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Chapter Content

Title:

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

Amended Date: 2021.03.29 
   Chapter III Issuance of Corporate Bonds
      Section I Ordinary Corporate Bonds
Article 20     When an issuer files for registration of an issue of straight corporate bonds, and purchasers of the bonds are restricted to professional investors as defined in the TPEx Rules for International Bonds, the content of the prospectus submitted shall be prepared in accordance with Article 6, paragraph 3 of the Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses. If the purchasers of the bonds are not restricted to professional investors as defined in the TPEx Rules for International Bonds, the prospectus submitted shall be prepared in accordance with the above-mentioned provisions, and, in addition, shall specify any risks related to credit, the condensed balance sheet and statement of comprehensive income for the most three recent years and the most recent period.
     The prospectus for the corporate bonds under the preceding paragraph shall disclose the concluding opinion of the securities underwriter, and the securities underwriter's undertaking that the collected underwriting fees will not in any manner or under any name be used to compensate, or be returned to, the issuer or its related parties or any of their designated persons.
    For the corporate bonds of paragraph 1, an application shall be filed with the Taipei Exchange for OTC trading.
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Article 21    A public company may issue corporate bonds only after it has submitted the Registration Statement for Issuing Corporate Bonds (Attachment 14), provided all information required therein and sent the registration statement along with relevant documents to the FSC and obtained an effective registration.
    In the event the public company registers with the FSC and FSC-designated institutions in accordance with the preceding paragraph, its registration shall become effective 3 business days after the Registration Statement for Issuing Corporate Bonds is received by the FSC and its designated institutions. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
    The provisions of paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to public companies that file for registration in accordance with paragraph 1.
    After registering for issuing corporate bonds, if the public company changes the terms of issuance or the coupon interest rate and then submits the modified relevant documents to the FSC and FSC-designated institutions before the original registration becomes effective, its registration will become effective in accordance with the time frame prescribed in paragraph 2.
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Article 22    In the event the issuer meets all the following conditions simultaneously, it may submit the Shelf Registration Statement for Issuing Corporate Bonds (Attachment 15), provide all information required therein, along with all required documents to the FSC for effective registration. In addition, it shall complete the issuance within the scheduled issuance period.
  1. Its stocks have been listed in the stock exchange market or traded in the business places of securities firms for a combined period of 3 years or more. However, this provision does not apply under the following circumstances:
    1. Where the issuer is a government-owned enterprise.
    2. Where the issuer is a financial holding company conforming to Article 4 paragraph 4 of the Financial Holding Company Act providing that the subsidiary bank, subsidiary insurance company, or subsidiary securities firm be listed or its shares be traded in the business places of securities firms for a total of 3 years.
  2. It has periodically or non-periodically disclosed its financial information to the public in accordance with Article 36 of the Act or other relevant laws for the past 3 years.
  3. There has been no occurrence of rejection, or withdrawal by the FSC with regard to the offering and issuance of securities within the past 3 years. However, this restriction need not apply to the case where, following the date of receiving the notice of effective registration, the issuance has not been fully subscribed and payment thereof has not been fully collected in cash and hence the case has been rejected or revoked by the FSC.
  4. The cash capital increase or corporate bond issuance plans effectively registered with the FSC within the past 3 years have been implemented in accordance with the schedules and no material changes have occurred.
  5. The CPAs retained by the issuer have not received a warning or more severe sanction for their handling of securities offering and issuance within the last 3 years.
  6. The lead underwriter retained by the issuer has not been punished in accordance with Article 66, subparagraph 2 of the Act to discharge its director, supervisor, or manager or with more severe sanctions in connection with handling of securities offering and issuance within the last 3 years.
    Paragraph 2 of Article 12, Articles 15, 16, and 20, and paragraphs 2 and 4 of the preceding article shall apply mutatis mutandis to the issuer that registers with the FSC in accordance with the preceding paragraph.
    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 said period at the time of registering with the FSC.
    Where an issuer issues corporate bonds during the scheduled issuance period, it shall consign an underwriter to underwrite the issuance on a firm commitment basis.
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Article 23    When issuing corporate bonds within the scheduled issuance period as referred to in the preceding Article, the issuer shall, on the next business day after it has put such issuance plan in public announcement in accordance with Article 252 of the Company Act and completed payment collection, submit the Supplementary Form for the Shelf Registration for Issuing Corporate Bonds (Attachment 16) completed with all required information, together with required documents, to the FSC for recordation.
    In case of change of CPA or lead underwriter retained by the issuer during the scheduled issuance period as referred in the preceding Article, qualifications prescribed in paragraph 1, subparagraph 5 or 6 of the preceding article shall apply to the succeeding CPA or lead underwriter.
    The FSC may suspend the additional issuance of corporate bonds supplemental to the current issuance in case where an issuer violates Article 7and paragraph 1 of the preceding article during the scheduled issuance period.
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Article 24    Upon the occurrence of any one of the following events, the effective registration of the shelf registration for issuing corporate bonds shall be terminated:
  1. The issuer has the condition prescribed in paragraph 3 of the preceding article.
  2. The scheduled issuance period expires.
  3. The planned total issuance amount has been fully issued.
  4. The FSC deems revocation of the shelf registration to be necessary to protect the public interest.
    Prior to the termination of such shelf registration, the issuer is not allowed to register for issuing straight corporate bonds again.
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Article 25    Except as otherwise regulated by laws, an issuer registering the issuance of secured corporate bonds backed by stocks of another company shall comply with the following:
  1. The collateral shall be restricted to stocks, owned for 1 year or more by the issuer, of a listed company or a company whose shares are traded at the business places of securities firms in accordance with Article 3 of the TPEx Review Rules. The said collateral may not be attached with any restriction such as the creation of a pledge, restricted trading in the Stock Exchange market or an OTC market, change of trading method, or suspended trading.
  2. The value of the collateral upon registration may not be lower than 150 percent of the principal and interest to be borne by the subject corporate bonds to be issued.
  3. The collateral shall be mortgaged or pledged to the trustee of creditors, and it shall be noted in the trust contract that during the term of the corporate bond, the trustee shall daily evaluate the collateral based on its closing price. In case where the value of the collateral decreases to the extent that the collateral maintenance ratio is lower than a certain percentage of the principal and interests to be borne by the subject corporate bonds to be issued, the trustee shall promptly notify the issuer to settle the shortfall. The issuer shall settle the shortfall within 2 business days upon receipt of notification from the trustee, and shall state in the trust contract the actions to be taken when the issuer fails to settle the shortfall within the time limit, as well as the mandatory responsibilities of the trustee.
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Article 26    A public company may issue exchangeable corporate bonds whose repayment subject is the stocks, held by the public company for more than 2 years, of a listed company or a company whose shares are traded at the business places of securities firms in accordance with Article 3 of the TPEx Review Rules.
    A public company may issue exchangeable corporate bonds only after it has submitted the Registration Statement for Issuing Exchangeable Corporate Bonds (Attachment 17), provided all information required therein, along with required documents to the FSC, and after such registration becomes effective.
    Paragraph 2 of Article 12, Articles 15 and 16, and paragraph 4 of Article 21 shall apply mutatis mutandis to the public company registering with the FSC in accordance with the preceding paragraph, and such registration shall become effective 7 business days from the date upon which the FSC and FSC-designated institutions receive the registration statement for the issuance of corporate bonds. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, or credit card enterprise.
    When issuing exchangeable corporate bonds, the issuer shall set out the following items in the terms of issuance and exchange:
  1. Article 29, paragraph 1, subparagraphs 1 through 8, 10, 11, 13, and 17 shall apply mutatis mutandis.
  2. The procedures for requesting exchange and the ways of payment.
  3. The deposit procedures for the underlying shares.
    Unless otherwise regulated by related laws, the aforementioned deposit procedure shall be conducted by a centralized securities depository enterprise. During the period of deposit, the underlying shares may not be pledged or retrieved.
    The bondholder who requests for exchange shall fill out the Exchange Request Form and submits the form along with the bonds in question to the issuer or its agent. The exchange becomes effective at the time of receipt of the aforementioned documents. After receiving the exchange request from the bondholder, the issuer or its agent shall deliver the exchange underlying stock to the bondholder within the next business day. If the exchange results in odd-lot units of less than 1,000 shares, the stocks can be delivered within 5 business days.
    When issuing exchangeable corporate bonds, the issuer shall engage securities underwriter(s) to handle a public offering of the entire issuance, to which the provisions of Article 30, Article 32, Article 35, and Article 37 shall apply mutatis mutandis.
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      Section II Convertible Bonds
Article 27    Exchange-listed or OTC-listed companies shall submit the Registration Statement for Issuing Convertible Bonds (Attachments 18 and 19), provide all information required therein, along with required documents to the FSC for registration. The companies can commence issuing convertible bonds only after the registration becomes effective.
    Registration to issue convertible corporate bonds filed by an exchange-listed or OTC-listed company at which any of the circumstances set forth in Article 13, paragraph 1, subparagraph 2 exists shall become effective 20 business days from the date on which the FSC and FSC-designated institutions receive its registration form.
    Registration to issue convertible corporate bonds submitted by an exchange-listed or OTC-listed company, except those filing in accordance with the preceding paragraph, shall become effective 12 business days after the date on which the FSC and FSC-designated institutions receive its registration form.
    When an emerging stock company or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms submits a registration in accordance with paragraph 1, the Registration Statement for Issuing Convertible Bonds will become effective 7 business days after its receipt by the FSC and FSC-designated institutions. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, or credit card enterprise.
    Where registration is filed pursuant to paragraph 1 herein, Article 12, paragraph 2, Article 15, Article 16, and Article 21, paragraph 4 shall apply mutatis mutandis.
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Article 28    A convertible corporate bond issuance denominated in a foreign currency shall submit to the Taipei Exchange an application for trading over-the-counter.
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Article 29    The following items shall be specified in the terms of issuance and conversion when issuing convertible bonds:
  1. Issue date.
  2. Coupon rate and payment of interest.
  3. Date of interest payment.
  4. Type of corporate bonds, the face value of each bond and the aggregate amount of this issuance.
  5. The availability of collateral or guarantee.
  6. The name of trustee and material covenants.
  7. Terms of repayment (e.g. repayment of principal upon maturity, payment of principal prior to maturity, terms of call or redemption, etc.).
  8. The listing or trading at the business places of securities firms of convertible bonds of an exchange-listed or OTC-listed company.
  9. Procedures regarding request for conversion.
  10. Criteria for setting terms and conditions of conversion (including conversion price, conversion period and the classes/types of shares to be converted with).
  11. Adjustment of conversion price.
  12. The disposition of interests and dividends in the year of conversion.
  13. The disposition of monetary value for the conversion of less than one share while processing a conversion.
  14. Rights and obligations after conversion.
  15. The number of times and date for the bondholder to submit the certificates of conversion to acquire new stocks.
  16. Conversion shall be performed by either issuing new shares or delivering already issued shares, except that conversion by an emerging stock company or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms shall be effected only through the issuance of new shares.
  17. Procedures for obtaining the convertible bonds.
  18. Other important stipulations.
    Where secured convertible corporate bonds are backed by the stocks of another company held by the issuer, the provisions of Article 25 shall apply mutatis mutandis.
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Article 30    The face value of convertible bond is limited to NT$100,000 or multiples thereof and the repayment period may not be longer than 10 years. Those bonds in the same issuance shall have the same repayment period.
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Article 31    When issuing convertible bonds, with the exception of listed or OTC companies, for which an underwriter shall be engaged to underwrite all bonds issued on a firm commitment basis, the bonds may not be underwritten and offered to the public.
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Article 32    From the end of a designated period of time following the issuance date of convertible corporate bonds until 10 days before the maturity date, the bondholder may request for conversion at any time in accordance with the procedures of conversion set by the issuer, except during the period in which transfer is suspended by laws.
    The designated period of time referred to in the preceding paragraph shall be set by the issuer in its procedures for conversion.
    Convertible corporate bonds issued by an exchange-listed, OTC-listed, or emerging stock company are not subject to the restriction of paragraph 1 that conversion may not be made during the 10 days before the maturity date.
Article 33    The conversion of convertible bonds to stocks is not subject to the restriction of Article 140 of the Company Act that the issuing price of the stocks may not be below par value.
    The conversion price for convertible bonds issued by 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, nor may it be lower than the company's 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 issuing and conversion price for convertible bonds issued by a company whose shares are neither listed on an exchange nor traded on an OTC market shall not be lower than the company's 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.
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Article 34    When the bondholder requests for conversion, unless otherwise regulated by the FSC, the holder shall fill out a conversion request form and submit it along with the bond in question, or the passbook in which the bond is recorded, to the issuer or its agent for such purpose. The conversion will become effective at the time the said documents have arrived at the business places of the issuer or its agent. After receiving such request for conversion, the issuer or its agent shall enter the name of the bondholder into the shareholder register and it shall deliver the new shares or certificates of bond-to-stock conversion to the holder within 5 business days.
    The shares or certificates of bond-to-stock conversion of listed, OTC, or emerging stock companies issued under the preceding paragraph can be traded in the market or at the business places of securities firms on the date of its delivery to shareholders.
    Where the issuer makes delivery of newly issued shares under paragraph 1, it shall, within 15 days after the end of the current quarter, publicly announce the number of new shares issued in the preceding quarter.
    For new shares issued in accordance with paragraph 1, the day, month, and year of effective registration as stated in the FSC notification may be substituted for the day, month, and year of amendment registration for issuance of new shares under Article 162, paragraph 1, subparagraph 2 of the Company Act; after such issuance of new shares, the issuer shall, at least once per quarter, submit an application for capitalization amendment registration to the competent authority for company registration, annexing the FSC's letter of approval for the original issuance of convertible corporate bonds.
    For certificates of bond-to-stock conversion issued in accordance with paragraph 1, before the end of each fiscal year, the issuer shall present the consent letter from the FSC which previously approved the issuance of convertible bonds and apply with the competent authority over the corporate registration/incorporation to register the change in its capital and to issue new shares.
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Article 35    Convertible bonds, as well as certificates of bond-to-stock conversion and stocks for which conversion is requested in accordance with related laws, except those in scripless form, shall be in registered form.
Article 36    Before the formal delivery of shares or certificates of bond-to-stock conversion in accordance with Article 34, these shares or certificates shall be certified by the certifying organization in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.
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Article 37    The conversion price of the convertible bond shall be announced to the public by the issuer prior to the sale of the bonds.
    The conversion price referred to in the preceding paragraph shall mean the face value of convertible bond required for converting it to one share of stock.
      Section III Corporate Bonds with Equity Warrants
Article 38    An exchange-listed or OTC-listed company or an emerging stock company may issue corporate bonds with equity warrants for which the corporate bonds 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 corporate bonds with equity warrants for which the corporate bonds and warrants are detachable.
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Article 39    An exchange-listed or OTC-listed company may only issue corporate bonds with equity warrants after it has submitted the Registration Statement for Issuing Corporate Bonds with Equity Warrants (Attachments 22 and 22-1), and provided all information required therein, along with required documents to the FSC for registration, and the registration has become effective.
    Registration to issue corporate bonds with equity warrants filed by an exchange-listed or OTC-listed company where any of the circumstances under Article 13, paragraph 1, subparagraph 2 exist shall become effective 20 business days from the date the FSC and FSC-designated institutions receive the registration form.
    The registration filed by an exchange-listed or OTC-listed company, except those filing in accordance with the preceding paragraph, shall become effective 12 business days after being received by the FSC and FSC-designated institution.
    When an emerging stock company or a company whose shares are neither listed on an exchange nor traded at the business places of securities firms that submits a registration in accordance with paragraph 1, the Registration Statement for Issuing Convertible Bonds will become effective 7 business days after its receipt by the FSC and FSC-designated institutions. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, or credit card enterprise.
    Where registration is filed pursuant to paragraph 1 herein, Article 12, paragraph 2, Article 15, Article 16, and Article 21, paragraph 4 shall apply mutatis mutandis.
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Article 40    For an issuance of corporate bonds with equity warrants that is denominated in a foreign currency, an application shall be filed with the Taipei Exchange for OTC trading.
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Article 41    The following items shall be provided in the terms and conditions when issuing corporate bonds with equity warrants:
  1. Issue date.
  2. Coupon rate and payment of interest.
  3. Date of interest payment.
  4. Type of corporate bonds, the amount of each bond and the aggregate amount of this issuance.
  5. The units of warrant represented by each corporate bond with warrant.
  6. For corporate bonds 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 availability of security or guarantee.
  8. Name of trustee and material covenants.
  9. Terms of repayment (e.g. repayment of principal upon maturity, payment of principal prior to maturity, terms of call or redemption, etc.).
  10. The listing or trading at the business places of securities firms of listed or OTC companies' corporate bonds with equity warrants.
  11. Procedures regarding request for exercising warrant; payment for stock price shall be made either in cash or by corporate bonds of the issuer.
  12. Criteria for setting terms and conditions of exercising warrant (including exercise price, exercise period, the classes/types of shares with which to exercise warrant, and the number of shares represented by each unit of warrant).
  13. Adjustment of exercise price.
  14. The disposition of interests and dividends in the year of exercising warrant.
  15. Rights and obligations after exercising warrant.
  16. Performance of contract shall be made only by issuing new shares.
  17. The number of times and date for the bondholder to acquire new stocks by submitting certificates of payment for shares.
  18. Procedure for obtaining the corporate bond with equity warrant.
  19. Other stipulations.
    Secured corporate bonds with equity warrants are backed by the stocks of another company held by the issuer, the provisions of Article 25 shall apply mutatis mutandis.
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Article 42    The face value of a corporate bond with equity warrants is limited to NT$100,000 or multiples thereof.
    In cases where it is necessary to issue new shares in connection with exercise of warrants, the total number of new shares multiplied by the exercise price per share may not exceed the total issued amount, in terms of face value, of the subject corporate bonds.
    The exercise price for the corporate bonds with equity warrants issued by 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, nor may it be lower than the company's net value per share as reported in the financial report 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 issue price.
    The exercise price for shares of corporate bonds with warrants issued by a company whose shares are neither listed on an exchange nor traded on an OTC market may not be lower than its net value per share as reported in the financial report (audited and attested [or reviewed] by a CPA) for the most recent fiscal period, and a CPA shall be retained to give an opinion on the reasonableness of the issue price.
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Article 43    When issuing corporate bonds with equity warrants, with the exception of listed or OTC companies, for which an underwriter shall be engaged to underwrite all bonds issued on a firm commitment basis, the bonds may not be underwritten and offered to the public.
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Article 44    Prior to offering the corporate bonds with equity warrants, the issuer shall make public announcement on the exercise price.
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Article 45    From the end of a designated period of time following the issuance date of corporate bonds with warrants until 10 days before the maturity date, the bondholder may request for exercising warrants at any time in accordance with the terms set by the issuer, except during the period in which transfer is suspended by laws. However, the exercise period may not be longer than the repayment period for the corporate bond.
    The designated period of time referred to in the preceding paragraph shall be set by the issuer in its terms for issuance and exercise.
    Corporate bonds with warrants issued by an exchange-listed, OTC-listed, or emerging stock company are not subject to the restriction of paragraph 1 that exercise may not be made during the 10 days before the maturity date.
Article 46    The performance of obligations by the issuer regarding exercise of warrant is not subject to the restriction of Article 140 of the Company Act that the issue price of the stocks may not be below par value.
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Article 47    When requesting for exercising warrants, the holder shall fill out an exercise request form and submit it to the issuer or its agent for such purpose. After receiving such request and full payment of the stock price, the issuer or its agent shall enter the name of the bondholder into the shareholder register and deliver the new shares or certificates of payment for shares to the holder within 5 business days.
    The aforesaid shares or certificates of payment for shares issued by listed, OTC, or emerging stock companies in accordance with the preceding paragraph may be traded in the stock exchange market or at the business places of securities firms from the day of delivery to shareholders.
    Where the issuer delivers shares under paragraph 1, it shall, within 15 days after the end of the current quarter, publicly announce the amount of new shares issued in the preceding quarter.
    For new shares issued under paragraph 1, the day, month, and year of effective registration as stated in the FSC notification may be substituted for the day, month, and year of amendment registration for issuance of new shares under Article 162, paragraph 1, subparagraph 2 of the Company Act; after such issuance of new shares, the issuer shall, at least once per quarter, submit an application for capitalization amendment registration to the competent authority for company registration, annexing the FSC's letter of approval for the original issuance.
    Before the end of each fiscal year, the issuer issuing the certificates of payment for shares in accordance with paragraph 1 shall present evidence of full payment of the stock price and the consent letter from the FSC which previously approved the issuance of corporate bonds with equity warrants and apply to the competent authority in charge of the corporate registration to register the change in its capital and to issue new shares.
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Article 48    Corporate bonds with equity warrants, and duly applied for and issued certificates of payment for shares, or stocks, except where in scripless form, shall uniformly be in registered form.
Article 49    Except where physical certificate is not printed, before the formal delivery of exchanged shares or certificates of payment for shares in accordance with Article 47, these shares or certificates shall be certified by the certifying organization in accordance with the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.
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