Financial Supervisory Commission Vice Chairperson Dr. Tien-Mu Huang September 3, 2014 IFRSs Adoption in Taiwan 1

Outline  Background of IFRSs adoption in Taiwan  Benefits of adopting IFRSs  Strategies for adopting IFRSs  Future 2

Background of IFRSs adoption in Taiwan 3

Capital markets overview Equity issuance by public companies No. of listed companies Authorized capital Market capitalization TWSE-listed companies 846 US$ billion US$ billion GTSM-listed companies 669 US$22.39 billion US$89.64 billion As of the end of July

Capital markets overview Foreign investment on the Taiwan Stock Exchange Total accumulated net inward remittances Share of market held by foreign investors Dec to end of July 2014 US$ billion 35.05% 5

The offering and issuance of overseas securities Overseas securities issues by public companies GDR/ADR Overseas corporate bonds With new shares With seasoned shares Total approvals (2004 – July 2014)

Development of accounting standards in Taiwan : followed US GAAP : converged to IFRSs : announced full adoption of IFRSs from From convergence to full adoption 7

Benefits of adopting IFRSs 8

The adoption of IFRSs is beneficial to investors, business enterprises and government 9

The global trend towards full adoption of IFRSs Internationalizat ion of capital markets Demand for high quality financial reporting Demand for high quality financial reporting IFRSs 10

Primary features of IFRSs Principles-based Fair value measurement Disclosures of business management information All-inclusive income 11

More transparency is leading the way IFRSs Local accounting standards The FSC's major policy 12

Strategies for adopting IFRSs 13

Strategies for adopting IFRSs InitiativeProcessAchievements 14

To adopt or to converge, that is not a question! Low cost of conversion High benefit Cost-benefit Analysis Increasing competitive advantage Policy Objective 15

Process Planning Supervision Organization Promotion Challenges 16

Planning On 14 May, 2009 FSC announced the “Roadmap toward IFRS Adoption in Taiwan” On 28 January, 2014 FSC announced the “Roadmap for Full Adoption of the Updated IFRS” The FSC has announced two roadmaps: 17

Domestic companies to adopt IFRS version 2010 in two-phase mandatory process. Roadmap toward IFRS adoption in Taiwan Planning 18

All public companies will fully adopt the latest version of the IFRSs according to a two-phase timetable. Roadmap for full adoption of the updated IFRSs Planning 19

Supervision Supervision of the implementation The FSC has required companies to file : - transition plans - implementation report 20

Organization IFRSs taskforce Communications platform 21

Organization Roadmap Work Plans IFRSs Taskforce 22

Communications platform - The FSC set up an IFRSs service center Organization 23

Promotion Education and outreach of IFRSs Insurance Other industries Banking Senior management Investors Accountants Staff Media Securities and futures 24

Challenges Cross-border communication 1 Regulatory system adjustments 2 25

Cross-border communication Examination Yuan Ministry of Finance Ministry of Education Ministry of Economic Affairs Income tax issues IFRSs for non-public companies National exams now based on the IFRS standards IFRSs education 26

Regulatory system adjustments The FSC has amended relevant laws and regulations, such as the: Securities and Exchange Act Securities and Exchange Act Enforcement Rules Regulations Governing the Preparation of Financial Reports by Securities Issuers 27

Achievements Phase I companies – Have filed IFRSs financial reports Phase I companies – Have filed IFRSs financial reports Phase II companies – Have completed the dry run Phase II companies – Have completed the dry run 28

Benefits After adopting IFRS 29

Benefits after adoption Companies’ responses 30

Benefits after adoption Taiwan’s capital markets have changed 31

Benefits after adoption Operating RevenueProfit Before Tax % % Listed Companies billion billion 1.83% billion billion 46.93% 32

Future 33

Future Keep Enhancing the transparency of financial reports Keep amending relevant laws and regulations in response to revisions of the IFRSs 34

Thank you for your attention IFRSs Adoption in Taiwan ブリーフィング完成 ありがとう 35