible assets shall be handled in accordance with items 1, 4, and 5 of the preceding subparagraph.
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Article 9
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The classification of asset account titles in the balance sheet, account content, and matters to be set out in notes are as follows:
1.Current assets: Assets generated by an enterprise's operations, where it is expected that the assets will be converted to cash, consumed, or are intended for sale within the enterprise's normal operating cycle; assets held primarily for trading; assets that are expected to be converted to cash within the 12 months following the balance sheet date; and cash and cash equivalents, provided that this does not include those that within 12 months following the balance sheet date are to be used in exchange for or liquidation of debt, or that are subject to other restrictions.
(1) Cash and cash equivalents: Cash in treasury, bank deposits, revolving funds (petty cash) for incidental expenses, and highly liquid short-term investments convertible into fixed cash amounts at any time, due in the near future, where fluctuations in the investment's interest rate have insignificant impact on its value.
Non-demand bank deposits shall be posted by item, with a note if their maturity date is longer than one year. Those specifically earmarked or restricted in use may not be listed under this account title.
If time deposits (including negotiable certificates of deposit) are pledged as collateral for a debt, and if the secured debt is a long-term liability, such deposits shall be re-classified as other assets. If the secured debt is a current liability, the deposits shall be re-classified as other current assets, and a note shall be provided to explain the fact of security. Where the time deposits are provided as a refundable guarantee deposit, they shall be classified as current assets or other assets depending on whether they are short-term or long-term.
Compensating balances, if incurred due to short-term loans, shall be classified as current assets, with an explanation to be provided in the notes. Compensating balances incurred due to long-term liabilities shall be classified as other assets or long-term investments rather than current assets.
(2) Financial assets－current－whose changes in fair value are recognized in earnings: Current financial assets that are one of the following:
(i) Financial assets for trading.
(ii) Financial assets, except those designated as hedged items in hedge accounting relationships, which at the time of initial recognition were designated as assets to be measured at fair value, with changes in fair value to be recognized in earnings.
The following financial products shall be classed as financial assets for trading:
(i) Products acquired primarily for the purpose of sale in the near term.
(ii) Assets that are part of a group of distinct financial product portfolios under comprehensive management, where there is evidence that in the near term the group is in fact being managed for short-term profit.
(iii) Derivative financial assets, except those that are designated and effective hedging instruments.
Financial assets whose changes in fair value are recognized in earnings shall be measured at fair value. "Fair value," for stocks or depository receipts listed on the Taiwan Stock Exchange or traded over-the-counter on the GreTai Securities Market (GreTai), means the closing price on the balance sheet date. For open-end funds, fair value means the net asset value of the given fund on the balance sheet date.
In these Regulations, "stocks traded over-the-counter" does not include the stocks of public companies that, under Article 5 of the GreTai Securities Market Regulations Governing Review of Emerging Stocks Traded on Over-the-Counter Markets, have been approved for over-the-counter trading at a securities firm's place of business ("emerging stocks").
Financial assets whose changes in fair value are recognized in earnings shall be classed according to liquidity as current or non-current. Those that are non-current shall be reclassified as "financial assets whose changes in fair value are recognized in earnings－non current" under "funds and investments".
(3) Available-for-sale financial assets－current: Non-derivative financial assets that meet one of the following conditions:
(i) The assets have been designated as available-for-sale.
(ii) The assets fall within none of the following financial asset classes:
a. Financial assets whose changes in fair value are included in earnings.
b. Financial assets held to maturity.
c. Financial assets measured at cost.
d. Bond portfolios with no active market bonds.
e. Receivables.
Available-for-sale financial assets shall be classified according to liquidity as current or non-current. Those that are non-current shall be reclassified as "available-for-sale financial assets－non current" under "funds and investments".
Available-for-sale financial assets shall be measured at fair value. "Fair value," for stocks or depository receipts listed on the Taiwan Stock Exchange or traded over-the-counter on the GreTai Securities Market, means the closing price on the balance sheet date. For open-end funds, fair value means the net asset value of the given fund on the balance sheet date.
(4) Derivative financial assets for hedging－current : Derivative financial assets that have been designated in hedge accounting relationships and are effective hedging instruments shall be measured at fair value and classed according to liquidity as current or non-current. Those that are non-current shall be reclassified as "derivative financial assets for hedging－non current" under "funds and investments".
(5) Financial assets measured at cost－current: Holdings in the following stocks that have no material influence, or derivatives linked to and settled in those stocks:
(i) Stocks not listed on the Taiwan Stock Exchange or traded on the GreTai.
(ii) Emerging stocks.
Financial assets measured at cost shall be classed according to liquidity as current or non-current. Those that are non-current shall be reclassified as "financial assets measured at cost－non current" under "funds and investments".
(6) Bond portfolios with no active market bonds－current: Investments in publicly quoted bonds paying fixed or determinable amounts that include no active market bonds, where the following conditions are also met:
(i) The bond investments have not been designated for measurement at fair value and for recognition of changes in their fair value in earnings.
(ii) The bond investments have not been designated as available-for-sale.
Bond portfolios with no active market bonds shall be stated at cost after amortization and classed according to liquidity as current or non-current. Those that are non-current shall be reclassified as "bond portfolios with no actively traded bonds－non current" under "funds and investments".
(7) Notes receivable: all notes receivable.
The fair value of notes receivable shall be calculated from the imputed interest rate, provided that for notes receivable at one-year periods or less, where the difference between the fair value and the value at maturity is small and the notes are frequently traded, the notes need not be measured at fair value.
Discounted or transferred notes receivable shall be deducted and the deduction set out in the financial statement notes.
Notes receivable resulting from operating activities and notes receivable resulting from non-operating activities shall be given separate entries.
Notes receivables in significant amounts from related parties shall be separately disclosed, unless resulting from operating activities.
Notes provided for security shall be so indicated in the notes to the financial statement.
Notes receivable that are determined to be impossible to collect shall be written off.
During account settlement, the amount of uncollectible notes receivable shall be assessed and an appropriate allowance for bad debt provided, and shall be classified as a deduction from notes receivable.
(8) Accounts receivable: claims resulting from the main business.
The fair value of accounts receivable shall be calculated based on the imputed interest rate, provided that for accounts receivable at one-year periods or less, where the difference between the fair value and the value at maturity is small and where trading is also frequent, the accounts receivable need not be measured at fair value.
Large accounts receivable from related parties shall be appropriately disclosed.
An account receivable for which collection is determined to be impossible shall be written off.
During account settlement, the amount of uncollectible accounts receivable shall be assessed and an appropriate allowance for bad debt provided, and shall be classified as a deduction from accounts receivable.
(9) Other receivables: other receivables not falling within notes receivable and accounts receivable.
Other receivables for which collection is determined to be impossible shall be written off.
During account settlement, the amount of other receivables uncollectible shall be assessed and an appropriate allowance for bad debt provided, and shall be classified as a deduction from other receivables.
If any of the "other receivables" exceeds the aggregate amount of current assets by 5%, they shall be individually stated according to type or counterparty.
(10) Other financial assets－current: Financial assets not listed separately on the balance sheet shall be listed as "other financial assets " and shall be categorized according to liquidity as either current or non-current. Non-current assets shall be reclassified as "other financial assets－non-current" under "funds and investments".
When the amount of a financial asset under "current assets" accounts for 5 percent of aggregate current assets, it shall be given a separate balance sheet entry.
(11) Prepayments: all prepaid amounts and expenses. Contractually stipulated prepayments for purchase of fixed assets and payments for uncompleted construction for operational use shall be listed as fixed assets and may not be listed as prepayments.
(12) Long-term equity investments held for disposal: equity investments in a subsidiary, where sale of those investments is planned within 12 months after the balance sheet date.
(13) Other current assets: all current assets not falling within the above categories. With the exception of "cash and other financial assets－current", any of the above assets which does not exceed 5% of aggregate current assets may be incorporated into "other current assets".
2. Funds and investments: Funds specifically allocated and deposited for specified use in the future and investments in a specific enterprise approved by the FSC, or long-term investments made for regular business purposes. A financial asset listed under the "funds and investments" account that accounts for 5% of aggregate "funds and investments" assets shall be given a separate balance sheet entry.
(1) Financial assets held to maturity－non-current: Non-derivative financial assets paying fixed or determinable amounts at a fixed maturity date, which the company positively intends and has the ability to hold to maturity. Financial assets held to maturity shall be measured at cost after amortization. Investments held to maturity that mature within one year shall be reclassified as "investments held to maturity－current" under "current assets".
(2) Funds: assets provided for specified uses such as sinking funds, improvement and expansion funds, and contingency reserves.
Resolutions and rules that serve as the basis for provision of a fund shall be set out in a note.
A welfare fund set aside in accordance with the Employee Welfare Fund Act shall be stated as an expense.
(3) Long-term investments: Long-term investments under the equity method in specified enterprises approved by the FSC, or in other property interests, to satisfy operational objectives, such as investment in the stocks of other enterprises or investments in real estate.
The method of valuation of long-term investments shall be provided in a note, and they shall be separately listed according to type.
The valuation and expression of long-term equity investments using the equity method shall be carried out in accordance with the Statement of Financial Accounting Standards No. 5.
In recognizing investment gains and losses according to the equity method, when an investee's financial report is not prepared in accordance with the generally accepted accounting principles of the ROC, that report shall first be adjusted in accordance with those principles and investment gains and losses recognized in accordance with the adjusted report. When any of the following circumstances apply to the investee, its financial statement shall be audited and certified by a CPA in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and with generally accepted accounting principles.
(i) Its paid-in capital is NT$30 million or more;
(ii) Its operating revenues reach NT$50 million or more or 10% or more of the company's operating revenues.
If long-term investments are pledged as collateral or subject to constraints or restrictions, that fact shall be indicated in the notes.
3. Fixed assets: Tangible assets used for operations, with a service life of one year or more, and not for the purpose of sale.
Under fixed assets, land and depreciable assets shall be presented separately. Any asset under "fixed assets" accounting for 5% of total "fixed assets" shall be given a separate balance sheet entry.
Fixed assets shall be recorded at the historical cost of acquisition or construction, provided that interest on the purchase price of a "presold" building or fixed assets purchased with a cash capital increase shall not be capitalized. Idled fixed assets shall be reclassified as other assets at the lower of their net fair value or book value. A fixed asset that is still in use after the expiration of its service life shall continue to be depreciated based on the residual value.
Leased assets shall be recognized and disclosed in accordance with the Statement of Financial Accounting Standards No. 2.
If a leased asset is of the operating lease type, an improvement made to the leased property is termed a leasehold improvement and shall be recorded as a fixed asset.
The valuation basis for a fixed asset shall be indicated in a note. If the fixed asset has been revalued, the date of revaluation and increased or decreased amount shall be recorded, and the acquisition costs and the appraisal increment shall be separately presented. The land value increment tax reserve allocated due to a land appraisal increment shall be classified as a long-term liability. Where fixed assets have been revalued, from the day following the date of record of the revaluation, depreciation shall be calculated based on the reassessed value.
Except for land, fixed assets shall be periodically depreciated or depleted on a reasonable and systematic basis within their estimated useful life, without interruption or deduction.
The accumulated depreciation or accumulated impairment of a fixed asset shall be recorded as a deduction from fixed assets.
A leasehold improvement shall be reasonably and systematically depreciated based on the lower of its estimated useful life or lease term, without interruption or reduction.
The method for calculating the depreciation of depreciable assets shall be given in a note.
If a fixed asset is provided as a guarantee, or has a mortgage, or a lien (dien) against it, that fact shall be given in a note.
4. Intangible assets: Assets which are nonphysical but have economic value, including patents, copyrights, franchises, trademark rights, and goodwill. Any asset under "intangible assets" that accounts for 5% of total "intangible assets" shall be given a separate balance sheet entry.
Externally purchased intangible assets should be recorded at actual cost.
Self-developed intangible assets that cannot be identified clearly (e.g. goodwill) shall not be recorded; those which can be clearly identified (e.g. patents) can only be recorded in an amount that is no more than the fee for application for registration.
During the development stage, the assets shall be valued and profits/losses recognized and disclosed in accordance with the Statements of Financial Accounting Standards No. 19.
The valuation basis for intangible assets shall be noted.
5. Other assets: All the assets not falling within the above categories and with a collection or recovery period of one year or one operating cycle or longer. When the amount of other assets exceeds 5% of the total amount of assets, the names of the accounts shall be separately recorded.
(1) Operating bond: the operating bond set aside in accordance with the Securities and Exchange Act and the Rules Governing Stock Exchanges;
(2) Refundable deposits: all other refundable deposits;
(3) Deferred debits: long-term prepaid expenses which will bring future economic benefits and shall be periodically amortized subsequently;
(4) Other assets: assets not falling within the above categories.
The fair value of long-term notes receivable and other long-term receivables shall be calculated from the imputed interest rate.
Large, overdue accounts receivable shall be listed separately, and the collection status and the amount of allowance for bad debt shall be noted.
If financial assets held by a company are pledged as collateral for debt, they shall be categorized according to the liquidity of the collateralized debt as current or non-current assets.
Assets provided as refundable deposits shall be categorized according to liquidity as current or non-current assets.
6. Settlement/clearance debit items: an item to be offset by the company-type securities exchange in handling securities settlement/clearance. When the statement is prepared, the balance after offsetting debit items against credit items shall be recorded. However, the nature, content, use method, and pledge status shall be explained in the footnotes of the financial report, and the details shall be disclosed in the list of accounts.
(1) Settlement/clearance fund: The settlement/clearance fund paid/deposited by securities firms in accordance with the Securities and Exchange Law and the Regulations Governing the Securities Firms and the interest income and relevant expenses derived therefrom shall be recorded under this classification.
(2) Settlement price: the settlement amount receivable from securities firms.
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Article 10
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The categorization of liability account titles on the balance sheet, the content of entries made therein, and matters to be noted are as follows:
1. Current liabilities: Liabilities incurred through operations, for which liquidation is anticipated within one business cycle in the normal course of business; liabilities incurred primarily in relation to trading; liabilities which must be liquidated within 12 months after the balance sheet date; and liabilities whose liquidation the enterprise may not unconditionally defer more than 12 months beyond the balance sheet date.
(1) Short-term loans: Includes short-term borrowings from banks, overdrafts, and other short-term loans.
For short-term loans, the nature of the loan, lending bank name, interest rate interval, due date, and guarantee status, shall be noted based on the type of loans. If collateral is provided, the name of the collateral and its book value shall be recorded.
Borrowings from financial institutions, shareholders, employees, related parties, and other individuals or institutions shall be individually noted.
(2) Short-term bills payable: Short-term bills issued through financial institutions to acquire funds from the money market, including commercial paper payable and bankers' acceptances.
Short-term bills payable shall be valued at present value. Discounting of short-term bills payable shall be recorded as a deduction from short-term bills payable.
For short-term bills payable, the agency for guarantee and acceptance and the interest rate shall be noted. If collateral is provided, the name and book value of such collateral shall be stated.
(3) Financial liabilities－current－whose changes in fair value are recognized in earnings: Current financial liabilities that meet one of the following conditions:
(i) Financial liabilities for trading.
(ii) Financial liabilities, except those designated as hedged items in hedge accounting relationships, which at the time of initial recognition were designated as liabilities to be measured at fair value, with changes in fair value to be recognized in earnings.
The following financial products shall be classified as financial liabilities for the purpose of trading:
(i) Liabilities incurred primarily for the purpose of repurchase in the near term.
(ii) Liabilities that are part of a group of distinct financial product portfolios under comprehensive management, where there is evidence that in the near term the group is in fact being managed for short-term profit.
(iii) Derivative financial liabilities, with the exception of those that are designated and effective hedging instruments.
Financial liabilities whose changes in fair value are recognized in earnings shall be measured at fair value. "Fair value," for stocks or depository receipts listed on the Taiwan Stock Exchange or traded over-the-counter on the GreTai, means the closing price on the balance sheet date.
Financial liabilities whose changes in fair value are recognized in earnings shall be classed according to liquidity as current or non-current. Those that are non-current shall be reclassified as "financial liabilities whose changes in fair value are recognized in earnings－non current" under "long-term liabilities".
(4) Derivative financial liabilities for hedging－current: Derivative financial liabilities that have been designated in hedge accounting relationships and are effective hedging instruments; these shall be measured at fair value and classified according to liquidity as current or non-current. Those that are non-current shall be reclassified as "derivative financial liabilities－non current" under "long-term liabilities".
(5) Financial liabilities measured at cost－current: Derivative financial liabilities that are linked to stocks that are neither listed on the Taiwan Stock Exchange nor traded on the GreTai, or that are emerging stocks, and that are settled in those stocks. Financial liabilities measured at cost shall be classed according to liquidity as current or non-current; those that are non-current shall be reclassified as "financial liabilities measured at cost－non current" under "long-term liabilities".
(6) Notes payable: all notes payable.
Notes payable shall be valued at present value, provided that those resulting from operating activities and maturing within one year may be valued at face value.
Notes payable resulting from operating activities shall be distinguished from notes payable from non-operating activities.
Large-amount notes payable to banks and related parties shall be individually disclosed.
If collateral has been provided for notes payable, the name of the collateral and its book value shall be recorded.
Notes used for refundable deposits that can be recovered for cancellation upon termination of the guarantee obligation need not be recorded as current liabilities, provided that the nature and amount of the guarantee shall be explained in the notes to the financial statement.
(7) Accounts payable: liabilities incurred for purchase of materials, goods, or services on credit.
Accounts payable shall be valued at present value, providing that those resulting from operating activities and maturing within one year may be valued at the account book value.
Accounts payable resulting from operating activities shall be distinguished from accounts payable from non-operating activities.
Large accounts payable to related parties shall be appropriately disclosed.
If collateral has been provided for accounts payable, the name of the collateral and its book value shall be recorded.
(8) Other payables: other payables not falling within notes payable and accounts payable, such as taxes, wages, and dividends payable.
For dividends and bonuses payable passed by resolution of the shareholders meeting, the distribution method and proposed payment date, if determined, shall be disclosed.
During settlement of profits and losses at the end of each period, the estimated income tax payable calculated based on taxable income shall be recorded as a current liability.
Any other payables that exceed 5% of the aggregate amount of current liabilities shall be individually recorded by type.
(9) Other financial liabilities－current: Financial liabilities not listed individually on the balance sheet shall be listed as other financial liabilities and be categorized according to liquidity as either current or non-current. Non-current liabilities shall be reclassified as "other financial liabilities－non-current" under "long-term liabilities".
Any financial liability under "current liabilities" that accounts for 5 percent of aggregate current liabilities shall be given a separate balance sheet entry.
When financial liabilities of a company reach maturity within the 12 months after the balance sheet date and long-term refinancing or extension is not accomplished until after the balance sheet date, such liabilities shall still be stated as current liabilities.
(10) Advance receipts: all amounts received in advance.
Amounts received in advance shall be given separate entries according to category and any relevant stipulations shall be noted.
(11) Other current liabilities: All current liabilities not falling within the above categories. Any of the above current liabilities that do not exceed 5% of the aggregate total of current liabilities may be incorporated into "other current liabilities."
2. Long-term liabilities: Liabilities which will mature 12 months or more after the balance sheet date, including corporate bonds payable, long-term borrowings, long-term notes payable, and long-term payables. Any financial liability under "long-term liabilities" that accounts for 5 percent of aggregate long-term liabilities shall be given a separate balance sheet entry.
(1) Corporate bonds payable (including overseas corporate bonds): Bonds issued by the company. For issued bonds, the total approved amount, interest rate, maturity date, name of the collateral, book value, region of issue, and other relevant terms and restrictions shall be indicated in the notes to the financial statement. If the bonds are convertible corporate bonds, the method of conversion and amounts already converted shall also be noted.
Premiums and discounts on corporate bonds payable are valuation accounts and shall be classified as additions to or deductions from corporate bonds payable. They shall be reasonably and systematically amortized during the period of bond circulation and recorded as an adjustment in interest expenses.
(2) Long-term borrowings: Includes long-term bank loans, and other long-term borrowings or loans paid in installments. For long-term borrowings, the content, date of maturity, interest rate, name of collateral, book value, and any important restrictive covenants shall be disclosed.
For a long-term loan repaid in foreign currency or in an amount translated at a foreign exchange rate, the name and amount of such foreign currency shall be indicated.
Long-term loans from shareholders, employees, and related parties shall be separately recorded.
Long-term notes payable and other long-term payables shall be valued at present value.
(3) Preferred stock liabilities－non-current: Preferred stock issued in accordance with the Statement of Financial Accounting Standards No. 36 and having the nature of a financial liability.
Preferred stock liabilities shall be classified according to liquidity as current or non-current. Those that are current shall be reclassified as "preferred stock liabilities－current."
3. Other liabilities: Liabilities not falling within the above categories. When the amount of other liabilities exceeds 5% of the total amount of liabilities, the liabilities shall be separately reported by type.
(1) Refundable deposits: all other refundable deposits.
(2) Other miscellaneous liabilities: other liabilities not falling in one of the above classifications.
For financial liabilities maturing within 12 months after the balance sheet date, if the original loan contract period was in excess of 12 months and the company intends long-term refinancing, and has accomplished refinancing or rollover by the balance sheet date, or if, based on the current refinancing contract, it has the discretionary ability to refinance the financial assets or extend the loan more than 12 months beyond the balance sheet date, the assets shall be listed as non-current liabilities, and the amount of the loan and relevant facts provided in the notes to the financial statement.
Financial liabilities shall be listed as current liabilities when, under a given loan contract, breach of a specific clause of the loan contract requires immediate repayment. However, when the creditor has agreed prior to the balance sheet date not to enforce such a clause, and when there is an extension to more than 12 months after the balance sheet date with the condition that when the business is capable of rectifying the breach during the period of extension, the creditor may not demand immediate repayment of assets, then the loan shall be listed as a non-current liability.
4. Settlement/clearance credit item: an item for offset by the securities exchange in handling securities settlement/clearance. When the statement is prepared, the balance after offsetting debit items against credit items shall be recorded. However, the nature, content, use, and pledge status shall be explained in the footnotes of the financial report, and the details shall be disclosed in the list of accounts.
(1) Settlement/clearance fund deposits received: a contra account of "settlement/clearance fund" in asset accounts.
(2) Settlement prices: settlement amounts payable to securities firms.
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Article 11
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Classification of accounts in the balance sheet under "shareholder equity," the content of account entries, and matters to be noted are as follows:
1. Capital stock: Capital invested in the company by shareholders and for which application for registration has been made with the authority in charge of corporate registration, provided that preferred stock having the nature of a financial liability shall not be included.
The type of capital stock, par value per share, number of shares authorized, number of shares issued, and any special terms and conditions shall be indicated.
If convertible preferred stock and global depositary receipts are issued, the issue region, issuance and conversion methods, converted amount and special terms and conditions shall be disclosed.
Treasury stocks shall be treated using the cost method and recorded as a deduction from shareholder equity. The number of shares shall be noted.
2. Additional paid-in capital reserve: Refers to the equity components of financial products issued by the company or the premiums generated by capital stock transactions between the company and shareholders, and typically includes premium over the par value of stock issued, surplus from donations, and other revenues generated as recognized by generally accepted accounting principles.
Additional paid-in capital reserves shall be recognized separately according to their type; where utilization is restricted, the restricting conditions shall be disclosed in the notes to the financial statement.
3. Retained earnings (or accumulated deficit): Equity resulting from operating activities, including legal reserves, special reserves, and unappropriated retained earnings (or deficit to be covered).
(1) Legal reserve: The amount of legal reserve to be allocated in accordance with the Company Act.
(2) Special reserve: The reserve allocated from earnings in accordance with relevant provisions of laws and regulations, contracts, the articles of incorporation, or resolutions of shareholders meetings.
(3) Unappropriated earnings (or deficit to be covered): Undistributed and unappropriated earnings (uncovered deficit is "deficit to be covered").
(4) Distribution of earnings or covering of losses shall not be recorded until approved by the shareholders meeting, provided that any proposed earnings distribution or covering of losses shall be disclosed in the notes to the current financial statement.
4. Other shareholder equity: Refers to other items resulting in additions to or deductions from shareholder equity, and typically includes unrealized revaluation gains, unrealized gains/losses on financial products, net losses not recognized as retirement fund costs, translation adjustments, and treasury stock.
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Article 12
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The account structure of income statements, content of account entries, and matters to be noted are as follows:
1. Operating revenues: revenues from operating activities in the current period. Recognition of operating revenue shall comply with the Statement of Financial Accounting Standards No. 32.
(1) Handling fee revenue: revenue from handling fees paid on a monthly basis to the company-type securities exchange at an approved rate by securities brokers based on the volume of trading ordered by customers or by securities dealers based on the volume of trading conducted for their own accounts.
(2) Securities listing fee revenue: revenue from listing fees paid to the company-type securities exchange by listed companies based on their paid-in capital in accordance with the "securities listing contracts".
(3) Revenue from fees for use of computer equipment: revenue from stipulated fees paid by securities firms for using the computer equipment of the company-type securities exchange on the centralized stock market.
(4) Revenue from fees for use of information: revenue from stipulated fees paid by securities firms, futures commission merchants, and domestic and foreign institutions such as information companies for using information transmitted by the company-type securities exchange.
(5) Revenue from data processing fees: revenue from stipulated fees paid by the GreTai for data processing done on its behalf by the company-type securities exchange.
(6) Other operating revenue: other operating revenue not falling within the above categories.
2. Operating expenses: Expenses incurred during the current period from operations; shall be recorded in detail based on actual need.
3. Non-operating revenue and gains, expenses and losses: Revenues and expenses in the current period not arising from ordinary operating activities, including interest revenues, interest expenses, dividends on preferred stock having the characteristics of liabilities, gains/losses on valuation of financial assets, gains/losses on valuation of financial liabilities, gains/losses on investments recognized under the equity method, exchange gains/losses, gains/losses on disposal of fixed assets, gains/losses on disposal of investment, impairment losses, and gains from impairment loss reversals. Interest revenue and interest expenses shall be separately recorded. Gains/losses on valuation of financial assets, gains/losses on valuation of financial liabilities, investment gains/losses recognized under the equity method, exchange gains/losses, and gains/losses on disposal of investment may be recorded at net amounts.
4. Gains/losses from continuing operations: The net amounts in the preceding three subparagraphs; shall be separately listed as pre-tax gains/losses, income tax expenses (profits), and after-tax gains/losses.
5. Extraordinary gains and losses: Gains and losses that are distinguished by their unusual nature and by the infrequency of their occurrence. Significant losses or gains shall be separately recorded and shall not be amortized on a yearly basis.
6. The amount of cumulative effect resulting from the change of accounting principles shall be separately recorded following extraordinary losses/gains.
7. Current period net income (or net losses): Earnings (or losses) in the current accounting period are the aggregate of the amounts in the preceding three subparagraphs.
8. Earnings per share shall be calculated and disclosed in accordance with the Statement of Financial Accounting Standards No. 24.
9. Income tax shall be amortized and disclosed in accordance with the Statement of Financial Accounting Standards No. 22.
Except where otherwise provided by the Statement of Financial Accounting Standards, expenses and losses shall be listed according to function, provided that expenses relating to employment, depreciation, and amortization shall be disclosed.
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Article 13
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The statement of changes in shareholder equity is a report indicating changes in components of shareholder equity. The statement shall record beginning balances for capital stock, capital reserves, retained earnings (or accumulated deficit), and other components of shareholder equity that undergo adjustment, items increased or deceased in the current period and their amounts, and balances at the end of the period.
The contents of retained earnings entries are as follows:
1. Beginning balance;
2. Adjustments of preceding period profits/losses: Correction of errors in the calculation, recording, and recognition of profit and loss items in the preceding period and in the use of accounting principles and methods.
3. Current period net profits or net losses.
4. Allocation of legal reserves, special reserves, and distribution of dividends.
5. Ending balance.
Adjustments of gains and losses for the preceding period, unrealized losses or gains not included in current period gains/losses but directly recorded under shareholders' equity (e.g. translation adjustments), and income tax expenses (profits) arising out of changes in capital reserves shall be directly entered under such items as net amounts.
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Article 14
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A cash flow statement is a summarized report of inflow and outflow of cash and cash equivalents during a specific period in relation to operational, investment, and financing activities. Cash flow statements shall be prepared in accordance with The Statements of Financial Accounting Standards No. 17.
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Article 15
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In order that a financial report may thoroughly disclose the information of
financial position, results of operations, and cash flows, notes to the following matters shall be provided:
1. Company history and scope of operations;
2. A declaration that the financial statement has been prepared in accordance with these Regulations, applicable laws and regulations (with the name of the law or regulation to be given), and generally accepted accounting principles;
3. Summary of significant accounting policies and the bases of measurement employed;
4. Where due to special reasons the accounting treatment changes thus affecting the comparison of the financial information of the prior or subsequent periods, the reason of change and the impact on the financial statements shall be explained;
5. The basis of valuation shall be noted for those amounts, financial products, or other items presented in the financial report for which its disclosure is required;
6. If any account contained in a financial report is restricted by laws and regulations, contract, or other limitations, the condition, time limit and relevant matters shall be stated.
7. The standards on the basis of which assets or liabilities are classed as current or non-current.
8. Significant commitments and contingent liabilities;
9. Change of capital structure;
10. Long-term and short-term borrowings;
11. Addition, expansion, construction, lease, obsolescence, lying idle, sale, pledge, or transfer of major assets;
12. Major investment in other enterprises;
13. Significant transactions with related parties;
14. Loss caused by major disasters;
15. Processing or conclusion of material litigation;
16. Signing, completion, cancellation, or voidance of material contracts;
17. Adjustment of important organization and significant reformation of management system;
18. Information on the employees retirement plan;
19. Acceptance of any research and development project funded by another party and the amount thereof;
20. Information on derivatives investments;
21. Types, issuance dates, and amounts of privately placed securities;
22. Material impact of change of government laws and regulations;
23. Material impact of suspension of business;
24. Other necessary disclosures to ensure the financial statements are not misleading or to facilitate the fair presentation of the financial statements.
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Article 16
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Explanatory notes shall be added in the financial report with respect to any of the following subsequent events occurring in the period from the balance sheet date to the submission of the financial report:
1.Change of capital structure;
2.Long-term and short-term borrowings in substantial amounts;
3. Addition, expansion, construction, lease, obsolescence, lying idle, sale, pledge, transfer, or long-term lease-out, of major assets;
4. Principal investments in other enterprises;
5.Loss caused by major disasters;
6. Processing or conclusion of material actions;
7. Signing, completion, cancellation, or voidance of material contract;
8. Adjustment of important organization and significant reformation of management system;
9. Material impact of change of governmental laws and regulations;
10. Other significant events or measures which may affect the financial position, results of operations, or cash flows.
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Article 17
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The notes of a financial report shall disclose current-period information on the following items:
1. Major transaction information:
(1) Loans of capital to others;
(2) Provision of endorsements or guarantees for others;
(3) Period end securities holdings;
(4) Accumulated buying/selling of the same securities for which the dollar amount reaches NT$100 million or 20% or more of paid-in capital;
(5) Acquisition of fixed assets for which the dollar amount reaches NT$100 million or 20% or more of paid-in capital;
(6) Disposition of real estate for which the dollar amount reaches NT$100 million or 20% or more of the net paid-in capital;
(7) Account receivables from related parties for which the dollar amount reaches NT$100 million or 20% or more of paid-in capital.
(8) Derivatives transactions.
2. Information on re-invested enterprises: for those who directly or indirectly have major influence or control over the investee company, their names, locations, main business operations, original invested amount, holdings of stock at the end of the period, profits/losses during the current quarter, and recognized investment profits/losses shall be disclosed.
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Article 18
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The company-type securities exchange shall fully disclose information on related person transactions in accordance with the Statements of Financial Accounting Standards No. 6. To determine whether the transaction counterparty is related person, the substantive relationship shall be considered in addition to the formal legal relationship. When a counterparty is any one of the following, unless it can be proven there is no ability to control or act as a major influence, it shall be deemed to have a substantive relationship as a related person and relevant information shall be disclosed in the notes to the financial report in accordance with the Statements of Financial Accounting Standards No. 6:
1. An affiliated enterprise or its directors, supervisors, and managers as prescribed under Chapter 6-1 of the Company Law.
2. A company or institution under the same central management as that of the company-type securities exchange, or its directors, supervisors, and managers.
3. A manager or higher level executive in the central management office.
4. A company or institution listed by the company-type securities exchange as an affiliated enterprise in its publications or public announcements.
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Article 19
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Names of financial statements and lists of important account titles are as follows (formats as appended):
1. Balance Sheet (Form 1);
2. Lists of Assets, Liabilities, and Stockholders Equity Accounts;
(1) List of Cash and Cash Equivalents (Form 2-1);
(2) List of Financial Assets－Current－Whose Changes in Fair Value are Recognized in Earnings (Form 2-2);
(3) List of Available-for-sale Financial Assets－Current (Form 2-3);
(4) List of Derivative Financial Assets for Hedging－Current (Form 2-4);
(5) List of Financial Assets Measured at Cost－Current (Form 2-5);
(6) List of Bond Portfolios with no Active Market Bonds－Current (Form 2-6);
(7) List of Notes Receivable (Form 2-7);
(8) List of Accounts Receivable (Form 2-8);
(9) List of Other Receivables (Form 2-9);
(10) List of Prepayments (Form 2-10);
(11) List of long-term equity assets held for disposal (Form 2-11)
(12) List of Other Current Assets (Form 2-12);
(13) List of Changes in Financial Assets－Non-current－Whose Changes in Fair Value are Recognized in Earnings (Form 2-13);
(14) List of Changes in Available-for-sale Financial Assets－Non-current (Form 2-14);
(15) List of Changes in Financial Assets Held to Maturity (Form 2-15);
(16) List of Changes in Derivative Financial Assets for Hedging－Non-current (Form 2-16);
(17) List of Changes in Financial Assets Measured at Cost－Non-current (Form 2-17);
(18) List of Changes in Bond Portfolios With no Active Market Bonds－Non-current (Form 2-18);
(19) List of Changes in Funds (Form 2-19);
(20) List of Changes in Long-Term Equity Investments Using the Equity Method of Accounting (Form 2-20);
(21) List of Changes in Accumulated Impairment in Long-Term Equity Investments Using the Equity Method Of Accounting (Form 2-21);
(22) List of Other Changes in Long-Term Investments (Form 2-22);
(23) List of Changes in Fixed Assets (Form 2-23);
(24) List of Changes in Accumulated Depreciation of Fixed Assets (Form 2-24);
(25) List of Changes in Accumulated Impairment of Fixed Assets (Form 2-25);
(26) List of Changes in Intangible Assets (Form 2-26);
(27) List of Other Assets (Form 2-27);
(28) List of Short-term Loans (Form 3-1);
(29) List of Short-term Bills Payable (Form 3-2)
(30) List of Financial Liabilities Whose Changes in Fair Value are Recognized in Earnings (Form 3-3);
(31) List of Derivative Financial Assets for Hedging－Current (Form 3-4);
(32) List of Financial Liabilities Measured at Cost－Current (Form 3-5);
(33) List of Notes Payable (Form 3-6);
(34) List of Accounts Payable (Form 3-7);
(35) List of Accounts Collected in Advance (Form 3-8);
(36) List of Other Payables (Form 3-9);
(37) List of Other Current Liabilities (Form 3-10);
(38) List of Corporate Bonds Payable (Form 3-11);
(39) List of Long-term Loans (Form 3-12);
(40) List of preferred stock liabilities (Form 3-13);
(41) List of Other Liabilities (Form 3-14);
3. Income Statement (Form 4);
4. Lists of Income Accounts
(1) List of Operating Revenues (Form 5-1);
(2) List of Operating Costs (Form 5-2);
(3) List of Non-Operating Revenues and Gains, and Expenses and Losses (Form 5-3);
5. Statement of Changes in Shareholders' Equity (Form 6);
6. Statement of Cash Flows (Form 7).
7. List of Settlement/Clearance Fund (Form 8);
8. List of Settlement/Clearance Fund and Credit Lines of Banks (Form 9);
9. List of Receipt, Payment, and Use of Settlement/Clearance Fund (Form 10).
The company may decide on the basis of the materiality principle whether the lists of assets, liabilities, shareholder equity, and income items under subparagraphs 2 and 4 of the preceding paragraph require independent presentation.
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Article 20
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A company type securities exchange may prepare semi-annual financial reports in accordance with Chapters I and II, and waive the consolidated statements requirement.
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Article 21
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A company-type securities exchange preparing consolidated financial statements shall do so in accordance with the Statement of Financial Accounting Standards No. 7.
Notes to the consolidated financial statements shall include the following items:
1. The business relationship between the parent company and its subsidiaries and between each of its subsidiaries, and the status and amounts of any major transactions between them (Form 9).
2. Where subsidiaries hold shares in the parent company, the names of the subsidiaries and their shareholdings, dollar amounts, and reasons therefore shall be separately listed.
The provisions of Chapter II shall apply mutatis mutandis to the preparation of consolidated financial reports, and except where FSC regulations otherwise provide, preparation of statements of important accounting titles may be waived.
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Article 22
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These Regulations shall enter into force from 1 January 2006.
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