This Taiwan Stock Exchange Corporation Procedures for Verification and Disclosure of Material Information of Listed Exchange Traded Notes (“ETNs”) by Securities Firms (the "Procedures") is adopted pursuant to Article 2 of the Exchange Traded Notes Public Listing Contract entered between Taiwan Stock Exchange Corporation ("TWSE") and the securities firms.
The term Material Inofrmation as used in the Procedures means occurrence of any of the following events of the securities firm issuing the ETNs or of the listed ETNs:
- The event(s) stipulated in Article 36 paragraph 3 subparagraph 2 of Securities and Exchange Act happening to the securities firm;
- Dishonored check(s) due to insufficient deposits, record of payment after dishonor of a check, refusal to transaction or other loss of credits of the securities firms.
- Any material effect on company finances or business resulting from any litigious or non-litigious matter, administrative disposition, contentious administrative proceedings, provisional attachment, provisional injunction, or compulsory execution, with respect to business atctivities engaged in by a securities firm or carried out by an associate person thereof; or a chairperson or managerial officer of the securities firm violating the Securities and Exchange Act, Futures Trading Act, Company Act, Banking Act, Insurance Act, Act Governing Bills Finance Business, Financial Holding Company Act, or Commercial Accounting Act, or being indicted for a crime of corruption, malfeasance in office, fraud, breach of trust or misappropriation.
- Material investor litigation(s) or dispute(s) arsing from issuance of ETNs of the securities firm.
- Any of the events stipulated in Article 185 paragraph 1 Company Act of the securities firms.
- Reorganization or bankruptcy procedure of the securities firm, and any and all events occurring in the course of such procedure, including any petition made to a court and any notice given or ruling handed down by a court, or any ruling prohibiting transfer of shares or any precautionary measure ordered by a court under relevant laws, or any material change in any of the above matters.
- Appointment (or election) of or change in chairman, general manager, a juristic-person director or supervisor or representative thereof, independent director, natural-person director or supervisor, or member of a functional cimmittee formed in accordance with the Securities and Exchange Act, or a change in one-third or more of directors or supervisiors of the securities firm.
- Change of certified public accountant (CPA) due to reasons other than internal adjustments within the certifying accounting firm of the securities firm.
- A resolution made by the board of directors of the securities firm to suspend or resume its business.
- A resolution made by the board of directors of the securities firm to carry out dissolution, merger or consolidation, split-up, acquisition or exchange or conversion of shares or transfer of shares from another; or failure of board of directors or shareholders meeting of a company participating in the merger, consolidation, division, acquisition, or transfer of shares from another to convene on the same day and make resolution(s), or inability of a company participating in the merger, consolidation, spilt-up, acquisition, or transfer of shares from another to convene a subsequent shareholders meeting, or veto by either side on the proposal for merger, consolidation, split-up, acquisition, or transfer of shares from another; or resolution of the board of directors to cancel a merger or consolidation during the course of the merger or consolidation plan following the initial board resolution in favor of the merger or consolidation.
- Any material internal control fraud, non arms-length transaction or defalcation of assets of the securities firm.
- Any material financial of business change of the securities firm resulting in significant effect on issuance plan of the ETNs.
- Occurrence of the events stipulated in subparagraphs 1 to 11 of this Article to a branch of the securities firm that results in significant effect on its business operation.
- Suspension of provision of the underlying index or termination of the index liscencing agreement by the producing institution.
- Material matters happening to the underlying index of the ETNs resulting in significant effect on investors.
- Occurrence of early redemption, temporary suspension or resumption of application for suscription and cessation thereof to the ETNs as provided in the prospectus.
- Matters relating to dividend distribution of the ETNs.
- Change in the filing documents of the ETNs that results in material effect on issuance plan.
- Effective registration of the ETNs being revoked or annulled by the competent authority.
- Any other events that affect the securities firm’s ability to continue business operation or significantly affect rights and interests of investors of the ETNs.
Upon occurrence of any event provided in each subparagraph of the previous article, the securities firm shall input the material information or explanations into the Internet information reporting system designated by the TWSE on the date of occurrence or before the beginning of trading hours on the next trading day following the day of the media reportage thereof. However, if a press release is issued earlier, the information shall be input simultaneously with the press release.
Where a securities firm discovers mass media reportage of any circumstance provided in each paragraph of previous article or any reportage that diverges from facts, it shall input an explanation of the material information before the next trading day following day of the reportage.
Where the TWSE discovers, or an investor makes an inquiry to the TWSE with supporting documentation attached concerning any failure by a securities firm to publish any material information required under Article 2 hereof, the TWSE may, as it considers necessary, complete the "Public Statement Concerning Material Information - Form (1)" (Appendix 1) filling in source of the information and content thereof, and make inquiry to the spokesperson or acting spokesperson of the securities firm by fascimile, telephone or email. The securities firm shall input explanations related to such inquiry into the Internet information reporting system designated by the TWSE within the time required by the TWSE.
“Within the time required by the TWSE” provided in the previous paragraph means that, where the securities firm receives the inquiry from the TWSE by facsimile or telephone before 12:30 p.m. of the trading day, it shall input explanations related to such inquiry into the Internet information reporting system designated by the TWSE before closing of trading; where it receives the inquiry from the TWSE after 12:30 p.m. of the trading day, it shall input explanations related to such inquiry into the Internet information reporting system designated by the TWSE before 5 p.m. on the same day.
Before the securities firm publishes the material information, it shall not release any information in private in order to ensure that the information is correct and accessible to general public.
The material information pubished by the securities firm shall elaborate the facts, causes, estimated impact, and measures to be taken.
If the securities firm is for any other reason unable to input material information into the Internet information reporting system designated by the TWSE, and thus publishes the material information through the "Public Statement Concerning Material Information - Form (2)" (Appendix 2), the TWSE may publicly announce the information pursuant to regulations, or disclose it generally through the TWSE's information transmission system, or forward photocopies to all securities brokers to publicly post at their places of business and display them in the places for pulic reviewing of TWSE for reference by the investing public.
Where the securities firm violates the provisions of the Procedures, the TWSE may impose a breach penalty of NT$30,000; if the securities firm is required to do the publishing afterwards, it shall be completed within the time designated by the TWSE, and if it fails to comply with such prescribed time, the TWSE may impose a breach penalty of NT$10,000 per day until the day of completion thereof.
The securities firm on which breach penalty was imposed shall make the payment to the Finance Department of TWSE within five days upon receipt of the notice thereby.
The Procedures shall take effect after having been submitted to and approved by the competent authority whereas the related appendixes shall take effect after having been approved by the general manager of the TWSE. Subsequent amendments thereto shall be effected in the same manner.