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Amended Article

Title:

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

Amended Date: 2021.03.29 
Article 3     For the purposes of these Regulations, the meanings of the following terms are as defined respectively:
  1. Foreign issuer: a juristic person registered under the laws of a foreign nation, or a financial institution branch meeting the conditions set by the Financial Supervisory Commission (FSC).
  2. Primary exchange (or OTC) listed company: a foreign issuer whose issued stock is not listed for trading on an overseas securities market at the time it is initially approved for exchange-listed or OTC-listed trading by the Taiwan Stock Exchange Corporation (TWSE) or the Taipei Exchange (TPEx) respectively.
  3. Secondary exchange (or OTC) listed company: a foreign issuer whose issued stock or securities representing stock are already listed for trading on an approved overseas securities market, and whose securities are approved for exchange-listed or OTC-listed trading, respectively, by the TWSE or the TPEx.
  4. Emerging stock company: a foreign issuer whose issued stock is not listed or traded on an overseas securities market, and its stock has been approved for registration by the TPEx as an emerging stock.
  5. Taiwan Innovation Board primary listed company ("TIB primary listed company"): a company whose stock is listed and traded on the Taiwan Innovation Board (TIB) in accordance with Chapter IV of the Taiwan Stock Exchange Corporation Rules Governing Review of Securities Listings ("Listing Review Rules").
  6. Pioneer Stock Board company ("PSB company"): a company whose stock is registered and traded on the Pioneer Stock Board (PSB) in accordance with Chapter III of the Taipei Exchange Rules Governing the Review of Emerging Stocks for Trading on the TPEx ("Emerging Stock Review Rules").
  7. Depositary institution: a domestically located financial institution that has been approved by the competent authority to engage in business relating to Taiwan depositary receipts; or an overseas institution that issues overseas depositary receipts in accordance with the applicable securities laws and regulations of the country of issuance.
  8. Custodian institution: either (i) a financial institution that has entered into a custody contract or another document with a depositary institution, whereby the custodian institution maintains custody of the underlying securities represented by Taiwan depositary receipts; or (ii) an institution that maintains custody of securities issued by a foreign issuer.
  9. Taiwan depositary receipts (TDRs): depositary receipts issued by a depositary institution in the ROC, the underlying securities of which have been placed in a custodian institution by a foreign issuer.
  10. Sponsor issuance: an act whereby a foreign issuer, acting in accordance with the terms of a deposit contract, assists in administering the issuance of TDRs and provides financial information in accordance with contractual stipulations.
  11. Effective registration: a foreign issuer registering a planned offering and issuance with the FSC by duly filing all required documents, with the registration to automatically become effective after a certain number of business days have elapsed from the date the filing documents are received by the FSC and any FSC-designated agencies, unless the required content of the filing documents is incomplete or supplementary explanations are necessary to safeguard the public interest or the FSC has rejected the filing documents.
  12. Business day: a trading day in the securities market.
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Article 5     Where a foreign issuer registers a planned offering and issuance with the FSC by duly filing all required documents, the registration will automatically become effective after 12 full business days from the day on which the filing documents were received by the FSC and any FSC-designated agencies. However, the effective registration period shall be 7 business days if the foreign issuer is conducting one of the cases listed in subparagraphs 1 to 6 below; the effective registration period shall be 3 business days if the foreign issuer is conducting a case listed in subparagraph 7 below:
  1. A case of a primary exchange (or OTC) listed company or emerging stock company publicly offering and issuing overseas straight corporate bonds, or issuing employee stock warrants or new restricted employee shares.
  2. A case of a foreign issuer that has already duly issued stock and files, through the TWSE or TPEx, a primary exchange listing or primary OTC listing contract with the FSC for its stock, and subsequently conducts a public sale of new shares issued to effect a cash capital increase before the initial exchange listing or OTC listing.
  3. A case of a TIB primary listed company that is applying to be reclassified as a primary exchange listed company under Chapter III of the Listing Review Rules and will issue new shares for cash capital increase.
  4. A case of a foreign issuer that files, through the TWSE or TPEx, an exchange listing or OTC listing contract with the FSC for its sponsored issuance of TDRs, and subsequently conducts a public sale of TDRs before the initial exchange listing or OTC listing.
  5. A case of a secondary exchange (or OTC) listed company that makes a domestic secondary public offering of stock or sponsored issuance of TDRs using shares that have already been issued and are held by shareholders.
  6. A case of an emerging stock company issuing new shares for a cash capital increase without conducting a public issue.
  7. A case of a foreign issuer publicly offering and issuing domestic straight corporate bonds.
    The FSC may suspend an effective registration where the registration materials submitted by a foreign issuer are not complete or have not been completely filled out, or where it is necessary to do so in order to safeguard the public interest.
    Where a foreign issuer submits incomplete registration materials or fails to fill out its registration materials completely and acts on its own to rectify such insufficiency before the FSC issues notification of the suspension of effective registration, the registration shall become effective after the effective registration period specified in paragraph 1 herein has elapsed from the day on which the materials rectifying the insufficiency were received by the FSC and any FSC-designated agencies.
    Where a foreign issuer registers the offering and issuance of depositary receipts or stocks and a subsequent change in the issue price prompts it to submit amended registration materials to the FSC and any FSC-designated agencies prior to the occurrence of effective registration, the registration will still become effective within the effective registration time period set forth under paragraph 1, and the provisions of the preceding paragraph shall not apply.
    After receiving notice of suspension of effective registration, a foreign issuer may submit further materials to rectify the cause of suspension; if the FSC does not then reject the registration or notify the registrant to effect further rectification, the registration shall become effective after the effective registration period specified in paragraph 1 herein has elapsed from the day on which the rectified registration materials are received by the FSC and any FSC-designated agencies.
    After the FSC suspends an effective registration, if the foreign issuer fails, within 12 business days from the day on which it receives a letter notifying it of said suspension, to act in accordance with the provisions of the preceding paragraph to apply for lifting the suspension, or it applies for lifting of the suspension but the cause of suspension has not been eliminated, the FSC may reject the registration.
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Article 6     A foreign issuer that files to publicly offer and issue the securities listed below shall engage a securities underwriter to conduct an evaluation and issue an evaluation report, and engage a lawyer to review the relevant legal issues and issue a legal opinion:
  1. A domestic issue of corporate bonds with equity characteristics in which a securities underwriter is engaged to conduct underwriting to the public.
  2. A primary exchange (or OTC) listed company domestically issuing new shares in connection with a cash capital increase, issuing new shares in connection with a merger, issuing new shares in connection with acquiring shares of another company, or issuing new shares in connection with an acquisition or demerger.
  3. A primary exchange (or OTC) listed company or emerging stock company publicly offering and issuing overseas securities. Issuers of straight corporate bonds, however, are not subject to this restriction.
  4. A secondary exchange (or OTC) listed company issuing new shares in connection with a capital increase or issuing new shares to sponsor issuance of TDRs.
  5. A secondary exchange (or OTC) listed company making a domestic secondary public offering of stock or sponsored issuance of TDRs using shares that have already been issued and are held by shareholders.
  6. An emerging stock company issuing new shares in connection with a cash capital increase and allocating a certain percentage of the total amount of newly issued shares for issuance to the public.
    The concluding opinion of the evaluation report referred to in the preceding paragraph shall be published in the prospectus.
    A primary exchange (or OTC) listed company that files for a case under subparagraphs 1 to 3 of paragraph 1 shall, in the accounting year when the offering is completed and in the subsequent two accounting years, engage a securities underwriter to assist it in complying with ROC securities laws and regulations.
Article 8     When a primary exchange (or OTC) listed company conducts a case under Article 6, paragraph 1, subparagraphs 1 to 3, or an emerging stock company conducts a case under Article 6, paragraph 1, subparagraphs 3 or 6, the FSC may reject the filing if any of the following circumstances exist:
  1. The present plan for the offering and issuance of securities is unfeasible, unnecessary, or unreasonable.
  2. Any previous plan for offering and issuance or private placement of securities has, without just cause, failed to be executed on schedule or failed to produce reasonable benefit. However, in the event more than 3 years have passed from the completion date of the plan until the filing date, such restriction does not apply.
  3. Any previous private placement of securities did not conform to Articles 43-6 to 43-8 of the Act or the provisions of the Directions for Public Companies Conducting Private Placements of Securities, where the circumstances are serious.
  4. Any important content of the present plan for the offering and issuance of securities (such as issuance rules, source of funds, or particulars of the plan) has not been placed on the agenda of a board meeting or shareholders meeting and adopted by resolution at such a meeting.
  5. The company has lent a large amount of money to another party for purposes other than financing needs arising from a business transaction with another company or business firm, and has not yet rectified the situation.
  6. The company has entered into a non-arm's-length transaction of material significance, and has not yet rectified the situation.
  7. The company is filing for registration of a cash capital increase or issue of corporate bonds, but holds liquid financial asset investments, idle assets, or investment property, with no plan to actively dispose of or develop such holdings, and they amount to either: (1) 40 percent or more of the equity attributable to owners of the parent in the most recent financial reports audited and attested, or reviewed, by a CPA, or (2) 60 percent of the total amount of funds to be raised through the cash capital increase or corporate bond issuance. However, this provision does not apply if the funds to be raised will be used to purchase real estate, plants, or equipment or used for merger of a company that is not engaged primarily in the business of trading of securities, and furthermore there is a concrete fund raising plan evidencing the need to raise the funds.
  8. The company has failed to prepare its financial statements in accordance with relevant acts or regulations and with applicable accounting principles, where the circumstances are of material significance.
  9. Any circumstance in violation of Article 4, paragraph 3.
  10. The internal control system is materially deficient in design or implementation.
  11. The company's share price fluctuated abnormally during the month prior to the date of filing.
  12. The foreign issuer or its current chairperson, general manager, or de facto responsible person has received a sentence of imprisonment for a fixed term or a more severe punishment from a court in the past 3 years due to violation of laws governing business and industry or due to a crime involving breach of faith such as corruption, malfeasance, fraud, breach of fiduciary duty, or embezzlement, or has an obligation for damages arising from a violation of securities laws or regulations and has failed to duly perform the obligation.
  13. A subscriber, or an ultimate source of subscription, of the present offering and issuance of overseas securities is a related party of the foreign issuer. The term "related party" is as defined in the Regulations Governing the Preparation of Financial Reports by Securities Issuers.
  14. The securities underwriter, at the time the foreign issuer files for registration, has received cumulatively 10 demerit points in the most recent year from the FSC, TWSE, TPEx, and Taiwan Securities Association, and three months have not elapsed since the date when the demerit points cumulatively reached 10 points. However, this restriction does not apply to an issue of new shares for cash capital increase that are to be sold in the public sale prior to an initial exchange or OTC listing.
  15. As the FSC otherwise deems necessary to protect the public interest.
    The term "engaged primarily in the business of trading of securities" as referred to in subparagraph 7 of the preceding paragraph shall mean, of a company merged by the issuer, that the merged company's cash, together with cash equivalents, financial assets listed under current assets, and holdings of securities issued by the issuer account for 50 percent or more of the total assets value of such company, and the revenue or profit/loss respectively from trading or holding of the aforesaid assets account for 50 percent or more of the revenue or profit/loss of such company.
    When a foreign issuer conducts a case under Article 5, paragraph 1, subparagraph 2 or 3, the provisions of subparagraph 7 of paragraph 1 need not apply; if the underwriter evaluation report clearly states the feasibility of the capital allocations and the reasonableness of the expected benefits of the present plan for offering and issuance of securities, then the provisions regarding the necessity of the plan, as set out in subparagraph 6 of paragraph 1 of the preceding article and in subparagraph 1 of paragraph 1 of this article, need not apply.
    When a primary exchange (or OTC) listed company issues new shares in connection with a merger, acquisition of shares of another company, or acquisition or demerger, the provisions of subparagraphs 2, 5, 11, and 12 of paragraph 1 need not apply.
    When a primary exchange (or OTC) listed company issuing overseas straight corporate bonds has engaged a securities underwriter to publicly underwrite the bonds, the provisions of paragraph 1, subparagraph 11 need not apply.
    When a secondary exchange (or OTC) listed company conducts a case under Article 6, paragraph 1, subparagraphs 1, 4, or 5, the subparagraphs of paragraph 1 hereof shall apply mutatis mutandis. However, if it is issuing new shares or sponsoring issuance of TDRs in connection with a merger, acquisition of shares of another company, or acquisition or demerger, it may be exempted from the mutatis mutandis application of subparagraphs 2, 5, 11, and 12 of paragraph 1.
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Article 9-1     When a foreign issuer files for a case listed below, the FSC may engage the TWSE or the TPEx to handle case:
  1. A foreign issuer filing for a case under Article 5, paragraph 1, subparagraph 2 or 7, or Article 58, paragraph 1.
  2. Case in which a primary exchange (or OTC) listed company files for issuance of new shares in connection with a merger, or issuance of new shares in connection with receiving transfer of shares of another company, or issuance of new shares in connection with an acquisition or demerger conducted in accordance with related laws, or the retroactive handling of public issuance procedures for privately placed securities, or capital reduction.
    When the TWSE or the TPEx is engaged by the FSC to handle a case under the preceding paragraph, if, after effective registration, any circumstance is discovered under which the effective registration is voidable or revocable under these Regulations, the FSC may order the engaged institution to void or revoke the effective registration.
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Article 65     (Deleted)