23.  STOCKHOLDERS’ EQUITY Under Chunghwa’s Articles of Incorporation, Chunghwa’s authorized capital is NT$120,000,000 thousand, which is divided  into 12,000,000 thousand common shares (at $10 par value per share), among which 7,757,447 thousand common shares are  issued and outstanding as of December 31, 2011. For the purpose of privatizing Chunghwa, the MOTC sold 1,109,750 thousand common shares of Chunghwa in an international  offering of securities in the form of American Depositary Shares (“ADS”) amounting to 110,975 thousand units (one ADS  represents ten common shares) on the New York Stock Exchange on July 17, 2003. Afterwards, the MOTC sold 1,350,682  thousand common shares in the form of ADS amounting to 135,068 thousand units on August 10, 2005. Subsequently, the  MOTC and Taiwan Mobile Co., Ltd. sold 505,389 thousand and 58,959 thousand common shares of Chunghwa, respectively,  in the form of ADS totally amounting to 56,435 thousand units on September 29, 2006. The MOTC and Taiwan Mobile Co.,  Ltd. have sold 3,024,780 thousand common shares in the form of ADS amounting to 302,478 thousand units. As of December  31, 2011, the outstanding ADSs representing 556,463 thousand common shares, which equaled approximately 55,646 thousand  units and represented 7.17% of Chunghwa’s total outstanding common shares. 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 can, through deposit agents: Under the ROC Company Law, additional paid-in capital may only be utilized to offset deficits. However, the additional  paid-in capital from shares issued in excess of par and donations may be capitalized, which however is limited to a certain  percentage of Chunghwa’s paid-in capital. However, where a company undergoes an organizational change (such as a merger,  acquisition, or reorganization) that results in the capitalization of undistributed earnings after the organizational change, the  above restriction does not apply. Under the revised Company Law issued on January 4, 2012, the aforementioned additional  paid-in capital also may be distributed in cash. The additional paid-in capital from long-term investments may not be used for  any purpose. In addition, before distributing a dividend or making any other distribution to stockholders, Chunghwa must pay all outstanding  taxes, recover any past losses and set aside a legal reserve equal to 10% of its net income, and depending on its business  needs or requirements, may also set aside a special reserve. In accordance with the Articles of Incorporation, no less than  50% of the remaining earnings comprising remaining balance of net income, if any, plus cumulative undistributed earnings  shall be distributed in the following order: (a) from 2% to 5% of distributable earnings shall be distributed to employees as  employee bonus; (b) no more than 0.2% of distributable earnings shall be distributed to board of directors and supervisors  as remuneration; and (c) cash dividends to be distributed shall not be less than 50% of the total amount of dividends to be  distributed. If cash dividends to be distributed is less than NT$0.10 per share, such cash dividend shall be distributed in the  form of common shares. For the years ended December 31, 2010 and 2011, the accrual amounts for bonuses to employees and remuneration to directors  and supervisors were accrued based on past experiences and the probable amount to be paid in accordance with Chunghwa’s  Articles of Incorporation and Implementation Guidance for the Employee’s Bonus Distribution of Chunghwa Telecom Co.,  Ltd. PART III a. Exercise their voting rights, b. Sell their ADSs, and c. Receive dividends declared and subscribe to the issuance of new shares. F-36