Mega Bank Annual Report 2017

67 Annual Report 2017 -67- the subsequent use, disposal or reclassification for the related assets. Such amounts are reversed upon disposal or reclassified if the assets are investment property of land. If the assets are investment property other than land, the amounts are reversed over the use period and should be reversed by amortized balance upon disposal. As of December 31, 2017 and 2016, the special reserve of the Bank were NT$4,000,055 thousand and NT$3,873,832 thousand, respectively. In accordance with the regulations, the Bank shall set aside an equivalent amount of special reserve from earnings after tax of the current year and the undistributed earnings of the prior period based on the net decreased amount of other stockholders’ equi ty in the current period before distributing earnings. If there is any reversa l of decrease in other stockholders’ equity, the earnings may be distributed based on the reversal proportion. In accordance with Financial-Supervisory-Banks Letter No. 10510001510, as a response to the development of financial technology, and to ensure the rights of bank practitioners, the Bank shall, upon appropriating the earnings of 2016 to 2018, provision 0.5% to 1% of income after taxes as special reserve. Starting from the 2017 accounting year, public banks may reverse an amount of the aforementioned special reserve commensurate to employee termination or arrangement expenditures resulting from the development of financial technology. (23) Retained earnings and dividend policies A. The current year’s earnings, if any, shall first be used to pay all taxes and offset prior year’s operating loss, and the remaining amount should then be set aside as legal reserve and special reserve in accordance with provisions under the applicable laws and regulations. The remaining earnings plus prior year’s accumulated unappropriated earnings are subject to the Board of Directors’ proposal for a distribution plan and approval by the stockholders at the Ordinary Stockholders’ Meeting. B. The legal reserve is to be used exclusively to offset any deficit or to increase capital by issuing new shares or distribute cash dividends according to original shareholders in proportion to the number of shares being held by each of them and is not to be used for any other purposes. For the legal reserve to be used for issuing new shares or distributing cash dividends, only the portion of the legal reserve exceeding 25% of paid-in capital may be capitalized or released. C. Shareholders other than those not living in ROC have imputation tax credit for the distribution of earnings after (in) 1998 based on the creditable tax rate on the dividend declaration day. As of December 31, 2017 and 2016, cumulative unappropriated retained earnings recorded in the books were all earnings generated in and after 1998. D. The appropriations and distributions for 2016 an d 2015 approved by the Bank’s Board of Directors on the stockholders’ behalf on May 5, 2017 and May 13, 2016, respectively, were as follows: For the years ened December 31, 2016 2015 NT$ NT$ Legal reserve $ 5,702,988 $ 7,712,534 Special reserve 126,223 28,478 Cash dividends (NT$1.50 dollar per share) 12,804,350 12,804,350 $ 18,633,561 $ 20,545,362 Information on the appropriation of the Bank’s earnings as approved by the Board of Directors and during the shareholders’ meeting is posted in the “Market Observation Post System” at the website of the Taiwan Stock Exchange. E. The appropriation of 2017 earnings resolved by the Board of Directors on March 16, 2018 is set forth below: For the year ended December 31, 2017 NT$ US$ Legal reserve $ 6,457,023 $ 217,790 Special reserve 535,745 18,070 Cash dividends (NT$1.50 dollar per share) 12,804,350 431,879 $ 19,797,118 $ 667,739 F. For information related to employees’ compensation, please refer to Note 6(32). (24) Other equity Cumulative translation differences of foreign operations Available-for-sale financial assets Total NT$ January 1, 2017 ( $ 926,233 ) ( $ 535,566 ) ( $ 1,461,799 ) Available-for-sale financial assets Evaluation adjustment for the year - 2,093,917 2,093,917 Realized gain and loss for the year - ( 1,294,331 ) ( 1,294,331 ) Cumulative translation differences of foreign operations ( 1,777,256 ) - ( 1,777,256 ) Share of other comprehensive income of associates and joint ventures accounted for under equity method ( 9,881 ) 31,006 21,125 December 31, 2017 ( $ 2,713,370 ) $ 295,026 ( $ 2,418,344 )