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Amendments

Title：

Regulations Governing the Offering and Issuance of Securities by Securities Issuers  CH

Amended Date： 2023.12.29 
Article Content Chapter Content Search Article No. Search Legal Basis Subordinate Legislation Amended Article Legislative History Chinese

Title： Regulations Governing the Offering and Issuance of Securities by Securities Issuers(2014.06.26)
Date：
Article 6     An issuer registering to offer and issue securities shall submit a prospectus.
    Given any of the following circumstances when the issuer files for registration, the issuer shall ask the lead securities underwriter for an evaluation and ask a lawyer to review the relevant legal issues. They shall respectively provide an evaluation report and a legal opinion in accordance with regulatory requirements:
  1. The filing for registration for issuance of new shares for cash, new shares in connection with merger, new shares in connection with receiving transfer of shares of another company, or new shares in connection with an acquisition or demerger conducted in accordance with laws, is made by a public company whose stocks are listed on a stock exchange (a "listed" company) or by an OTC company.
  2. A company whose stock is approved for trading in the business places of securities firms in accordance with Article 5 of the GreTai Securities Market Rules Governing Review of Emerging Stocks Traded on Over-the-Counter Markets (hereinafter referred to as an "emerging stock company") carries out a cash capital increase through a new share issue and allocates a certain percentage of the newly issued shares to a public offering.
  3. A company whose stock is neither listed on a stock exchange (hereinafter referred to as "unlisted") nor traded in the business places of securities firms, conducts an issuance of new shares for cash and allocates a certain percentage of the aggregate new shares to be publicly offered in accordance with Article 18.
  4. The offering is used to establish a company.
  5. Corporate bonds with equity characteristics are to be offered publicly through a securities underwriter.
  6. Straight corporate bonds are to be offered publicly through a securities underwriter, and purchasers of the bonds are not restricted to professional investors as defined in the GreTai Securities Market Rules Governing Management of Foreign Currency Denominated International Bonds.
    If the securities firm meets the financial and business requirements set by the FSC, it can be exempted from the requirement that the lead underwriter must issue an evaluation report.    The legal opinion in paragraph 2 and the preceding paragraph, and concluding opinions of the evaluation report or rating report, shall be provided in the prospectus.
Article 12     When offering and issuing stocks, the issuer shall submit the relevant registration statement (Attachments 2 through 12) based on the nature of its case, recording all of the necessary information, together with the required attachments to the FSC. Only after the registration becomes effective can the issuer proceed with such offering and issuance.
    If the registration statement submitted by the issuer, or the information recorded therein, is incomplete, or any one of the events prescribed under Article 5 herein occurs, and the issuer submits the necessary supplementation before receiving a stop order from the FSC regarding its registration, its registration shall become effective when the effective registration period set forth in Article 13 has elapsed, counting from the date on which the FSC and FSC-designated institutions receive supplementation in full.
    The registration of an issuer of an issuance of new shares for cash shall still become effective based on the effective registration period set forth in Article 13 herein, and the provisions of the preceding paragraph do not apply if the issuer, prior to that registration becoming effective, submits to the FSC and FSC-designated institutions updated relevant data due to a change in the issuing price.
Article 13     For an issuer conducting any of the case types listed below, registration shall become effective 20 business days from the date on which the FSC and FSC-designated institutions receive its registration form for the issuance of new shares:
  1. Establishment by offering.
  2. Any one of the types of share issuance set forth under Article 6, paragraph 2, subparagraphs 1 and 3, where the circumstances in any one of the following items exist:
    1. An issuance conducted in accordance with Article 6, paragraph 2 has been previously rejected, disapproved or revoked by the FSC. However, this restriction need not apply where the case had been rejected or revoked by the FSC because the issuance had not been fully subscribed and payment therefore had not been fully collected in cash since the effective registration or upon arrival of notification of approval.
    2. The issuer has been sanctioned two or more times by the FSC in accordance with Article 178 of the Act for violating the Act or other relevant acts and regulations during the fiscal year when the registration was filed or during the previous fiscal year.
    3. The profits or net profits before tax of the issuer show losses in the recent 2 consecutive years or the latest financial reports indicate that the net asset value per share is lower than its par value.
    4. The issuer is required to allocate special reserve for its non-arm's length transactions and such requirement is not lifted yet.
    5. During the year of registration or the previous 2 years, an event set forth under Article 185 of the Company Act has occurred or a portion of the operations or R&D results is transferred to another company. However, if the operating revenue or assets value of those transferred items or the expenses accumulated for R&D does not exceed 10 percent of the operating revenue or assets value or R&D expenses shown on the financial reports of the previous year respectively, such restriction does not apply.
    6. A material change has occurred among the company's governance or top management in the year of registration or the previous 2 years and any one of the following events takes place:
      1. The submitted financial reports indicates an addition to the principal products (meaning that the operating revenue resulting from the products accounts for 20 percent or more of the operating revenue) and that the total operating revenue or operating income from the added principal products accounts for 50 percent or more of the same respective categories of that year. However, the difference between the operating revenue for the preceding and following periods did not reach 50 percent or more therefore the principal products may not be counted.
      2. The submitted financial reports indicates that the issuer has acquired an on-going or completed construction project and the operating revenue or operating income from that project has reached 30 percent of the same respective categories of that year.
      3. The submitted financial reports indicates that the issuer has received transfer of a portion of the operations or R&D results of another company other than an affiliated company and that the operating revenue or operating income from that partial operations or R&D result has reached 30 percent of the same respective categories of that year.
    Except for an issuer filing for registration pursuant to the provisions of the preceding paragraph, the registration of an issuer that files to issue new shares shall become effective 12 business days after the date on which the FSC and FSC-designated institutions receive its registration form. However, for an issuer other than those in the financial holding, banking, bills finance, credit card, or insurance businesses that conducts any of the matters listed below, the effective registration period shall be shortened to 7 business days:
  1. An emerging-stock company, or company that is neither listed on an exchange nor traded on an OTC market, issues new shares for a cash capital increase, and does not allocate a certain percentage of the newly issued shares to a public offering.
  2. An emerging-stock company, or company that is neither listed on an exchange nor traded on an OTC market, issues new shares in connection with merger, or issues new shares in connection with an acquisition or demerger conducted in accordance with related laws.
  3. An emerging-stock company issues new shares for cash for the purpose of public sale in connection with initial listing on the stock exchange or OTC market.
  4. Either an OTC-listed company has applied to transfer its listing to a stock exchange or an exchange-listed company has applied to transfer its listing to an OTC market, and the Taiwan Stock Exchange or the GreTai Securities Market has filed the exchange listing or OTC listing with the FSC, and the company is now carrying out a cash capital increase in order to achieve compliance with standards governing dispersion of equity ownership.
    Where an issuer issues new shares in connection with receiving transfer of shares of another company, and files for effective registration with the FSC on the same day, that registration becomes effective 12 days from the date on which the FSC and FSC-designated institutions receive the registration application.
    Paragraph 1, subparagraph 2 does not apply to cases of issuance of new shares in connection with merger, issuance of new shares in connection with receiving transfer of shares of another company, or issuance of new shares in connection with acquisition or demerger conducted in accordance with related laws.
Article 17     When an exchange-listed or OTC-listed company handles an issuance of new shares in a cash capital increase, unless those who are prohibited from trading stocks in the market under paragraph 2 of Article 139 of the Act, the issuer shall allocate 10 percent of the aggregate number of new shares for public offering at market price and is exempted from paragraph 3 of Article 267 of the Company Act which prescribes that the current shareholders shall be entitled to subscribe the new shares in proportion to the percentage of their respective shareholding. However, if the shareholders meeting decides to have a higher percentage, its resolution should be applied.
    The provisions of the preceding paragraph shall apply mutatis mutandis to an issue of new shares for cash conducted by an emerging stock company for the purpose of public sale in connection with initial listing on the stock exchange or OTC market; the provisions of the preceding paragraph may apply mutatis mutandis to an issue of new shares for cash conducted by an emerging stock company for other purposes.
    Issuing new shares for cash capital increase by a company whose shares are listed or traded at the business places of securities firms, except those allocating a certain percentage of the aggregate number of new shares for public offering pursuant to the preceding two paragraphs, shall be handled in accordance with paragraph 3 of Article 267 of the Company Act.
    Where the issuer allocates shares for public offering at market price in accordance with paragraphs 1 and 2, the prices for the employees of the issuer or the original shareholders to pay for the new shares in the same issuance shall be the same as the price set for public offering.
Article 18     If the number of registered shareholders holding 1,000 shares or more of a company whose shares are neither listed on an exchange nor traded in the business places of securities firms does not reach 300, or the company fails to reach the shareholding dispersion standard prescribed by the competent authorities, upon conducting cash offering of new shares, the company shall allocate 10 percent of the new shares for public offering and is exempted from paragraph 3 of Article 267 of the Company Act which prescribes that the current shareholders shall be entitled to subscribe the new shares in proportion to their respective shareholding percentage, unless any one of the following events occurs. However, if the shareholders meeting decides to set a higher percentage, its resolution shall be applicable:
  1. It conducts the initial public offering.
  2. It has been incorporated for less than 2 complete fiscal years.
  3. Both the company's final operating income and the pre-tax income as ratios of the equity attributable to owners of the parent as reported in the financial reports fail to meet any of the below conditions. However, the profitability as reported in the financial reports does not take into account the effects on the company brought about by the net profit (or net loss) attributable to its non-controlling interests.
    1. The said ratios for the most recent fiscal year reach 2 percent or more, and the company has no accumulated losses for the most recent fiscal year.
    2. The said ratios for the most recent 2 fiscal years reach 1 percent or more.
    3. The average of the said ratios for the most recent 2 fiscal years reaches 1 percent or more, and the profitability of the company for the most recent fiscal year is more favorable than that for the previous fiscal year.
  4. The number of shares allocated for public offering in accordance with the 10 percent requirement or the percentage set by the resolution of the shareholders meeting does not reach 500,000.
  5. Preferred stocks with warrants are issued.
  6. Any situation where the FSC deems the public offering unnecessary or inappropriate.
    Where a company is a major national economic enterprise as determined and certified by the competent authority for the enterprise, the provisions of subparagraphs 1 through 3 of the preceding paragraph shall not be applicable.
    Where an issuer publicly offers its securities in accordance with paragraph 1, the prices for the employees of the issuer or the original shareholders to pay for the new shares in the same issuance shall be the same as the price set for public offering, and it shall be noted in the prospectus and subscription form that its shares are neither listed on the Stock Exchange nor listed and traded on any OTC market.
Article 20      When an issuer files for registration of an issue of straight corporate bonds, and purchasers of the bonds are restricted to professional investors as defined in the GreTai Securities Market Rules Governing Management of Foreign Currency Denominated International Bonds, the prospectus submitted must contain the issuer's basic company information, issuance rules, and planned utilization of funds, and the issuer may be exempt from the requirement to prepare the prospectus in accordance with the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses.
    For the corporate bonds of the preceding paragraph or corporate bonds denominated in a foreign currency, an application shall be filed with the GreTai Securities Market for registration for OTC trading.
Article 21     A public company may issue corporate bonds only after it has submitted the Registration Statement for Issuing Corporate Bonds (Attachments 13 and 14), provided all information required therein and sent the registration statement along with relevant documents to the FSC and obtained an effective registration.
    In the event the public company registers with the FSC and FSC-designated institutions in accordance with the preceding paragraph, its registration shall become effective 7 business days after the Registration Statement for Issuing Corporate Bonds is received by the FSC and its designated institutions. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
    The provisions of paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to public companies that file for registration in accordance with paragraph 1.
    After registering for issuing corporate bonds, if the public company changes the terms of issuance or the coupon interest rate and then submits the modified relevant documents to the FSC and FSC-designated institutions before the original registration becomes effective, its registration will become effective in accordance with the time frame prescribed in paragraph 2.
Article 22     In the event the issuer meets all the following conditions simultaneously, it may submit the Shelf Registration Statement for Issuing Corporate Bonds (Attachment 15), provide all information required therein, along with all required documents to the FSC for effective registration. In addition, it shall complete the issuance within the scheduled issuance period.
  1. Its stocks have been listed in the stock exchange market or traded in the business places of securities firms for a combined period of 3 years or more. However, this provision does not apply under the following circumstances:
    1. Where the issuer is a government-owned enterprise.
    2. Where the issuer is a financial holding company conforming to Article 4 paragraph 4 of the Financial Holding Company Act providing that the subsidiary bank, subsidiary insurance company, or subsidiary securities firm be listed or its shares be traded in the business places of securities firms for a total of 3 years.
  2. It has periodically or non-periodically disclosed its financial information to the public in accordance with Article 36 of the Act or other relevant laws for the past 3 years.
  3. There has been no occurrence of rejection, or withdrawal by the FSC with regard to the offering and issuance of securities within the past 3 years. However, this restriction need not apply to the case where, following the date of receiving the notice of effective registration, the issuance has not been fully subscribed and payment thereof has not been fully collected in cash and hence the case has been rejected or revoked by the FSC.
  4. The cash capital increase or corporate bond issuance plans effectively registered with the FSC within the past 3 years have been implemented in accordance with the schedules and no material changes have occurred.
  5. The CPAs retained by the issuer have not received a warning or more severe sanction for their handling of securities offering and issuance within the last 3 years.
  6. The lead underwriter retained by the issuer has not been punished in accordance with Article 66, subparagraph 2 of the Act to discharge its director, supervisor, or manager or with more severe sanctions in connection with handling of securities offering and issuance within the last 3 years.
    Paragraph 2 of Article 12, Articles 15 and 16, and paragraphs 2 and 4 of the preceding article shall apply mutatis mutandis to the issuer that registers with the FSC in accordance with the preceding paragraph.
    The scheduled issuance period referred to in paragraph 1 may not exceed 2 years counting from the date of effective registration. The issuer shall set the said period at the time of registering with the FSC.
    Where an issuer issues corporate bonds during the scheduled issuance period, it shall consign an underwriter to underwrite the issuance on a firm commitment basis.
     When an issuer files for registration of an issue of corporate bonds in accordance with paragraph 1, and purchasers of the bonds are restricted to professional investors as defined in the GreTai Securities Market Rules Governing Management of Foreign Currency Denominated International Bonds, the prospectus submitted must contain the issuer's basic company information, issuance rules, and planned utilization of funds, and the issuer may be exempt from the requirement to prepare the prospectus in accordance with the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses.
Article 23     When issuing corporate bonds within the scheduled issuance period as referred to in the preceding Article, the issuer shall, on the next business day after it has put such issuance plan in public announcement in accordance with Article 252 of the Company Act and completed payment collection, submit the Supplementary Form for the Shelf Registration for Issuing Corporate Bonds (Attachment 16) completed with all required information, together with required documents, to the FSC for recordation.
    In case of change of CPA or lead underwriter retained by the issuer during the scheduled issuance period as referred in the preceding Article, qualifications prescribed in paragraph 1, subparagraph 6 or 7 of the preceding article shall apply to the succeeding CPA or lead underwriter.
    The FSC may suspend the additional issuance of corporate bonds supplemental to the current issuance in case where an issuer violates Articles 7 and 8 and paragraph 1 of the preceding article during the scheduled issuance period.
Article 26     A public company may issue exchangeable corporate bonds whose repayment subject is the stocks, held by the public company for more than 2 years, of a listed company or a company whose shares are traded at the business places of securities firms in accordance with Article 3 of the GreTai Securities Market Rules Governing Review of Securities Traded on Over-the-Counter Markets.
    A public company may issue exchangeable corporate bonds only after it has submitted the Registration Statement for Issuing Exchangeable Corporate Bonds (Attachment 17), provided all information required therein, along with required documents to the FSC, and after such registration becomes effective.
    Paragraph 2 of Article 12, Articles 15 and 16, and paragraphs 2 and 4 of Article 21 shall apply mutatis mutandis to the public company registering with the FSC in accordance with the preceding paragraph. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, or credit card enterprise.
    When issuing exchangeable corporate bonds, the issuer shall set out the following items in the terms of issuance and exchange:
  1. Article 29, paragraph 1, subparagraphs 1 through 8, 10, 11, 13, and 17 shall apply mutatis mutandis.
  2. The procedures for requesting exchange and the ways of payment.
  3. The deposit procedures for the underlying shares.
    Unless otherwise regulated by related laws, the aforementioned deposit procedure shall be conducted by a centralized securities depository enterprise. During the period of deposit, the underlying shares may not be pledged or retrieved.
    The bondholder who requests for exchange shall fill out the Exchange Request Form and submits the form along with the bonds in question to the issuer or its agent. The exchange becomes effective at the time of receipt of the aforementioned documents. After receiving the exchange request from the bondholder, the issuer or its agent shall deliver the exchange underlying stock to the bondholder within the next business day. If the exchange results in odd-lot units of less than 1,000 shares, the stocks can be delivered within 5 business days.
    When issuing exchangeable corporate bonds, the issuer shall engage securities underwriter(s) to handle a public offering of the entire issuance, to which the provisions of Article 30, Article 32, Article 35, and Article 37 shall apply mutatis mutandis.
Article 32     From the end of a designated period of time following the issuance date of convertible corporate bonds until 10 days before the maturity date, the bondholder may request for conversion at any time in accordance with the procedures of conversion set by the issuer, except during the period in which transfer is suspended by laws.
    The designated period of time referred to in the preceding paragraph shall be set by the issuer in its procedures for conversion.
    Convertible corporate bonds issued by an exchange-listed, OTC-listed, or emerging stock company are not subject to the restriction of paragraph 1 that conversion may not be made during the 10 days before the maturity date.
Article 45     From the end of a designated period of time following the issuance date of corporate bonds with warrants until 10 days before the maturity date, the bondholder may request for exercising warrants at any time in accordance with the terms set by the issuer, except during the period in which transfer is suspended by laws. However, the exercise period may not be longer than the repayment period for the corporate bond.
    The designated period of time referred to in the preceding paragraph shall be set by the issuer in its terms for issuance and exercise.
    Corporate bonds with warrants issued by an exchange-listed, OTC-listed, or emerging stock company are not subject to the restriction of paragraph 1 that exercise may not be made during the 10 days before the maturity date.
Article 72     To issue bonus shares or carry out a capital reduction, a public company shall submit for registration to the FSC a registration statement, (Attachments 32 and 33) specifying all required particulars, and the required documents.
    Where an exchange-listed or OTC-listed company files to register a capital reduction, the registration shall become effective 12 business days from the date on which the FSC and FSC-designated institutions receive the registration statement for a new share issuance.
    Registration by a public company for the cases listed below shall become effective 7 business days from the date upon which the FSC and FSC-designated institutions receive the registration statement for the issuance of new shares, provided that the effective registration period for a financial holding, bank, bills finance, credit card, or insurance enterprise shall be 12 business days.
  1. Issuance of new bonus shares.
  2. Capital reduction by an emerging stock company, or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms.
    The provisions of Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to cases handled under paragraph 1.
    If, after effective registration, any circumstance in Article 11, paragraph 1, subparagraphs 3 to 6, the FSC may revoke or void the effective registration.