Crucial 2012 Annual Report Download - page 271

26
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
On May 16, 2006 and August 4, 2009, the Company issued 40 million and 64 million GDSs, respectively,
representing 1,040 million common shares of the Company and these GDSs were offered for trading in the
MTF market of the LSE. Each GDS offers the holder the right to receive 10 shares of the Company.
(b) Capital surplus
As of December 31, 2010 and 2011, the capital surplus consisted of the following:
December 31,
2010 2011
Paid-in capital in excess of par value $ 41,017,382 41,017,382
Premium from exercise of employee stock options 224,963 236,870
Employee stock option plans 160,987 294,667
Expired employee share purchase option 212,571 212,571
Total $ 41,615,903 41,761,490
According to the ROC Company Law, realized capital surplus can be transferred to common stock or distributed
the cash dividends after deducting the accumulated deficit, if any. Realized capital surplus includes the
additional paid-in capital from issuance of common stock in excess of the common stock's par value, and
donation from others. The Company's paid-in capital in excess of par value is transferrable to common stock
annually but shall not exceed 10% of total issued and outstanding common stock according to Regulations
Governing the Offering and Issuance of Securities by Securities Issuers.
(c) Legal reserve
According to the ROC Company Law, the Company's annual net profit, after providing for income tax is
appropriated for legal reserve at the rate of 10% thereof until the accumulated balance of legal reserve equals
the total issued capital. If the shareholders resolved during their meeting to distribute dividend in the form of
new shares of stock or cash, legal reserve may be transferred to capital or distributed in cash if the Company
incurs no accumulated deficit, but the amount should not exceed 25% of total issued capital.
(d) Earnings appropriation and distribution
The Company's annual net profit, after providing for income tax and covering the losses of previous years, is
first set aside for legal reserve at the rate of 10% thereof until the accumulated balance of legal reserve equals
the total issued capital. Thereafter, 1% to 15% of the remaining profit, if any, after providing for any special
reserves pursuant to relevant laws and regulations, if necessary, is appropriated as bonus to employees, and
such bonus to employees is recognized as the Company's expenses in the current year commencing from the
year 2008. The remainder plus the undistributed earnings of the previous years are distributed or left
undistributed for business purposes according to the resolution of the stockholders' dividend distribution plan,
which are initially proposed by the Board of Directors and adopted by the shareholders in the Annual
Stockholders' Meeting.