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Article 1
These Regulations are enacted pursuant to Paragraph 3 of Article 7 of the Company Act.
Article 2
When applying for registration of incorporation or registration of corporate changes
for a merger,split-up, acquisition, share conversion, share exchange, or increase
or reduction of the paid-incapital, a company shall bind together and submit to
a certified public accountant ("CPA") for auditing a statement of change of
paid-in capital and the following documents, depending on the nature of the case:
1. Statement of shareholders' capital contributions in cash;
2. Statement of capital contributions by claims;
3. Statement of capital contributions by properties;
4. Statement of capital contributions by service.
5. Statement of allotment of shares through capitalization of dividends and
bonuses and statement of appropriation of earnings;
6. Statement of allotment of shares through capitalization of legal reserve;
7. Statement of allotment of shares through capitalization of capital reserve
and statement of sources of capital reserve;
8. Statement of allotment of shares after merger (if any shares are cancelled
due to a merger, a statement of cancellation of shares after the merger shall
also be included);
9. Statement of allotment of shares after a split-up, and the types and amounts
of assets and liabilities of the demerged portion of the demerged company as of
the date immediately before the recordation date;
10. Statement of allotment of shares after acquisition;
11. Statement of allotment of shares after share exchange;
12. Statement of allotment of shares after share conversion;
13. Statement of conversion of shares from convertible corporate bonds or share
subscription warrants; and
14. Statement of capital reduction. (In the event of capital reduction as a result
of a split-up,the types and amounts of the assets and liabilities of the demerged
portion of the demerged company as of the date immediately before the recordation
date shall also be included. This is not required in the case of buying-back of
shares for capital reduction.)
In the case of a company, the statements specified in Subparagraphs 1, and5
to 14 of Paragraph 1 of this Article shall apply only to its directors, supervisors
or shareholders that hold more than 10 percent of the total shares. For those
shareholders holding less than 10 percent of the total shares, statements with
consolidated information are acceptable.
In the case of a publicly traded company, if all the equity capital is
contributed by issued shares according to special laws, the statements specified
in Subparagraph 3, Paragraph 1 of this Article shall only apply to its directors,
supervisors or shareholders that hold more than 10 percent of
the total shares. For those shareholders holding less than 10 percent of
the total shares, statements with consolidated information are acceptable.
The company’s seal and the responsible person seal or signature of
the responsible person shall be affixed to the statement of change of
paid-in capital amount and the other documents under
the first Paragraph. The seal of the company and the seal or signature of
the responsible person representing the company shall be affixed to the statement
of change of paid-in capital and documents to be submitted.
In the case of buying-back of shares for capital reduction in accordance
with Article 28-2 of the Securities and Transaction Act, the audit
by a CPA is not required.
Article 3
With regard to the documents listed under Paragraph 1 of the previous Article,
the company shall prepare and attach relevant documents in accordance
with the following:
1. Statement of shareholders' capital contributions in cash: The statement shall
indicate the names of the shareholders, the dates and amounts of share contributions,
and the dates and bank account information where the contributions
are deposited. The photocopies of deposit slips, or in the absence of such
deposit slips, photocopies of bankbooks, statements of accounts or inquiry
sheets shall also be attached. If the company opened a special bank account to
collect all the contributions,it may replace the photocopies of the deposit slips,
the bankbooks, the statement of accounts or the inquiry sheets with the special
account deposit contract (or the contract entrusted for the collection of contributions)
and the certificate of collection of all the contributions issued by
the bank(or photocopies of bankbooks). In the event of any inconsistency
between the bank deposits and the accounting books, a reconciliation statement
shall be prepared. Where any contributions have been utilized, a statement
of capital utilization affixed with the corporate seal of the company and the seal
of the responsible person or signature of the responsible person of the company
indicating the purpose shall be additionally submitted. If necessary, the
competent government authorities may require the company to submit photocopies
of certificates of primary utilizations. If any contributions are transferred
into term deposits, any pledge, termination of contract or assignment, if any,
shall be specified.
2. Statement of capital contributions by claims: The statement shall indicate the
names of the shareholders, reasons for and dates of incurrence of the claims,
the amounts of the incurred claims, and the amount of contributions by claims,
bearing the signatures or seals of the creditors with their consent and
attached with the primary documents to prove the incurrence of
the claims. Where any contributions have been utilized, a statement of capital
utilization affixed with the corporate seal of the company and the seal of
the responsible person or signature of the responsible person of the company
indicating the purpose shall also be submitted. If necessary, the competent
government authorities may require the company to submit photocopies of
certificates of primary utilizations. If any contributions are transferred into
term deposits, any pledge, termination of contract or assignment, if any, shall be
specified.
3. Statement of capital contributions by properties: The statement shall indicate
the names of shareholders, the types, quantities, prices or criteria for appraising
the prices of the properties, and the shares or certificates allotted by
the company. If any technology, stock or other property is contributed,
the relevant property shall be specified as having been registered in the name of
the company in accordance with the law before the date of incorporation or
the capital increase recordation date. However, if there is no registration requirement
in accordance with the law, such property shall be specified as having been
delivered to the company before incorporation or the capital increase recordation date.
If any stock is contributed, the criteria for appraising the price shall be specified.
4. Statement of allotment of shares through capitalization of dividends and bonuses,
legal reserve, capital reserve, merger, split-up, acquisition, or share exchange,
share conversion, statement of capital reduction, or statement of conversion of
shares from convertible corporate bonds or shares subscription warrants: The
statement shall indicate the names of the shareholders, the amounts and the dates.
5. Statement of capital contributions by service: The statement shall indicate the
names of shareholders, the amount of such capital contribution prescribed in
the Articles of Incorporation, and the shares or certificates allotted by the company.
For any equity capital of a close company to be contributed with technologies or service,
a written consensus of the shareholders shall also be submitted.
Article 4
When a CPA is engaged to audit the capital for a company’s incorporation
registration or amendment registration of merger, acquisition, share exchange,
share conversion or increase or decrease of paid-in capital, the CPA shall verify
whether the paid-in capital amount in the statement of change of capital and
the attached documents prepared by the company in accordance with Article 2
are correct.
The CPA shall submit the audit report after auditing the documents set forth
in the preceding paragraph.
Article 5
When applying for registration of branch office incorporation in the Republic
of China, registration of increase or reduction of its working capital in
the Republic of China, a foreign company shall prepare a statement of change of
working capital, affixed with the corporate seal of the branch office and the seal
of the responsible person in the Republic of China ,or signature of the responsible
person in the Republic of China and submit to the CPA to audit.
The CPA shall submit the audit report after auditing the documents set forth
in the preceding paragraph.
Article 6
When applying for registration of incorporation, increase or reduction of working
capital in the Republic of China, a profit seeking enterprise of Mainland Area
shall prepare a statement of change of working capital affixed with the corporate
seal of the branch office and the seal of the litigious and non-litigious agent
in the Republic of China to audit.
The CPA shall attach the audited statement of change of working capital in
accordance with the previous paragraph to the audit report. If the application is
for branch registration or an increase of its working capital in the Republic
of China, photocopies of bank passbooks, bank statements, or inquiry sheets shall
also be attached.
Article 7
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.
The CPA engaged to audit and certify the registration of capital amount
under the previous Paragraph shall audit the following matters:
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.
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.
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.
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:
(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.
(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.
(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.
(4) The date of evaluation under the previous three Subparagraphs shall fall within
the two months prior to the recordation date.
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.
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.
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.
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.
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.
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.
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.
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.
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 competentauthority shall also be verified.
Article 8
When a CPA is engaged to audit for a company’s paid-in capital reduction registration,
the audit report issued by the CPA shall state the reasons for the capital reduction
(such as redemption or buying-back of shares for capital reduction, return
of paid-in capital in cash for capital reduction, return of paid-in capital in kind
for capital reduction, making-up losses by capital reduction, and capital reduction
by split-up), the number of cancelled shares, and the amount of capital reduced,
as well as the total number of shares issued and the total amount of capital before
and after the capital reduction.
The CPA engaged to audit and certify the registration of capital
amount under the previous Paragraph shall audit the following matters:
1. The names of shareholders and the number of cancelled shares set forth
in the resolution of the shareholders' meeting or the board of directors meeting
(or the consensus of directors or the shareholders).
2. In the event of a capital reduction by a split-up, the names of shareholders, the number of cancelled
shares and other relevant matters in accordance with the Company Law, the Business Mergers and
Acquisitions Act, the resolution of the shareholders' meeting and the split-up plan.
Article 9
Unless otherwise provided in these Regulations, a CPA's audit report shall contain the
following particulars:
1. The name of the audited statement of change of capital (working capital) and attached
documents and the date thereof.
2. The name of the company audited and its company uniform number; in the case of application
for incorporation of a company, the company uniform number is not required.
3. The CPA's audit scope and his/her professional opinion..
4. Signature and seal of the CPA.
5. The date of auditing and certification.
6. The name, location and telephone number of the accounting firm.
The audit report issued by the CPA pursuant to the audit work performed in accordance
with these Regulations shall include at least four sections. The first section shall
be the Introduction, stating the name of the statement of change of capital (working capital)
and the attached documents audited and the date thereof and the responsibilities of the company
and the CPA. The second section is the Scope, stating the scope and basis of
the audit work. The third section is the Opinion, stating the results of the CPA’s audit and the audit
opinions issued. The fourth section is the Restricted Purpose, stating the purpose for
the issuance of the report and the restrictions on its use.
The CPA engaged for the audit of a statement of change of paid-in capital shall prepare to
record the audit work that was planned and performed in accordance with the regulations,
which the competent government authorities may request for review at any time.
The audit documentation shall serve as proof as to whether the CPA has fulfilled his/her
professional responsibilities, as well as the basis for the opinions that
formed the audit report. The opinions, facts and figures included in the audit
report shall be supported by substantial evidence provided in the audit documentation.
The date of auditing and certification as referred to in above Subparagraph
5, Paragraph 1 shall mean the date on which the audit is completed; provided that
certification shall commence from after the financial instruction's business hours on the date of
incorporation or the date of recordation for capital increase, capital reduction, merger or acquisition.
Article 10
These Regulations shall be enforced starting November 1, 2018. |