Chapter III Security Token Offering Procedures and Management |
| Article 25 | The types of security tokens that an issuer offers on a trading platform shall be limited to non-equity dividend tokens and debt tokens.
Under the preceding paragraph, "dividend tokens" means tokens giving entitlement to share in the issuer's operating profit; "debt tokens" means tokens for which a maturity is specified and which are redeemable at maturity and give entitlement to share in interest distributed by the issuer.
For any single offering of security tokens by an issuer, all of the security tokens shall have identical terms and conditions of issuance, and furthermore shall have the same price.
The currency of the funds raised by an issuer, and of dividends or interest distributed after the offering, shall be limited solely to New Taiwan dollars.
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| Article 26 | An issuer wishing to offer security tokens shall complete an "Application by an Issuer for a Security Token Offering" (Attachment 3) and submit the application, with all relevant documentation, including a prospectus, to the securities firm.
The information required to be published in the prospectus under the preceding paragraph will be separately prescribed by the TPEx. The prospectus furthermore shall disclose professional opinions as follows:
- Opinion issued by an information technology professional(s) with respect to matters including the security of the information technology to be used in the security token offering.
- Opinion issued by a financial professional(s) (a securities underwriter or a CPA(s) that does not provide attestation services to the issuer) on the reasonableness of the offering price.
- Opinion issued by an attorney(s) on the legality of the security token offering.
When professionals and attorneys issue opinions under the preceding paragraph, they shall do as follows:
- Before taking on the case, they shall prudently evaluate their own professional ability and practical experience, and furthermore they may not have any direct or indirect interest relationship with the issuer that could affect their independence.
- They shall properly plan and execute appropriate work procedures to form a conclusion and issue the opinion on the basis thereof. They furthermore shall fully and accurately record in the working papers for the case the procedures executed, the data collected, and the conclusions.
- They shall evaluate item-by-item the completeness, accuracy, and reasonableness of the sources of data, parameters, and information used as the basis for issuing the opinion.
- They shall state that the personnel who prepared the opinion are professionally qualified and independent, and have evaluated the information and found it to be reasonable, correct, and compliant with relevant laws and regulations.
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| Article 27 | A securities firm that handles offerings of security tokens for issuers on its trading platform shall sign a contract with each issuer for each offering case.
The contract under the preceding paragraph shall specify that these Rules and any matters publicly announced by the TPEx are all integral parts of the contract and shall be complied with by both parties.
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| Article 28 | A securities firm shall disclose on its trading platform the rules regarding any relevant fees that it may collect from investors. If any fees are negotiated in a specific case, they shall be specified in the contract.
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| Article 29 | A securities firm may disclose on the trading platform the basic information of an issuer and information related to the fundraising case only after performing due diligence and confirming that the issuer meets all of the following conditions:
- The issuer has established an internal control system and implements it effectively.
- The accounting treatment complies with the Business Entity Accounting Act; however, if the competent authority has made other provisions, those provisions shall be followed.
- There is no record of any material instance of dishonoring of a negotiable instrument of, or violation of the Tax Collection Act by, or any material litigation concluded within the past 2 years or still pending that calls into question the integrity and good faith of, the issuer or any of its directors, supervisors, or general manager.
- The legality of the fundraising items and of the business items operated by the issuer.
- The fundraising plan and its effects/benefits are necessary, reasonable, and feasible.
- Any programmed auto execution that is done with respect to the security tokens offered is consistent with the description in the prospectus.
- Any other matters as required by the TPEx.
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| Article 30 | After the securities firm has confirmed that the issuer meets the conditions under the preceding article, it shall disclose on the trading platform for at least 5 days information including the basic information of the issuer, the type of security token to be offered, the amount of funding intended to be raised, the method of payment for subscriptions, the fundraising period, and the prospectus, before professional investors may begin to subscribe the security tokens.
The related provisions of the Financial Consumer Protection Act do not apply to professional investors.
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| Article 31 | An investor who is participating in subscription for the first time shall first apply for registration on the platform, and also sign an account opening contract (Attachment 4) with the securities firm and sign a Risk Disclosure Statement (Attachment 5), and shall designate an account opened in the investor's own name at a financial institution to serve as the account for related transactions. The securities firm shall exercise controls to ensure that all related monetary payments and receipts are done solely by means of remittances in New Taiwan dollars from and to the aforesaid account.
The securities firm shall examine whether an investor who is interested in subscribing meets the qualifications of a professional investor, and an investor may proceed with subscription procedures only after the securities firm has verified that the investor does not exceed its investment limit and after a prospectus has been delivered to the investor.
The "investment limit" in the preceding paragraph refers to the limit of NT$300,000 set as the maximum subscription that a professional investor who is a natural person may make in any single security token offering.
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| Article 32 | The securities firm shall open a trust account at a financial institution to be used exclusively for receipt and deposit on behalf of the issuer of the funds to be raised. Only after the fundraising period has ended and the funds collected furthermore have reached the fundraising soft cap may the securities firm then transfer the funds in the aforesaid account to the issuer.
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| Article 33 | An issuer may ffer security tokens on a single trading platform only, and the cumulative amount of offerings by it may not exceed NT$30 million.
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| Article 34 | Following the first time that a securities firm accepts an application for issuance of security tokens for an issuer or issues security tokens itself, after 6 months has elapsed from the day that trading of that issue of security tokens begins, and provided that there has been no material violation of any relevant provision of these Rules during that period, the securities firm may again accept an application for issuance of security tokens or issue security tokens itself. Furthermore, the cumulative amount of offerings by the securities firm on its trading platform may not exceed NT$200 million.
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| Article 35 | During a fundraising period, the issuer may not externally make any statement or issue financial or business forecast information.
If an issuer, during a fundraising period, violates the preceding paragraph or undergoes any material event that could affect its ability to continue operation, or for any other cause that the TPEx deems necessary, the securities firm shall immediately suspend its fundraising on the trading platform.
Under the circumstances in the preceding paragraph, any subscriptions by investors who have expressed intent to subscribe shall become invalid. If the payment for a subscription has already been made, the securities firm shall make an advance disbursement of the processing fees for the refund and then carry out the refund procedures.
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| Article 36 | If an issuer of security tokens has disclosed a security token buyback mechanism in the prospectus, it may, after its security tokens have been traded on the trading platform for a full year, by agreement of a majority of the directors in attendance at a board meeting attended by at least two-thirds of the directors, carry out a buyback of its security tokens on the trading platform, and shall complete the execution of the buyback within 2 months counting inclusively from the day that it enters the information on the buyback into the securities firm information disclosure section in accordance with Article 37, and shall immediately cancel the security tokens that it buys back.
After the issuer has bought back security tokens under the preceding article, if the quantity of outstanding security tokens is lower than 10 percent of the originally issued quantity, the securities firm shall publicly announce the termination of trading of the security tokens.
A securities firm may engage in negotiated trading on its trading platform of security tokens that it issued itself, and paragraph 1 do not apply to such trading. However, its daily inventory of the security tokens may not exceed 3 percent of the outstanding quantity. If it occurs that its inventory exceeds that amount, it shall fully correct that excess within 3 business days.
A securities firm that, for reasons other than negotiated trading needs, buys back security tokens that it issued itself on its trading platform shall comply with the provisions of paragraphs 1 and 2 when doing so.
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| Article 37 | An issuer shall input the following information by the required deadline into the information disclosure section designated by the securities firm:
- Basic information of the issuer: including information such as an overview of the company and the basic data of the directors, supervisors, and management team, shall be input before trading begins. In the event of any subsequent change, the updated information shall be input within 5 days from the date that the change is learned of.
- Annual financial report: the annual financial report audited and attested by a CPA shall be input within 4 months after the end of each fiscal year
- Information on any decision by the issuer to distributed dividends, interest, or other benefits: shall be input on the next business day following the resolution by the board of directors.
- Information on fundraising by an offering of security tokens:
- Fundraising plan items and progress: shall be input within 10 days from the end of the fundraising period. Any changes in related information shall be input within 5 days from the date of the change.
- Quarterly statement on utilization of the funds raised: shall be input within 20 days after the end of each quarter.
- Information on buybacks of security tokens:
- Buyback information: before the beginning of trading hours on the next business day following the resolution by the board of directors, information shall be input including the name of the security token to be bought back, ceiling on the total monetary amount of the buyback, intended buyback period and quantity, and buyback price range.
- Execution status: on the next business day after expiration of the buyback period or completion of execution of the buyback, input the execution status.
- Maturity of debt tokens: input the date for termination of trading at least 10 days before the date that issued debt tokens will reach maturity.
With respect to the circumstance in subparagraph 6 of the preceding paragraph, the securities firm shall use a conspicuous means to disclose the date for termination of trading of the debt tokens that are approaching maturity.
There may not be any misrepresentation, concealment, or information sufficient to mislead others in the content of any information reported pursuant to any subparagraph of paragraph 1.
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| Article 38 | "Material information" means the occurrence of any event listed below with respect to an issuer:
- Dishonor of a negotiable instrument due to insufficient funds, refusal by a financial institution to honor a transaction, or other loss of creditworthiness.
- Search by law enforcement authorities, or any litigious or non-litigious matter, administrative disposition, administrative litigation, precautionary injunctive procedure, or compulsory execution, with a material effect on the finances or business of the issuer.
- Major decrease in production or a full or partial work stoppage, or lease of a plant or important equipment of the issuer to others, or a pledge on all or a major portion of its assets, with a material effect on the issuer's business operations.
- The occurrence of any event under Article 185, paragraph 1 of the Company Act.
- Ruling by a court to prohibit the transfer of stock of the company pursuant to Article 287, paragraph 1, subparagraph 5 of the Company Act.
- Signing, amendment, termination, or rescission of an important memorandum of understanding, a plan for strategic alliance or other business cooperation plan or important contract, or change in important content of a business plan, or completion of development of a new product, or successful development and formal entry into the full-scale production stage of an experimental product, or purchase of an enterprise of another, or acquisition of or assignment to another of patent rights, trademark rights, copyrights, or other intellectual property transactions, with a material effect on the finances or business of the company.
- Occurrence of a disaster, group protest, strike, environmental pollution event, information security incident, or other material event, with a material effect on the finances or business of the issuer.
- Change in chairman, general manager, or one-third or more of the directors.
- Change of the attesting CPAs for a reason other than internal adjustment at the accounting firm of the attesting CPAs.
- Material change or significant delay in progress of any item of the fundraising plan.
- Resolution by the board of directors to distribute dividends or interest, or failure to make the distribution by the deadline therefor.
- Resolution by the board of directors to buy back security tokens, expiration of a buyback period, or completion of execution of a buyback.
- Resolution by the board of directors or a shareholders meeting to apply for termination of trading of the issuer's security tokens on the trading platform.
- Announcement of suspension or termination of trading of the issuer's security tokens on the trading platform under Article 40.
- Mass media reportage or information circulating around the market sufficient to affect the prices of the issuer's security tokens.
- Any other event with a material effect on the rights or interests of investors.
If an event set out in any subparagraph of the preceding paragraph occurs with respect to an issuer, the issuer shall input the relevant information into the information disclosure section designated by the securities firm before the beginning of trading hours on the business day next following the occurrence of the event.
If any event in paragraph 1 applies to the issuer and it has not duly made a public disclosure of material information, the securities firm shall notify the issuer to input the related information into the designated information disclosure section 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 externally disclose any information on its own before publishing the material information through the aforesaid information disclosure section.
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 originally disclosed.
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| Article 39 | The securities firm shall see to it that the issuer scrupulously carries out information disclosures under Articles 37 and 38, and shall continuously make available and maintain the information disclosure section for disclosures by the issuer.
Information disclosed under the preceding paragraph shall be kept for at least 10 years. However, in the event of any dispute, it shall be kept until the dispute is resolved.
If an error is found in information reported by an issuer, then upon discovery of the error or receipt of notification from the securities firm, the issuer shall immediately input 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 issuer, and the issuer shall solely bear any related legal liability.
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| Article 40 | If any of the following circumstances applies to an issuer, the securities firm shall suspend the trading of its security tokens on the trading platform:
- The issuer's application documents, information, or explanations contain any misrepresentation or any important fact is omitted.
- The issuer commits a material violation of law or regulation or these Rules.
- The issuer materially breaches its contract with the securities firm.
- The issuer fails to file an annual financial report, or the CPA attesting the filed financial report issues a disclaimer of opinion or an adverse opinion in the audit report.
- Any other circumstance under which the TPEx or the securities firm deems it necessary to suspend the trading of the issuer's security tokens on the trading platform.
Where trading of security tokens is to be suspended under the preceding paragraph, the securities firm shall promptly make a public announcement that the trading of the security tokens will be suspended beginning from the 5th business day following the announcement date.
Where trading of a security token is suspended due to occurrence of an event in any subparagraph of paragraph 1, the issuer may, upon extinction of the cause and where furthermore no cause under any other subparagraph thereof exists, submit relevant supporting documents to apply for resumption of trading. Upon examining such documents and finding them accurate, the securities firm shall promptly publicly announce that trading of the security tokens will resume from the business day next following the day the announcement is made.
If any of the following events applies to an issuer, the securities firm shall promptly make a public announcement that the trading of its security tokens on the trading platform will be terminated beginning from the 40th day following the announcement date:
- Trading of the security tokens has been suspended under paragraph 1 for over 3 months, and the cause(s) of the suspension, which need not be limited to a cause under a single subparagraph, has not been extinguished.
- The issuer's corporate registration is voided or revoked by a competent authority, or the issuer is dissolved by a competent authority.
- The issuer files with a court for bankruptcy or reorganization.
- The quantity of security tokens issued and outstanding is lower than 10 percent of the originally issued quantity,
- Any other circumstance under which the TPEx or the securities firm deems it necessary to terminate the trading of issuer's security tokens on the trading platform.
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| Article 41 | A securities firm wishing to offer security tokens on its trading platform shall complete an "Application by a Securities Firm for an Offering of Security Tokens Issued by the Securities Firm on its Trading Platform" (Attachment 6) and submit the application, with all relevant documentation, including a prospectus, to the TPEx.
A securities firm applying to offer security tokens under the preceding paragraph shall pay the examination fee of NT$300,000 in one lump sum to the TPEx.
The TPEx may agree for the securities firm to disclose on its trading platform the relevant basic information and information related to the fundraising case only after finding that the securities firm meets all of the conditions set out in the subparagraphs of Article 29, and that it furthermore is free of any conditions set out in the subparagraphs of Article 14-1, paragraph 1 of the Regulations Governing Securities Firms.
There may not be any misrepresentation or concealment in any information duly provided to the TPEx, or information disclosed externally, by the securities firm or its directors, supervisors, or managerial officers.
During a fundraising period, the securities firm may not externally make any statement or issue financial or business forecast information.
Offerings of security tokens issued by securities firms themselves under paragraph 1 shall be subject mutatis mutandis to the provisions of Article 25, Article 26, paragraphs 2 and 3, Articles 30 to 33, Articles 35 to 38, and Article 40 regarding types of security tokens, information required to be included in the prospectus, fundraising procedures, upper limits on fundraising, suspension of fundraising, information disclosure, and termination of trading.
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