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Title:

Exchange Traded Notes Prospectus and Simplified Prospectus Template  CH

Announced Date: 2018.09.10 
Categories: Primary Market > Review
Article 1     This template is established in accordance with Article 15 of the Regulations Governing the Issuance of Exchange Traded Notes by Securities Firms (the "Regulations"); Article 14, paragraph 2 of the Taiwan Stock Exchange Corporation (TWSE) Criteria Governing Review of Listing of Exchange Traded Notes; and Article 12, paragraph 3 of the GreTai Securities Market (GreTai) Criteria Governing Review of Exchange Traded Notes Traded on Over-the-Counter Markets.
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Article 2     A securities firm should prepare the prospectus and simplified prospectus when issuing exchange traded notes (ETNs) or follow-on notes by following the general guidelines below:
  1. Information contained therein should be accurate and specific and written in easy-to-understand language and there should be no false or missing information.
  2. Information contained therein should be timely and up-to-date. If a transaction or other event that would influence the decision of an interested party has taken place prior to the publication of the prospectus, information about the transaction or event should be disclosed.
Article 3     The following information, in that order, should be printed on the front cover of the prospectus:
  1. Name of issuing company and its corporate chop.
  2. The prospectus is prepared for issuance of ETNs.
  3. A summary description of the following:
    1. Name of ETNs.
    2. Number of units to be issued and total value of issued notes.
    3. Issue date and period.
    4. Details of underlying index, including name of institution calculating the index and name of index.
    5. Issue price.
    6. How the price is determined, investor's rights and costs to be borne by investors.
  4. The following language should be shown in conspicuous print:
    1. The ETNs are valid upon approval of the Financial Supervisory Commission. The approval, however, does not indicate that investing in the ETNs is risk-free.
    2. The ETNs are non-preferential claim and unsecured securities, do not provide protection on principal and have no third-party guarantee. The securities firm issuing the ETNs only promises to pay investors the returns linked to the performance of the underlying index being tracked after maturity or early redemption of the ETNs, deducting investment services fees or tracking fees. There is no restriction on maximum fluctuations of ETNs tracking foreign indexes.
    3. The claimable amount of the ETNs upon maturity or early sellback may be lower than the original investment principal due to market fluctuations, the securities firm issuing ETNs being in default, or credit risks, and the principal may be zero in a worst scenario. Investors are advised to carefully review the prospectus and make sure they fully understand the risks and features of the ETNs.
    4. Securities firms shall not use the fact that they have been accredited to track the underlying index or they have been approved by TWSE or GreTai to issue their proposed ETNs in their promotion as proof of their application or guarantee of value of their ETNs. The securities firm issuing the ETNs and its responsible person and all other parties who have signed or affixed chops in the prospectus shall be held legally liable for any false or concealed information in the prospectus.
    5. Websites where the prospectus may be accessed, including the website designated by the competent authority for reporting of information, and the website(s) where the securities firm discloses information about the prospectus.
  5. Date of publication.
    It should be specified on the front cover of the prospectus prepared for issuing ETNs or follow-on notes that the prospectus is a draft for reporting.
Article 4     On the inside of the front cover of the prospectus, the following information about this issue, in that order, should be printed:
  1. Distribution plan of the prospectus, where the prospectus will be displayed, how copies of prospectus will be distributed and may be requested.
  2. Name, address and telephone number of the firm underwriting the ETNs.
  3. Name, address and telephone number of the securities firm.
  4. Name of the lawyer, and name, address and telephone number of the law firm.
  5. Name of the Certified Public Account who has audited the financial statement for the most recent year, and the name, address and telephone number of the accounting firm.
Article 5     The signature and chop of the securities firm and its responsible person should appear on the back cover of the prospectus.
    The ETN's underwriter and its responsible person should sign and/or affix chops at the part of the prospectus they are responsible for when underwriting the ETNs.
Article 6     The prospectus should include the following information:
  1. Summary description of the ETNs.
  2. Summary description of the securities firm.
  3. List of underwriters and liquidity providers, and their responsibilities.
  4. How information about the ETNs will be disclosed.
  5. CPA's audit opinion.
  6. Lawyer's opinion on legality.
  7. Information about the underlying index.
  8. Any and all disputes arising from and/or in connection with the ETNs shall be resolved in accordance with the law of the Republic of China.
  9. The competent court shall be the Taiwan Taipei District Court, unless otherwise provided under an arbitration agreement.
  10. Other important terms and conditions.
  11. Information to be specified as required by the competent authority, TWSE or GreTai.
Article 7     All information to be included in a prospectus as required under this template should be included. The prospectus should have a table of contents, page numbers and a summary. If any information required under this template may be omitted from the prospectus as approved by TWSE or GreTai, specify "none" or "omitted" after the applicable section heading.
    If same information is required to be specified at different places in the prospectus, the information may be specified in one place, where references to this information, including page number, are identified at such other places.
Article 8     A simplified prospectus covers key information from the prospectus and should include the following information:
  1. The following language should be shown in conspicuous print:
    1. The simplified prospectus covers key information from the prospectus, and the terms used and their definitions are exactly the same as those terms in the prospectus.
    2. Investors' rights and obligations arising from their subscription of the ETNs are described in detail in the prospectus. Investors are advised to refer to the prospectus if they are interested in subscribing the ETNs.
  2. Required information described in subparagraphs 1 to 4 and 8 of Article 9.
  3. Investment risk warnings: As required under subparagraph 4 of Article 3.
  4. Availability of prospectus: Including being available at the location of the securities firm and its business premises where its ETNs are offered for sale, and the website designated for reporting information and the securities firm's website.
  5. Date of publication.
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Article 9     The following information should be covered in the summary description of the ETNs:
  1. Name of the securities firm.
  2. Brief description of the ETNs: Name, number of units to be issued, total value of notes to be issued, issue price, issue date, maturity date, issue period, name of the underlying index, relevant markets, benchmark value, whether incomes may be distributed, investment costs, redemption upon maturity, early redemption by securities firm and subscription and sellback by investors, etc.
  3. Description of underlying index: Important terms and conditions of index licensing contract, how the index is formed and calculated, past performance, the underlying index is consistent with the description under Article 2, paragraph 3 of the Regulations, how investors are notified of a material event relating to the underlying index that may have a material impact on their rights and interests when it has occurred and how information about this event is disclosed, and how dividends on the ETNs are allocated or how the benchmark value is adjusted if allocation of dividends on securities comprising the index should be described when calculating price index.
  4. Estimation of benchmark value and how benchmark value is calculated, disclosed, and reason of the difference between the value and trading price.
  5. How incomes will be allocated.
  6. What costs investors will bear, including description of management services charged by securities firm and how fees are calculated and charged.
  7. Purpose of funds and hedging strategies, and description of risk management measures.
  8. What risks investors are exposed to.
  9. How the ETNs are traded in the securities markets and how investors subscribe and sell back the notes. This information should at least cover sellback price being the benchmark value published after market close on the date of request, minimum sellback units, delivery schedule of funds and securities, etc.
  10. Method of redemption upon maturity. This information should at least cover the redemption schedule, redemption price being the benchmark value published after market close on the last trading day, last trading day being the second business day before the maturity date, date of delisting from the exchange or OTC market being the business day immediately after the maturity date, etc.
  11. Conditions and procedures for securities firm to issue follow-on notes, early redeem, suspend or resume subscription and stop subscription. This information should at least cover that the last trading day being the business day immediately after the date when conditions on early redemption (or mandatory redemption) are satisfied, redemption price being calculated using the benchmark value published after market close on the last trading day, redemption schedule, etc.
  12. Procedures for reporting revocation or rescission by competent authority to take effect, delisting from the exchange or OTC market, and required actions. This information should at least cover that the last trading day being the business day immediately after satisfaction of conditions on delisting from the exchange or OTC market, redemption price being calculated based on the benchmark value published after market close on the last trading day, a redemption plan to be promptly prepared and reported in writing to TWSE or GreTai if the institution calculating the underlying index announces to stop calculating the index, or the index licensing contract is terminated.
  13. Other required information.
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Article 10     The following information should be covered in the summary description of the securities firm:
  1. Date of establishment.
  2. Address and telephone number of head office and branch.
  3. For general manager, deputy general manager, director, supervisor and department head: List their names, indicate their concurrent job position at a different company, if any, and start date.
  4. Major business activities the company engages in and their percentage to the whole business.
  5. Major pending litigation, non-litigation or administrative action of the company, about which fact in dispute, when the action started, major parties to the action, and current status of the case should be disclosed.
  6. Condensed balance sheet and consolidated profit-and-loss statement for the most recent two years.
  7. Financial analysis should cover at least the following information:
    1. Financial structure
      1. Debt to asset ratio.
      2. Ratio of long-term funds to real estate and equipment.
    2. Solvency.
      1. Current ratio.
      2. Quick ratio.
      3. Interest coverage ratio.
    3. Cash flow.
      1. Cash flow ratio.
      2. Cash flow adequacy ratio.
      3. Cash re-investment ratio.
  8. Information about financial instruments in use not disclosed in balance sheet and other necessary information.
Article 11     The following information should be covered in the information about the underlying index:
  1. Highest and lowest index points and closing index points at the end of each month in the most recent year.
  2. For an index composed of securities, name of company whose securities comprising the index and their weighted percentage should be specified.
Article 12     This template is jointly drafted by TWSE and GreTai and should be reported to the competent authority and come into force upon approval by the authority. Subsequent amendments thereto shall be effected in the same manner.