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Amendments

Title：

Regulations Governing the Preparation of Financial Reports by Company-Type Stock Exchanges  CH

Amended Date： 2018.07.27 
Article Content Chapter Content Search Article No. Search Legal Basis Amended Article Legislative History Chinese

Title： Regulations Governing the Preparation of Financial Reports by Company-Type Stock Exchanges(2017.02.10)
Date：
Article 11     Assets shall be properly classified. Current and non-current assets shall be distinguished, except when a presentation of all assets in order of liquidity provides information that is reliable and more relevant.
    For each asset line item, the total amount expected to be recovered within 12 months after the balance sheet date and the total amount expected to be recovered more than 12 months after the balance sheet date shall be separately presented in the financial reports or disclosed in the notes.
     Current assets means that the company-type stock exchange expects to realize the asset, or intends to sell or consume it, in its normal operating cycle; that it holds the asset primarily for the purpose of trading; that it expects to realize the asset within 12 months after the balance sheet date; or that the asset is cash or a cash equivalent, unless the asset is to be used for an exchange or to settle a liability, or otherwise remains restricted, at more than 12 months after the balance sheet date. As a minimum, current assets shall include the following asset line items:
  1. Cash and cash equivalents:
    1. Cash on hand, demand deposits, and short-term, highly liquid time deposits or investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
    2. A company-type stock exchange shall disclose the components of cash and cash equivalents and the policy which it adopts in determining the composition of cash and cash equivalents.
  2. Financial assets at fair value through profit or loss –current:
    1. Financial assets held for trading:
      1. Assets that are acquired principally for the purpose of sale in the near term.
      2. Assets that, upon initial recognition, are a part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent pattern of short-term profit-taking.
      3. Assets that are derivative financial assets, except for derivative financial assets that are financial guarantee contracts or designated and effective hedging instruments.
    2. Financial assets that, except for those designated as hedged items under hedge accounting requirements, are designated upon initial recognition as at fair value through profit or loss.
    3. Financial assets at fair value through profit or loss shall be measured at fair value.
  3. Available-for-sale financial assets –current:
    1. Financial assets that are not derivative financial assets and are designated as available-for-sale.
    2. Financial assets that are neither derivative financial assets nor any of the following:
      1. Financial assets measured at fair value through profit or loss.
      2. Held-to-maturity financial assets.
      3. Financial assets measured at cost.
      4. Debt instrument investments for which no active market exists.
      5. Receivables.
    3. Available-for-sale financial assets shall be measured at fair value.
  4. Derivative financial assets for hedging –current: Any derivative financial asset that is a designated and effective hedging instrument under hedge accounting requirements. Any such asset shall be measured at fair value.
  5. Financial assets measured at cost –current: Refers to financial assets that meet all of the following conditions:
    1. An investment in equity instruments that do not have a quoted price in an active market, or a derivative instrument that is linked to such equity instruments that do not have a quoted price in an active market and that shall settled by delivery of such equity instruments.
    2. The fair value cannot be reliably measured.
  6. Debt instrument investments for which no active market exists –current:
    1. Debt instrument investments that do not have a quoted price in an active market and with fixed or determinable payments, and that meet all of the following conditions:
      1. Not classified as at fair value through profit or loss.
      2. Not designated as available-for-sale.
      3. There are no other reasons except for credit worsening that are likely to cause the holder to not be able to recover almost all of the original investments.
    2. Debt instrument investments for which no active market exists shall be measured at amortized cost using the effective interest method.
  7. Trade receivables: Refers to claims resulting from principal business operations:
    1. Trade receivables shall be measured at amortized cost using the effective interest method. However, short-term trade receivables with no stated interest rate may be measured at the original invoice amount if the effect of discounting is immaterial.
    2. With respect to discounted or transferred trade receivables, an assessment shall be made to determine whether the risks and rewards of the trade receivables, and the control retained over them, will qualify them for derecognition in accordance with IAS 39, and the trade receivables shall then be disclosed in accordance with IFRS 7.
    3. Trade receivables from related parties in significant amounts shall be presented separately.
    4. At each balance sheet date an assessment shall be made of whether there is any uncollectible amount from trade receivables and an appropriate allowance for doubtful debts shall be made.
  8. Other receivables: Refers to receivables other than notes receivable and trade receivables. At each balance sheet date an assessment shall be made of whether there is any unrecoverable amount from other receivables and an appropriate allowance for doubtful debts shall be made.
  9. Current tax assets: The portion of the tax amount already paid in respect of current and prior periods that exceeds the amount due for those periods.
  10. Prepayments: All prepayments and prepaid expenses.
  11. Non-current assets held for sale:
    1. Any non-current asset, or asset included in a disposal group held for sale, that is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups, and whose sale must be highly probable.
    2. The measurement, presentation, and disclosure of non-current assets held for sale and disposal groups held for sale shall be made in accordance with IFRS 5.
    3. When non-current assets or disposal groups classified as held for sale no longer meet the criteria in IFRS 5, they shall cease to be classified as held for sale.
    4. When assets or disposal groups meet the definition of held for distribution to owners, they shall be reclassified from held for sale to held for distribution to owners, and shall be deemed an extension of the original disposal plan, and the classification, presentation, and measurement of the new disposal plan shall apply. When the assets or disposal groups classified as held for distribution to owners no longer meet the criteria in IFRS 5, they shall cease to be classified as held for distribution to owners.
  12. Other current assets: Current assets not attributable to any of the classes above.
    Non-current assets means tangible, intangible and financial assets of a long-term nature, other than assets classified as current. As a minimum, non-current assets shall include the following asset line items:
  1. Held-to-maturity financial assets – non-current:
    1. A non-derivative financial asset with fixed or determinable payments and fixed maturity, and which the enterprise has the positive intention and ability to hold to maturity, excluding the following items:
      1. Assets that are designated, upon initial recognition, as at fair value through profit or loss.
      2. Assets that are designated as available-for-sale.
      3. Assets that meet the definition of loans and receivables.
    2. Held-to-maturity financial assets shall be measured at amortized cost using the effective interest method.
  2. Investments accounted for using the equity method:
    1. The valuation and presentation of investments accounted for using the equity method shall be made in accordance with IAS 28.
    2. When investment gain or loss is recognized, if the financial reports prepared by an associate do not conform to these Regulations, those financial reports shall first be adjusted to achieve conformance before they may be used to recognize investment gain or loss. The financial reports of an associate used in applying the equity method shall be prepared as of the same date as that of the investor, and if prepared as of a different date, adjustments shall be made for the effects of significant transactions or events that occur between that date and the date of the investor's financial reports. In no case shall there be more than 3 months difference between the balance sheet date of the associate and that of the investor. If a CPA determines, pursuant to Statement of Auditing Standards No. 51, that an associate has a material effect on the fair presentation of the financial reports of an investor, the financial reports of the associate shall be audited by a CPA in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and generally accepted auditing standards.
    3. If an investment accounted for using the equity method is pledged as collateral or otherwise subject to any restriction or limitation, that fact shall be noted.
  3. Property and equipment:
    1. Tangible asset items that are held for use in the production or supply of goods or services, for rental to others, or for administrative purposes, and that are expected to be used during more than 1 financial year or 1 operating cycle.
    2. Property and equipment shall be subsequently measured using the cost model and accounted for in accordance with IAS 16.
    3. Each component of property and equipment that is significant shall be depreciated separately. The depreciation method used shall reflect the pattern in which the asset's future economic benefits are expected to be consumed. If that pattern cannot be determined reliably, the straight-line method shall be used. The depreciable amount should be allocated on a systematic basis over the asset's useful life.
    4. When items of property and equipment have different useful lives, or provide economic benefits in different ways, or are subject to different depreciation methods or depreciation rates, the notes to the financial reports shall show each class of their material components.
  4. Investment property:
    1. Property held, by the owner or by the lessee under a finance lease, to earn rentals, or for capital appreciation, or both.
    2. Investment property shall be subsequently measured using the cost model and accounted for in accordance with IAS 40. If the investment property is subsequently measured at fair value, the valuation model, qualifications of the appraiser, and information disclosure shall comply with Article 9, paragraph 4, subparagraph 4 of the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
  5. Intangible assets:
    1. Refers to an identifiable non-monetary asset without physical substance that meets the definition of identifiability, control by an entity, and existence of future economic benefits.
    2. Intangible assets shall be subsequently measured using the cost model and accounted for in accordance with IAS 38.
    3. The amortization method used shall reflect the pattern in which the asset's future economic benefits are expected to be consumed. If that pattern cannot be determined reliably, the straight-line method shall be used. The amortized amount of an intangible asset shall be allocated on a systematic basis over its useful life.
  6. Deferred tax assets: The amounts of income taxes recoverable in future periods in respect of deductible temporary differences, the carryforward of unused tax losses, and the carryforward of unused tax credits.
  7. Settlement and clearing debit items: Refers to an item used by a company-type stock exchange for its securities settlement and clearing operations:
    1. Settlement and clearing funds: Settlement and clearing funds deposited by securities firms in accordance with the Act and the Regulations Governing Securities Firms and the interest revenue and relevant fees arising from these funds shall be recorded under this item. The nature, content, utilization, and pledge status of these funds shall be indicated in the notes to the financial reports.
    2. Settlement prices: Settlement amounts receivable from securities firms.
  8. Other non-current assets: Non-current assets not attributable to any of the classes above.
    The items described in the preceding two paragraphs in relation to financial assets at fair value through profit or loss, derivative financial assets for hedging, available-for-sale financial assets, financial assets measured at cost, debt instrument investments for which no active market exists, held-to-maturity financial assets, trade receivables, and other receivables shall be accounted for in accordance with IAS 39.
    A company-type stock exchange shall assess at each balance sheet date whether there is any objective evidence of impairment for the items described in paragraph 3 and paragraph 4 in relation to available-for-sale financial assets, financial assets measured at cost, debt instrument investments for which no active market exists, held-to-maturity financial assets, trade receivables, other receivables, investments accounted for using the equity method, property and equipment, investment property measured using the cost model, intangible assets, and evaluation assets. If any such evidence exists, the company-type stock exchange shall recognize the amount of any impairment loss in accordance with IAS 39 and IAS 36. If the recoverable amount of non-financial assets is determined on the basis of fair value less costs of disposal, disclose the extra information regarding the fair value measurement, including the level of the fair value hierarchy, the valuation techniques, and the key assumptions. If the recoverable amount is determined on the basis of value in use, disclose the discount rate for value in use measurement.
     With respect to the items described in paragraph 3 and paragraph 4 in relation to financial assets at fair value through profit or loss, derivative financial assets for hedging, available-for-sale financial assets, debt instrument investments for which no active market exists, held-to-maturity financial assets, trade receivables, other receivables, non-current assets held for sale, and investment property, the measurement and disclosure of fair value shall be made in accordance with IFRS 13.
    The items described in paragraph 3 and paragraph 4 in relation to financial assets at fair value through profit or loss, derivative financial assets for hedging, available-for-sale financial assets, financial assets measured at cost, debt instrument investments for which no active market exists, and held-to-maturity financial assets shall be distinguished as current and non-current based on liquidity.
Article 14     A company-type stock exchange shall present all items of income and expense recognized in a period in a single statement of comprehensive income displaying components of profit or loss and components of other comprehensive income.
    A company-type stock exchange shall present expenses recognized in profit or loss under the preceding paragraph using a classification based on their nature.
    When items of income or expense are material, a company-type stock exchange shall disclose their nature and amount separately in the financial statements or in the notes.
    As a minimum, the statement of comprehensive income shall include the following line items:
  1. Revenue:
    1. Exchange fee revenue: Revenue from exchange fees paid to a company-type stock exchange on a monthly basis and at an approved rate by securities brokers based on the volume of customer trades or by securities dealers based on the volume of proprietary trades made for their own accounts.
    2. Securities listing fee revenue: Revenue from listing fees paid to a company-type stock exchange by listed companies based on their paid-in capital in accordance with the Agreement for Listing of Securities.
    3. On-line processing fee revenue: Revenue from stipulated fees paid by securities firms for using the computer equipment of a company-type stock exchange in relation to the centralized securities market.
    4. Information usage fee revenue: Revenue from stipulated fees paid by institutions such as securities firms, futures commission merchants, and domestic and foreign information companies for using the information transmitted by a company-type stock exchange.
    5. Data processing fee revenue: Revenue from stipulated fees paid by the Taipei Exchange for the processing of data by a company-type stock exchange on its behalf.
    6. Other revenue: Revenues not attributable to any of the items above.
    7. The recognition and measurement of revenue shall be made in accordance with IAS 18. When, and only when, a company-type stock exchange assesses it has exposure to the significant risks and rewards for the sale of goods or the rendering of services based on an examination of the circumstances of the transaction, the recognition of revenue shall be based on the gross amount; otherwise, the recognition of revenue shall be based on the net amount.
  2. Operating expense: The expenses to be borne as a result of operating activities in the period, including employee benefits expense, depreciation and amortization expense, and other operating expense.
  3. Finance costs: Include interest expenditures incurred in relation to operating activities and for all classes of liabilities, with the portion eligible for capitalization being deducted.
  4. Share of the profit or loss of associates and joint ventures accounted for using the equity method: The profit or loss of associates and interests in joint ventures that a company-type stock exchange recognizes using the equity method according to its share in the associates and the interests in joint ventures.
  5. Tax expense (benefit): The aggregate amount included in the determination of profit or loss for the period in respect of current tax and deferred tax.
  6. Profit or loss of discontinued operations:
    1. The post-tax profit or loss of discontinued operations and the post-tax gain or loss recognized on the measurement to fair value less costs to sell or on the disposal of the assets or disposal group(s) constituting the discontinued operation.
    2. The presentation and disclosure of profit or loss of discontinued operations shall be made in accordance with IFRS 5.
  7. Profit or loss during the period: Earnings or deficit in the current reporting period.
  8. Other comprehensive income: Refers to each component of other comprehensive income classified by nature, including share of the other comprehensive income of associates and joint ventures accounted for using the equity method:
    1. Items that may be subsequently reclassified into profit or loss: Include exchange differences resulting from translating the financial statements of a foreign operation, unrealized valuation gains and losses from available-for-sale financial assets, and the effective portion of gains and losses on hedging instruments in a cash flow hedge.
    2. Items not to be reclassified into profit or loss: Include revaluation surplus and remeasurements of defined benefit plans.
  9. Total comprehensive income.
  10. Allocations of profit or loss during the period attributable to non-controlling interest and owners of the parent.
  11. Allocations of total comprehensive income during the period attributable to non-controlling interest and owners of the parent.
  12. Earnings per share:
    1. Basic and diluted earnings per share for profit or loss from continuing operations attributable to the ordinary equity holders of the parent entity and for profit or loss attributable to the ordinary equity holders of the parent entity.
    2. The calculation and presentation of earnings per share shall be made in accordance with IAS 33.
Article 17     To meet the objective of presenting full and complete information about the financial position, financial performance, and cash flows of a company-type stock exchange, financial reports shall contain explanatory notes disclosing the following:
  1. History and scope of business operations of the company-type stock exchange.
  2. A statement that the financial reports comply with these Regulations, applicable laws and regulations (giving the title of the laws or regulations), as well as IFRS, IAS, IFRIC Interpretations, and SIC Interpretations.
  3. The date when the financial reports were authorized for issue and the process involved in authorizing the financial reports for issue.
  4. The effect or impact that may arise when it has or has not applied a new or revised IFRS, IAS, IFRIC Interpretation, or SIC Interpretation recognized by the FSC.
  5. A summary of significant accounting policies used that are relevant to an understanding of the financial reports, and the measurement basis (or bases) used in preparing the financial reports.
  6. Significant accounting judgments, estimations, and assumptions, as well as information about the assumptions it makes and other major sources of estimation uncertainty.
  7. Objectives, policies and processes for managing capital, and any change in capital structure, including funding, liability, and equity.
  8. If for a special reason there is a change in accounting treatment, thus affecting the comparison of financial data between two successive periods, the reason for the change and its effect on the financial reports shall be noted.
  9. If it is necessary to provide the basis of valuation for any amount, financial instrument, or other item presented in the financial reports, the basis of valuation shall be noted.
  10. If any item presented in the financial reports is subject to any legal, regulatory, contractual, or other restriction, the circumstances and timing of the restriction and other related information shall be noted.
  11. Criteria for classifying assets and liabilities into current and non-current.
  12. Material contingent liabilities and unrecognized contractual commitments.
  13. Financial risk management objectives and policies.
  14. Long-term and short-term borrowings.
  15. The addition, expansion, construction, lease, obsolescence, idling, sale, transfer, or long-term renting of major assets.
  16. Principal investments in other enterprises.
  17. Significant transactions with related parties.
  18. Losses due to major disasters.
  19. Major litigation pending or concluded.
  20. The signing, completion, voidance, or lapse of major contracts.
  21. Major organizational adjustments and significant management reforms.
  22. Information about employee benefits. The information shall be disclosed in accordance with IAS 19, and shall include the influence of defined benefit plans on the amount, timing, and certainty of future cash flows, actuarial losses and gains arising from changes in demographic assumptions and financial assumptions, and the expected contributions in the next reporting period in the following financial year.
  23. Segment financial information in accordance with IFRS 8, including the scope of business, revenue, and gains and losses of each reportable segment.
  24. Any research and development project funded by another party and the amount.
  25. Information about investments in derivative instruments.
  26. When subsidiaries hold shares in the parent, the names of the subsidiaries and the shareholdings, amounts, and reasons shall be separately presented.
  27. In the case of private placement of securities, the type, issue date, and amount shall be disclosed.
  28. Material effects of changes in government laws and regulations.
  29. Material effects of discontinuance of operations.
  30. Fair value information. The information shall be disclosed in accordance with IFRS 13, and shall include information on recurring or non-recurring fair value measurement of assets and liabilities, inputs such as fair value valuation technique and parameters or assumptions used in fair value measurement, and Level 3 of fair value hierarchy.
  31. Foreign-currency-denominated assets and liabilities that have significant influence: Include the amount of risk exposure, currency, and exchange rate for monetary and non-monetary items denominated in foreign currencies, and the foreign exchange gains or losses on monetary items.
  32. Supporting information for items presented in the balance sheet and in the statements of comprehensive income, of changes in equity and of cash flows, or other necessary descriptions essential for avoiding misunderstanding by users or for the fair presentation of the financial reports.
Article 20     A company-type stock exchange shall fully disclose information on related party transactions in accordance with IAS 24, and the following provisions shall be complied with:
  1. The name and relationship of the related party shall be presented.
  2. If the transaction amount or balance of any single related party reaches 10 percent or more of the company-type stock exchange's total transaction amount or balance of that type of transaction, the name of each such related party shall be individually presented.
    In considering whether a counterparty is a related party, attention shall be directed to the substance of the relationship in addition to the legal form. Unless it can be established that no control, joint control, or significant influence exists, a party falling within any of the following shall be deemed to have a substantive related party relationship, and relevant information shall be disclosed in the notes to the financial reports in accordance with IAS 24:
  1. An affiliated enterprise within the meaning given in Chapter VI-I of the Company Act, and any of its directors, supervisors, and managerial officers.
  2. A company or institution governed by the same general management office as the company-type stock exchange, and any of its directors, supervisors, and managerial officers.
  3. A person holding the position of manager or higher in the general management office.
  4. A company or institution shown as an affiliated enterprise in the company-type stock exchange's publications or public announcements.
  5. Another company or institution whose board chairman or president is the same person as, or is the spouse or a relative within the second degree of kinship of, the board chairman or president of the company-type stock exchange.
Article 21     Titles and forms of financial statements are as follows:
  1. Balance sheet (Forms 1 and 1-1).
  2. Statement of comprehensive income (Forms 2 and 2-1).
  3. Statement of changes in equity (Form 3).
  4. Statement of cash flows (Form 4).
  5. Schedules to the financial reports (Forms 5-1 to 5-10).
Article 30     These Regulations shall come into force from the date of issuance, with the exception of Article 3, Article 6, Article 9, paragraph 1, Articles 10 to 15, Article 17, Article 19, Articles 21 to 23, Article 25, Article 27, and Article 29, as amended on 15 September 2014, which shall come into force from financial year 2015, and the amendments of 10 February 2017, which shall come into force from financial year 2017.