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Article 26
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The text of an opinion which an expert issues based on the value of its own estimation of the object under review shall specify, as a minimum:
- value criterion and value premise;
- record date of evaluation;
- material assumptions and restrictions applied;
- reasons for employing the appraisal or valuation method and related parameters employed, and process of calculation;
- adjustments, analyses, and determinations made;
- information used and its sources, for example CPA-audited financial statements, Market Observation Post System, databases etc. Whether the evaluation procedure and information are appropriate and reasonable shall be indicated if information is sourced from the internal information of the principal or object under review which has not been verified by an impartial third party, for example the expert’s own unaudited figures and prospective financial information etc. ;
- final value or value interval;
- conclusions of opinions: comparison between the contents of engagement, for example the estimated transaction price or share exchange ratio, acquisition price etc. of the object under review, and the final value or value interval, and express opinion on the relevant reasonableness.
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Article 27
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The text shall, in addition to disclosing the above in accordance with the preceding article, specify the following as a minimum if the object under review being appraised by an expert is an equity, the value of an enterprise, a share exchange ratio, an intangible asset or its right-of-use assets:
- historical financial information of the object under review.
- the following if the valuation method adopts the income approach:
- management’s projections of the future performance of the object under review (for example, analyses of the business cycle and market situation of the industry etc.), and reasons.
- assumptions of key factors concerning prospective financial information, and reasons.
- extrapolated number of periods of future income (forecast period and permanent period) .
- future benefit flow and basis of calculation of future value.
- sources and process of creation of primary parameters such as discount rate, capitalization rate etc. .
- bases and reasons for adjustments to value premiums and discounts.
- preliminary estimates of value and value interval.
- the following if the valuation method adopts the income approach:
- comparable company or comparable transaction selected and conditions of selection.
- selection, calculation, and adjustment of value multiples, and reasons for application and adjustment.
- bases and reasons for adjustments to value premiums and discounts.
- preliminary estimates of value and value interval.
- general analysis, adjustment, and description of the difference between the preliminary value or value interval derived from different valuation methods, including specific reasons taken into account for employing a particular valuation and its weight if each of the above valuation methods has a different or the same weight; and the necessary analysis and description if no adjustment is possible.
- in the event of a public tender offer, where the reasonableness of the consideration is evaluated based on the premium interval of previous public tender offers of a certain period, the previous public tender offers selected, and specific reasons for such selection, with consideration given to the reasonableness of the selection.
- at least the following disclosures as required by Article 13, paragraph 2 of the Regulations Governing Information to be Published in Public Tender Offer Prospectuses if the expert issues its opinion in accordance with said article:
- method, principles, or calculation method for the pricing of the public tender offer, and comparison among market value approach, cost approach, and discounted cash flow in international convention.
- comparison of the financial condition, profit earning, and price-to-earning ratio between the acquired company and TWSE- or TPEx-listed companies in the same industry.
- contents and conclusions of an appraisal report of an appraisal institution on which report the tender offer price is drawn.
- impact assessment on the soundness of the finance and business of the acquired company or surviving company, if an asset or share of the acquired company or surviving company is provided as collateral of the offeror’s financing plan.
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Article 28
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If an expert bases its opinion on other expert reports or the principal’s self-appraisal report, the text shall evaluate and elucidate each of the items listed in Articles 26 and 27 as applicable to the circumstances, describe the procedures of examination, inquiry, calculation or other necessary analysis of such other expert reports or the principal’s self-appraisal report, etc., explain other procedures, if any, performed by the expert, and opine on whether adequate and appropriate information is obtained.
The text shall, in addition to complying with the preceding article, indicate the following if an expert bases its opinion on Article 9 or 14 of the Acquisition and Disposal Regulations:
- rate of difference between the result of appraisal of a professional real estate appraiser and the estimated transaction amount.
- reasons for any difference between the appraisal result and transaction amount that accounts for at least 20% of the transaction amount.
- reasons for any discrepancy between the appraisal results of two or more professional appraisers that accounts for at least 10% of the transaction amount if the estimated transaction amount is at least TWD 1 billion.
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Article 29
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Where an expert verifies the results of the principal’s evaluation, the text shall disclose, inter alia, the following, subject to the circumstances:
- The disclosure shall cover the following, where the expert verifies the results of evaluation which the principal conducts in accordance with Article 16 of the Acquisition or Disposal Regulations:
- method of evaluation employed by the principal and results of such evaluation; in the event of imputation, imputation formula and results of recalculation by the expert.
- raw data used by the principal and results of verification by the expert.
- conclusions of opinions: whether the evaluation method of the principal is legally compliant, and specific opinion on the results of validation of the estimated transaction price.
- The disclosure shall cover the following, where the expert verifies the objective evidence which the principal introduces in accordance with Article 17 of the Acquisition or Disposal Regulations:
- method of evaluation employed by the principal and results of such evaluation; in the event of imputation, imputation formula and results of recalculation by the expert.
- raw data used by the principal and results of verification by the expert.
- where the principal introduces a non-stakeholder transaction as an example, results of verification by the expert that the parties to such transaction are not stakeholders of the principal company and as to the transaction time, amount, place, area, conditions of transaction etc., and whether the comparison with the object under review is legally compliant.
- conclusions of opinions: specific opinions on whether the evaluation method of the principal is legally compliant, on whether the estimated transaction price is comparable to the conditions of transaction with a non-stakeholder, and on the reasonableness of the estimated transaction price etc. .
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