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Article 2
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The financial reports of a publicly held bills finance company (hereinafter, "Bills Finance Company") shall be prepared in accordance with these Regulations. Matters not provided for herein shall be handled in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and generally accepted accounting principles promulgated by the Financial Accounting Standards Committee of the Accounting Research and Development Foundation of the Republic of China. A Bills Finance Company shall handle its accounting affairs, upon which the preparation of its financial reports is based, in accordance with the Business Accounting Act and other applicable acts and regulations.
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Article 4
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"Financial report" shall mean financial statements, list of major account titles, and other disclosures or explanations under these Regulations, which help users to make decisions. A financial statement shall include a balance sheet, income statement, statement of changes in shareholders' equity, cash flow statement, and the footnotes thereto.
A Bills Finance Company, unless newly established, shall prepare the major statements and footnotes thereto referred to in the preceding paragraph by comparing two consecutive periods, and the responsible person, manager, and handling accountant shall sign or seal each page of such statements.
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Article 6
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In order to thoroughly disclose the information on the financial condition, operating results, and cash flows, the financial reports shall provide notes and explanations on the matters specified below:
- Historical changes and development of the Bills Finance Company and its business scope;
- A declaration that the financial statements were prepared in conformance with these Regulations and other applicable acts and regulations (the titles of the acts or regulations shall be expressly stated) and generally accepted accounting principles;
- Summary of significant accounting policies and the basis on which they are judged;
- Where for some special reason the accounting treatment changes, affecting the comparison of the financial information between the two successive periods, the reason for the change and its effect on the financial statements shall be explained;
- If there is a need to note the estimation and valuation basis of any amount in the financial report, it shall be noted.
- If any account title contained in the financial report is restricted by any act or regulation, contract, or otherwise, the circumstances, time limit and relevant matters shall be stated;
- Standards for classifying assets and liabilities as either current or non-current;
- Significant commitments and contingent liabilities (including off-balance sheet items);
- Information relevant to financial products (including derivatives);
- Management policies and practices in relation to various risks such as credit, market, liquidity, and operational and legal risks, and exposure to major risks. The following information shall be disclosed under its respective risk category:
- Asset quality (Form A), overview of main businesses (Form B), lending risk concentration (Form C), policies on reserves and provisions for losses, and changes in allowance for bad debts (credit risk);
- Information on significant concentration of risks in relation to assets, liabilities and off-balance sheet items (credit risk);
- Averages of interest assets and interest liabilities and average interest rate during the current period (market risk);
- Interest rate sensitivity information (market risk) (Form D);
- List of capital sources and uses (liquidity risk) (Form E);
- Special matters (operational risk and legal risk) (Form F);
- Capital adequacy (Form G);
- Change in capital structure;
- Addition, expansion, construction, lease, obsolescence, lying idle, sale, pledge, transfer or long-term rent of major assets;
- Major investments in other enterprises;
- Loss caused by major disasters;
- Progression or conclusion of material litigation;
- Signing, completion, cancellation, or voidance of material contracts;
- Information related to employee pension funds;
- Major organizational adjustments and significant reformation of management system;
- Material effects of changes in government acts and regulations;
- Segment financial information;
- Material effect of suspension of business;
- Transfer of the major part of business and assets/liabilities from or to another financial institution;
- Long-term and short-term borrowings and lendings;
- Information in relation to income tax;
- Significant transactions with related parties;
- Loans to banks and other enterprises in the same industry and overdrafts and borrowings by banks;
- Where the Bills Finance Company is a subsidiary of a financial holding company, allocation of the revenue, cost, expense, and gain/loss incurred between it and the financial holding or any other subsidiary in their business interchanges or transactions, joint business promotion, information sharing, and common use of business facilities or premises.
- Other disclosures necessary to avoid misleading users or to facilitate fair presentation of the financial report.
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Article 6
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In order to thoroughly disclose the information on the financial condition, operating results, and cash flows, the financial reports shall provide notes and explanations on the matters specified below:
- Historical changes and development of the Bills Finance Company and its business scope;
- A declaration that the financial statements were prepared in conformance with these Regulations and other applicable acts and regulations (the titles of the acts or regulations shall be expressly stated) and generally accepted accounting principles;
- Summary of significant accounting policies and the basis on which they are judged;
- Where for some special reason the accounting treatment changes, affecting the comparison of the financial information between the two successive periods, the reason for the change and its effect on the financial statements shall be explained;
- If there is a need to note the estimation and valuation basis of any amount in the financial report, it shall be noted.
- If any account title contained in the financial report is restricted by any act or regulation, contract, or otherwise, the circumstances, time limit and relevant matters shall be stated;
- Standards for classifying assets and liabilities as either current or non-current;
- Significant commitments and contingent liabilities (including off-balance sheet items);
- Information relevant to financial products (including derivatives);
- Management policies and practices in relation to various risks such as credit, market, liquidity, and operational and legal risks, and exposure to major risks. The following information shall be disclosed under its respective risk category:
- Asset quality (Form A), overview of main businesses (Form B), lending risk concentration (Form C), policies on reserves and provisions for losses, and changes in allowance for bad debts (credit risk);
- Information on significant concentration of risks in relation to assets, liabilities and off-balance sheet items (credit risk);
- Averages of interest assets and interest liabilities and average interest rate during the current period (market risk);
- Interest rate sensitivity information (market risk) (Form D);
- List of capital sources and uses (liquidity risk) (Form E);
- Special matters (operational risk and legal risk) (Form F);
- Capital adequacy (Form G);
- Change in capital structure;
- Addition, expansion, construction, lease, obsolescence, lying idle, sale, pledge, transfer or long-term rent of major assets;
- Major investments in other enterprises;
- Loss caused by major disasters;
- Progression or conclusion of material litigation;
- Signing, completion, cancellation, or voidance of material contracts;
- Information related to employee pension funds;
- Major organizational adjustments and significant reformation of management system;
- Material effects of changes in government acts and regulations;
- Segment financial information;
- Material effect of suspension of business;
- Transfer of the major part of business and assets/liabilities from or to another financial institution;
- Long-term and short-term borrowings and lendings;
- Information in relation to income tax;
- Significant transactions with related parties;
- Loans to banks and other enterprises in the same industry and overdrafts and borrowings by banks;
- Where the Bills Finance Company is a subsidiary of a financial holding company, allocation of the revenue, cost, expense, and gain/loss incurred between it and the financial holding or any other subsidiary in their business interchanges or transactions, joint business promotion, information sharing, and common use of business facilities or premises.
- Other disclosures necessary to avoid misleading users or to facilitate fair presentation of the financial report.
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Article 13
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A cash flow statement records inflows and outflows of cash and cash equivalents to summarize the operating, investing, and financing activities of the Bills Finance Company during a given period. It shall be prepared in accordance with Statement of Financial Accounting Standards No. 17.
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Article 14
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Notes to a financial statement, in addition to being prepared in accordance with Articles 6 and 7 herein, shall further disclose information relating to the following matters having occurred in the current period:
- Information on significant transactions:
- Purchases or sales of the stock of the same invested enterprise in aggregate amount of NT$100 million or 20% of paid-in capital or more.
- Acquisition of real estate equaling NT$100 million or 20% of paid-in capital or more..
- Disposal of real estate equaling NT$100 million or 20% of paid-in capital or more.
- Receivables from related parties amounting to NT$100 million or 20% of paid-in capital or more.
- Sales of non-performing loans amounting to NT$3 billion or more.
- Such other significant transactions that may affect decision-making by the financial statement user.
- Information on invested enterprises:
- Where the Bills Finance Company directly or indirectly has significant influence or control over an invested company, the name, location, principal line of business, original investment amount, shareholding position at period-end, current period gain or loss and recognized investment gain or loss.
- Where the Bills Finance Company directly or indirectly has control over an invested company, further disclosure shall be made of information relating to transactions by the invested company set out in items 2 through 6 of the preceding subparagraph as well as information on such invested company with respect to loans to others, endorsements and guarantees for others, holdings of securities at period-end, purchases or sales of the same securities in aggregate amount of NT$100 million or 20% of paid-in capital or more, and derivatives transactions. However, where the invested company is a financial, insurance, or securities enterprise with principal line of business registered to include loans to others, endorsements and guarantees, and securities trading, such operating transactions are not required to be disclosed as significant transactions.
- Notes to consolidated financial statements shall also disclose information on the matters listed in the preceding two subparagraphs; provided that where the total assets or operating revenues of the invested company are less than 10% of the respective figures for the Bills Finance Company, or where the Bills Finance Company directly or indirectly controls the personnel, finances, or operations of the invested company, it may be exempt from the provisions of subparagraph 2.Notwithstanding the foregoing, if the competent authority prescribes otherwise, such other provision shall govern. The Bills finance company disclosing information on transactions under the preceding paragraph shall add appropriate notes of explanation for those already offset in the consolidated financial statement.
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Article 16
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Names of financial statements and lists of major account titles are as follows (formats as attached):
- Balance sheet (Form 1).
- List of assets, liabilities, and shareholders' equity accounts.
- List of cash and cash equivalents (Form 2-1).
- List of loans to banks and enterprises in the same industry (Form2-2).
- List of operating bills and bonds (Form 2-3).
- List of investments in bills and bonds under reverse repurchase agreements (Form 2-4).
- List of receivables (Form 2-5).
- List of other current assets (Form 2-6).
- List of changes in long-term equity investments (Form 2-7).
- List of changes in long-term bond investments (Form 2-8).
- List of changes in fixed assets (Form 2-9).
- List of changes in accumulated depreciation of fixed assets (Form 2-10).
- List of other assets (Form 2-11).
- List of loans and overdrafts from banks and other enterprises in the same industry (Form 2-12).
- List of liabilities from bills and bonds under repurchase agreements (Form 2-13).
- List of payables (Form 2-14).
- List of other current liabilities (Form 2-15).
- List of bonds payable (Form 2-16).
- List of other liabilities (Form 2-17).
- Income statement (Form 3).
- List of profit and loss accounts:
- List of profits and losses from transactions in bills and bonds (Form 4-1).
- List of service charge revenue (Form 4-2).
- List of interest revenue (Form 4-3).
- List of other revenues and gains (Form 4-4).
- List of various provisions (Form 4-5).
- List of interest expenses (Form 4-6).
- List of operating expenses (Form 4-7).
- List of other expenses and losses (Form 4-8).
- Statement of changes in shareholders' equity (Form 5).
- Cash flow statement (Form 6).
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Article 18
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Financial forecasts shall be prepared in good faith for the anticipated results of the business plan based on proper basic assumptions and accounting principles.
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Article 20
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A Bills Finance Company shall explain its business conditions as follows:
- Significant business matters: The Bills Finance Company shall provide explanations on matters which have significant effect on business in the last five years, such as merger with, acquisition of, or otherwise combination with another company, splits, investing in affiliated enterprises, reorganization, procurement or disposal of major assets, significant change in operation method or business activity, etc.
- Remuneration and related information on directors, supervisors, general manager and vice general manager (Form 7):
- Transportation allowance and remuneration to each director and supervisor in the most recent accounting year. If a director concurrently acts as manager, the remuneration shall be respectively disclosed based on his/her position.
- Total salaries, cash awards, special allowance, and bonuses paid to the general manager and vice general manager in the most recent accounting year.
- If remuneration other than those described in the preceding two items, such as automobile, house, or other personal expenditures, is provided to directors, supervisors, general manger, or vice general manager, the name, position, the nature and cost of the assets provided, actual rental or rental imputed based on fair market price, and other payment shall be disclosed.
- Where any of the chairman, general manager, or manager in charge of finance or accounting has during the past twelve months held a position at the accounting firm of a certified public accountant or an affiliated enterprise of such accounting firm, the name, position held, and period during which the position was held shall be disclosed. The term "affiliated enterprise of a certified public accountant's accounting firm" as used in these Regulations means enterprises in which accountants at the accounting firm of the certified public accountant hold more than 50% of the shares or hold more than half of the directors' positions, or those companies or institutions listed as affiliated enterprises in the external publications or printed materials of the accounting firm of the certified public accountant.
- Labor-management relations (Form 8):
- Significant employee welfare programs, the retirement system and status of implementation thereof, and arrangements between labor and management of the Bills Finance Company shall be disclosed.
- Loss caused to the Bills Finance Company by labor disputes during the last thee years shall be explained. Any amount already incurred or estimated likely to be incurred in the future and counter measures shall be also disclosed. If the amount cannot be reasonably estimated, such fact shall be explained.
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Article 21
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A Bills Finance Company shall disclose the market value, dividends, and shareholding dispersion of securities issued by it:
- Market value information: If the securities of the Bills Finance Company have been listed on a stock exchange or over-the-counter market, it shall disclose the highest and lowest trade price in each quarter of the last two years (Form 9).
- Dividend information: Information on the details of the dividend policy, the cash dividend per share distributed in the last two years, and the amount of dividends from earnings and capital reserves shall be provided. If there is any accumulated unpaid dividend, the amount thereof shall be disclosed. In case of any material change or expected material change in the dividend policy of the Bills Finance Company, an explanation shall be given (Form 10).
- Shareholding dispersion: An explanation on the condition of dispersion of the common shares and preferred shares of the Bills Finance Company on the balance sheet date shall be provided (Form 11).
- If the Bills Finance Company distributes shares as a result of capital increase out of earnings or capital reserves, it shall disclose the information of cash dividend and market value retroactively adjusted based on the number of shares after distribution.
- The Bills Finance Company shall disclose the current period condition of transfer of shares and/or pledge of or change in equity interests of its directors, supervisors, managers, and shareholders holding 10% or more of its total shares (Form 12).
- If the Bills Finance Company is approved to offer and issue securities by shelf registration system, it shall disclose the approved amount and relevant information of the securities to be issued or already issued (Form 13).
- Where the Bills Finance Company has issued or privately placed employee stock option certificates which are still in circulation and have not been exercised, it shall compile a disclosure statement based on the issuance dates, giving information on the total number of units issued, the total number of units still in circulation, the number of shares which may be purchased through options, the initial date on which the options may be exercised, the option purchase price, the exercise method, and the market value of common stocks (Form 14).
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Article 22
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A Bills Finance Company shall disclose the following financial information for the last five years:
- Condensed balance sheet and income statement (Form 15);
- Material financial ratio analysis (Form 16); and
- Significant information which may increase the understanding of financial condition, operating results, cash flows, or changing trends relating thereto (e.g., impact of change in commodity price and exchange rate).
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Article 25
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A Bills Finance Company preparing financial reports and making disclosures in accordance with the provisions of this chapter shall seek a certified public accountant to issue a review opinion, in accordance with other regulations governing key points for examination of disclosure items for financial reports.
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Article 29
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Changes in accounting procedures at a Bills Finance Company shall be undertaken in accordance with the following rules:
- Changes in accounting principles:
- Where legitimate reasons require a change in accounting principles, at the end of the year prior to the projected change, the Bills Finance Company shall set out the original accounting principles, the reason for changing to the proposed new accounting principles and their theoretical basis, concrete evidence that the new accounting principles will be superior to the old, and the cumulative projected effects of the changes in accounting principles and adoption of the new principles; the Bills Finance Company shall seek a certified public accountant to provide an analysis of the reasonableness of each item and a review opinion, which shall be presented in a proposal to the board of directors for passage and thereafter submitted to the competent authority for approval and recordation.
- Where there are conditions as set forth in Statement of Financial Accounting Standards No. 8, paragraph 12, in which substantive difficulty prevents determination of the cumulative effects of change in accounting principles, the Bills Finance Company shall set out the original accounting principles, the reason for changing to the proposed new accounting principles and their theoretical basis, concrete evidence that the new accounting principles will be superior to the old, and the reasons why the cumulative effect cannot be determined, and shall seek a certified public accountant to provide an analysis of the reasonableness of each item and a review opinion and to present opinion on the effects on the audit opinion for the year of the change to the new accounting principles, and thereafter proceed in accordance with the procedures set forth above.
- Except where cumulative effect of change in accounting principle cannot be determined as set forth above, the Bills Finance Company shall, within two months after the beginning of the year during which it changes to the new accounting principles, calculate the actual cumulative effect of change in accounting principle and submit the figure to the SFC for recordation following ratification by the board of directors. If the difference between the figures showing the actual cumulative effect and the projected cumulative effect differs by NT$10 million or more, the Bills Finance Company shall present an analysis of the reason for the difference between the two, request a certified public accountant's opinion on its reasonableness, and submit both to the competent authority.
- Where the circumstances in item 2 apply to the Bills Finance Company, it shall disclose the effects of adopting the new accounting principles on profits and losses for each relevant period in notes to the first quarter, semi-annual, third quarter, and annual financial reports in the year during which the new accounting principles are adopted.
- With the exception of purchases of new assets to which newly adopted accounting principles are applied, which may be exempted from application of the provisions of each of the preceding items, where any other changes in accounting principles have not been duly reported for approval and recordation prior to their adoption, the financial report for the year in which the new principles were adopted shall be rewritten, and the new principles may not be adopted until the year following approval and recordation of a supplementary report.
- Accounting estimates relating to changes in the estimated useful life of depreciable, depletable assets, and 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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