Section I The Offering, Issuance, and Trading of Securities |
| Article 22 | With the exception of government bonds or other securities exempted by the Competent Authority, the public offering or issuance of securities without having filed for effective registration with the Competent Authority is prohibited.
A company that has issued stock under this Act, when issuing new shares under the Company Act, shall still be required to comply with the preceding paragraph, except in cases handled as provided in Article 43-6, paragraphs 1 and 2 hereof.
The provisions of paragraph 1 shall apply mutatis mutandis to a holder of securities as defined in Article 6, paragraph 1, or certificates of payment therefor, or documents of title thereto, or stock warrant certificates, or certificates of entitlement to new shares, who publicly offers to resell the securities or certificates.
Regulations governing the conditions, documents required to be attached, review and approval procedures, and other required matters for compliance with respect to filings for effective registration under the preceding three paragraphs shall be prescribed by the Competent Authority.
In formulating or amending provisions of the preceding paragraph's regulations relating to foreign exchange, the Competent Authority shall consult with and obtain the approval of the Central Bank of China. |
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| Article 22-1 | When a company that has issued stock under this Act issues new shares to increase the capital, the Competent Authority may prescribe the shareholding dispersion standards.
The Competent Authority shall prescribe regulations governing the conditions required to be met, operation procedures, and other matters for compliance in connection with a public company's convening of shareholders meetings, shareholders meetings with video conferencing, the exercise of shareholders meeting voting power in writing or through electronic transmission, shareholder services including shareholder or stock affairs, in-house or outsourced handling of shareholder services, evaluation of shareholders services, and other matters relating to shareholder services. |
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| Article 22-2 | The transfer of stock by the directors, supervisors, managerial officers, or shareholders holding more than ten percent of the total shares of a company that has issued stock under this Act shall be effected in accordance with any of the following methods:
1. An offering to the public following approval from the Competent Authority or the effective date of a filing for registration with the Competent Authority.
2. Transfer, at least three days after the filing date for registration with the Competent Authority, on a centralized exchange market or the over-the-counter market, shares that comply with the holding period requirement and daily transfer allowance ratio prescribed by the Competent Authority. However, filing is not required for transfers totaling less than 10,000 shares per trading day.
3. Transfer, within three days from the date of filing for registration with the Competent Authority, to specific persons satisfying the qualifications prescribed by the Competent Authority.
If a transferee of stock transferred under subparagraph 3 of the preceding paragraph wishes to transfer the shares within one year therefrom, they still must do so in accordance with one of the methods listed in the preceding subparagraphs.
The calculation of shares held by persons referred to in paragraph 1 shall include shares held by their spouses and minor children and those held under the names of others. |
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| Article 23 | The transfer of stock warrant certificates shall be effected within the time limit for the subscription of new shares by existing shareholders. |
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| Article 24 | If a company issues new shares in accordance with this Act, any of its previous shares not issued in accordance with this Act shall be deemed as having been issued in accordance with this Act. |
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| Article 25 | A company that publicly issues stock, after registration, shall promptly file with the Competent Authority and announce to the public the class and numbers of the shares held by its directors, supervisors, managerial officers, and shareholders holding more than ten percent of the total shares.
The holders of stock referred to in the preceding paragraph shall file, by the fifth day of each month, a report with the company of any changes in the number of shares they held during the preceding month. The issuer shall compile that information and file it with the Competent Authority by the fifteenth day of each month. When necessary, the Competent Authority may order the company to announce that information publicly.
The provisions of paragraph 3 of Article 22-2 shall apply mutatis mutandis to the calculation of shareholding referred to in the preceding two paragraphs.
When stock referred to in paragraph 1 is pledged, the pledgor shall immediately notify the company. The company shall file with the Competent Authority and publicly announce the status of a pledge of stock within five days after the creation of the pledge. |
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| Article 25-1 | The use of proxies for the attendance of a shareholders meeting of a company that publicly issues shares shall be restricted, prohibited, or regulated. The regulations governing the qualifications of a public company's proxy solicitors, proxy agents, and those handling proxy solicitation matters on its behalf, the format, acquisition, and methods of solicitation or agenting of proxies, the number of shares represented, statistical tallying and verification, the conditions under which votes cast by proxy shall be excluded, documents required to be filed with the authorities and kept on file, provision of information, and other required matters for compliance shall be prescribed by the Competent Authority. |
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| Article 26 | The total shares of registered stock held by all of the directors and all of the supervisors of any company that publicly offers and issues securities under this Act shall each respectively be not less than a certain percentage of its total issued shares.
The regulations governing the director and supervisor shareholding percentages referred to in the preceding paragraph and for the auditing thereof shall be prescribed by order of the Competent Authority. |
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| Article 26-1 | When a company that has issued securities under this Act convenes a shareholders meeting, in the notice of the subjects to be discussed at the shareholders meeting it shall list and state the main contents of any proposals relating to paragraph 1 of Article 209, paragraph 1 of Article 240, and paragraph 1 of Article 241 of the Company Act. Such proposals may not be raised as extemporary motions. |
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| Article 26-2 | A company that has issued stock under this Act, when giving a shareholders meeting notice to shareholders who own less than 1,000 shares of registered stock, may do so in the form of a public announcement. For a regular shareholders meeting, such notice may be given 30 days before the meeting date; for a special shareholders meeting, such notice may be given 15 days before the meeting date. |
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| Article 26-3 | The board of directors of a company that has issued stock in accordance with the Act may not number less than five persons.
When the government or a juristic person is a shareholder of a public company, then except with the approval of the Competent Authority, its representative(s) may not concurrently be elected or serve as director(s) and supervisor(s) of the company. The provisions of Article 27, paragraph 2 of the Company Act shall not apply.
Except with the approval of the Competent Authority, the following relationships may not exist among more than half of a company's directors:
1. Spouse.
2. Relative within the second degree of kinship.
Except with the approval of the Competent Authority, a company must have at least one supervisor who is not related, as defined in the subparagraphs of the preceding paragraph, to any other supervisor, and at least one supervisor who is not related to any director.
When a company convenes a shareholders meeting for the election of directors and supervisors and the original electees do not meet the conditions of the two preceding paragraphs, the determination of which directors or supervisors are elected shall be made according to the following provisions:
1. If the conditions for among the directors are not met, the election of the director(s) receiving the lowest number of votes among those not meeting the conditions shall be deemed invalid.
2. If the conditions for among the supervisors are not met, the provisions of the preceding subparagraph shall apply mutatis mutandis.
3. If the conditions for among the supervisors and directors are not met, the supervisor(s) receiving the lowest number of votes among those not meeting the conditions shall be deemed invalid.
When a person serving as director or supervisor is in violation of the provisions of paragraph 3 or paragraph 4, that person shall ipso facto be discharged through the mutatis mutandis application of the provisions of the preceding paragraph.
When the number of directors falls below five due to the dismissal of a director for any reason, the company shall hold a by-election to fill the vacant seat(s) at the next shareholders meeting. When the number of directors falls short by one-third of the total number prescribed by the articles of incorporation, the company shall convene a special shareholders meeting within 60 days of the occurrence of that fact to hold a by-election for directors.
A company shall formulate rules for the conduct of board meetings. Regulations governing the content of deliberations, procedures, matters to be recorded in the meeting minutes, public announcements, and other matters for compliance shall be prescribed by the Competent Authority. |
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| Article 27 | The Competent Authority may set a minimum or maximum value for each share of publicly issued stock. However, stock issued before such a value is set may continue to use its original value; the same shall apply when new shares of such stock are issued for capital increase.
A company shall report any modification of its issue price per share to the Competent Authority. |
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| Article 28 | (Deleted) |
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| Article 28-1 | If a public company whose stock is neither listed on a stock exchange nor traded on the over-the-counter market and whose ownership dispersion fails to meet the standards prescribed by the Competent Authority pursuant to paragraph 1 of Article 22-1 issues new shares for cash, it shall allocate a certain percentage of the total amount of the newly issued shares to be publicly offered, unless such a public offering is deemed to be unnecessary or inappropriate by the Competent Authority. The provisions of paragraph 3 of Article 267 of the Company Act regarding the preemptive subscription rights of existing shareholders shall not apply to such public offering.
In cash offering of new shares by a public company whose stock is listed on a stock exchange or traded on the over-the-counter market, the Competent Authority may require a certain percentage of its new issues to be offered at the market value to the public; in such circumstance, the provisions of paragraph 3 of Article 267 of the Company Act regarding the preemptive subscription rights of existing shareholders shall not apply to such public offering.
The percentage referred to in the preceding two paragraphs shall be ten percent of the total newly issued shares . However, if a higher percentage is determined by a resolution of the shareholders meeting, the percentage resolved upon shall be complied with.
When shares are allocated for public offering in accordance with paragraphs 1 and 2, the price of the shares in the same issue that is subscribed by company employees or existing shareholders shall be identical to the price of the publicly issued shares. |
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| Article 28-2 | In any of the following situations, a company whose stock is listed on a stock exchange or traded on the over-the-counter market may, upon the approval of a majority of the directors present at a directors meeting attended by two-thirds or more of directors, buy back its shares from the centralized securities exchange market or over-the-counter market or in accordance with paragraph 2 of Article 43-1, without being subject to the restrictions of paragraph 1 of Article 167 of the Company Act:
1. Transfer of shares to its employees.
2. For equity conversion purposes in coordination with the issuance of corporate bonds with warrants, preferred shares with warrants, convertible corporate bonds, convertible preferred shares, or share subscription warrants; or
3. The buyback is necessary for purposes of maintaining the company's credit and shareholders' equity, and the shares bought back are cancelled.
The number of shares bought back by a company under the preceding paragraph may not exceed ten percent of the total number of issued shares of the company. The total amount of the shares bought back may not exceed the amount of the retained earnings plus premium on capital stock plus realized capital reserve.
Regulations regarding the procedures, price, quantity, method, conversion method, and matters required to be reported and publicly announced in connection with the buyback of shares by a company in accordance with paragraph 1 above shall be prescribed by the Competent Authority.
The shares bought back by a company in accordance with paragraph 1 shall be transferred within five years from the date of buyback, except for shares bought back as referred to in subparagraph 3, for which amendment registration shall be completed within six months from the date of buyback. Any shares not transferred within the time limit shall be deemed unissued shares, and amendment registration shall be carried out.
Shares bought back by a company in accordance with paragraph 1 shall not be pledged. Before the shares have been transferred, the shareholder's rights shall not be enjoyed.
If a company buys back shares from the centralized securities exchange market or over-the-counter market, the shares held by its affiliated enterprises defined under Article 369-1 of the Company Act or its directors, supervisors, managerial officers, or shareholders holding more than 10 percent of the company's total shares, shall not be sold during the buyback period.
The board of directors resolution referred to in paragraph 1, and the implementation thereof shall be reported in the most recent shareholders meeting. The same shall also apply if the shares are not bought back for any reason.
The shares held by persons prohibited from selling their shares as set out in paragraph 6 shall include shares held by their spouses and minor children and those held under the names of other parties. |
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| Article 28-3 | A public company that publicly offers or issues stock warrants, preferred shares with warrants, or corporate bonds with warrants shall, when subscribers exercise the warrant rights in accordance with the subscription rules prescribed by the company, be obligated to issue the shares to them, and the restrictions of paragraph 7 of Article 156 of the Company Act requiring the issuance price to be the same and of paragraphs 1, 2, and 3 of Article 267 of the same Act regarding preemptive subscription rights of employees and existing shareholders shall not apply.
The number of shares that may be subscribed under the subscription rules prescribed by a company referred to in the preceding paragraph shall be specified in the company's articles of incorporation in advance and shall not be subject to the restrictions of paragraphs 1 and 2 of Article 278 of the Company Act. |
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| Article 28-4 | The total issue amount of the corporate bonds offered and issued by a company that has issued stock in accordance with this Act, unless the Competent Authority has obtained the approval of the central authority with jurisdiction over the business of the company, shall comply with the following provisions, and is not subject to the restrictions under Article 247 of the Company Act:
1. The total issue amount of secured corporate bonds, convertible corporate bonds, or corporate bonds with warrants may not exceed 200 percent of the company's total assets less total liabilities.
2. The total issue amount of unsecured corporate bonds other than bonds under the preceding subparagraph may not exceed one-half of the company's total assets less total liabilities. |
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| Article 29 | If an issue of corporate bonds has a financial institution serving as a guarantor, it may be deemed a secured issue. |
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| Article 30 | When applying for approval to offer and issue securities publicly, a company is required to submit a prospectus, in addition to the other information required under the Company Act.
The information required to be supplied in the prospectus referred to in the preceding paragraph shall be prescribed by an order of the Competent Authority.
The provisions of paragraph 1 shall apply mutatis mutandis when a company applies for listing on a stock exchange or over-the-counter trading of its securities. The regulations governing the information required to be included in the prospectus shall be drafted by the stock exchange and over-the-counter securities exchange, respectively, and submitted for approval by the Competent Authority. |
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| Article 31 | A prospectus shall be delivered to the subscriber of securities prior to public offering.
Any person who violates the preceding paragraph shall be liable for the compensation of damage sustained by any bona fide counterparty. |
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| Article 32 | If there is any misrepresentation or concealment in the material content of the prospectus referred to in the preceding Article, the following persons, within the scope of their responsibilities, shall be jointly and severally liable with the issuer to any bona fide counterparty for compensation for damage resulting therefrom:
1. The issuer and its responsible person(s).
2. Any employees of the issuer who has signed and affixed their seal on the prospectus to certify its accuracy in whole or in part.
3. Any underwriter of the securities.
4. Any CPA, lawyer, engineer, or any professional or technical person who has signed or affixed their seal to certify in whole or in part or to present their opinion on the correctness of the prospectus.
With the exception of the issuer, the persons referred to in subparagraphs 1 through 3 of the preceding paragraph shall not be liable for compensation if they can prove that they exercised all due diligence, and that they had good cause to believe, with respect to portions of materials not certified by a person referred to in subparagraph 4, that there was no misrepresentation or concealment in the material content, or that they had good cause to believe, with respect to any certified portion, that it was true. The persons referred to in subparagraph 4 of the preceding paragraph also shall not be liable if they can prove that they exercised reasonable investigation and had good cause to believe that their certification or opinions were accurate. |
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| Article 33 | The stock or bond subscribers shall deliver the payment due for the subscription of the stock or bonds, together with the subscription forms for the stock or bonds, to the collecting agent. Upon receipt of the payment, the collecting agent shall deliver to each of those payers a certificate, signed/sealed by the issuer, of payment for the stock or bonds.
Both the certificate of payment referred to in the preceding paragraph and its counterfoil shall be signed/sealed by the collecting agent, and the counterfoil shall be returned to the issuer.
When a company that has issued securities under this Act issues new shares, if the period for payment of the subscription publicly announced pursuant to Article 273 of the Company Act is one month or longer, the failure of a subscriber to effect payment within the period shall result in the forfeiture of their rights of subscription, and the provisions of paragraph 3 of Article 266 of the Company Act applying mutatis mutandis the provisions of Article 142 of the Company Act shall not apply. |
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| Article 34 | An issuer shall deliver the stock or corporate bonds to the subscribers against the certificates of payment referred to in the preceding Article within thirty days from the date the stock or corporate bonds may be issued pursuant to the Company Act, and public announcement shall be made prior to the delivery.
The transfer of the certificates of payment for stock or bonds shall be made within the time limit specified in the preceding paragraph. |
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| Article 35 | Stock or bonds issued by a company shall be duly certified. The regulations governing such certification shall be prescribed by the Competent Authority. |
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| Article 36 | Unless under special circumstances as otherwise provided by the Competent Authority, a company that has issued securities under this Act shall perform public announcement and filing with the Competent Authority as follows:
1. Within three months after the close of each fiscal year, publicly announce and file with the Competent Authority the annual financial report duly signed or sealed by the chairperson, managerial officer, and accounting officer, and audited and attested by a CPA, approved by the board of directors, and recognized by the supervisors.
2. Within 45 days after the end of the first, second, and third quarters of each fiscal year, publicly announce and register with the Competent Authority financial reports duly signed or sealed by the chairperson, managerial officer, and accounting officer and reviewed by a CPA and reported to the board of directors.
3. Within the first ten days of each calendar month, publicly announce and file with the Competent Authority the operating status for the preceding month.
Regulations governing the applicable scope of the special circumstances as referred to in the preceding paragraph, deadlines for public announcement and filing under such special circumstances, and other required matters for compliance in connection therewith shall be prescribed by the Competent Authority.
Within two days from the date of occurrence of any of the following events, any company referred to in paragraph 1 of this Article shall publicly announce and file with the Competent Authority:
1. Any inconsistency between the annual financial report approved by the regular meeting of shareholders and the annual financial report publicly announced and filed with the Competent Authority.
2. Any event that has a material impact on shareholders' rights and interests or securities prices.
The companies referred to in paragraph 1 shall prepare an annual report and distribute it to the shareholders at the regular meeting of shareholders. The particulars to be covered in the annual report, principles for its preparation, and other required matters for compliance shall be prescribed by the Competent Authority.
Copies of the reports publicly announced and filed with the Competent Authority referred to in paragraphs 1 to 3 and the annual report referred to in the preceding paragraph shall, if the securities are listed for trading on a stock exchange, be sent to the stock exchange, or, if the securities are traded over-the-counter, copies shall be sent to the institution designated by the Competent Authority, for review by the public.
During a period that a company is undergoing a reorganization procedure, the powers of the board of directors and the supervisors under paragraph 1 shall be exercised by the reorganizers or the reorganization supervisors.
The regular meeting of shareholders of a company whose stock is listed on a stock exchange or traded over-the-counter shall be held within six months after the close of each fiscal year, and the proviso of Article 170, paragraph 2 of the Company Act shall not apply.
In a year which expires the term of the directors and supervisors of a company whose stock is listed on a stock exchange or traded over-the-counter, if the board of directors does not convene the regular meeting of shareholders to elect directors and supervisors for the new term in accordance with the preceding paragraph, the Competent Authority may ex officio set a deadline for the meeting to be held. If the meeting is not held by the deadline, the entire body of directors and supervisors shall ipso facto be dismissed from the time of expiration of the deadline. |
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| Article 36-1 | The Competent Authority shall prescribe rules governing the applicable scope, work procedures, required public announcements, required filings, and other required matters for compliance with respect to major financial or operational actions of public companies, such as acquisition or disposal of assets, engaging in derivatives trading, monetary loans to others, endorsements or guarantees for others, or disclosure of financial forecasts. |
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| Article 37 | To perform audit and attestation of the financial reports referred to in Article 36, a CPA shall require approval from the Competent Authority. Regulations governing the approval procedures shall be prescribed by the Competent Authority.
Except as otherwise provided by the Certified Public Accountant Act or other laws, a CPA performing an audit and attestation under the preceding paragraph shall do so in compliance with the audit and attestation regulations promulgated by the Competent Authority.
If there is any error or omission by a CPA in performing the attestation referred to in paragraph 1, the Competent Authority may impose any of the following sanctions, according to the seriousness thereof:
1. Warning.
2. Suspension from practicing any attestation under this Act for a period of two years.
3. Voidance of their approval to perform attestation.
The financial reports referred to in paragraph 1 of Article 36 shall be placed at the company's office and branches for inspection or copying by shareholders and creditors. |
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| Article 38 | To protect the public interest or the interests of investors, the Competent Authority may, prior to the approval of a public offering or issuance, require the issuer, securities underwriters, or other related parties to submit reference materials or reports and make a direct examination of their relevant documents and accounts.
The Competent Authority may, at any time after the issuance of securities, order the issuer to submit financial and business reports or make a direct examination of the financial and business conditions of the issuer. |
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| Article 38-1 | When the Competent Authority deems it necessary, it may, from time to time, appoint a CPA, lawyer, engineer, or other professionals or technicians to examine the financial and business conditions and related documents, statements, and account books of the issuer, securities underwriters, or other related parties and to submit reports or opinions to the Competent Authority, at the expense of the examinee.
When shareholders who have been continuously holding, for a period of 1 year or longer, 3 percent or more of the total number of the outstanding shares of a company whose stock is listed on a stock exchange or traded over-the-counter deem that a specific matter materially damages the rights or interests of shareholders, they may apply to the Competent Authority, attaching their reasons, related evidence, and explanations of the necessity, for examination of the specific matter of the issuer or related documents and account books. When the Competent Authority deems it necessary, it will do as provided in the preceding paragraph. |
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| Article 39 | During its examination of the financial reports and other reference materials or reports filed by the issuer, or its examination of the financial and business conditions of the issuer, the Competent Authority, if it finds that the issuer has failed to comply with a law or regulation, may issue an order for corrections or improvements within a specified period, and it may additionally impose penalties pursuant to this Act. |
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| Article 40 | The approval of a public offering shall not be cited in promotional material as substantiating anything under the application or as a guarantee of the value of the securities. |
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| Article 41 | When the Competent Authority deems it necessary, it may order a company that has issued securities under this Act to set aside, in addition to the allocation of legal reserve required by law, a certain proportion of its earnings as a special reserve.
When a company that has issued securities under this Act applies to capitalize its legal reserve or capital reserve, it shall first make up any loss. If it will capitalize capital reserve, a limit of a certain percentage shall be imposed. |
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| Article 42 | If a company intends to have stock that has not been issued in accordance with this Act listed on a stock exchange or traded on the over-the-counter market, it shall first apply to the Competent Authority for retroactive handling of the public issuance examination and approval procedures under this Act.
Company stock that has not undergone retroactive handling of public issuance examination and approval procedures under this Act in accordance with the preceding paragraph may not be traded under this act, nor may any public tender offer or brokerage be conducted for the purposes of trading such stock. |
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| Article 43 | The payment or settlement of securities listed on a stock exchange or traded on over-the-counter markets shall be effected on a cash payment and actual delivery basis. The settlement period and the margin deposit to be paid in advance may be prescribed by an order of the Competent Authority.
Settlement of trades of securities held in the custody of a centralized securities depository enterprise may be effected through book-entry transfer. The regulations for the operations thereof shall be prescribed by the Competent Authority.
If securities held in the custody of a centralized securities depository enterprise are the subject of a pledge, the delivery of the pledge created may be effected through book-entry transfer, and Article 908 of the Civil Code shall not apply.
Securities held in fungible custody by a securities depository shall be co-owned by the owners in accordance with the types and quantities of securities deposited by them. Upon withdrawal, securities of the same type and in the same quantity may be used to return them.
To handle custody business, a centralized securities depository enterprise may enter the stock and corporate bonds held in its custody into the issuer's shareholders register or corporate bond counterfoils in its own name. When, before the stock or corporate bond issuer calls a shareholders meeting or corporate bondholders meeting, decides to distribute dividends or bonuses or other benefits, or pays principal or interest, the centralized securities depository enterprise notifies the issuer of the true name or title and domicile or residence of, and the amount held by, the owner of stock or corporate bonds held in its custody it shall be deemed to have entered that information into the issuer's shareholders register or corporate bond counterfoils or that the stock or corporate bonds have been delivered to the company, and the provisions of paragraph 1 of Article 165, Article 176, Article 260, and paragraph 3 of Article 263 of the Company Act shall not apply.
The provisions in the preceding two paragraphs shall apply mutatis mutandis to government bonds and other securities. |
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