Chapter II Issuing Stock |
| 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.
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| 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:
- Establishment by offering.
- Any one of the types of share issuance set forth under Article 6, paragraph 2, subparagraph 1 or 4, where the circumstances in any one of the following items exist:
- 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.
- 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.
- 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.
- The issuer is required to allocate special reserve for its non-arm's length transactions and such requirement is not lifted yet.
- 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.
- A change to one-third or more of directors has occurred in the year of registration or the previous 2 years and any one of the following events takes place, provided that this rule does not apply if more than half of the issuer's directors are controlled by the original major shareholders before and after such change:
- 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.
- 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.
- 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.
- The securities underwriter, at the time the issuer files for registration, has received cumulatively 5 or more demerit points in the most recent year from the FSC, TWSE, TPEx, and Taiwan Securities Association.
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:
- 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.
- 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.
- An issuer issues new shares for cash capital increase for the purpose of public sale in connection with initial listing on the stock exchange or OTC market.
- A TIB-listed company applying to be reclassified as a company under Chapter II of the Listing Review Rules issues new shares for cash capital increase; either an OTC-listed company has applied to transfer its listing to a stock exchange listing or an exchange-listed company has applied to transfer its listing to an OTC listing, and the Taiwan Stock Exchange or the Taipei Exchange 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.
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| Article 14 | An exchange-listed or OTC-listed company or an emerging stock company may issue preferred shares with warrants for which the preferred shares and warrants are detachable; a company whose stock is neither listed on an exchange nor traded over-the-counter at securities firms may not issue preferred shares with warrants for which the preferred shares and warrants are detachable.
For issuance of preferred stocks with warrants, the terms and conditions shall provide for the following items:
1. Issue date.
2. Class of the preferred stocks and total issue amount.
3. The number of warrant units represented by each preferred share with warrant.
4. The listing or trading at the places of business of securities firms of the preferred stocks with warrants of an exchange-listed or OTC-listed company.
5. Criteria for setting conditions for exercising the warrant (including exercise price, exercise period, type of the share for warrant exercise, and the number of shares represented by each warrant).
6. For stocks with detachable warrants, the total number of the issued units of the warrants and the method of calculation of the price per unit of the warrants.
7. The adjustment of exercise price.
8. Procedure of request for exercising the warrant and method of paying for stock price. The method of paying for stock price shall be conducted by means of a choice of payment of cash or an offset of preferred stocks from the given offering.
9. The rights and obligations after exercising warrant.
10. Shares for performance of contract shall be restricted to the issuance of new shares.
11. The number of times and date for the stockholder to acquire new stocks by submitting the certificate of payment for stock price.
12. Procedure for obtaining the preferred stocks with warrants.
13. Other important stipulations.
The exercise price for preferred shares with warrants in an emerging stock company, may not be lower than the weighted average trade price for the company's common shares during the period preceding the price determination date, and may not be lower than its net value per share as reported in the financial reports for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a recommending securities firm shall be retained to give an opinion on the reasonableness of the issuing price.
The exercise price for preferred shares with warrants issued by a company whose stock is neither listed on an exchange nor traded over-the-counter at securities firms may not be lower than its net value per share as reported in the financial reports for the most recent fiscal period, audited and attested or reviewed by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issuing price.
The weighted average trade price for the company's common shares during the period preceding the price determination date as mentioned in paragraph 3 of this article and in Article 33, paragraph 2, and Article 42, paragraph 3 shall mean, for the 30 business days preceding the price determination date, the sum of the monetary amounts traded on each of those business days of those emerging stock common shares in the Emerging Stock Computerized Price Negotiation and Click System divided by the sum of the numbers of those shares traded on each of those business days.
Paragraph 2 of Article 42, and Articles 43 through 49 shall apply mutatis mutandis to issuance of preferred stocks with warrants by an issuer. |
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| Article 15 | Where an issuer files registration to issue stocks and any of the circumstances listed below exists, the FSC may suspend the effectiveness of its registration:
- The registration statement is incomplete or the information contained therein is insufficient.
- Any one of the events prescribed under Article 5 occurs.
- The FSC deems it necessary in order to protect the public interest.
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| Article 16 | After receiving the notice of suspension for its registration from the FSC, the issuer may make corrections in response to the reasons given in the said notice and apply for revoking the suspension by the FSC. If the issuer does not receive any notice for further supplementation from the FSC or its case is not rejected, its registration shall become effective upon the expiration of the time period starting from the last date when the FSC and FSC-designated institutions receive the supplementary documents to the time required for becoming effective as prescribed under Article 13.
If, after the FSC suspends its effective registration in accordance with the previous Article, within 12 business days after receipt of such notice, the issuer does not apply for revocation of such decision or the causes of suspension given in the FSC's notice remain pending even it has applied for revocation, the FSC may reject the issuer's application.
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| 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 capital increase conducted 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 be applied mutatis mutandis to an issue of new shares for cash capital increase conducted by an emerging stock company for purposes other than a case referred to above.
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.
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| 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:
- It conducts the initial public offering.
- It has been incorporated for less than 2 complete fiscal years.
- 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.
- 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.
- The said ratios for the most recent 2 fiscal years reach 1 percent or more.
- 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.
- 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.
- Preferred stocks with warrants are issued.
- 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.
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| Article 19 | An issuer that conducts an issuance of new shares for cash, or issuance of new shares in connection with merger, receipt of transfer of shares of another company, or an acquisition or demerger conducted in accordance with related laws is not subject to the restriction set forth in Article 140 of the Company Act prohibiting a stock issue price lower than par value.
An issuer registering an issuance of new shares for cash at below par value shall state its reasons for not using other cash raising methods and the reasonableness thereof, its method for setting the issuing price, and any possible effects on shareholders' equity, and shall submit the report to a shareholders' meeting for approval by resolution in accordance with the Company Act or securities laws and regulations.
An issuer registering an issuance of new shares for cash at below par value shall, after receiving the effective registration from the FSC, using a prominent font, specify in the prospectus and the subscription form the necessity and reasonableness of issuing the new shares at a discount, and the reasons and reasonability for not using other cash raising methods.
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| Article 19-1 | An issuer that simultaneously meets all of the conditions listed in the subparagraphs below may submit the Shelf Registration Statement for Issuance of New Shares (Attachment 3-1) and provide all the information required therein along with all the required documents to the FSC for effective registration. In addition, it shall complete the issuance within the scheduled issuance period.
- It is an exchange-listed or OTC-listed company whose stock has been listed on the stock exchange market or traded on the OTC stock market for a combined period of 3 years or more.
- At the time of filing for registration, its market capitalization is NT$2 billion or more.
- In the fiscal year it files for registration and the preceding 2 fiscal years, it has not had any disposition imposed on it by the FSC under Article 178 of the Act for any violation of the Act or relevant laws or regulations.
- In the fiscal year it files for registration and the preceding 2 fiscal years, it has not had any offering and issuance of securities rejected, voided, or revoked by the FSC. However, this restriction need not apply in cases where, since the date of delivery of the notice of effective registration, the issue has not been fully subscribed and payment therefore has not been fully collected in cash and the case has been voided or revoked by the FSC.
- Any cash capital increase or corporate bond issuance plans effectively registered with the FSC in the fiscal year it files for registration and the preceding two fiscal years have all been implemented as planned and on schedule, and no material changes have occurred.
- In the fiscal year it files for registration and the preceding two fiscal years, the lead underwriter engaged by the issuer has not been subject to any order under Article 66, subparagraph 2 of the Act to a sanction to dismiss any of its directors, supervisors, or managerial officers or a more severe sanction in connection with the handling of securities offering and issuance.
The provisions of paragraph 2 of Article 12, of subparagraph 2 of paragraph 1 and the main provision of paragraph 2 of Article 13, and of Article 15 and Article 16 apply mutatis mutandis to an issuer's filing for registration under the preceding paragraph. The provisions of Article 17 and of the preceding article apply mutatis mutandis to an issuer's issuance of new shares during the scheduled issuance period.
"Market capitalization" in paragraph 1, subparagraph 2 means the total number of the issuer's shares that are listed on the stock exchange market or traded on the OTC stock market multiplied by the average closing price calculated from the 30th, 90th or 120th business day prior to the date of the filing for registration, whichever is lower.
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 period at the time of filing with the FSC.
When an issuer issues new shares under a shelf registration, the amount of the first issue shall reach 50 percent or more of the total amount filed for under the shelf registration.
When an issuer intends to issue new shares under a shelf registration, it shall submit the information including the total amount of new shares to be issued, the scheduled issuance period, utilization plan, source of funds, and implementation schedule for approval by a majority vote of a meeting of the board of directors at which two-thirds or more of the directors are present.
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| Article 19-2 | When the issuer makes any takedown issue of new shares during the scheduled issuance period, it shall submit the prospectus and furthermore shall engage the lead securities underwriter and a lawyer, respectively, to issue an evaluation report and a legal opinion, and publish the legal opinion and summary evaluative report opinion in the prospectus.
When an issuer makes any takedown issue of new shares under the shelf registration, it shall, within 30 days from the date the lead underwriter issues the summary evaluative opinion, carry out the matters under Article 273 of the Company Act. It furthermore shall, within 3 months from the day that the lead underwriter issues the summary evaluative opinion, collect the funds in full and, on the next business day after it has completed collection of the funds, submit the Shelf Registration Supplement for an Issue of New Shares (Attachment 3-2) complete with all the required information together with the required documents to the FSC for recordation.
If an issuer making a takedown issue of new shares does not collect the funds in full within the deadline under the preceding paragraph, it shall suspend that takedown issue and make a public announcement within 2 days from the date it exceeds the deadline.
If an issuer making a takedown issue of new shares during the scheduled issuance period under the preceding article violates Article 7, Article 8, or subparagraph 1 or subparagraphs 3 to 6 of paragraph 1 of the preceding article, the FSC may void or revoke the new shares issued by it in that takedown issue.
When a circumstance under paragraph 3 or the preceding paragraph occurs with respect to an issuer, if the issuer has already collected proceeds for the securities, the issuer, within 10 days from the day it exceeds the deadline for conducting the takedown issue of new shares or the day it receives the notice of voidance or revocation from the FSC, shall return those proceeds plus interest computed in accordance with law, and bear liability for damages.
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| Article 19-3 | After an issuer has filed and obtained effective shelf registration for issuance of new shares, the registration will immediately be terminated upon occurrence of any of the following events, and a public announcement of the termination shall be made within 2 days from the date of occurrence of the cause for termination:
- An event under paragraph 4 of the preceding article.
- Change of the lead underwriter during the scheduled issuance period.
- Expiration of the scheduled issuance period.
- The total number of shares scheduled to be issued under the shelf registration has been issued in full.
- The FSC revokes the shelf registration as it deems necessary to protect the public interest.
Before the current shelf registration has duly been terminated pursuant to the preceding paragraph, the issuer may not make any further filing to issue new shares for cash capital increase.
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