As Article 64 of the Business Accounting Act was amended on May 24, 2006, the employees’ bonus shall be regarded as expenses in accounting since Jan 1, 2008.
However, the Company Act (“the Act”), which decides the order and the items of the surplus earning distribution of a company, is not amended harmonically to regard the employees’ bonus as expenses. Though the employees’ bonus shall be regarded as expenses in accounting, a company should comply with item 1 of Article 232 of the Act when paying bonus to employees and remuneration to directors and supervisors. The above-mentioned condition doesn’t fit the nature of expenses in accounting-it needs to pay whatever gain or loss.
Furthermore, according to item 2 of Article 235 of the Act, the percentage of surplus profit distributable as employees' bonus shall be definitely specified in the Articles of Incorporation. Before Jan 1, 2008 the employees’ bonus was not regarded as expenses in accounting, the earnings after tax (before minus bonus to employees and remuneration to directors and supervisors) which has covered the company’s losses and set aside a legal reserve (or/and a special reverse if necessary) in accordance with the provisions of the Act was called “appropriable earnings”, and a company can distribute dividends, employees’ bonus and directors and supervisors’ remuneration from the said appropriable earnings. However, since the employees’ bonus shall be regarded as expenses in accounting, the earnings after tax (minus bonus to employees and remuneration to directors and supervisors already) which has covered the company’s losses and set aside a legal reserve (or/and a special reverse if necessary) in accordance with the provisions of the Act is called “appropriable earnings (minus bonus to employees and remuneration to directors and supervisors already)”. “Appropriable earnings” that derived from the year since 2008 is not appropriated to employees, directors and supervisors but only to shareholders for dividends. There exists a conflict between the Act and the accounting principle in relation to the employees’ bonus.
The main purpose of this investigation focuses on overcoming the said conflict and tries to find a method to calculate the amount of the expenses derived from the employees’ bonus reasonably and lawfully under the Act. However, the method is much different from that regulated by the competent authorities-the Department of Commerce, Ministry of Economic Affairs and the Securities and Futures Bureau of Financial Supervisory Commission, Executive Yuan.
Before the Act is harmonically amended, I expect that the method for calculating the employees’ bonus in this thesis can be understood, accepted and carried out by the competent authorities. Wish companies whose stocks are either listed on a stock exchange or traded on the over-the-counter market can calculate the amount of the expenses derived from the employees’ bonus in an accurate, reasonable and lawful way.
A company shall not pay dividends or bonuses, unless its losses shall have been covered and a legal reserve shall have been set aside in accordance with the provisions of this Act.
