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Article 20
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To meet the objective of presenting full and complete information about the financial position, financial performance, and cash flows of a securities firm, financial reports shall contain explanatory notes disclosing the following:
- Company history and scope of business operations.
- A statement that the financial reports comply with these Regulations, applicable laws and regulations (giving the titles of the laws or regulations), as well as IFRS, IAS, IFRIC Interpretations, and SIC Interpretations.
- The date when the financial reports were authorized for issue and the process involved in authorizing the financial reports for issue.
- The effect or impact that may arise when it has or has not applied a new or revised IFRS, IAS, IFRIC Interpretation, or SIC Interpretation recognized by the FSC.
- A summary of significant accounting policies used that are relevant to an understanding of the financial reports, and the measurement basis (or bases) used in preparing the financial reports.
- Significant accounting judgments, estimations, and assumptions, as well as information about the assumptions it makes and other major sources of estimation uncertainty.
- Objectives, policies and processes for managing capital, and any change in capital structure, including funding, liability, and equity.
- If for a special reason there is a change in accounting treatment, thus affecting the comparison of financial data between two successive periods, the reason for the change and its effect on the financial reports shall be noted.
- If it is necessary to provide the basis of valuation for any amount, financial instrument, or other item presented in the financial reports, the basis of valuation shall be noted.
- If any item presented in the financial reports is subject to any legal, regulatory, contractual, or other restriction, the circumstances and timing of the restriction and other related information shall be noted.
- Criteria for classifying assets and liabilities into current and non-current.
- Material contingent liabilities and unrecognized contractual commitments.
- Information on related financial instruments such as call (put) warrants and hedging transactions.
- Financial risk management objectives and policies.
- Long-term and short-term borrowings.
- The addition, expansion, construction, lease, obsolescence, idling, sale, transfer, or long-term renting of major assets.
- Principal investments in other enterprises.
- Material transactions with related parties.
- Losses due to material disasters.
- Material litigation pending or concluded.
- The signing, completion, avoidance, or lapse of material contracts.
- Information about financial instruments. The information shall be disclosed in accordance with IFRS 7, including disclosure of the significance of financial instruments for the securities firm's financial position and performance; qualitative and quantitative disclosures describing risk exposures arising from financial instruments.
- Comprehensive information about the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers shall be disclosed in accordance with IFRS 15, including details of revenue recognized from contracts with customers, contract balances, contract performance obligations, significant judgments and changes in the judgments, and any assets recognized from the costs to obtain or fulfil a contract with a customer.
- Relevant information about leases. The information shall be disclosed in accordance with IFRS 16, including disclosure of information that gives a basis for the primary users of the financial reports to assess the effect that the leases have on the financial position, financial performance, and cash flows of the securities firm, and relevant qualitative and quantitative information about its leasing activities.
- Information about employee benefits. The information shall be disclosed in accordance with IAS 19, and shall include the influence of defined benefit plans on the amount, timing, and certainty of future cash flows, actuarial losses and gains arising from changes in demographic assumptions and financial assumptions, and the expected contributions in the next reporting period in the following financial year.
- Segment financial information required to be disclosed in accordance with IFRS 8 including the scope of business, revenue, and gains and losses of each reportable segment.
- Information on Mainland Area investments by the securities firm or by its subsidiaries in a third jurisdiction.
- When subsidiaries hold shares in the parent, the names of the subsidiaries and the shareholdings, amounts, and reasons shall be separately presented.
- In the case of private placement of securities, the type, issue date, and amount shall be disclosed.
- Material organizational adjustments and material management reforms.
- Material effects of changes in government laws and regulations.
- Material effects of discontinuance of operations.
- Any merger with or transfer of all business operations from or to another securities firm.
- The content and monetary amount of trust business activities conducted in accordance with the Trust Enterprise Act.
- Fair value information. The information shall be disclosed in accordance with IFRS 13, and shall include information on recurring or non-recurring fair value measurement of assets and liabilities, inputs such as fair value valuation technique and parameters or assumptions used in fair value measurement, and Level 3 of fair value hierarchy.
- Foreign-currency-denominated assets and liabilities that have significant influence: Include the amount of risk exposure, currency, and exchange rate for monetary and non-monetary items denominated in foreign currencies, and the foreign exchange gains or losses on monetary items.
- Regulatory capital adequacy ratio.
- The basis for calculating the number of shares to be distributed as profit-sharing compensation to employees, and information on profit-sharing compensation to employees, directors, and supervisors:
- The fixed amount or ratio prescribed in the articles of incorporation (and a statement that this information may be queried on the Market Observation Post System).
- The basis for the estimated figures for the current period, the basis for calculating the number of shares to be distributed, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure.
- The actual distribution for the previous fiscal year (with an indication of the number of shares, monetary amount, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized amount, additionally specify the amount of the discrepancy, the cause, and how it is treated.
- Supporting information for items presented in the balance sheet and in the statements of comprehensive income, of changes in equity and of cash flows, including material information that could affect the securities firm's future cash flows, or other necessary descriptions essential for avoiding misunderstanding by the primary users or for the fair presentation of the financial reports.
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