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Article 7
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The audit report issued by the CPA engaged to audit and certify a company’s incorporation registration or change registration of merger, split-up, acquisition, share exchange, share conversion or increase of paid-in capital shall indicate the source of the contributions (cash, monetary claims, technologies, service, stock certificates, other types of property, dividends and bonuses, legal reserve, capital reserve, merger, split-up, acquisition, share exchange, share conversion, restricted employee entitlement to new shares), the issuing prices, the number of shares being issued, and the capital amount. In the case of shares issued at a premium or discount, the issued amount per share and the accounting treatment shall be specified. The total number of shares issued and the capital amount before and after the capital increase shall also be specified.<br/>The CPA engaged to audit and certify the registration of capital amount under the previous Paragraph shall audit the following matters:<br/>1. In the event of capital contributions in cash: The status of contributions shall be examined; where the payments have been deposited in a bank, the deposit certificates shall be verified; where the payments are made by bills, whether these bills have been honored shall be verified; where the payments are made by monetary claims against the company, whether the reasons for incurrence of such claims is truthful shall be verified; where any contributions have been utilized, a statement shall be prepared explaining the purpose of utilization and the relevant certificates shall be verified; and where the contributions have been deposited as time deposits, whether there is any pledge, cancellation of contract, or assignment shall be verified.<br/>2. Where contributions are made through technologies, stock certificates or other types of property: The names of the shareholders, the types, quantities, prices or criteria for appraising the prices of the property, and the shares or certificates allotted by the company shall be verified.<br/>3. Where contributions are made through technologies and other properties: Except for companies invested in by foreigners or overseas Chinese, the CPA shall obtain opinions of relevant institutions, organizations or experts on the appraised prices and evaluate whether their opinions should be adopted and verify whether the relevant property has already been registered under the name of the company according to the law prior to incorporation or the recordation date of increase of its capital; however, for those properties not legally required to be registered, whether the relevant property has already been delivered to the company before the incorporation or the recordation date of increase of its capital should be verified.<br/>4. Where contributions are made through share certificates of another company: The CPA shall verify whether the appraisal is carried out in accordance with the following:<br/>(1) Shares issued by a company that is not listed on the Taiwan Stock Exchange, not traded on the Gre Tai Securities Market, or not Emerging Stocks, may be appraised based on the net worth of the company on the date of evaluation.<br/>(2) Emerging Stocks may be appraised based on the average trading price of such stocks on the date of evaluation; however, if there is no trading price of such stocks on such a date, the appraisal shall be based on the average trading price of the last day preceding the date of evaluation; in the event of severe fluctuation of the price, the price shall be appraised based on the average trading price for the 30-day period before the date of evaluation.<br/>(3) Shares issued by a listed company or a company traded on the Gre Tai Securities Market may be appraised based on the closing price of such shares on the date of evaluation. Where there is no transaction price of Emerging Stocks on the date of evaluation, the price shall be appraised based on the closing price on the last transaction day before the date of evaluation; in the event of severe fluctuation of the price of such Emerging Stocks, the price shall be appraised based on the average trading price for the 30-day period before the date of evaluation. Where there is no transaction price of shares issued by a listed company or a company traded on the Gre Tai Securities Market on the date of evaluation, the price shall be appraised based on the closing price on the last transaction day before the date of evaluation; in the event of severe fluctuation of the price of such shares, the price shall be appraised based on the average of the closing prices for the 30-day before the date of evaluation.<br/>(4) The date of evaluation under the previous three Subparagraphs shall fall within the two months prior to the recordation date.<br/>5. In the event of capitalization of dividends and bonuses: Whether the appropriation of earnings meets the applicable provisions under the Company Law in accordance with the Articles of Incorporation, the financial statements and the proposal for appropriation of earnings ratified by the shareholders' meeting (or by consensus of the shareholders) shall be verified.<br/>6. In the event of capitalization of legal reserve: Whether the amount of capitalization and the calculation of the appropriated amounts meets the applicable provisions under the Company Law in accordance with the minutes of the shareholders' meeting (or the consensus of the shareholders) shall be verified.<br/>7. In the event of capitalization of capital reserve: Whether the type, source and contents thereof comply with the applicable provisions of the Company Law and whether the converted amount is consistent with the minutes of the shareholders' meeting (or the consensus of the shareholders) shall be verified.<br/>8. In case of a merger: The CPA shall verify the names of shareholders, the respective number of shares to be issued and related matters according to the Company Law, the Business Mergers and Acquisitions Act and other applicable legislations, the minutes of shareholders’ meetings and board meetings (or the consensus of directors or the shareholders) and the merger contract. The accounting treatment adopted shall also be stated.<br/>9. In case that new shares are to be issued in a split-up: The CPA shall verify the names of shareholders, the respective number of shares to be issued and related matters according to the Company Law, the Business Mergers and Acquisitions Act and other applicable legislations, the resolutions of the shareholders' meetings and board meetings (or the consensus of directors) and the split-up plan. The accounting treatment adopted shall also be stated.<br/>10. In the case that new shares are to be issued in acquisition: The CPA shall verify the names of shareholders, the respective number of shares to be issued and related matters according to the Company Law, the Business Mergers and Acquisitions Act and other applicable legislations, the resolutions of the shareholders' meetings and board meetings (or the consensus of directors) and the acquisition contract. The accounting treatment adopted shall also be stated.<br/>11. In the case that new shares are to be issued in share exchange: The CPA shall verify the names of shareholders, the respective number of shares to be issued and related matters according to the Company Law, the Business Mergers and Acquisitions Act and other applicable legislations, the resolutions of the shareholders' meetings and board meetings (or the consensus of directors) and the share exchange contract. The accounting treatment adopted shall also be stated.<br/>12. In the case that new shares are to be issued in share conversion: The CPA shall verify the names of shareholders, the respective number of shares to be issued and related matters according to the Company Law and other applicable legislations, the resolutions of the shareholders' meetings and board meetings (or the consensus of directors) and the share conversion contract. The accounting treatment adopted shall also be stated.<br/>The CPA shall verify the number of shareholders when being requested to certify the capital amount of a close company in accordance with the preceding paragraph. In case of capital contributions with technologies or service, written consensus of the all shareholders, the type and amount of such capital contribution prescribed in the Articles of Incorporation, and the shares allotted by the company shall be verified submission of value appraisal report is not required. In regard to capital contributions by service, the names of shareholders and whether such contribution falls into the percentage announced by the competent authority shall also be verified.
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