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Article NO. Content


Regulations Governing the Preparation of Financial Reports by Securities Firms  CH

Amended Date: 2024.01.24 
Article 16 Equity items, their components, and information to be disclosed in the balance sheet are as follows:<br/>1. Equity attributable to owners of the parent:<br/>A. Share capital:<br/>a. Capital contributed by shareholders to a securities firm, but excluding preferred shares in the nature of liabilities.<br/>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.<br/>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.<br/>C. Retained earnings (or accumulated deficit): Equity resulting from operating activities, including legal reserves, special reserves, and undistributed earnings (or deficit to be offset).<br/>a. Legal reserve: A fixed-percentage reserve appropriated as required by the Company Act.<br/>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.<br/>c. Undistributed earnings (or deficit to be offset): Undistributed and unappropriated earnings ("deficit to be offset" is deficit not yet offset).<br/>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.<br/>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.<br/>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.<br/>2. Non-controlling interest:<br/>A. The equity in a subsidiary not attributable, directly or indirectly, to a parent.<br/>B. For each business combination, the components of non-controlling interest in the acquiree shall be measured in accordance with IFRS 3.<br/>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.<br/>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.<br/>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.