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Article 4
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The financial reports shall mean financial statements, list of important account titles, and other disclosures and explanations under these Guidelines 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.
An Issuer, unless newly established or where regulations of the Financial Supervisory Commission of the Executive Yuan ("the FSC") provide otherwise, shall prepare the principal financial statements and their footnotes referred to in the preceding paragraph by comparing two consecutive periods, and the responsible person, in-charge and handling accountants of the Issuer shall sign or seal each page of such statements.
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Article 5
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The content of a financial report shall fairly present the financial position, operating results, and cash flows of the Issuer without misleading an interested party in making judgment and decision.
If a financial report violates these Guidelines or any other relevant regulations, upon examination and notice of adjustment from the FSC, the Issuer shall make adjustment and correction. If the adjusted amount attains the standard set by the FSC, a corrected financial report shall be publicly announced. When making public announcement, the Issuer shall indicate the reasons, items, and amount of adjustment as notified by the FSC.
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Article 8
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Assets: Assets shall be appropriately categorized. Liquid and illiquid assets shall be separated, provided that this shall not apply in the case of special enterprises where categorization of assets according to liquidity is not appropriate.
The anticipated total amount of return on assets within 12 months after the balance sheet date and in excess of 12 months after the balance sheet date shall be respectively provided in the financial statement or disclosed in a footnote.
The asset account/classification in the balance sheet, content thereof, and matters to be noted are as follows:
1. Current assets: Cash or cash equivalents that are not restricted in use; assets held for the purpose of trade, or that will be held short-term and are expected to be converted to cash within 12 months of the balance sheet date; assets that are expected to be converted to cash, put up for sale, or consumed during the normal course of a business operation cycle.
(1) Cash and cash equivalent: Cash in treasury, bank deposit, petty cash, and revolving fund paid in small amount for incidental expenses, and the short-term investment which is convertible into cash in fixed amount at any time, due in near future, and the change of whose interest rate has insignificant impact on its value.
The non-current bank deposits shall be separately classified. If the maturity date is longer than one year, a note shall be provided. The earmarked deposit or the deposit whose use is restricted, such as expansion and sinking funds, shall not be classified as cash.
If the 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 guarantee deposits-out, they shall be classified as current assets or other assets depending on whether they are short-term or long term.
Compensating balance, if incurred due to short-term loans, shall be classified as current asset, and an explanation shall be provided in the note. Compensating balance incurred due to long-term liability shall be classified as other asset or long-term investment rather than current asset.
(2) Short-term investment: This includes the securities, other than those issued by the Issuer, traded on the open market, convertible into cash at any time, and not aimed at controlling or maintaining close business relation with the investee company. Short-term investments shall be valued by using lower-of-cost-or-market method, and a note of the method for calculating the cost shall be provided. Market price means the average closing price of the last month in an accounting period. The market price of an open-end fund means the net asset value of the fund on the balance sheet date.
For the stock dividends acquired for holding securities or the stocks distributed due to capitalization of capital reserve, the increased number of shares shall be recorded by the type of short-term investments, and the average unit cost of each share shall be calculated by weighted average method.
If the securities are pledged as collateral for a debt, and if the secured debt is a long-term liability, such securities shall be re-classified as long-term investment; if the secured debt is a current liability, such securities shall still be classified as short-term investment, but a note shall be provided to explain the fact of security. Where the securities are provided as guarantee deposits-out, they shall be classified as short-term or long-term investment based on their long-term or short-term nature.
(3) Notes receivable: all the notes receivable.
The fair value of notes receivable shall be calculated based on 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 where trading is also frequent, the notes need not be measured at fair value.
Discounted or transferred notes receivable shall be deducted and a note shall be provided.
Notes receivable resulting from operating activities shall be separately recorded from notes receivable resulting from non-operating activities.
Notes receivables in significant amount from related parties shall be separately disclosed.
Notes provided for security shall be so indicated in the footnotes.
If the collection of a note receivable becomes impossible, it shall be written off.
At closing, the amount of notes receivable which cannot be realized shall be assessed and proper allowance for bad debts shall be recognized.
(4) Accounts receivable: claims resulting from sale of goods or services.
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.
Accounts receivable in significant amount from related parties shall be separately disclosed.
If the collection of an account receivable becomes impossible, it shall be written off.
At closing, the amount of accounts receivable which cannot be realized shall be assessed and proper allowance for bad debts shall be recognized.
The unrealized interest revenue of installment sales shall be classified as a deduction of account receivable. Where any portion of an amount is to be received beyond one year, a note shall be provided to explain the amount expected to be received in each year.
A "pledged account receivable" shall be separately recorded. The note payable provided as security shall be classified as a deduction of the "pledged account receivable".
Where the accounts receivable include long-term construction contract sum, the amount reserved for construction within the invoiced account receivable shall be indicated in the balance sheet or the footnote to the financial statements. If the expected period for recovery of the reserved amount is more than one year, the amounts expected to be recovered in each shall be noted.
(5) Other receivables: other receivables not falling within notes receivable and accounts receivable.
At closing, the amount of other receivables uncollectible shall be assessed and proper allowance for bad debts shall be recognized.
If any of the other receivables exceeds the aggregate amount of current assets by 5%, they shall be separately recorded by counterparty.
Allowances for bad debts shall be respectively recorded as the deductions of notes receivable, accounts receivable, and other receivables. If such accounts are further classified, the allowances for bad debts shall also be respectively recorded in the same manner.
(6) Other financial assets－liquid: Financial assets not listed separately on the balance sheet shall be listed under "other financial assets," and shall be categorized as either liquid or illiquid assets. Illiquid assets shall be re-listed under "other financial assets－illiquid."
(7) Inventory: those finished goods or merchandise which are held for sale in the normal course of business; items of work-in-progress which will be sold after further processing; or those materials and supplies directly or indirectly consumed in the production of goods or services to be available for sale.
Inventories shall be valued and disclosed in accordance with The Statements of Financial Accounting Standards No. 10.
Where the value of inventories is apparently reduced due to defects, damage, or obsolescence, the net realized value shall be used as valuation basis.
Inventories provided for pledge, security, or used under the surveillance of creditors shall be noted.
If a construction company which contracts with other parties to construct pre-sold buildings meets all of the following conditions, it may recognize the profit for sale of the buildings based on Percentage-of-Completion Method:
1) The construction has progressed beyond the preparatory stage, i.e., the designing, planning, contracting, grading of the construction have been completed and the construction work can be processed at any time;
2) The total amount of pre-sale contracts has reached the total estimated construction cost;
3) Buyers' payment has reached 15% of the total contract price;
4) Collection of the contract amount receivable can be reasonably estimated;
5) Estimate for contract costs to be invested to complete the contract and the degree of its completion at the end of the period are reasonably dependable;
6) Costs belonging to the contract for sale of buildings can be reasonably identified.
When a construction company purchases a property under construction from another party, the company continuing the construction and sale of the buildings shall adopt the Completed Contract Method for recognition of profits on the sale of the buildings.
As a contractor has statutory mortgage on the construction-in-progress commissioned by a construction company, the construction company shall not offset such construction against the billings on construction-in-progress.
(8) Construction-in-progress: the construction costs incurred during the construction period by the long-term construction contract undertaken by an enterprise and the recognized profits/losses.
The profits/losses recognized and expressed in the long-term construction contract shall be in accordance with Rule Number 11 of the Statements of Financial Accounting Standards.
(9) Prepayments: prepaid expenses and prepayments for purchase of materials.
Prepayments for purchase of fixed assets in accordance with contract and payment for uncompleted construction for use by operations shall be classified as fixed assets and shall not be recorded as prepayments.
(10) Long-term equity assets held for disposal: equity investments in a subsidiary where sale of those investments is planned within 12 months after the balance sheet date.
(11) Other current assets: all the current assets not falling within the above categories.
The above current assets, except for cash and other liquid financial assets, whose amount is less than 5% of the aggregate amount of current assets, may be incorporated into other current assets.
2.Funds and long-term investments: all special funds and the long-term investments for regular business purposes.
(1) Funds: the asset allocated/deposited for special purpose such as sinking fund, improvement and expansion fund, contingent reserve, etc.
The resolutions and rules based on which a fund is allocated/deposited shall be recorded.
The welfare fund set aside in accordance with the Statute on Employee Welfare Fund shall be classified as expense.
(2) Long-term investments: the long-term investments for acquiring controlling power or other property rights and interests to satisfy the operation objective, such as investment in the stocks of other enterprises, purchase of long-term bonds, investment in real estate, etc.
The method used to account for long-term investments shall be provided. Long-term investments shall be separately classified based on their nature.
An investor company's investment in an enterprise's stock shall be classified as a long-term investment in equity securities if any of the following conditions is met:
With the exception of holdings of stocks of public companies that may be traded on OTC markets pursuant to Article 5 of the GreTai Securities Market Criteria Governing Review of Emerging Stocks Traded on Over-the-Counter Markets (i.e., emerging stocks) and that have material influence, to which the cost method shall be applied, valuation and presentation of long-term equity investments shall be prepared in accordance with The Statements of Financial Accounting Standards No. 5
Long-term investments shall be valued by equity method. If the investee company meets any of the following conditions, its financial statements shall be audited by a certified public account in accordance with the "Regulations for Auditing and Certification of Financial Statements by Certified Public Accountants" and the generally accepted auditing standards:
1) Where its paid-in capital is NT$30 million or more;
2) Where its operating revenue reaches NT$50 million or more or 10% or more of the operating revenue of the Issuer.
Valuation of unamortized premium or discount of long-term investments in bonds shall be adjusted based on par value. The premium or discount shall be amortized on a reasonable and systematic basis.
If long-term investments are pledged as collateral or subject to restrictions, such shall be indicated in the notes.
3. Fixed assets: the tangible assets used for operation, with a service life of one year or more, and not for the purpose of sale.
Within the fixed asset classification, land, depreciable assets and depletive assets shall be presented separately.
The fixed assets shall be recorded at acquisition costs or construction costs. However, the interest on the purchase price of a "presold" building and the fixed assets purchased with capital increase in cash shall not be capitalized. Fixed assets that will no longer be used in operations shall be reclassified as other assets at a value equal to the lower of the net realizable value or book value. When there is no net realizable value, the cost and accumulated depreciation shall be offset against each other, and the difference thereof shall be recognized as a loss for the current period. If a fixed asset is still used after the expiration of the service life, such asset shall be depreciated based on the residual value.
The leased assets shall be recognized and disclosed in accordance with The Statements of Financial Accounting Standards No. 2.
If a leased asset falls within operating lease, the improvement made to the leased property is called leasehold improvement and shall be recorded as a fixed asset.
The valuation basis for a fixed asset shall be indicated. If the fixed assets have 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 in the balance sheet. The land value increment tax reserve allocated due to land appraisal increment shall be classified as long-term liability. Where fixed assets have been revalued, from the day following the date of record of the revaluation, depreciation computation shall be based on the reassessed value.
Except for land, the fixed assets shall be periodically depreciated or depleted on a reasonable and systematic basis within the estimated useful or mining life and reclassified as expenses or indirect manufacturing costs of relevant period according to the nature without interruption or deduction.
The accumulated depreciation, accumulated impairment, or accumulated depletion of a fixed asset shall be recorded as a deduction from fixed assets.
The leasehold improvement shall be reasonably and systematically depreciated based on the lower of the estimated useful life and the lease term, and re-classified as expenses or indirect manufacturing costs of relevant period according to its nature without interruption or reduction.
For depreciable assets, the method for computation of depreciation shall be noted.
If the title to land is temporarily registered in the name of another person, such shall be disclosed in the note, and the preservation measures shall be indicated.
4. Intangible assets: the assets which are nonphysical but have economic value, including patent, copyright, franchise, trademark right, goodwill, etc.
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. patent) can only be recorded in an amount which is no more than the fee for application for registration.
Research and development costs, shall be recorded as expense when incurred. However, expenditures made during the period of development may be capitalized when they conform with each of the following provisions:
(a) Technical feasibility has been established for the given product or know-how (process).
(b) The company intends to complete and to use or to market the given product or know-how (process).
(c) The company has the ability to use or to market the given product or know-how (process).
(d) A specific market already exists for the given product or know-how (process); where the given product or know-how (process) is not provided for sale but is provided for internal use, technical feasibility shall have been established.
(e) There are sufficient technical, financial, and other resources to enable completion of the development project and to enable use or marketing of the given product or know-how (process).
(f) A dependable assessment can be made of the costs expended on the given product or know-how (process) during the development period.
The amount to be capitalized may not exceed the discounted value of projected net future earnings (e.g., the discounted value of anticipated future revenues after deduction of recurring costs for research and development, production, and marketing and administrative expenses).
For the computer software purchased or developed for sale, lease, or marketing in other manners, the cost incurred before the technical feasibility is established shall be recorded as research and development expenses. The cost incurred for the period from the establishment of technical feasibility to the completion of the master copy of the product shall be capitalized. The cost incurred for copying software, documents, training materials from the master copy of the product shall be classified as inventory cost.
The term "establishment of technical feasibility" means the completion of detailed programming or operation model. In other words, when the necessary planning, designing, coding, and testing which ensure that a product can be produced based on the designed specifications are completed, technical feasibility is established. Capitalized computer software cost shall be individually amortized. The annual amortization ratio shall be the higher of the ratio of the income of such product (software) in the current period to the total income of the product in the current period and the subsequent periods and the amortization ratio calculated based on the residual service life of the product using straight line method.
Computer software cost shall be valued on the balance sheet date on the basis of the lower of unamortized cost and recoverable value.
During the development stage, the assets shall be valued and the loss/profit shall be recognized and disclosed in accordance with the Statements of Financial Accounting Standards No. 19.
The valuation basis for intangible assets shall be noted. Intangible assets shall be amortized reasonably and systematically. The maximum amortization period shall not be more than 20 years, provided that this restriction shall not apply where there is clear evidence showing that the period of benefits exceeds 20 years.
The amortization method of intangible assets shall be noted.
5. Other assets: all the assets not falling within the above categories and with a collection or realization period longer than one year or one operating cycle, such as guarantee deposit-out, long-term note receivable, and other miscellaneous assets.
The fair value of long-term notes receivable and other long-term receivables shall be calculated on the basis of the imputed interest rate.
The account receivable overdue in substantial amount shall be separately recorded, and the condition thereof and the amount of allowance for bad debt shall be noted.
When the amount of other assets exceeds 5% of the total amount of assets, such assets shall be separately recorded on the basis of their nature.
When land acquired by the issuer is registered under another's name as the owner, the reasons shall be disclosed in a note, and the methods of preservation shall be specified.
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Article 11
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The account structure of income statement, contents thereof, and matters to be noted are as follows:
1. Operating Revenue: the revenue derived from sale of goods or provision of services in the ordinary course of operating activities in the current period, including sales revenue and service revenue. Recognition of operating revenue shall be comply with the Statement of Financial Accounting Standards No. 32.
Revenues from sale of goods, reprocessing, repairing/processing, and services shall be separately recorded.
Sales return and allowance shall be recorded as a deduction of sales revenue.
2. Operating cost: the cost to be borne for sale of goods or provision of services in the ordinary course of operating activities in the current period, including sales cost, service cost, etc.
Purchase return and allowances shall be deducted from purchase cost.
3. Operating expenses: the expenses to be borne for sale of goods or provision of services in the current period, including research and development expense, selling expenses, management and general affairs expenses. However, if the operating cost and operating expenses cannot be separately recorded, they may be consolidated as operating expenses.
4. Non-operating revenue and gains, expenses and losses: the revenue and expenses incurred not for ordinary operating activities, including interest revenue, interest expenses, investment gains/losses recognized under the equity method, exchange gains/losses, gains/losses on disposal of fixed assets, gains/losses on disposal of investment, impairment losses, and impairment loss reversal.
Interest revenue and interest expense shall be separately recorded. Investment gains/losses recognized under the equity method, exchange gains/losses, and gains/losses on disposal of investment may be recorded at their net amount.
5. Losses and gains from continuing operation: The net amount of the preceding four Items shall be indicated as pre-tax loss/gain, income tax expense (profit), and after-tax loss/gain.
6. Discontinued losses and gains: the losses or gains incurred in the current period for disposing or deciding to dispose of significant department, including the operating losses and gains and disposal losses and gains before suspension of operation in the current period. Disposal losses and gains shall be assessed on the date on which the disposal is decided. Any loss shall be immediately recognized. The profit, if any, shall be recognized upon realization.
7. Extraordinary losses and gains: the losses and gains that are distinguished by their unusual nature and by the infrequency of their occurrence, such as the passage of a new law prohibiting operations or losses due to seizure of [assets] by a foreign government.
Significant losses or gains from payment of debts before maturity shall be recorded as extraordinary losses or gains.
Significant losses or gains shall be separately recorded and shall not be amortized on yearly basis.
8. The amount of cumulative effect resulting from the change of accounting principles shall be separately recorded below extraordinary losses/gains.
9. Net income (or net loss) of current period: The earnings (or losses) of the current accounting period are the aggregate amount of the preceding four Items.
10. Earnings per share shall be calculated and disclosed in accordance with The Statements of Financial Accounting Standards No. 24.
11. Income tax shall be amortized and disclosed in accordance with the Statements of Financial Accounting Standards No. 22.
Except where otherwise provided by the Statement of Financial and Accounting Standards, expenses and losses shall be listed according to function, provided expenses relating to employment, depreciation, depletion, and amortization shall be disclosed.
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Article 13-1
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The notes of the financial report attachments, in addition to being in accordance with Articles 6 and 7, must disclose the relevant information for the following for this term:
1. Major transaction information:
(1) Loan of capital to others.
(2) Endorsement guaranty for others.
(3) Holding of securities at the end of the term.
(4) Accumulated buying/selling of the same securities for which the dollar amount reaches one hundred million NT Dollars or over 20% of the paid-in capital.
(5) Acquiring fixed assets for which the dollar amount reaches one hundred million NT Dollars or over 20% of the paid-in capital.
(6) Disposition of real estate for which the dollar amount reaches one hundred million NT Dollars or over 20% of the net paid-in capital.
(7) Buying/selling products with related parties for which the dollar amount reaches one hundred million NT Dollars or over 20% of the paid-in capital.
(8) Account receivables from related parties for which the dollar amount reaches one hundred million NT Dollars or over 20% of the paid-in of capital.
(9) Dealing in derivations transactions.
If the issuer belongs to a financial, insurance, securities, etc. business, and its main registered business operations include loaning capital to others, endorsement guaranties, and in securities trading, Sub-items 1 to 4 are not applicable for the disclosure of loans of capital to others, endorsement guaranties and short-term investments trading, operating securities and bonds, hedging account securities, etc. transaction information.
2. Information on Re-invested Enterprises:
(1) For those who directly or indirectly have major influence or control over the investee company, their name, location, main business operations, original invested amount, holdings of stock at the end of the term, losses/profits during the current quarter, and recognized investment profits/losses shall be disclosed.
(2) For those who directly or indirectly have control over the investee company, the investee company's transaction information listed under Sub-items 1 to 9 shall be disclosed. If the investee company under the issuer's direct or indirect control belongs to a financial, insurance, or securities business, the regulations of the preceding Item apply.
3. Information on Mainland China Investment:
(1) The name of the investee company in mainland China, the main business operations, the paid-in of capital, method of investment, the inward and outward remittance of capital, the stockholding ratio, investment losses/profits, the book value of the investment at the end of the term, the return remittance of investment profits/losses, and the limit of investment amount for the mainland China region.
(2) Major transactions with the investee company on mainland China that occur directly or indirectly through a third region and their prices, payment terms, and unrealized profits/losses:
(A) The amount and percentage of goods bought and the balance and percentage of payables at the end of the term.
(B) The amount and percentage of goods sold and the balance and percentage of receivables at the end of the term.
(C) The amount and percentage of property transactions and the amount of profits/losses created thereupon.
(D) The balance of negotiable instrument endorsement guaranty or the collateral provided at the end of the term and its purpose.
(E) The highest balance, the end of term balance, the interest rate range, and the current term's total interest for financing.
(F) Other transactions having a major impact on the current term's profit/loss or the state of financial affairs, such as the provision or receipt of service.
The transaction amounts or balance referred to in the above Items (A) through (F) shall be individually listed if they reach 10% of the issuer's respective transaction total amounts or balance, otherwise they may be aggregated for reporting.
(3) When the issuer applies the equity method in recognizing the investment losses/profits for the mainland China investee company or prepares the consolidated report, the recognition or preparation shall be done in accordance with the financial report of the investee company, audited and certified by an international firm in cooperation with an R.O.C. accounting firm, provided that when preparing an interim consolidated financial report, recognition or preparation may be done in accordance with a financial report of the investee company that has been reviewed by an international firm in cooperation with an R.O.C. accounting firm.
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Article 14
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Names of financial statements and lists of important account titles are as follows (formats as attached):
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 Short-term Investments (Form 2-2);
(3) List of Notes Receivable (Form 2-3);
(4) List of Accounts Receivable (Form 2-4);
(5) List of Other Receivables (Form 2-5);
(6) List of Inventories (Form 2-6);
(7) List of Construction in Progress (Form 2-7);
(8) List of Prepayments (Form 2-8);
(9) List of long-term equity assets held for disposal (Form 2-8.1)
(10) List of Other Current Assets (Form 2-9);
(11) List of Changes in Funds (Form 2-10);
(12) List of Changes in Long-term Equity Investments (Form 2-11);
(13) List of Changes in Long-term Bond Investments (Form 2-12);
(14) List of Changes in Other Long-term Investments (Form 2-13);
(15) List of Changes in Fixed Assets (Form 2-14);
(16) List of Changes in Accumulated Depreciation of Fixed Assets (Form 2-15);
(17) List of Changes in Intangible Assets (Form 2-16);
(18) List of Other Assets (Form 2-17);
(19) List of Short-term Loans (Form 3-1);
(20) List of Short-term Bills Payable (Form 3-2)
(21) List of Notes Payable (Form 3-3);
(22) List of Accounts Payable (Form 3-4);
(23)List of Accounts Collected in Advance (Form 3-5);
(24)List of Construction Price Received in Advance (Form 3-6);
(25) List of Other Payables (Form 3-7);
(26) List of Other Current Liabilities (Form 3-8);
(27) List of Corporate Bonds Payable (Form 3-9);
(28) List of Long-term Loans (Form 3-10);
(29) List of Other Liabilities (Form 3-11);
3. Income Statement (Form 4);
4. Lists of Revenue and Expense Accounts
(1) List of Operating Revenue (Form 5-1);
(2) List of Operating Cost (Form 5-2);
(3) List of Selling Expenses (Form 5-3);
(4) List of Administrative and General Affairs Expenses (Form 5-4);
(5) List of Non-Operating Revenue and Gains, and Expenses and Losses (Form 5-5);
5. Statement of Changes in Stockholders' Equity (Form 6);
6. Statement of Cash Flows (Form 7).
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Article 15
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(deleted)
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Article 16
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(deleted)
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Article 17
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(deleted)
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Article 23
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An Issuer shall prepare interim financial reports in accordance with Chapter 1, Chapter 2 hereof and The Statements of Financial Accounting Standards No. 23.
When an Issuer prepares the quarterly report, the statement of changes in stockholders equity and list of important accounting titles may be waived. In the case of investee company in which the Issuer holds less than 50% shares, the investment losses/gains recognized in accordance with equity method may also be waived, and except where FSC regulations otherwise provide, preparation of first-quarter and third-quarter consolidated reports may also be waived.
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Article 24-1
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An Issuer shall prepare consolidated financial reports in accordance with the Statement of Financial Accounting Standards No. 7. Notes to 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 26)
2. Where subsidiaries hold stock in the parent company, the names of the subsidiaries and their shareholdings, dollar amounts, and reasons therefore shall be separately listed.
The provisions of Chapters 1, 2, and 5 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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