| 23. | EQUITY |
| a. | Share capital |
Ordinary shares
|
December 31,
2016
|
December 31,
2017
|
|||||||
| Numbers of shares authorized (in thousands) | 10,000,000 | 10,000,000 | ||||||
| Numbers of shares reserved (in thousands) | ||||||||
| Employee share options | 800,000 | 800,000 | ||||||
| Number of shares issued and fully paid (in thousands) | 7,946,184 | 8,738,079 | ||||||
|
December 31,
2016
|
December 31,
2017
|
|||||||||||
| NT$ | NT$ | US$ (Note 4) | ||||||||||
| Share capital authorized | $ | 100,000,000 | $ | 100,000,000 | $ | 3,373,819 | ||||||
| Share capital reserved | ||||||||||||
| Employee share options | $ | 8,000,000 | $ | 8,000,000 | $ | 269,906 | ||||||
| Share capital issued | $ | 79,568,040 | $ | 87,380,787 | $ | 2,948,070 | ||||||
The holders of issued ordinary shares with a par value at $10 per share are entitled the right to vote and receive dividends, except the shares held by the Group’s subsidiaries which are not entitled the right to vote. As of December 31, 2016 and 2017, there were both 500,000 thousand ordinary shares included in the authorized shares that were not yet required to complete the share registration process.
In December 2016, the board of directors approved the issuance of 300,000 thousand ordinary shares for cash capital increase at NT$34.3 per share. The aforementioned cash capital increase has been completed and the Company has completed the registration formalities in March 2017.
As disclosed in Note 20, there were 424,258 thousand ordinary shares were issued under the conversion of Bonds in 2017. The record dates of 101,164 thousand and 323,094 thousand ordinary shares were July 13, 2017 and October 13, 2017, respectively. The Company has completed the registration formalities.
American Depositary Receipts
The Company issued ADSs and each ADS represents five ordinary shares. As of December 31, 2016 and 2017, 125,518 thousand and 115,261 thousand ADSs were outstanding and represented approximately 627,590 thousand and 576,305 thousand ordinary shares of the Company, respectively.
| b. | Capital surplus |
| December 31 | ||||||||||||
| 2016 | 2017 | |||||||||||
| NT$ | NT$ | US$ (Note 4) | ||||||||||
|
May be used to offset a deficit,
distributed as cash dividends,
or transferred to share capital (1)
|
||||||||||||
| Arising from issuance of ordinary shares | $ | 5,844,397 | $ | 21,553,853 | $ | 727,188 | ||||||
| Arising from conversion of bond payable | - | 1,930,066 | 65,117 | |||||||||
| Arising from the difference between consideration received and the carrying amount of the subsidiaries’ net assets during actual disposal or acquisition | 7,176,958 | 7,176,958 | 242,137 | |||||||||
| May be used to offset a deficit only | ||||||||||||
| Arising from changes in percentage of ownership interest in subsidiaries (2) | 6,134,228 | 6,084,895 | 205,293 | |||||||||
| Arising from treasury share transactions | 950,368 | 1,151,345 | 38,844 | |||||||||
| Arising from exercised employee share options | 630,411 | 1,089,178 | 36,747 | |||||||||
| Arising from expired employee share options (Note 27) | 3,626 | 223,454 | 7,539 | |||||||||
| Arising from share of changes in capital surplus of associates | 82,243 | 83,733 | 2,825 | |||||||||
| May not be used for any purpose | ||||||||||||
| Arising from employee share options | 1,230,247 | 960,888 | 32,419 | |||||||||
| Arising from equity component of convertible bonds | 214,022 | 214,022 | 7,221 | |||||||||
| Others (3) | - | 155,936 | 5,261 | |||||||||
| $ | 22,266,500 | $ | 40,624,328 | $ | 1,370,591 | |||||||
| 1) | Such capital surplus may be used to offset a deficit; in addition, when the Company has no deficit, such capital surplus may be distributed as cash dividends or transferred to share capital (limited to a certain percentage of the Company’s capital surplus and once a year). |
| 2) | Such capital surplus arises from the effect of changes in ownership interest in a subsidiary resulted from equity transactions other than actual disposal or acquisition, or from changes in capital surplus of subsidiaries accounted for using the equity method. |
| 3) | Such capital surplus arises from the excess of related carrying amount of related accounts over the par value and the Company has not completed registration formalities when the convertible bonds were converted into ordinary shares and employee share options were exercised. |
| c. | Retained earnings and dividend policy |
In accordance with the amendments to the Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The consequential amendments to the Company’s Articles of Incorporation was resolved at the Company’s annual shareholders’ meeting. For information about the accrual basis of the employees’ compensation and remuneration to directors and the actual appropriations, please refer to employee benefits expense under profit before income tax in Note 24(g).
The amended Articles of Incorporation of ASE Inc. (the “Articles”) in June 2016 provides that annual net income shall be distributed in the following order:
| 1) | Replenishment of deficits; |
| 2) | 10.0% as legal reserve; |
| 3) | Special reserve appropriated or reversed in accordance with laws or regulations set forth by the authorities concerned; |
| 4) | Addition or deduction of realized gains or losses on equity instruments at fair value through other comprehensive income; |
The Company is currently in the mature growth stage. To meet the capital needs for business development now and in the future and satisfy the shareholders’ demand for cash inflows, the Company shall use residual dividend policy to distribute dividends, of which the cash dividend is not lower than 30% of the total dividend distribution, with the remainder to be distributed in stock. A distribution plan is also to be made by the board of directors and passed for resolution in the shareholders’ meeting.
Appropriation of earnings to legal reserve shall be made until the legal reserve equals the Company’s share capital. Legal reserve may be used to offset deficits. If the Company has no deficit and the legal reserve has exceeded 25% of the Company’s share capital, the excess may be transferred to capital or distributed in cash.
Under Rule No. 1010012865 and Rule No. 1010047490 issued by the FSC and the directive titled “Questions and Answers for Special Reserves Appropriated Following Adoption of IFRSs”, the Company should appropriate to or reverse a special reserve.
Expect 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 Company.
The appropriations of earnings for 2015 and 2016 resolved at the Company’s annual shareholders’ meetings in June 2016 and June 2017, respectively, were as follows:
| Appropriation of Earnings | Dividends Per Share | |||||||||||||||
| For Year 2015 | For Year 2016 | For Year 2015 | For Year 2016 | |||||||||||||
| NT$ | NT$ | NT$ | NT$ | |||||||||||||
| (in dollars) | (in dollars) | |||||||||||||||
| Legal reserve | $ | 1,947,887 | $ | 2,168,034 | ||||||||||||
| Cash dividends | 12,476,779 | 11,415,198 | $ | 1.60 | $ | 1.40 | ||||||||||
| $ | 14,424,666 | $ | 13,583,232 | |||||||||||||
| d. | Other equity |
| 1) | Exchange differences on translating foreign operations |
| For the Year Ended December 31 | ||||||||||||||||
| 2015 | 2016 | 2017 | ||||||||||||||
| NT$ | NT$ | NT$ | US$ (Note 4) | |||||||||||||
| Balance at January 1 | $ | 4,540,862 | $ | 4,492,671 | $ | (1,643,623 | ) | $ | (55,453 | ) | ||||||
| Exchange differences arising on translating foreign operations | 11,459 | (5,843,856 | ) | (4,952,815 | ) | (167,099 | ) | |||||||||
| Share of exchange difference of associates and joint venture accounted for using the equity method | (59,650 | ) | (292,438 | ) | (137,221 | ) | (4,630 | ) | ||||||||
| Balance at December 31 | $ | 4,492,671 | $ | (1,643,623 | ) | $ | (6,733,659 | ) | $ | (227,182 | ) | |||||
| 2) | Unrealized gain (loss) on available-for-sale financial assets |
| For the Year Ended December 31 | ||||||||||||||||
| 2015 | 2016 | 2017 | ||||||||||||||
| NT$ | NT$ | NT$ | US$ (Note 4) | |||||||||||||
| Balance at January 1 | $ | 526,778 | $ | 588,119 | $ | (197,314 | ) | $ | (6,657 | ) | ||||||
| Unrealized gain (loss) arising on revaluation of available-for-sale financial assets | (4,304 | ) | (257,240 | ) | 169,585 | 5,721 | ||||||||||
| Cumulative loss reclassified to profit or loss on impairment of available-for-sale financial assets | - | - | 50,206 | 1,694 | ||||||||||||
| Cumulative loss (gain) reclassified to profit or loss on disposal of available-for-sale financial assets | 10,827 | 7,512 | (1,517 | ) | (51 | ) | ||||||||||
| Share of unrealized gain (loss) on available-for-sale financial assets of associates and joint venture accounted for using the equity method | 54,818 | (535,705 | ) | 401,610 | 13,550 | |||||||||||
| Balance at December 31 | $ | 588,119 | $ | (197,314 | ) | $ | 422,570 | $ | 14,257 | |||||||
| e. | Treasury shares (in thousand shares) |
| Balance at | Balance at | |||||||||||||||
| January 1 | Addition | Decrease | December 31 | |||||||||||||
| 2015 | ||||||||||||||||
| Shares held by subsidiaries | 145,883 | - | - | 145,883 | ||||||||||||
| Shares reserved for bonds conversion | - | 120,000 | - | 120,000 | ||||||||||||
| 145,883 | 120,000 | - | 265,883 | |||||||||||||
| Balance at | Balance at | |||||||||||||||
| January 1 | Addition | Decrease | December 31 | |||||||||||||
| 2016 | ||||||||||||||||
| Shares held by subsidiaries | 145,883 | - | - | 145,883 | ||||||||||||
| Shares reserved for bonds conversion | 120,000 | - | - | 120,000 | ||||||||||||
| 265,883 | - | - | 265,883 | |||||||||||||
| 2017 | ||||||||||||||||
| Shares held by subsidiaries | 145,883 | - | - | 145,883 | ||||||||||||
| Shares reserved for bonds conversion | 120,000 | - | - | 120,000 | ||||||||||||
| 265,883 | - | - | 265,883 | |||||||||||||
In February 2015, the board of directors approved to repurchase up to 120,000 thousand of the Company’s ordinary shares which were reserved for equity conversion of convertible overseas bonds. The Company has completed the repurchase during March 2015 and the shares repurchased accounted for 1.53% of the Company’s total issued shares. The average repurchase price was NT$44.45 per share.
The Company’s shares held by its subsidiaries at each balance sheet date were as follows:
|
Shares
Held By Subsidiaries
|
Carrying amount | Carrying amount | Fair Value | Fair Value | ||||||||||||||||
| (in thousand shares) | NT$ |
US$
(Note 4)
|
NT$ |
US$
(Note 4)
|
||||||||||||||||
| December 31, 2016 | ||||||||||||||||||||
| ASE Test | 88,200 | $ | 1,380,721 | $ | 2,915,026 | |||||||||||||||
| J&R Holding | 46,704 | 381,709 | 1,543,559 | |||||||||||||||||
| ASE Test, Inc. | 10,979 | 196,677 | 362,849 | |||||||||||||||||
| 145,883 | $ | 1,959,107 | $ | 4,821,434 | ||||||||||||||||
| December 31, 2017 | ||||||||||||||||||||
| ASE Test | 88,200 | $ | 1,380,721 | $ | 46,583 | $ | 3,364,848 | $ | 113,524 | |||||||||||
| J&R Holding | 46,704 | 381,709 | 12,878 | 1,781,749 | 60,113 | |||||||||||||||
| ASE Test, Inc. | 10,979 | 196,677 | 6,636 | 418,840 | 14,131 | |||||||||||||||
| 145,883 | $ | 1,959,107 | $ | 66,097 | $ | 5,565,437 | $ | 187,768 | ||||||||||||
Fair values of the Company’s shares held by subsidiaries are based on the closing price from an available published price quotation, which is a Level 1 input in terms of IFRS 13, at the balance sheet dates.
The Company issued ordinary shares in connection with its merger with its subsidiaries. The shares held by its subsidiaries were reclassified from investments accounted for using the equity method to treasury shares on the proportion owned by the Company.
Under the Securities and Exchange Act of the ROC, the Company shall neither pledge treasury shares nor exercise shareholders’ rights on these shares, such as rights to dividends and voting. The subsidiaries holding treasury shares, however, retain shareholders’ rights except the rights to participate in any share issuance for cash and voting.
| f. | Non-controlling interests |
| For the Year Ended December 31 | ||||||||||||||||
| 2015 |
2016
(Retrospectively Adjusted)
|
2017 | ||||||||||||||
| NT$ | NT$ | NT$ | US$ (Note 4) | |||||||||||||
| Balance at January 1 | $ | 8,209,860 | $ | 11,492,545 | $ | 12,000,551 | $ | 404,877 | ||||||||
| Attributable to Non-controlling interests: | ||||||||||||||||
| Share of profit for the year (Note 28) | 968,567 | 1,253,438 | 1,677,941 | 56,611 | ||||||||||||
| Exchange difference on translating foreign operations | (74,968 | ) | (601,787 | ) | (334,920 | ) | (11,300 | ) | ||||||||
| Unrealized gain on available-for-sale financial assets | 3,928 | 1,129 | 5,763 | 194 | ||||||||||||
(Continued)
| For the Year Ended December 31 | ||||||||||||||||
| 2015 |
2016
(Retrospectively Adjusted)
|
2017 | ||||||||||||||
| NT$ | NT$ | NT$ | US$ (Note 4) | |||||||||||||
| Defined benefit plan actuarial gains (losses) | $ | (3,440 | ) | $ | 8,846 | $ | (13,724 | ) | $ | (463 | ) | |||||
| Non-controlling interests arising from acquisition of subsidiaries (Note 28) | - | 42,857 | - | - | ||||||||||||
| Partial disposal of subsidiaries (Note 30) | 1,712,836 | 26,436 | (3,055 | ) | (103 | ) | ||||||||||
| Repurchase of outstanding ordinary shares of subsidiaries (Note 30) | - | (912,886 | ) | - | - | |||||||||||
| Spin-off of subsidiaries | 3,006 | - | - | - | ||||||||||||
| Non-controlling interest relating to outstanding vested employee share options held by the employees of subsidiaries | 904,904 | 927,823 | 263,213 | 8,880 | ||||||||||||
| Non-controlling interest relating to outstanding expired employee share options | - | - | (159,200 | ) | (5,371 | ) | ||||||||||
| Cash dividends to non-controlling interests | (232,148 | ) | (237,850 | ) | (246,440 | ) | (8,314 | ) | ||||||||
| Balance at December 31 | $ | 11,492,545 | $ | 12,000,551 | $ | 13,190,129 | $ | 445,011 | ||||||||