Page 199 - 2017 TSMC Annual Report

b. Capital surplus
December 31, 2017
$ 24,184,939 22,804,510 8,892,847 118,792 289,240 19,208
$ 56,309,536
Under the relevant laws,
price over the par value
convertible bonds) 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 stock dividends up to a certain percentage of TSMC’s paid-in capital. The capital surplus from share of changes in equities of subsidiaries and associates and dividend of a claim extinguished by a prescription may be used to offset a deficit; however, when generated from issuance of restricted shares for employees, such capital surplus may not be used for any purpose.
c. Retained earnings and dividend policy
In accordance with the amendments to the R.O.C. Company Act in May 2015, the recipients of dividends and bonuses are limited to shareholders and do not include employees. The amendments to TSMC’s Articles of Incorporation on earnings distribution policy had been approved by TSMC’s shareholders in its meeting held on June 7, 2016. For policy about the profit sharing bonus to employees, please refer to Note 31.
TSMC’s amended Articles of Incorporation provide that, when allocating the net profits for each fiscal year, TSMC shall first offset its losses in previous years and then set aside the following items accordingly:
1) Legal capital reserve at 10% of the profits left over, until the accumulated legal capital reserve equals TSMC’s paid-in capital;
2) Special capital reserve in accordance with relevant laws or regulations or as requested by the authorities in charge;
3) Any balance left over shall be allocated according to the resolution of the shareholders’ meeting.
TSMC’s Articles of Incorporation also provide that profits of TSMC may be distributed by way of cash dividend and/or stock dividend. However, distribution of earnings shall be made preferably by way of cash dividend. Distribution of earnings may also be made by way of stock dividend; provided that the ratio for stock dividend shall not exceed 50% of the total distribution.
Additional paid-in capital From merger
From convertible bonds From share of changes in From share of changes in Donations
equities of subsidiaries equities of associates
December 31, 2016
$ 24,184,939 22,804,510 8,892,847 107,798 282,155 55
$ 56,272,304
the capital surplus generated from donations and the excess of the issuance of capital stock (including the stock issued for new capital, mergers and
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