Chapter III Procedures and Management of Equity Crowdfunding |
| Article 18 | The securities that a company offers on the securities firm's crowdfunding platform for purpose of equity crowdfunding shall be limited to the company's common stock and preferred stock without debt characteristics only.
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| Article 19 | A securities firm may accept applications to conduct equity crowdfunding on its crowdfunding platform only from companies with paid-in capital of not more than NT$50 million, and shall sign a contract with such companies on a case-by-case basis.
The contract as referred to in the preceding paragraph shall specify the rights and obligations of both parties under these Regulations, and shall include the following items:
- Fee standards (kickbacks by any means or form are prohibited).
- Method for handling of breach of contract.
- The company may not refuse any request for provision of information or the conducting of any investigation as required by law or regulation or by the TPEx.
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| Article 19-1 | When a securities firm collects commission or other relevant service fees from investors, it shall disclose on its crowdfunding platform the principles for collection of the fees, and the method or basis of their calculation, and if there are any individual stipulations, they shall be specified in the contract.
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| Article 20 | A securities firm shall ensure that the applicant company meets the conditions set out in all of the following subparagraphs before disclosing on the crowdfunding platform the basic information of the company and information about a cash capital increase.
- The company has established an internal control system and the internal control system has been effectively implemented.
- The accounting treatment complies with the Business Entity Accounting Act.
- There is no substantial doubt about the integrity and good faith of the company, and its directors, supervisors, and general manager.
- Any other matter as prescribed by the TPEx.
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| Article 21 | A company shall engage a financial institution to collect on its behalf the payments for the shares subscribed through the fundraising, and to deposit them in the designated account opened by the company. The funds in the designated account may not be utilized during the fundraising period. If the target capital raising amount cannot be fully collected during the fundraising period, the funds in the designated account may not be remitted to the company, and the company shall carry out the procedures to refund the share payments, plus interest accrued on the designated account, to all the investors who made the payments, and the company shall bear the remittance handling fees for the refunds.
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| Article 22 | The company may engage a professional shareholder services agent to handle shareholder services for the company.
If the company handles shareholder services on its own, it shall establish an internal control system for the shareholder services operations.
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| Article 23 | When the company conducts a cash capital increase it shall, in compliance with related laws and regulations, in addition to making available a certain percentage of shares for subscription by employees, make the remainder available for subscription by shareholders in respective proportion to their shareholding percentage. If the employees or shareholders do not fully subscribe the shares and waive their rights to the unsubscribed shares, the company may, through a single securities firm's crowdfunding platform, make the unsubscribed shares available for subscription by investors, or make them available for subscription by institutional angels only.
The provisions of the Financial Consumer Protection Act do not apply to institutional angels referred to in the preceding paragraph.
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| Article 24 | When a company conducts a cash capital increase, within 5 days from the date it confirms the number of shares for which subscription rights are waived by employees or shareholders, it shall file with the securities firm a written fundraising plan (Attachment 3) containing the basic company information, capital raising and utilization records for the past 3 years, capital utilization plan for the current cash capital increase, the fees or any other form of consideration paid to the securities firm, and other expenses in connection with the issuance. The securities firm shall conduct due diligence to verify that no material irregularities exist, after which it shall disclose the fundraising plan through the securities firm's crowdfunding platform for no less than 5 business days. Only then may investors begin to subscribe the shares.
The company shall disclose the crowdfunding progress through the securities firm's crowdfunding platform from the beginning of the equity crowdfunding until the completion of company amendment registration.
During the period of equity crowdfunding, the company may not externally state or issue any forecasted financial or business information.
The company and its board of directors, supervisors, and managerial officers shall assist in the due diligence process conducted by the securities firm and provide any needed materials.
If any of the following circumstances occurs when a company conducts equity crowdfunding, the company shall note the circumstance in a prominent typeface in the fundraising plan. Furthermore, the securities firm shall disclose the circumstance prominently when disclosing the fundraising plan on its crowdfunding platform.
- The company is a close company as defined in Article 356-1 of the Company Act.
- The current equity crowdfunding offer is available to institutional angels only.
- The securities offered in the current equity crowdfunding are preferred stock without debt characteristics.
The company shall be solely liable in the event there is any misrepresentation, falsehood, or concealment in any relevant information filed by the company with the securities firm under paragraph 1.
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| Article 25 | The total amount of funds raised by a company from equity crowdfunding through all securities firms' crowdfunding platforms in a fiscal year may not exceed NT$30 million
A fiscal year referred to in the preceding paragraph shall be from 1 January to 31 December.
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| Article 26 | An investor intending to subscribe shall first confirm a Risk Disclosure Statement (Attachment 4) through the securities firm's crowdfunding platform and agree to comply with the provisions of the Personal Information Protection Act before the investor may carry out subscription procedures. When the platform has checked and verified that the subscription does not exceed the investor's investment limit, it will complete the investor's subscription. Institutional angels, however, are not subject to this restriction.
The "investment limit" of the preceding paragraph refers to the amount of investment made by an investor through a single securities firm's crowdfunding platform, which may not exceed NT$50,000 for each subscription through equity crowdfunding, and may not exceed NT$100,000 for the aggregate subscription during a period as defined in paragraph 2 of the preceding Article. This limit, however, does not apply to the amount that may be invested by an institutional angel for subscription to the shares of any company, nor does it apply to the amount that may be invested by a member of the board of directors, a supervisor, or a 10 percent or greater shareholder of the fundraising company.
The point in time for determination of "a member of the board of directors, a supervisor, or a 10 percent or greater shareholder" as referred to in paragraph 2 shall be the record date of book closure before the company conducts the equity crowdfunding.
With respect to institutional angels meeting the requirements of Article 13, paragraph 4, with the exception of a professional institutional investor under subparagraph 1 thereof or of a public company under subparagraph 2 thereof, for which the securities firm may directly create a file for the investor with no need for an application to be submitted, any institutional angel under the other subparagraphs thereof shall submit an application accompanied by the relevant supporting documents to the securities firm, to assist the securities firm in executing investment limit control operations after the securities firm has examined the application and found the requirements for investment are met.
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| Article 27 | When a company conducts a cash capital increase, and makes the portion of shares to which its employees and shareholders have waived subscription rights available for subscription by investors, or available for subscription by institutional angels only, through the crowdfunding platform of a securities firm, if in the first round of subscription, the shares are not fully subscribed, or are fully subscribed but some of the subscribers fail to make payment for the shares by the deadline, unless the securities firm and the company mutually agree not to do so, the company shall set an appropriate period of time for a second round of subscription. If the parties have mutually agreed not to hold a second round of subscription as mentioned above, or if in the second round of subscription, the shares are not fully subscribed, or are fully subscribed but some of the subscribers fail to make payment for the shares by the deadline, the subscriptions of the investors who have expressed the willingness to subscribe shall be voided, and the share payments, plus interest accrued on the account, shall be refunded out of the company's deposit account to all those who have already made the payments, and the company shall bear the remittance handling fees for the refunds.
If the shares have been fully subscribed in the first or second round of subscription, the securities firm shall follow the will of the company in confirming the list of subscribers, and notify the subscribers on the list to carry out payment procedures, and shall also notify the company or the professional shareholder services agent to confirm that the share payments have been collected in full and related matters.
If it is confirmed that share payments under the preceding paragraph have not been collected in full, the company shall follow the provisions of paragraph 1. If it is confirmed that the share prices have been collected in full, the company shall carry out relevant matters including information reporting, amendment of its company registration, and delivery of the physical share certificates if any are printed by the issuing company; if the issuing company does not print physical share certificates, it shall register its issued shares with a central securities depository in accordance with Article 161-2 of the Company Act.
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| Article 28 | During the period from the date of completion of the fundraising to 31 December of the fiscal year following the date of completion of utilization of the funds, the company shall input and disclose the following information, in the prescribed format, through the information disclosure system designated by the securities firm:
- Basic company information, including a company overview, basic information on the board of directors, supervisors, and management team: shall be input within 5 days from the time the company knows of any change in the above.
- A business report, annual financial statement, and the surplus earning distribution or loss offsetting proposal submitted for recognition by a regular shareholders meeting: shall be input at least 10 days prior to the date on which the regular shareholders meeting is convened. The annual financial statements shall include a balance sheet, income statement, statement of changes in shareholders equity, and a statement of cash flows. If a company reaches a certain equity capital or scale criteria, as provided in Article 20, paragraph 2 of the Company Act, it shall submit a CPA audited financial statement.
- Dividend distribution for the current year: shall be input on the next business day following the resolution by the board of directors or confirmation by the shareholders meeting.
- Information on the cash capital increase:
- Fundraising plan items and progress: shall be input within 10 days from the date of full collection of the share payments collected in the fundraising. Any changes in related information shall be entered into the system within 5 days from the time of the change.
- Quarterly statement on utilization of the funds raised: shall be input within 20 days after the end of each quarter.
No misrepresentation, concealment, or information that could mislead others in the content of the information reported pursuant to any subparagraph of the preceding paragraph is allowed.
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| Article 29 | If any of the following events occurs to the company during the period from the date of completion of the fundraising to December 31 of a fiscal year following the date of completion of utilization of the funds, the company shall input and disclose the relevant information, in the prescribed format, through the information disclosure system designated by the securities firm, within 5 days from the occurrence of the fact:
- Dishonor of a negotiable instrument due to insufficient deposits, refusal by a financial institution to honor a transaction, or any other loss of credit.
- Any litigious or non-litigious matter, administrative disposition, administrative dispute, injunctive proceeding, or compulsory execution matter with a material effect on the finances or business of the company.
- Any effect on company operations resulting from any serious decrease in production, complete or partial stoppage of work, leasing out of a company plant or principal equipment, or pledge of all or a principal portion of company assets.
- Any circumstance set forth in paragraph 1 of Article 185 of the Company Act.
- Any change in chairman or general manager.
- Any material effect on company finances or business resulting from any signing, amendment, termination, or rescission of an important memorandum of understanding, a plan for a strategic alliance or other business cooperation.
- Resolution by the board of directors to carry out a capital increase through a new share issue or the record date of a cash capital increase, or a material change in the above.
- Any other circumstances with a material effect on shareholder equity.
If any event in the preceding paragraph applies to the company and it has not made a public disclosure of material information, the securities firm may notify the company by fax, telephone, or email of the requirement to enter the related information into a designated information disclosure website within a specified deadline.
No information disclosed pursuant to the subparagraphs of paragraph 1 may make any description of an exaggerated nature or that resembles advertising or promotional language, nor may the information involve any misrepresentation, concealment, or anything that could mislead others.
To ensure the correctness of and equal access to information, an issuer may not disclose any information in private before publishing material information.
If there is any material change in the development of subsequent events with respect to material information that an issuer has published, the issuer shall update or supplement in a timely manner the content of the relevant information in accordance with the provisions under which the information was reported.
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| Article 29-1 | If an error is found in information reported by a company, then upon discovery of the error or receipt of notification from the securities firm, the company shall immediately enter the correct information to rectify the error.
If information reported by a company contains any misrepresentation or falsehood, it will be handled pursuant to the contract entered into between the securities firm and the company, and the company shall solely bear any related legal liability.
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