Article 228-1 of the Company Law The company's articles of association may stipulate that profit distribution or loss allocation shall be made after the end of each quarter or half of the fiscal year.
Proposals on the company's profit distribution or loss compensation for the first three quarters or the first half of the fiscal year shall be submitted to the supervisor for review together with the business report and financial statements, and then submitted to the board of directors for resolution.
When distributing surplus in accordance with the provisions of the preceding paragraph, the company shall first estimate and retain the tax payable, make up losses according to law, and set aside the statutory surplus reserve. However, this restriction does not apply when the statutory surplus reserve has reached the paid-in capital.
When the company distributes its earnings in accordance with the provisions of Paragraph 2 by issuing new shares, it shall comply with the provisions of Article 240; the distribution of cash shall be subject to a resolution of the board of directors.
A company that issues shares to the public shall, when distributing profits or making up losses in accordance with the preceding four paragraphs, do so in accordance with the financial statements audited or reviewed by an accountant.
It can be seen from this that if the company wants to pay dividends multiple times a year, it is feasible according to the company law. Taking the process of paying dividends every half year as an example, a proposal for profit distribution or loss compensation should be drawn up at the end of the first half of the fiscal year, together with the business report After the documents and financial statements are submitted to the supervisor for review, they will be submitted to the board of directors for resolution. Based on this, if the fiscal year adopts the calendar year, and the first half of the fiscal year ends on June 30, the board of directors will prepare a profit distribution or loss compensation proposal, business report and financial statements from July 1 and submit them to the supervisor for review , The board of directors shall make a resolution on the distribution of surplus or compensation of losses before December 31. In addition, within 5 days before the base date of profit distribution, the stock transfer date shall be terminated (refer to item 2 of Article 165 of the same law).
[Example of charter records for distributing surplus in the middle of the year provided by the Ministry of Economic Affairs]
Paragraph 1 of Article 228-1 of the Company Law stipulates that the company's articles of association are required. If a company intends to amend its articles of association so that profits can be distributed semi-annually or quarterly, it can refer to the following examples proposed by the Ministry of Economic Affairs for amendments:
Article 00: At the end of each fiscal year of the company, the board of directors shall prepare business reports, financial statements, and proposals for profit distribution or loss compensation, and submit them to the regular shareholders' meeting for approval. (The company's profit distribution or loss allocation can be done after the end of each quarter)
(The company's profit distribution or loss compensation can be done after the end of each half of the fiscal year)
Article 00: The company's dividends are fixed as annual dividends, but when the company has no surplus, it is not allowed to use the capital as interest.
| question | answer |
| Can the company's articles of association explicitly adopt both "quarterly" and "half-fiscal year" for profit distribution or loss recovery? | You can only "choose one" to use "quarterly" or "every half fiscal year" for profit distribution or loss compensation. |
| What is the undistributed surplus at the beginning of the period in the quarterly earnings distribution statement when preparing the interim surplus distribution statement? | The undistributed surplus at the beginning of the period refers to the undistributed balance at the end of the period after the last distribution. |
| How should the statutory surplus reserve be listed if the surplus is distributed multiple times a year? | The provision shall be based on the company's after-tax net profit of the current period or the actual distribution amount. |
| If the company distributes earnings every quarter (or every half of the fiscal year), should employee remuneration be pre-estimated and retained? | Employee remuneration should be estimated and retained, and the company can specify in the articles of association that the estimated employee remuneration should be retained and paid at the end of each fiscal year, but not quarterly (or semi-fiscal year). |
| What is the time limit for the company to make multiple profit distributions? | 1. The distribution of earnings for each quarter shall be made after the end of the quarter, and the board of directors shall decide on the distribution before the end of the next quarter. 2. If the articles of association provide for distributions every half of the fiscal year, the board of directors shall make a resolution on distributions before the end of the second half of the year. |
| How do supervisors issue audit opinions? | The Company Law does not restrict the form in which audit opinions can be issued. |
| When a non-public offering company distributes earnings every quarter (or every half of the fiscal year) according to the articles of association, are its financial statements checked or reviewed by accountants? | It is not mandatory to be audited or audited by an accountant, and the company can decide on its own. |
| Can the profit be distributed if the qualified opinion of the report reviewed by the accountant? | There is no provision in this Act, and the decision of the board of directors is still to be made on whether distribution should be made. |
| If the articles of association stipulate multiple profit distributions, is the distribution in the fourth quarter or the second half of the fiscal year in accordance with Article 228-1? | Article 228 shall be followed at the end of the fiscal year, and Article 228-1 shall not apply. |
| How should the surplus allocation statement or loss allowance statement present the situation of multiple distribution of surplus or loss allowance? | The preparation of the annual surplus distribution statement shall specify the distribution of surplus in each interim period of the current year. |
| Should the profit distribution statement or loss compensation statement for each quarter or the first half of the fiscal year be submitted to the general meeting of shareholders for approval in accordance with Article 230? | Article 228-1 does not stipulate that the financial statements of the previous three quarters or the first half of the fiscal year shall be submitted to the general meeting of shareholders for approval. |
| If the articles of association of the company provide for quarterly (or semi-fiscal year) profit distribution or loss compensation, if distribution is not planned, whether the proposal for profit distribution or loss compensation should be fabricated, business reports and financial statements should be submitted to the supervisor for review After the board of directors resolution procedures? | If the company decides not to distribute profits or make up losses, it does not need to go through the procedure of preparing reports and submitting them to supervisors for review, but it still needs to be resolved by the board of directors not to distribute or make up losses. |
| Can the earnings of the previous quarter or the first half of the fiscal year be distributed after the amendment to the Articles of Association amended in accordance with the provisions of this Article? | After the Articles of Association is amended, the distribution of the surplus of the previous quarter or the first half of the fiscal year does not need to wait until the next fiscal year to apply. |
| Can the financial statements stipulated in this article be presented in the form of consolidated financial statements? | The company's individual financial statements should be the main body. Expressed in the form of consolidated financial statements, if it can distinguish the company's individual profit and loss for the current period and the amount of cumulative profit and loss, it is also acceptable. |
△Schedule for profit distribution or loss compensation at the end of each half of the fiscal year Regarding the company’s Article 228-1 of the Company Law, if the company’s articles of association stipulates that the profit distribution or loss compensation at the end of each half of the fiscal year should be made in the first half of the fiscal year. Finally, a proposal on profit distribution or loss compensation shall be drawn up, and the business report and financial statements shall be submitted to the supervisor for review and then submitted to the board of directors for resolution. Based on this, if the fiscal year adopts the calendar year, and the first half of the fiscal year ends on June 30, the board of directors will prepare a profit distribution or loss compensation proposal, business report and financial statements from July 1 and submit them to the supervisor for review , The board of directors shall make a resolution on the distribution of surplus or compensation of losses before December 31. In addition, within 5 days before the base date of profit distribution, the stock transfer date shall be terminated (refer to item 2 of Article 165 of the same law).
(Ministry of Economic Affairs No. 10702062900, November 26, 2017)
△ "Quarterly" or "half fiscal year" profit distribution or loss compensation matters
1. Regarding the annual interim profit distribution or loss compensation stipulated in Article 228-1 of the Company Law, it refers to the profit distribution or loss compensation for the first three quarters or the first half of the fiscal year. After the end of the fourth quarter or the second half of the fiscal year, the fiscal year has ended The termination shall be handled in accordance with the provisions of Article 228, and since this Article does not apply, it shall be explained first.
2. The company shall, in accordance with Article 228-1, Item 1, stipulate in the Articles of Association that "choose one" to adopt "quarterly" or "every half fiscal year" for profit distribution or loss compensation, and after the Articles of Association is amended, that is The surplus of the previous quarter or the first half of the fiscal year can be distributed without waiting for the next fiscal year to apply.
3. In actual implementation, if the profit distribution or loss compensation is not made after the end of each quarter or half of the fiscal year, there is no need to practice fabricating profit distribution or loss compensation proposals, business reports and financial statements, and submitting The procedure for submitting the resolution of the board of directors after the review by the supervisor. However, if the company decides not to distribute the surplus or not to make up the loss, it still needs to be resolved by the board of directors not to distribute or make up the loss.
4. In addition, Article 235-1 of this Law stipulates that employee remuneration shall be calculated based on the current year's profit status in accordance with the fixed amount or proportion stipulated in the articles of association, and shall be paid at the end of each fiscal year, and shall not be paid quarterly (or every half of the fiscal year). . However, employee remuneration is a matter that should be paid by law. When the company distributes earnings every quarter (or every half of the fiscal year), in addition to estimating and retaining tax payables, making up losses according to law, and setting aside statutory surplus reserves, it should also Estimated retained employee compensation.
(Jingshangzi No. 10802400630 of the Ministry of Economic Affairs on January 22, 2018)
△Distribute within the amount of distributable surplus that is a positive number on a quarterly or semi-fiscal year basis
1. According to Article 228-1, Paragraph 5 of the Company Act, a company that only provides for public offering of shares shall, when distributing profits or making up losses in accordance with the preceding 4 Paragraphs, do so in accordance with the financial statements audited or reviewed by accountants. However, there is no restriction under the Company Law on whether the quarterly or semi-annual financial statements of a company with non-public offering of shares are audited or audited by accountants, and the company can decide on its own.
2. The company's quarterly or semi-fiscal year profit distribution is based on the undistributed balance at the end of the period after the previous distribution, plus the net profit of the current quarter or the first half of the fiscal year, and estimates and retains tax payables to make up for losses and withdraw statutory surplus according to law After reserve, it will be distributed within the amount of distributable surplus. As for the distribution of surplus at the end of the year, the undistributed balance at the end of the period after the last distribution is also added to the net profit or loss of the fourth quarter or the second half of the fiscal year to form the distributable surplus amount. If the accumulated amount is negative, there will be no distribution due to no surplus (Article Article 232, Item 2), shall be accumulated as the opening amount of the next year. Therefore, the company distributes within the amount of positive distributable earnings every quarter or half of the fiscal year. Even if the amount of distributable earnings at the end of the year is negative, there is no such thing as over-distribution or overdraft of earnings.
(Jingshangzi No. 10800006700 Letter of the Ministry of Economic Affairs dated January 25, 2018)
△ Explanation of the resolution of the board of directors under Article 228-1 of the Company Law
1. In accordance with Article 228-1, Item 2 of the Company Act, the proposal on profit distribution or loss compensation of the company for the first three quarters or the first half of the fiscal year shall be submitted to the supervisor for review together with the business report and financial statements, and then submitted to the board of directors for resolution. Paragraph 4 of the same article stipulates that when the company distributes earnings in accordance with Paragraph 2 by issuing new shares, it shall be handled in accordance with Article 240; the distribution of cash shall be subject to a resolution of the board of directors.
2. With regard to the part of the stock distribution in the first three quarters or the first half of the year, in accordance with the above-mentioned regulations, the board of directors fabricates a proposal for profit distribution or loss compensation, which should be submitted to the supervisor for review together with the business report and financial statements. If there is no amendment opinion, no need Once the board of directors makes a resolution again, it can be submitted to the shareholders' meeting for a resolution to distribute shares in accordance with Article 240 of the Company Law.
(Jingshangzi No. 10802407620 letter of the Ministry of Economic Affairs on April 9, 2018)
1. In order to enhance the investment efficiency of shareholders, the company may distribute surplus or make up for losses after the end of each quarter or half of the fiscal year. However, it should be stipulated in the articles of association, please add the first item.
2. If the company distributes profits or makes up losses in the first three quarters or the first half of the fiscal year, the proposal must be submitted to the supervisor for review together with the business report and financial statements, and then submitted to the board of directors for resolution. Paragraph 2 is added. Since this item has been clearly mentioned in the resolution of the board of directors, the relevant provisions of the shareholders' meeting, such as Article 184, Article 230, Article 240, etc., shall not apply and shall be explained.
3. When distributing earnings for the first three quarters or the first half of the fiscal year, the company should first estimate and retain the tax payable, make up for losses according to law, and set aside the statutory surplus reserve. However, when the statutory surplus reserve has reached the amount of paid-in capital, this limitation shall not apply, and the third item shall be added.
4. If the company distributes earnings in the first three quarters or the first half of the fiscal year, if the method is to issue new shares, it will have a greater impact on shareholders’ equity due to equity changes. According to Article 240, a special resolution of the shareholders' meeting is required; as for the distribution of cash, there is no need for a resolution of the shareholders' meeting, but only a resolution of the board of directors. The fourth item is added.
5. The interim profit distribution or loss compensation of a company that issues shares to the public shall be made in accordance with the financial statements audited or reviewed by an accountant. Paragraph 5 is added.
Article 228-1, Item 4 of the new law stipulates that when a company distributes earnings in accordance with Item 2 by issuing new shares, it shall follow the provisions of Article 240; the distribution of cash shall be subject to a resolution of the board of directors. Therefore, the distribution of stock dividends , still subject to a special resolution of the shareholders' meeting. Allowing the company to distribute dividends in the interim, it is more flexible in the use of funds for high dividend companies and investors, but it may be more difficult for companies with a low allotment rate to raise funds, which will inevitably generate a cluster of funds moving to high dividend companies in the domestic market effect. In addition, the new law does not stipulate that companies with non-public offerings should distribute profits or make up losses in accordance with the financial statements audited or reviewed by accountants (refer to item 5 of Article 228-1 of the company). Estimating the profit and loss in the first half of the year may use cash dividend distribution to attract uninformed investors to buy old stocks or participate in cash capital increase; or the board of directors deliberately sells the retained earnings at once by overestimating assets and underestimating liabilities, leaving only shell companies. Creditors such as banks and manufacturers have no way to claim compensation; even if the tax is not listed, the Federal Taxation Bureau has also become a victim; or unintentionally, some small and medium-sized enterprises with poor accounting quality have not correctly calculated financial statements, resulting in false profits for the company There are all kinds of possibilities such as actual losses. In order to eliminate the disadvantages, there should be relevant supporting measures, or if the shareholder proposes to specify in the articles of association the interim distribution of surplus, an accountant must be appointed to check or review the financial statements.
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