The description of the "operation of the company" shall include the following items:
- Business content:
- Scope of business: Setting forth the main line(s) of business engaged in by the company and its percentage out of the entire company business, company's current products (services), and the new products (services) planned to be developed.
- Industry summary: Describing the industry's current condition and development, relations with industries upstream, downstream and at the same level, various trends of product development and competition status.
- Technology and research & development summary: Setting forth the technological arrangement in business operations, research & development, personnel involved in research & development and their educational background and employment history, along with their invested research costs each year for the last 5 years and any successfully developed technologies or products.
- Long and short term plans for business development.
- Summary of market and production/sales
- Market analysis: Analyzing the areas/regions of sales (supply) of the company's major products (services), market share, market's future supply/demand conditions and development potential, competitive niche, and the advantageous and disadvantageous factors for future development and policies for dealing with them.
- Important use and production process for the major products.
- Supply status of the major raw materials.
- Description of major gross profit margin changes by each department classification or major product classification for the most recent 2 years: When the gross profit margin fluctuates over 20 percent from the previous year's rate, analysis of the key factors causing the price/volume changes and their impact on the gross profit margin shall be made. For construction companies or companies with construction departments, setting forth an analysis on the estimated recognized income and gross profit for each construction project during the year of registration and the preceding year, and describing whether there are any unusual events involved in the gross profit margin of each construction project and the expected sales for projects that have been completed but not yet sold. (Tables 33, 34)
- List of principal suppliers and clients: Setting forth the names of any suppliers (clients) that have supplied (sold) 10 percent or more of the company's procurements (sales) in either of the preceding 2 fiscal years, and the monetary amount and the proportion of such procurements (sales) as a percentage of total procurements (sales), and explaining the reason for any change in the amount; provided however, that Where the company is prohibited by contract from revealing the name of a trading counterpart, or where a trading counterpart is an individual person who is not a related party, a code may be used in place of such trading counterpart's actual name. (Tables 35, 36)
- Production for the most recent 2 fiscal years: Setting forth production by volume, production by value, and production capacity for the most recent 2 fiscal years by each department classification or major product classification, and an analysis of any changes. (Table 37)
- The sales volume and value for the most recent 2 fiscal years: Setting forth the sales volume and sales value for the most recent 2 fiscal years by each department classification or major product classification, and an analysis of any changes. (Table 38)
- Number of employees for the most recent 2 fiscal years: Documenting the employees information for the past 2 fiscal years and up to the prospectus publication date of the current fiscal year. Such information shall be categorized by the nature of the works performed to include the statistics on the number of employees, average age, average years of service and the educational background breakdown. (Table 39)
Information on environmental protection expenditures:
- According to laws and regulations if it is required to apply for a permit for installing anti-pollution facilities, or permit of pollution drainage, or to pay anti-pollution fees, or to organize and set up an exclusively responsible unit/office for environmental issues, the description of the status of such applications, payment or establishment shall be made.
- Setting forth the company's investment on the major anti-pollution facilities, the use purpose of such facilities and the possible effects to be produced. (Table 40)
- Describing the process undertaken by the company on environmental pollution improvement for the most recent 2 fiscal years and up to the prospectus publication date. If there had been any pollution dispute, its handling process shall also be described.
- Describing any losses suffered by the company in the most recent 2 fiscal years and up to the prospectus publication date due to environmental pollution incidents (including any compensation paid and any violations of environmental protection laws or regulations found in environmental protection inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future 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.
- Explaining the current condition of pollution and the impact of its improvement to the profits, competitive position and capital expenditures of the company, as well as the projected major environment-related capital expenses to be made for the coming 2 fiscal years.
- Labor relations:
- Setting forth all employee benefits, continuing education, training, retirement systems, and the status of their implementation, as well as the status of agreements between labor and management, and all measures aimed at preserving the rights and interests of employees.
- Describing any losses suffered by the company in the most recent 2 fiscal years and up to the prospectus publication date due to labor disputes (including any violations of the Labor Standards Act found in labor inspection, specifying the disposition dates, disposition reference numbers, the articles of law violated, the substance of the legal violations, and the content of the dispositions), and disclosing an estimate of possible expenses that could be incurred currently and in the future 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.