Asus 2009 Annual Report Download - page 118

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ASUSTEK COMPUTER INC.
Notes to Financial Statements
Pursuant to the Securities and Exchange Act, the total shares of treasury stock shall not
exceed 10% of the number of shares issued, and the total purchase cost shall not exceed the
sum of the retained earnings, additional paid-in capital-premiums, and realized additional paid-
in capital. For shares bought back with the intent of maintaining the Company’ s credibility
and stockholders’ rights, the registration procedure must be completed within six months from
the date of buyback. Treasury stock held by the Company cannot be pledged and does not
have the right to receive dividends or vote until it is disposed of.
C. Additional paid-in capital
Pursuant to the Company Act, additional paid-in capital can only be used to offset a deficit or to
increase common stock. Cash dividends cannot be declared out of additional paid-in capital.
According to the Regulations Governing the Offering and Issuance of Securities by Securities
Issuers, capital increases through the capitalization of paid-in capital in excess of par value
should not exceed 10% of total common stock outstanding. In addition, capital increases
through the capitalization of paid-in capital in excess of par value can only commence in the
year following the initial year.
As of December 31, 2009 and 2008, due to the non-proportional investment in investee’ s
increase in capital, additional paid-in capital amounting to $1,963,105 and $1,835,145,
respectively, was recognized, in accordance with SFAS. As this additional paid-in capital is
not regulated by the R.O.C. Company Act, Article 241, the transfer thereof to retained earnings
is prohibited.
D. Limitation on distribution of retained earnings
According to the Company’ s articles of incorporation, annual net income after making up prior
years' losses, if any, should be distributed as follows: 10% as legal reserve, an appropriate
amount as special reserve according to relevant regulation or as required by the government,
10% of capital stock as capital interest, no less than 1% as employees’ bonuses, and no more
than 1% as directors’ and supervisors’ bonuses. When the employees’ bonuses are distributed
in stock, the recipients must include the employees of subsidiaries. After the distribution of
earnings, the remained earnings, if any, may be appropriated according to a resolution adopted
in a stockholders’ meeting.
The Company is facing a rapidly changing industrial environment, with the life cycle of the
industry in the growth phase. In light of the long-term financial plan of the Company and the
demand for cash by the stockholders, the Company should distribute cash dividends of no less
than 10% of the aggregate of all dividends.
E. Based on the resolutions approved by the stockholders during their annual stockholders’
meetings on June 16, 2009, and June 11, 2008, the employees’ bonuses and directors’ and
supervisors’ remuneration were appropriated from the distributable retained earnings of 2008
and 2007 as follows: