a. Capital stock Common stock
December 31
2014 2013
Numbers of shares authorized (in thousands) 2,601,706 2,601,706
Capital stock authorized $ 26,017,060 $ 26,017,060
Number of shares issued and fully paid (in thousands) 2,390,506 2,390,506
Shares issued $ 23,905,063 $ 23,905,063
Fully paid ordinary shares, which have a par value of $10, carry one vote per share and carry a right to dividends.
b. Retained earnings and dividend policy
The Bank’s Articles of Incorporation provide that the annual net income, less losses of prior years, if any, shall be appropriated as follows:
1) Legal reserve, 30%;
2) Special reserve, if needed; and
3) The remaining is appropriated as follows:
a) Bonuses to directors and supervisors - 4%;
b) Employees - 2% to 4%;
c) The manner of distributing the dividend to stockholders should be determined by the stockholders in their meeting on the basis of operating results.
The dividend distribution should be in accordance with future capital budget plan, the operating policy on capital demand and the financial structure under conservative consideration. Basically, cash dividend is not lower than 20% of the total dividend and the final distribution is determined in the meeting of stockholders.
For the years ended December 31, 2014 and 2013, the bonus to employees was $20,279 thousand and
$10,139 thousand, and the remuneration to directors and supervisors was $40,557 thousand and $20,279 thousand, respectively. The bonus to employees and remuneration to directors and supervisors were estimated based on past experiences and represented 2% and 4%, respectively, of distributable retained earnings. Material differences between such estimated amounts and the amounts proposed by the Board of Directors in the following year are adjusted for in the current year. If the actual amounts subsequently resolved by the stockholders differ from the proposed amounts, the differences are recorded in the year of stockholders’ resolution as a change in accounting estimate.
Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC, an amount equal to the net debit balance of certain shareholders’ equity accounts (including unrealized revaluation increment, unrealized gain or loss on financial instruments, net loss not recognized as pension cost, cumulative translation adjustments) shall be transferred from unappropriated earnings to a special reserve before any appropriation of earnings generated before January 1, 2012 shall be made. Any special reserve appropriated may be reversed to the extent of the decrease in the net debit balance.
Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Bank’s capital surplus. Legal reserve may be used to offset deficit. If the Bank has no deficit and the legal reserve has exceeded 25% of the Bank’s capital surplus, the excess may be transferred to capital or distributed in cash.
Under the Company Law, legal reserve shall be appropriated until it has reached the Bank’s capital surplus. This reserve may be used to offset deficit. When the Company has no loss and the legal reserve has exceeded 15% of the Bank’s capital surplus, the excess may be transferred to capital or distributed in cash.
Except for non-ROC resident shareholders, all shareholders receiving the dividends are allowed a tax credit equal to their proportionate share of the income tax paid by the Bank.
The appropriations of earnings for 2013 and 2012 had been approved in shareholders’ meetings on June 6, 2014 and June 14, 2013, respectively. The appropriations and dividends per share were as follows:
2013 2012
Dividend Dividend Appropriation
of Earnings
Per Share (NT$)
Appropriation of Earnings
Per Share (NT$)
Legal reserve $ 226,452 $ 17,769
Special reserve 51,840 (436,641)
Cash dividend - common stock 476,546 $0.20 478,101 $0.20
2013 2012
Cash Dividends
Stock Dividends
Cash Dividends
Stock Dividends
Bonus to employees $ 10,139 $ - $ 10,172 $ - Bonus to directors and supervisors 20,279 - 20,345 - The appropriations of earnings for 2013 were approved in the board of directors’ meeting on June 6, 2014. Because of transition to IFRSs, the Group reduced retained earnings by $388,956 thousand, and increased investments accounted for using equity method by $7,478 thousand and increased actuarial gain (loss) on defined benefit plans by $7,480 thousand, then increased net income by $1,128,836 thousand. After the reduction of retained earnings, appropriation for legal reserve was $226,452 thousand and appropriation for special reserve was $51,840 thousand. The amount of earnings available for distribution as dividends was $476,546 thousand and the appropriation was distributed in cash dividends.
The appropriations of earnings for 2012 were proposed according to the Bank’s financial statements for the year ended December 31, 2012, which were prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers and International Financial Reporting Standards, and by reference to the balance sheet for the year ended December 31, 2012, which was prepared in accordance with the Guidelines Governing the Preparation of Financial Reports by Securities Issuers (revised) and International Financial Reporting Standards.
Bonuses to employees and remuneration to directors and supervisors for 2014 be proposed by the shareholders’ meetings on March 25, were as follows:
Appropriation of Earnings
Dividends Per Share (NT$)
Legal reserve $ 528,947
Special reserve 279,154
Cash dividend - common stock 955,055 $0.40
Bonus to employees and remuneration to directors and supervisors will be approved in shareholders’
meeting on June 6, 2014.
Information on the bonus to employees, directors and supervisors proposed by the Bank’s board of directors is available on the Market Observation Post System website of the Taiwan Stock Exchange.
c. Others equity items
1) Exchange differences on translating the financial statements of foreign operations
For the Year Ended December 31
2014 2013
Balance at January 1 $ (9,412) $ (149,183)
Exchange differences arising on translating the financial
statements of foreign operations 295,585 154,914
Income tax related to gains arising on translating the financial
statements of foreign operations (38,331) (15,143)
Balance at December 31 $ 247,842 $ (9,412)
2) Unrealized gain (loss) on available-for-sale financial assets
For the Year Ended December 31
2014 2013
Balance at January 1 $ 169,548 $ 383,471
Unrealized gain arising on revaluation of available-for-sale
financial assets 487,475 331,776
Cumulative gain reclassified to profit or loss on sale of
available-for-sale financial assets (224,971) (449,311) Cumulative loss reclassified to profit or loss on impairment
of available-for-sale financial assets 101,286 25,781 Actual disposal of interest in subsidiaries (211) - Share of unrealized gain on revaluation of available-for-sale
financial assets of associates accounted for using the
equity method 31,914 (122,169)
Balance at December 31 $ 565,041 $ 169,548
d. Non-controlling interests
2014 2013
Balance at January 1 $ 16,153,633 $ 16,252,825
Attribute to non-controlling interests
Share of profit for the year 985,090 1,047,473
Exchange differences arising on translation of foreign entities 20,766 8,972 Unrealized gains and losses on available-for-sale financial
assets 50,636 (174,376)
Actuarial gains (loss) on defined benefit plans (2,588) 3,607 Disposal of partial interest in CBF (Note 43) 20,197 -
Dissolved of TFITT (30,372) -
Subsidiaries dividends paid (673,385) (770,668)
Subsidiaries refund capital (212,571) (214,200)
Ending balance $ 16,311,406 $ 16,153,633
e. Treasury stock
On June 26, 2013, the board of directors resolved, to buy-back outstanding shares at $5.5-$8 per share from emerging market in order to transfer the shares to employees. The Bank bought back 7,774 thousand shares in the amount of $50,620 thousand.
Under the Securities and Exchange Act, the Bank shall neither pledge treasury stock nor exercise shareholders’ rights on these shares, such as rights to dividends and to vote.