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Amendments

Title:

Regulations Governing the Issuance of Call (Put) Warrants by Issuers  CH

Amended Date: 2022.04.26 

Title: Regulations Governing the Issuance of Call (Put) Warrants by Issuers(2012.07.10)
Date:
Article 1     These Regulations are adopted pursuant to Article 22, paragraph 4 of the Securities and Exchange Act (the "Act").
Article 5     To issue call (put) warrants, an issuer shall first apply to the Financial Supervisory Commission (FSC) for accreditation as a qualified issuer of call (put) warrants.
    In order to apply to the FSC for accreditation as a qualified issuer of call (put) warrants, a domestic issuer must have a credit rating of a certain grade issued by a credit rating institution approved by the competent authority; a foreign issuer may submit application on the basis of a credit rating of a certain grade issued by a credit rating institution recognized by the competent authority.
    If an issuer engages a foreign institution to act as a risk management institution, or if an issuer is a foreign institution, it shall first obtain a consent letter from the competent authority in charge of foreign exchange.
    In order to apply to the FSC for accreditation as a qualified issuer of call (put) warrants, an issuer shall submit an Application for Accreditation as a Qualified Call (Put) Warrants Issuer (see attachment) furnishing all required particulars, together with duplicate copies of all other required documents, to the Taiwan Stock Exchange Corporation (TWSE) or the GreTai Securities Market (GTSM). After the TWSE or GTSM examines and approves the application, the applicant shall file the examination opinion with the FSC for final review and approval.
    In carrying out final review and approval of an application for accreditation of qualifications to issue call (put) warrants as referred to in the first paragraph of this article, the FSC shall act on the basis of a financial report duly audited and attested by a certified public accountant (CPA), a licensed attorney's opinion regarding legal and regulatory compliance, credit rating information, related documents, and an examination opinion issued by the TWSE or the GTSM.
Article 6     If, at any time on or after the date on which an issuer applies to the FSC for accreditation as a qualified issuer of call (put) warrants, an event occurs which has a material impact on shareholders' equity or securities prices as contemplated in Article 36, paragraph 3, subparagraph 2 of the Act, in addition to duly making a public announcement and filing with the TWSE or GTSM within two days of the date of the occurrence of the fact, the issuer shall also provide the CPA who attested to its financial report with a professional opinion from an appropriate expert, as dictated by the nature of the event, and retain the CPA to provide an opinion regarding the effect of the event upon the financial report, and shall then file the opinion with the TWSE or GTSM. The TWSE or GTSM shall then provide an opinion on how to handle the matter and file it with the FSC.
Article 7     When any one of the following circumstances applies to an issuer that has applied for accreditation as a qualified issuer of call (put) warrants, the FSC may deny accreditation:
  1. It has made incomplete submission of required application documents, and has failed to supplement those documents by the deadline prescribed by the FSC.
  2. Particulars of the application do not conform to laws and regulations, or the application contains misrepresentations or nondisclosures.
  3. There is a major loss of creditworthiness which has yet to be settled, or four years have not elapsed since settlement.
  4. The issuer fails to meet any of the requirements in the subparagraphs of Article 38, paragraph 1, subparagraphs 2 to 5 of the Standards Governing the Establishment of Securities Firms; or, if the issuer is a foreign institution, a similar failure exists on the part of its head office.
  5. The issuer's regulatory capital adequacy ratio for the half year preceding the application date is lower than 200 percent; or, if the issuer is a foreign institution, a similar circumstance applies to its head office.
  6. The issuer lacks appropriate risk management measures.
  7. The issuer has been incapable of meeting obligations in connection with a previous issue of call (put) warrants.
  8. In the most recent year the issuer has failed to comply with TWSE or GTSM regulations applicable to call (put) warrants, and improvement within a specified time period was not possible.
  9. The issuer fails to prepare financial reports in accordance with generally accepted accounting principles, or effective enforcement of its internal control system is not possible.
  10. The issuer violates Article 6, or an assessment shows that its filed particulars might have material impact on its financial status.
  11. There is a major dispute or violation with respect to rights and interests that could influence the issuer's finances or business, and there is no resolution or improvement.
  12. There is factual evidence of material irregularities with the issuer's finances or business.
  13. The FSC otherwise considers it necessary to deny accreditation in order to protect the public interest.
Article 8     The underlyings to which call (put) warrants issued by an issuer are linked are limited to the following:
  1. Stocks, baskets of stocks, exchange-traded securities investment trust funds, offshore exchange-traded funds, and Taiwan depositary receipts that are listed on the TWSE or GTSM and meet conditions prescribed by the TWSE or the GTSM.
  2. Indexes as publicly announced by the TWSE or GTSM.
  3. Any foreign security or index of a foreign securities market that meets the following requirements:
    1. A foreign securities market shall meet the conditions and fall within the scope set out below:
      1. It must be organized as either a securities exchange or over-the-counter market and be regulated by the local competent securities authority.
      2. The sovereign rating of the country where the trading takes place shall have a rating of a certain grade or higher from a credit rating institution listed in Appendix 1.
      3. The scope of foreign securities markets is listed in Appendix 2.
    2. The foreign security or index of the aforementioned foreign securities market may not include any of the following items:
      1. Securities of a Taiwan enterprise traded on any foreign securities market, provided that this rule shall not apply to depositary receipts issued overseas by a Taiwan enterprise.
      2. Any Taiwan stock index compiled by a foreign or domestic institution, and related financial commodities, provided that this rule shall not apply if such index is compiled by the TWSE or GTSM, in cooperation with a foreign or domestic institution, with Taiwan stocks not being the major component shares.
    3. Any foreign security or index that meets requirements set forth by the TWSE or the GTSM.
    If a company that issued any linked underlying referred to in the preceding paragraph is involved in a merger or acquisition, the FSC may suspend further issuance by an issuer of call (put) warrants on that underlying, and shall suspend the issue of warrants that an issuer has received permission to issue but has not yet issued, provided that call (put) warrants already issued shall remain valid.
Article 9-1     If an issuer that has been accredited by the FSC as a qualified issuer of call (put) warrants fails to issue any call (put) warrants for 1 year or more, or if the issuer fails to make improvements in the following 1 year or more after having been suspended from issuance of call (put) warrants by the FSC pursuant to paragraph 1 or 2 of the preceding article, the issuer may not proceed with issuance of call (put) warrants until it has once again been applied and been accredited as a qualified issuer of call (put) warrants in accordance with these Regulations.
Article 10     After an issuer has been accredited by the FSC as a qualified issuer of call (put) warrants, the issuer shall obtain consent from the TWSE or the GTSM for the call (put) warrants that it plans to list on an exchange or an over-the-counter market, and may not proceed with issuance and sales until the TWSE or the GTSM has consented to its issuance plan; the same shall apply to a follow-on issue by the issuer.
    The issuer of the call (put) warrants referred to in the preceding paragraph shall enter into a contract with the TWSE or the GTSM for exchange listing or over-the-counter listing of call (put) warrants. The TWSE or the GTSM shall report the contract for exchange listing or over-the-counter listing to the FSC for recordation.
Article 11     (deleted)
Article 12     (deleted)
Article 13     An issuer issuing call (put) warrants may contract with a securities underwriter to underwrite the call (put) warrants, or it may sell the warrants by itself. The issuer shall deliver a prospectus to subscribers.
    Matters to be stated in the prospectus referred to in the preceding paragraph shall be formulated by the TWSE or the GTSM and reported to the FSC for approval.
Article 16     If an issuer issues offshore call (put) warrants for which the linked underlying is a domestic security or index, the scope of the underlyings shall comply with the provisions of Article 8; if the linked underlying is a foreign security or index, the scope of the underlyings shall be handled pursuant to the requirements of the competent authority or exchange where the warrants are traded, provided that the mainland China stock price indices and securities listed on mainland China securities markets may not be included.