Page 289 - 2017 TSMC Annual Report

Some of guarantee deposits were refunded to customers by offsetting related accounts receivable.
21. EQUITY
a. Capital stock
Authorized shares (in thousands) Authorized capital
Issued and paid shares (in thousands) Issued capital
December 31, 2017
28,050,000 $ 280,500,000 25,930,380 $ 259,303,805
December 31, 2016
28,050,000 $ 280,500,000 25,930,380 $ 259,303,805
A holder of issued common shares with par value of NT$10 per share is entitled to vote and to receive dividends.
The authorized shares include 500,000 thousand shares allocated for the exercise of employee stock options.
As of December 31, 2017, 1,068,165 thousand ADSs of the Company were traded on the NYSE. The number of common shares represented by the ADSs was 5,340,823 thousand shares (one ADS represents five common shares).
b. Capital surplus
Additional paid-in capital
From merger
From convertible bonds
From share of changes in equities of subsidiaries
From share of changes in equities of associates
Donations 19,208
$ 56,309,536
December 31, 2017
December 31, 2016
$ 24,184,939 22,804,510 8,892,847 107,798 282,155 55
$ 56,272,304
$
24,184,939 22,804,510 8,892,847 118,792 289,240
Under the relevant laws, the capital surplus generated from donations and the excess of the issuance price over the par value of capital stock (including the stock issued for new capital, mergers and 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 the Company’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 the Company’s Articles of Incorporation on earnings distribution policy had been approved by the Company’s shareholders in its meeting held on June 7, 2016. For policy about the profit sharing bonus to employees, please refer to Note 29.
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