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Equity | 12 Months Ended
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Dec. 31, 2019
Disclosure Of Classes Of Share Capital [Abstract] |
Equity |
2 8. | EQUITY
| a. | Share capital
| 1) | Common stocks
|  | December 31 |
|  | 2018 |  |  | 2019 |
|  | NT$ |  |  | NT$ |
|  | (In Millions) |
Number of authorized shares |  |  | 12,000 |  |  |  | 12,000 |
Authorized shares |  | $ | 120,000 |  |  | $ | 120,000 |
Number of issued and paid shares |  |  | 7,757 |  |  |  | 7,757 |
Issued and outstanding shares |  | $ | 77,574 |  |  | $ | 77,574 |
The issued common stocks of a par value at $10 per share entitled the right to vote and receive dividends.
| 2) | Global depositary receipts
The MOTC and some stockholders sold some common stocks of Chunghwa in an international offering of securities in the form of American Depositary Shares (“ADS”) (one ADS represents 10 common stocks) in July 2003, August 2005, and September 2006. The ADSs were traded on the New York Stock Exchange since July 17, 2003. As of December 31, 2019, the outstanding ADSs were 230 million common stocks, which equaled 23 million units and represented 2.96% of Chunghwa’s total outstanding common stocks. The ADS holders generally have the same rights and obligations as other common stockholders, subject to the provision of relevant laws. The exercise of such rights and obligations shall comply with the related regulations and deposit agreement, which stipulate, among other things, that ADS holders are entitled to, through deposit agents:
| a) | Exercise their voting rights,
| b) | Sell their ADSs, and
| c) | Receive dividends declared and subscribe to the issuance of new shares.
| b. | Additional paid-in capital
The adjustments of additional paid-in capital for the years ended December 31, 2017, 2018 and 2019 were as follows:
|  | Share Premium |  |  | Movements of Additional Paid-in Capital for Associates and Joint Ventures Accounted for Using Equity Method |  |  | Movements of Additional Paid-in Capital Arising from Changes in Equities of Subsidiaries |  |  | Difference between Consideration Received and Carrying Amount of the Subsidiaries’ Net Assets upon Disposal |  |  | Donated Capital |  |  | Stockholders’ Contribution Due to Privatization |  |  | Total |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Balance on January 1, 2017 |  | $ | 126,045 |  |  | $ | — |  |  | $ | 389 |  |  | $ | 85 |  |  | $ | 13 |  |  | $ | 20,648 |  |  | $ | 147,180 |
Unclaimed dividend |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | — |  |  |  | 3 |
Change in additional paid-in capital from investments in associates and joint ventures accounted for using equity method |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Partial disposal of interests in subsidiaries |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | 76 |  |  |  | — |  |  |  | — |  |  |  | 77 |
Change in additional paid-in capital for not participating in the capital increase of a subsidiary |  |  | — |  |  |  | — |  |  |  | 802 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 802 |
Other changes in additional paid-in capital in subsidiaries |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Share-based payment transactions of subsidiaries |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |
Treasury stock transfer of subsidiaries |  |  | — |  |  |  | — |  |  |  | 27 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 27 |
Balance on December 31, 2017 |  | $ | 126,045 |  |  | $ | — |  |  | $ | 1,221 |  |  | $ | 161 |  |  | $ | 16 |  |  | $ | 20,648 |  |  | $ | 148,091 |
Balance on January 1, 2018 |  | $ | 126,045 |  |  | $ | — |  |  | $ | 1,221 |  |  | $ | 161 |  |  | $ | 16 |  |  | $ | 20,648 |  |  | $ | 148,091 |
Unclaimed dividend |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2 |  |  |  | — |  |  |  | 2 |
Partial disposal of interests in subsidiaries |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 826 |  |  |  | — |  |  |  | — |  |  |  | 826 |
Change in additional paid-in capital for not proportionately participating in the capital increase of a subsidiary |  |  | — |  |  |  | — |  |  |  | 777 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 777 |
Share-based payment transactions of subsidiaries |  |  | — |  |  |  | — |  |  |  | 11 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 11 |
Treasury stock transfer of subsidiaries |  |  | — |  |  |  | — |  |  |  | 55 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 55 |
Balance on December 31, 2018 |  | $ | 126,045 |  |  | $ | — |  |  | $ | 2,064 |  |  | $ | 987 |  |  | $ | 18 |  |  | $ | 20,648 |  |  | $ | 149,762 |
Balance on January 1, 2019 |  | $ | 126,045 |  |  | $ | — |  |  | $ | 2,064 |  |  | $ | 987 |  |  | $ | 18 |  |  | $ | 20,648 |  |  | $ | 149,762 |
Unclaimed dividend |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1 |  |  |  | — |  |  |  | 1 |
Share-based payment transactions of subsidiaries |  |  | — |  |  |  | — |  |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (1 | )
Balance on December 31, 2019 |  | $ | 126,045 |  |  | $ | — |  |  | $ | 2,063 |  |  | $ | 987 |  |  | $ | 19 |  |  | $ | 20,648 |  |  | $ | 149,762 |
Additional paid-in capital from share premium, donated capital and the difference between consideration received and the carrying amount of the subsidiaries’ net assets upon disposal may be utilized to offset deficits. Furthermore, when Chunghwa has no deficit, it may be distributed in cash or capitalized, which however is limited to a certain percentage of Chunghwa’s paid-in capital except the additional paid-in capital arising from unclaimed dividend can only be utilized to offset deficits. The additional paid-in capital from movements of paid-in capital arising from changes in equities of subsidiaries may only be utilized to offset deficits. Among additional paid-in capital from movements of investments in associates and joint ventures accounted for using equity method, the portion arising from the difference between consideration received and the carrying amount of the subsidiaries’ net assets upon disposal may be utilized to offset deficits; furthermore, when the Company has no deficit, it may be distributed in cash or capitalized. However, other additional paid-in capital recognized in proportion of share ownership may only be utilized to offset deficits.
| c. | Retained earnings and dividends policy
In accordance with the Chunghwa’s Articles of Incorporation, Chunghwa must pay all outstanding taxes, offset deficits in prior years and set aside a legal reserve equal to 10% of its net income before distributing a dividend or making any other distribution to stockholders, except when the accumulated amount of such legal reserve equals to Chunghwa’s total issued capital, and depending on its business needs or requirements, may also set aside or reverse special reserves. No less than 50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings shall be distributed as stockholders’ dividends, of which cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be distributed. If cash dividend to be distributed is less than $0.10 per share, such cash dividend shall be distributed in the form of common stocks. Special reserve was appropriated in accordance with the relevant laws and regulations or as requested by local authority. Pursuant to existing regulations, Chunghwa is required to set aside additional special reserve equivalent to debit balances under stockholder’s equity. For subsequent decrease in the deduction amount to stockholder’s equity, the decreased amount could be reversed from the special reserve to retained earnings. The appropriation for legal reserve shall be made until the accumulated reserve equals the aggregate par value of the outstanding capital stock of Chunghwa. This reserve can only be used to offset a deficit, or, when the legal reserve has exceeded 25% of Chunghwa’s paid-in capital, the excess may be transferred to capital or distributed in cash. The appropriations of the 2017 and 2018 earnings of Chunghwa approved by the stockholders in their meetings on June 15, 2018 and June 21, 2019 were as follows:
|  | Appropriation of Earnings |  |  | Dividends Per Share |
|  | For Fiscal Year 2017 |  |  | For Fiscal Year 2018 |  |  | For Fiscal Year 2017 |  |  | For Fiscal Year 2018 |
|  | NT$ |  |  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |  |  |  |  |  |  |  |  |
Reversal of special reserve |  | $ | 5 |  |  | $ | — |  |  |  |  |  |  |  |  |
Cash dividends |  |  | 37,205 |  |  |  | 34,746 |  |  | $ | 4.796 |  |  | $ | 4.479 |
The appropriations of earnings for 2019 had been proposed by Chunghwa’s Board of Directors on February 26, 2020. The appropriations and dividends per share were as follows:
|  | For Fiscal Year 2019 |
|  | Appropriation of Earnings |  |  | Dividends Per Share |
|  | NT$ |  |  | NT$ |
|  | (In Millions) |  |  |  |  |
Cash dividends |  | $ | 32,783 |  |  | $ | 4.226 |
The appropriations of earnings for 2019 are subject to the resolution of the stockholders’ meeting planned to be held on May 29, 2020.
| d. | Other equity items
| 1) | Exchange differences arising from the translation of the foreign operations
The exchange differences arising from the translation of the foreign operations from their functional currency to New Taiwan dollars were recognized as exchange differences arising from the translation of the foreign operations in other comprehensive income.
| 2) | Unrealized gain or loss on available-for-sale financial assets
|  | Unrealized Gain or Loss on AFS Financial Assets |
|  | NT$ |
|  | (In Millions) |
Balance as of January 1, 2017 |  | $ | (51 | )
Unrealized gain or loss on available-for-sale financial assets |  |  | 607 |
Income tax relating to unrealized gain and loss on available-for-sale financial assets |  |  | 2 |
Amount reclassified from equity to profit or loss on disposal of available-for-sale financial assets |  |  | — |
Balance as of December 31, 2017 under IAS 39 |  |  | 558 |
Effect of retrospective application of IFRS 9 |  |  | (558 | )
Balance as of January 1, 2018 under IFRS 9 |  | $ | — |
Unrealized gain or loss on available-for-sale financial assets were accumulated gains and losses on the available-for-sale financial assets measured at fair value, which were recognized in other comprehensive income and were included in the calculation of the related disposal gain and loss or impairment loss of such financial assets upon reclassified to profits or losses.
| 3) | Unrealized gain or loss on financial assets at FVOCI
|  | Year Ended December 31 |
|  | 2018 |  |  | 2019 |
|  | NT$ |  |  | NT$ |
|  | (In Millions) |
Beginning balance |  | $ | — |  |  | $ | 538 |
Effect of retrospective application of IFRS 9 |  |  | 883 |  |  |  | — |
Beginning balance as adjusted |  |  | 883 |  |  |  | 538 |
Unrealized gain (loss) for the year |  |  |  |  |  |  |  |
Equity instruments |  |  | (345 | ) |  |  | 197 |
Ending balance |  | $ | 538 |  |  | $ | 735 |
| e. | Noncontrolling interests
|  | Year Ended December 31 |
|  | 2017 |  |  | 2018 |  |  | 2019 |
|  | NT$ |  |  | NT$ |  |  | NT$ |
|  | (In Millions) |
Beginning balance |  | $ | 6,272 |  |  | $ | 8,474 |  |  | $ | 9,857 |
Effect of retrospective application of IFRS 9, 15 and 16 |  |  | — |  |  |  | (4 | ) |  |  | (20 | )
Beginning balance as adjusted |  |  | 6,272 |  |  |  | 8,470 |  |  |  | 9,837 |
Attributable to noncontrolling interests |  |  |  |  |  |  |  |  |  |  |  |
Net income for the year |  |  | 1,172 |  |  |  | 1,024 |  |  |  | 974 |
Exchange differences arising from the translation of the net investment in foreign operations |  |  | (12 | ) |  |  | (3 | ) |  |  | 8 |
Unrealized gain or loss on financial assets at FVOCI |  |  | — |  |  |  | (1 | ) |  |  | (26 | )
Unrealized loss on available-for-sale financial assets |  |  | (2 | ) |  |  | — |  |  | - |
Income tax relating to unrealized gain and loss on available-for-sale financial assets |  |  | 1 |  |  |  | — |  |  | - |
Remeasurements of defined benefit pension plans |  |  | (8 | ) |  |  | (9 | ) |  |  | 15 |
Income tax relating to remeasurements of defined benefit pension plans |  |  | — |  |  |  | 3 |  |  |  | (3 | )
Share of other comprehensive income (loss) of associates accounted for using equity method |  |  | (2 | ) |  |  | 1 |  |  |  | (1 | )
Cash dividends distributed by subsidiaries |  |  | (942 | ) |  |  | (958 | ) |  |  | (710 | )
Partial disposal of interests in subsidiaries |  |  | 29 |  |  |  | 349 |  |  | - |
Share-based payment transactions of subsidiaries |  |  | 20 |  |  |  | 42 |  |  |  | 22 |
Change in additional paid-in capital for not proportionately participating in the capital increase of subsidiaries |  |  | 1,750 |  |  |  | 700 |  |  | - |
Other changes in additional paid-in capital of subsidiaries |  |  | — |  |  |  | — |  |  | - |
Net increase (decrease) in noncontrolling interests |  |  | 196 |  |  |  | 239 |  |  |  | (1 | )
Ending balance |  | $ | 8,474 |  |  | $ | 9,857 |  |  | $ | 10,115 |

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