These Regulations are adopted under Article 14, paragraph 2 of the Securities and Exchange Act (the "Act").

A securities issuer ("issuer") shall establish an accounting system based on the nature of its accounting matters, the actual status and development of its business, and its management needs.
The accounting system referred to in the preceding paragraph shall separately provide the following items, based on the nature of the issuer's business operations, and in a way that meets the needs of preparation of the consolidated financial reports and uniformity in the accounting policies of the issuer and its subsidiaries:
1. A general description of the accounting system.
2. A chart of journals and ledgers.
3. Descriptions and uses of accounting items, accounting documents, account books, and accounting statements.
4. General accounting procedures.
5. Cost accounting procedures.
6. Accounting for sales, purchases, and collections.
7. Rules for payments and warehouse management.
8. Other items required by the Financial Supervisory Commission (FSC).
The issuer shall see to it that its subsidiaries establish their accounting systems in accordance with the preceding paragraph.

The financial reports of an issuer shall be prepared in accordance with these Regulations and other applicable laws and regulations. Matters not provided for therein shall be governed by generally accepted accounting principles (GAAP).
The GAAP described in the preceding paragraph shall mean the following, as endorsed by the FSC: International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations developed by the International Financial Reporting Interpretations Committee (IFRIC) or the former Standing Interpretations Committee (SIC).

"Financial reports" shall mean financial statements, statements of major accounting items, and any other disclosures and explanatory information helpful to the decision making of the primary users.
A complete set of financial statements shall comprise a balance sheet, a statement of comprehensive income, a statement of changes in equity, a statement of cash flows, and their accompanying notes or supplementary schedules.
An issuer, unless newly established, or under any of the circumstances set out in paragraph 4 herein, or otherwise required by the FSC, shall prepare the major financial statements and notes described in the preceding paragraph by presenting comparative information for two consecutive periods. The major financial statements shall also be signed or sealed on each page by the issuer's chairperson, managerial officer, and principal accounting officer.
When an issuer applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial reports, or when it reclassifies items in its financial reports, it shall do so in accordance with the applicable provisions of IAS 1.
For the purposes of these Regulations, information is material if omitting, misstating or obscuring the information in the financial reports could reasonably be expected to influence decisions that the primary users of general purpose financial reports make on the basis of information in those financial reports. Judgments of materiality depend on qualitative factors and quantitative factors. Whether information is quantitatively material is assessed by considering not only the size of the impact recognized in the financial report, but also any unrecognized items that could ultimately affect primary users' overall perception of the issuer's financial position, financial performance and cash flows (e.g., contingent liabilities or contingent assets). When assessing qualitative factors, consideration shall be given to both issuer-specific and external qualitative factors, including involvement of a related party, uncommon transactions or features of a transaction, unexpected variation or changes in trends, the issuer's geographical location, its industry sector, or the state of the economy or economies in which it operates.

Financial reports shall present fairly the financial position, financial performance, and cash flows of an issuer without being misleading to an interested party in making judgments and decisions.
If a financial report violates these Regulations or any other applicable requirements, for which the FSC as a result of an audit gives a notice requiring adjustment to be made, the issuer shall make the required adjustment and correction. If the adjusted amount reaches the threshold set by the FSC, a corrected financial report shall be publicly disclosed, together with a description of the reasons, items, and amount specified in the FSC notice for adjustment.

The following shall apply when an issuer makes an accounting change:
1. Changes in accounting policies:
A. "Accounting policies" are the specific principles, bases, conventions, rules and practices applied by an entity in preparing and presenting financial statements.
B. When an issuer changes an accounting policy voluntarily in a new financial year in order to produce financial reports that provide reliable and more relevant information about the effects of transactions or other events or conditions on the issuer's financial position, financial performance, or cash flows, it shall request its attesting certified public accountants (CPAs) to provide an item-by-item analysis and review opinion on the reasonableness of the nature of the change in accounting policy, the reasons why applying the new accounting policy provides reliable and more relevant information, each line item affected and the estimated effect for the financial year preceding the earliest financial year affected by retrospective application of the new accounting policy, and the actual effect on the opening balance of retained earnings for the immediately preceding financial year. These shall be submitted as a proposal for adoption by resolution of the board of directors and for recognition by the supervisors, after which they shall be publicly disclosed and filed.
C. If, for the voluntary change in accounting policy in the new financial year, it is impracticable to determine either the period-specific effects or the cumulative effect of the change, as described in paragraph 23 of IAS 8, the issuer shall calculate the effects in accordance with paragraph 24 of IAS 8 and the preceding item above, and shall request the attesting CPAs to provide an item-by-item analysis and review opinion on the reasonableness of the reasons why retrospective application is impracticable and how and from when the change in accounting policy has been applied, and also provide an opinion on the impact on the audit opinion for the financial year preceding the change in accounting policy. The issuer shall then make a public disclosure and filing according to the above procedure.
D. Unless it is impracticable to determine the effects as described in the preceding item, then within 2 months after the beginning of the financial year in which the new accounting policy is adopted, the issuer shall calculate the line items affected and the actual effect for the financial year preceding the earliest financial year affected by retrospective application of the new accounting policy and the actual effect on the opening balance of retained earnings for the immediately preceding financial year, and shall submit those for adoption by the board of directors and for recognition by the supervisors, after which they shall be publicly disclosed and filed, and shall also be submitted to the shareholders meeting for the financial year of the change. If the difference between the actual effect of the change in accounting policy and the effect originally presented in public disclosure and filing is NT$10 million or more, and is also 1 percent or more of net operating revenues for the immediately preceding financial year, or 5 percent or more of paid-in capital, the issuer shall analyze the reasons for the difference and request the attesting CPAs to provide an opinion on its reasonableness. The analysis and the CPAs' opinion shall also be publicly disclosed and filed as described above.
E. If the shares issued by an issuer have no par value or a par value other than NT$10 per share, the threshold of 5 percent of paid-in capital as set out in the preceding item shall be replaced by 2.5 percent of equity attributable to owners of the parent as stated in the balance sheet.
F. If an issuer voluntarily changes an accounting policy or accounting estimate after the beginning of a financial year, it shall publicly disclose and file information on the prior periods affected by retrospective application of the new accounting policy, the line items affected and the actual effect for the immediately preceding financial year, and the actual effect on the opening balance of retained earnings for the immediately preceding financial year. The issuer shall also provide additional information on the reasonableness and necessity for the change in an accounting policy or accounting estimate after the beginning of the financial year, and shall prior to public disclosure and filing request the attesting CPAs to provide an item-by-item analysis and review opinion on the reasonableness of those and other relevant matters. These shall then be publicly disclosed and filed after being submitted as a proposal for adoption by resolution of the board of directors and recognition by the supervisors, and shall also be submitted to the next following shareholders meeting. If the effect of the issuer's retrospective application of a new accounting policy on the financial statements for any quarter of the current fiscal year reaches the standard for restatement of the financial reports as prescribed in Article 6 of the Enforcement Rules of the Act, the issuer shall restate the financial reports for the relevant period and request the attesting CPAs to re-audit or review the financial statements and then re-disclose and file the reports.
2. Changes in accounting estimates:
A. "Accounting estimates" means amounts in financial statements that are subject to measurement uncertainty and are estimated by an entity using measurement techniques and inputs.
B. If a change in an accounting estimate arises from a change in the useful life or the depreciation or depletion method of depreciable or depletable assets, a change in the amortization period or amortization method of intangible assets, a change in the residual value of any such assets, or a change in a technique used to estimate the fair value thereof, the issuer shall request the attesting CPAs to provide an analysis and review opinion on the reasonableness of the nature of the changes and the reasons why the changes can provide reliable and more relevant information. Those changes in accounting estimates shall then be submitted as a proposal for adoption by resolution of the board of directors and for recognition by the supervisors, after which they shall be publicly disclosed and filed, and shall also be submitted to the next following shareholders meeting. If the issuer makes a change in an accounting estimate during a fiscal year, the issuer shall do the same as above, and also shall provide additional information on the reasonableness and necessity of the time of the change.
The expression "public disclosure and filing" or "publicly disclose and file" as used in this article means entering the information into the website specified by the FSC for the submission of electronic filings.
If an issuer has established the position of independent director in accordance with the Act, then when it submits a proposal for resolution by the board of directors pursuant to paragraph 1, adequate consideration shall be given to each independent director's opinion; if an independent director has an objection or reservation, the objection or reservation shall be documented in the minutes of the meeting of the board of directors.
If an issuer has established an audit committee in accordance with the Act, the matters for which paragraph 1 requires recognition by the supervisors shall be subject to the consent of one-half or more of the entire membership of the audit committee, and shall also be submitted to the board of directors for resolution.
The expression "entire membership of the audit committee " as used in the preceding paragraph shall be calculated according to the number of members then actually holding that position.

An issuer shall prepare consolidated financial reports in accordance with Chapter II of these Regulations and IFRS 10, and shall prepare annual parent company only financial reports in accordance with Chapter IV of these Regulations.
An issuer that does not have a subsidiary shall prepare individual financial reports in accordance with Chapter II of these Regulations, and shall prepare statements of major accounting items in accordance with Article 23 of these Regulations when preparing its annual individual financial reports.
An issuer preparing interim financial reports shall follow the provisions of Chapters II and III of these Regulations as well as IAS 34.

The meaning of "parent," "subsidiary," "associate," and "joint arrangement" as used in these Regulations shall be determined in accordance with IFRS 10, IFRS 11, and IAS 28.
The meaning of "control," "significant influence," or "joint control" as used in these Regulations shall be determined in accordance with IFRS 10, IFRS 11, and IAS 28.