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Article 15
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Liabilities shall be properly classified. Current and non-current liabilities shall be distinguished.
For each liability line item, the total amount expected to be settled within 12 months after the balance sheet date and the total amount expected to be settled more than 12 months after the balance sheet date shall be separately presented in the financial reports or disclosed in the notes.
Current liability means that the securities firm expects to settle the liability in its normal operating cycle; that it holds the liability primarily for the purpose of trading; that the liability is due to be settled within 12 months after the balance sheet date, even if an agreement to refinance or to reschedule payments on a long-term basis is completed after the balance sheet date and before the financial reports are authorized for issue; or that the securities firm on the balance sheet date does not have in substance the right to defer settlement of the liability for at least 12 months after the balance sheet date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the transfer of the securities firm's own equity instruments do not affect its classification as current or non-current if the securities firm classifies the option as an equity instrument. As a minimum, current liabilities shall include the following liability line items:
1. Short-term borrowings:
A. Includes short-term borrowings from banks, overdrafts, and other short-term borrowings.
B. For short-term borrowing, the nature of the borrowing, the guarantee status, and the interest rate range shall be noted based on the type of borrowing. If collateral is provided, the name and carrying amount of the collateral shall be presented.
C. Borrowings from non-financial, non-insurance institutions in accordance with Article 17 of the Regulations Governing Securities Firms shall be presented separately.
2. Commercial paper payable:
A. Commercial paper issued through financial institutions to acquire funds from the money market.
B. Commercial paper payable shall be measured at amortized cost using the effective interest method. However, short-term commercial paper payable with no stated interest rate may be measured at the original face amount if the effect of discounting is immaterial.
C. For commercial paper payable, the guarantor or accepting institution and the interest rate shall be noted. If collateral is provided, the name and carrying amount of the collateral shall be noted.
3. Financial liabilities at fair value through profit or loss – current: The following financial instruments shall be appropriately recorded under the category of investments in bonds with reverse repurchase agreements – short sale, call (put) warrants, securities borrowed, or derivative instruments:
A. Financial liabilities held for trading:
a. Liabilities that are incurred principally for the purpose of repurchasing them in the near term;
b. Liabilities that, upon initial recognition, are 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; or
c. Derivative financial liabilities, except for financial guarantee contracts or financial liabilities that are designated and effective hedging instruments.
B. Financial liabilities that are designated as at fair value through profit or loss.
C. Financial liabilities at fair value through profit or loss shall be measured at fair value. However, with respect to a financial liability designated as at fair value through profit or loss, if the amount of change in the fair value of the financial liability is attributable to change in the credit risk, it shall be recognized in other comprehensive income, unless for the purpose of avoiding accounting mismatch or in the case of loan commitments and financial guarantee contracts, under which circumstances the amount of changes in fair value shall be recognized in profit or loss.
4. Financial liabilities for hedging – current: A financial liability that is a designated and effective hedging instrument under hedge accounting requirements.
5. Liabilities for bonds with repurchase agreements: The actual amounts received by a securities firm when engaging in transactions in bonds with repurchase agreements.
6. Short sale margins: Margins received from short selling customers by a securities firm conducting securities trading margin purchase and short sale business.
7. Payables for short sale collateral received: Short sale proceeds (less securities transaction taxes, handling fees for execution of customer orders, and short sale handling fees) received as collateral from short selling customers by a securities firm conducting securities trading margin purchase and short sale business.
8. Trade payables:
A. Payables arising from a securities firm's business operations, including transaction proceeds payable from its purchase of securities held for operations and payables from its execution of customer orders to buy or sell securities. The details of such trade payables shall be disclosed in the notes.
B. Trade payables shall be measured at amortized cost using the effective interest method. However, short-term trade payables with no stated interest rate may be measured at the original invoice amount if the effect of discounting is immaterial.
C. Payables to related parties in significant amounts shall be presented separately.
9. Other payables: Payables other than trade payables, such as tax payable, accrued payroll, and dividends payable. For dividends and bonuses payable passed by resolution of the board of directors or a shareholders meeting in accordance with the Company Act, the distribution method and scheduled payment date, if determined, shall be disclosed.
10. Current tax liabilities: Unpaid tax for current and prior periods.
11. Provisions – current:
A. Any liability of uncertain timing or amount.
B. Provisions shall be accounted for in accordance with IAS 37.
C. A provision shall be recognized when a securities firm has a present obligation as a result of a past event, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
D. A securities firm shall disaggregate provisions into provisions for employee benefits and other items in the notes to the financial reports.
12. Liabilities directly associated with non-current assets held for sale: Any liability 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.
13. Other current liabilities: Current liabilities not attributable to any of the classes above.
Non-current liabilities means liabilities other than current liabilities. Whether the securities firm intends or expects to settle a liability within 12 months after the balance sheet date does not affect the classification of the liability as current or non-current. As a minimum, non-current liabilities shall include the following liability line items:
1. Bonds payable (including overseas bonds):
A. For bonds issued by a securities firm, the total approved amount, interest rate, maturity date, name of collateral, carrying amount, issuing area, and other relevant terms and restrictions shall be noted in the notes to the financial reports. If the bonds are convertible bonds, the method of conversion and amounts already converted shall also be noted.
B. Premiums and discounts on bonds payable are valuations of bonds payable. They shall be presented as an addition to or deduction from bonds payable, and shall also be amortized, as an adjustment to interest expenses, using the effective interest method during the period of bond circulation.
2. Long-term borrowings:
A. For long-term borrowings, the content, maturity date, interest rate, name of collateral, carrying amount, and any other important restriction terms shall be noted.
B. For a long-term borrowing repaid in a foreign currency or in an amount translated at a foreign exchange rate, the name and amount of such foreign currency shall be noted.
C. Long-term notes payable and other long-term payables shall be measured at amortized cost using the effective interest method.
3. Lease liabilities:
A. Means the present value of the lease payments that the lessee has not paid.
B. Lease liabilities shall be accounted for in accordance with IFRS 16.
4. Deferred tax liabilities: The amounts of income taxes payable in future periods in respect of taxable temporary differences.
5. Other non-current liabilities: Non-current liabilities not attributable to any of the classes above.
The items described in the preceding two paragraphs in relation to financial liabilities at fair value through profit or loss, financial liabilities for hedging, liabilities for bonds with repurchase agreements, short sale margins, payables for short sale collateral received, trade payables, and other payables shall be accounted for in accordance with IFRS 9.
With respect to the items described in paragraphs 3 and 4 in relation to financial liabilities at fair value through profit or loss, financial liabilities for hedging, short sale margins, payables for short sale collateral received, trade payables, other payables, bonds payable, and long-term borrowings, the measurement and disclosure of fair value shall be made in accordance with IFRS 13.
The items described in paragraphs 3 and 4 in relation to financial liabilities at fair value through profit or loss, financial liabilities for hedging, lease liabilities, and provisions shall be distinguished as current and non-current based on liquidity.
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Article 16
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Equity items, their components, and information to be disclosed in the balance sheet are as follows:
1. Equity attributable to owners of the parent:
A. Share capital:
a. Capital contributed by shareholders to a securities firm, but excluding preferred shares in the nature of liabilities.
b. For share capital, the classes, par value per share, the number of shares authorized, the number of shares issued and fully paid (including shares not yet registered with the competent authority in charge of company registration), a reconciliation of the number of shares outstanding at the beginning and at the end of the period, the rights, preferences and restrictions attaching to each class of share capital, shares in the securities firm held by the securities firm or by its subsidiaries or associates, shares reserved for issue (or for transfer or conversion) under options and contracts for the sale of shares, and special conditions shall be disclosed in the notes.
B. Capital surplus: Means the equity components of financial instruments issued by a securities firm or premiums resulting from share capital transactions between a securities firm and its owners, and typically includes premium in excess of the par value of the shares issued, donated surplus, and others arising as a result of regulatory provisions associated with these Regulations. Capital surpluses shall be presented separately according to their nature; if there is any restriction on their use, the restriction shall be disclosed in the notes.
C. Retained earnings (or accumulated deficit): Equity resulting from operating activities, including legal reserves, special reserves, and undistributed earnings (or deficit to be offset).
a. Legal reserve: A fixed-percentage reserve appropriated as required by the Company Act.
b. Special reserve: A reserve appropriated from earnings in accordance with the requirements of applicable laws and regulations, contracts, or articles of incorporation, or as resolved at shareholders meetings.
c. Undistributed earnings (or deficit to be offset): Undistributed and unappropriated earnings ("deficit to be offset" is deficit not yet offset).
d. An earnings distribution or offsetting of deficit shall not be accounted for unless and until passed by a resolution of the board of directors or a shareholders meeting in accordance with the Company Act. However, when an earnings distribution or offsetting of deficit has been proposed, such shall be disclosed in the notes to the financial reports for the current period.
D. Other equity: Includes the accumulated balances of exchange differences resulting from translating the financial statements of a foreign operation, of unrealized gains or losses from financial assets measured at fair value through other comprehensive income, gains and losses on hedging instruments, and of revaluation surplus.
E. Treasury shares: Treasury shares shall be accounted for using the cost method and presented as a deduction from equity. The number of shares shall be noted.
2. Non-controlling interest:
A. The equity in a subsidiary not attributable, directly or indirectly, to a parent.
B. For each business combination, the components of non-controlling interest in the acquiree shall be measured in accordance with IFRS 3.
C. A securities firm shall disclose information on any subsidiary in which it has a non-controlling interest of materiality and on the non-controlling interest in accordance with IFRS 12.
In the case of an enterprise from another industry that concurrently operates securities business, when preparing financial statements for its securities segment in accordance with Article 8 of these Regulations, it shall separately present the operating capital earmarked for use in the securities segment under equity items.
A securities firm may elect to recognize the remeasurements of defined benefit plans in retained earnings or other equity, and disclose the accounting policy in the notes. Remeasurements of defined benefit plans that have been recognized in other equity may not be reclassified into profit or loss or transferred into retained earnings in a subsequent period.
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Article 28
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A securities firm shall provide information on its business conditions in accordance with the following:
1. Significant business matters: The securities firm shall provide information on matters arising over the most recent 5 financial years that have had a significant impact on its business, including acquisitions of or mergers with other companies, demergers, equity investments in affiliated enterprises, reorganization, purchases or disposals of major assets, and significant changes in operation method or business activity.
2. Remuneration to directors, supervisors, general manager, and assistant general managers, and to chairmen of the board and general managers who are rehired as consultants after retiring from the securities firm or its affiliated enterprises:
A. The securities firm may opt either to disclose aggregate remuneration information, with the name(s) indicated for each remuneration range, or to disclose the name of each individual and the corresponding remuneration amount. For a director concurrently serving as a member of management, the remuneration shall be disclosed separately for each position held. The securities firm may adopt the aggregate disclosure method if it is a non-public company whose issued voting shares are all held, directly or indirectly, by one single person.
B. In any of the following circumstances, the securities firm shall disclose the remuneration paid to each individual director, supervisor, general manager, assistant general manager, and consultant, provided that this rule does not apply if it is a non-public company whose issued voting shares are all held, directly or indirectly, by one single person:
a. The securities firm's most recent capital adequacy ratio, whether unaudited, CPA-reviewed, or adjusted following FSC examination, is lower than 150 percent.
b. There has been an after-tax deficit in the parent company only or individual financial report within the most recent 3 financial years. The preceding provision does not apply if the parent company only or individual financial report for the most recent fiscal year shows net profit after tax, which is sufficient to make up the accumulated deficits.
C. The securities firm, if a public company that has had an insufficient director shareholding percentage for 3 consecutive months or longer during the most recent financial year, shall disclose the remuneration paid to each of the directors, and, if one that has had an insufficient supervisor shareholding percentage for 3 consecutive months or longer during the most recent financial year, shall disclose the remuneration paid to each of the supervisors.
D. The securities firm, if a public company that has had an average ratio of share pledging by directors and supervisors in excess of 50 percent in any 3 months during the most recent financial year, shall disclose the remuneration paid to each of the directors and supervisors having a ratio of pledged shares in excess of 50 percent for each such month.
E. If the total amount of remuneration received by all of the directors and supervisors of the securities firm in their capacity as directors or supervisors of all the companies listed in the financial reports exceeds 2 percent of the net profit after tax, and the remuneration received by any individual director or supervisor exceeds NT$15 million, the securities firm shall disclose the remuneration paid to that individual director or supervisor, provided that this rule does not apply if it is a non-public securities firm whose issued voting shares are all held, directly or indirectly, by one single person.
F. If a securities firm listed on the TWSE or the TPEx is ranked within the lowest two tiers in the corporate governance evaluation for the most recent fiscal year, or in the most recent fiscal year or up to the date of publication of the financial report for that year, the securities firm's securities have been placed under an altered trading method, suspended from trading, delisted from the TWSE or the TPEx, or the Corporate Governance Evaluation Committee has resolved the securities firm shall be excluded from evaluation, the securities firm shall disclose the remuneration paid to each individual director and supervisor.
G. If the average annual salary of the full-time non-management employees in a TWSE or TPEx listed securities firm is less than NT$500,000 in the most recent fiscal year, the securities firm shall disclose the remuneration paid to each individual director and supervisor.
H. If a TWSE or TPEx listed securities firm had an increase of 10 percent or more in net profit after tax for the most recent fiscal year, and the average annual salary of its full-time non-management employees did not increase relative to the preceding fiscal year, the securities firm shall disclose the remuneration paid to each individual director and supervisor.
I. If a TWSE or TPEx listed securities firm had a decline in after-tax net income reaching 10 percent and exceeding NT$5 million for the most recent fiscal year, along with an increase in its average remuneration per director (not including the remuneration of those who are also employees) reaching 10 percent and exceeding NT$100,000, the securities firm shall disclose the remuneration paid to each individual director and supervisor.
J. If the circumstance in subitem b of item B or item F applies to a securities firm listed on the TWSE or the TPEx, it shall disclose the individual remuneration paid to each of its top five management personnel.
3. Number of employees in non-management positions, average annual employee benefit expenses for the fiscal year, and difference compared to those of the preceding year.
4. Labor-management relations:
A. Indicate each item of employee benefit policies, professional development, training, or retirement programs and the status of their implementation, as well as agreements between labor and management and policies for safeguarding employees' rights and interests.
B. List the loss sustained as a result of labor disputes in the most recent financial year, together with the disclosure of an estimate of losses incurred to date or likely to be incurred in the future and the mitigation measures taken or to be taken. If the losses cannot be reasonably estimated, the securities firm shall make a statement to that effect.
C. List any violations of the Labor Standards Act found during a labor inspection, including the disposition date, disposition reference number, the provisions breached, description of the violation, and the disposition.
5. The following items shall be disclosed with respect to the implementation of the internal control system:
A. Statement of the internal control system.
B. If a CPA has been engaged to carry out a project audit of the internal control system, the CPA audit report shall be disclosed.
6. Cyber security management:
A. Describe the cyber security risk management framework, cyber security policies, concrete management programs, and investments in resources for cyber security management.
B. List any losses suffered by the securities firm in the most recent fiscal year due to significant cyber security incidents, the possible impacts therefrom, and measures being or to be taken. If a reasonable estimate cannot be made, an explanation of the facts of why it cannot be made shall be provided.
7. The term "affiliated enterprises" in this article refers to those conforming with Article 369-1 of the Company Act.
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Article 40
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These Regulations shall come into force from the date of issuance, with the exception of Article 4, Article 7, Article 8, Article 11, paragraph 1, Article 12, Articles 14 to 18, Article 20, Article 22, Article 24, Article 25, Article 33, Article 35, and Article 37, as amended on 11 September 2014, which shall come into force from financial year 2015, Article 14, Article 17, Article 20, Article 23, Article 33-1, Article 33-2, and Article 39, as amended on 14 February 2017, which shall come into force from financial year 2017, the Articles as amended on 14 September 2017, which shall come into force from financial year 2018, Article 14, paragraph 4, subparagraphs 3 and 4, and paragraph 6, Article 15, Article 20, Article 27, as amended on 30 July 2018, which shall come into force from financial year 2019, the articles amended on 18 March 2020, which shall come into force from financial year 2020, the articles amended on 1 September 2022, which shall come into force from financial year 2022, Article 10 and Article 14, paragraph 4, subparagraph 1, item B amended on 24 November 2022, which shall come into force from financial year 2023, and the introductory part of paragraph 3, and paragraph 4, of Article 15 amended on 24 January 2024, which shall come into force from financial year 2024.
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