Chapter Content

Title:

Regulations Governing the Offering and Issuance of Securities by Securities Issuers 

Amended Date: 2021.03.29 
   Chapter VI Retroactive Handling of Public Issuance Procedures
Article 66    In the event that the issuer conducts initial public offering in accordance with paragraph 1 of Article 42 of the Act and Article 156-2 of the Company Act, it shall submit the registration statement (Attachment 24) to the FSC, providing the necessary information and annexing the relevant documents such as the stock issue prospectus. The registration will become effective 12 business days after the receipt of the registration statement by the FSC and FSC-designated institutions.
    The Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses and the Regulations Governing Information to be Published in Financial Institution Prospectuses for Offering and Issuance of Securities shall apply mutatis mutandis to the information to be provided in the stock issue prospectus under the preceding paragraph.
    Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis to submission of the registration statement under paragraph 1.
    If, after effective registration for initial public offering under paragraph 1, any circumstance set forth in Article 11, paragraph 1, subparagraph 4, 5, or 7 is discovered to exist, the FSC may revoke or void the effective registration.
    A company conducting an initial public offering of stock under paragraph 1 shall concomitantly conduct an initial public offering of employee stock option certificates previously issued under Article 167-2 of the Company Act.
    A company conducting an initial public offering of stock under paragraph 1 may concomitantly conduct an initial public offering of straight corporate bonds previously privately placed under Article 248 of the Company Act, after 3 years have elapsed from the delivery date of the privately placed straight corporate bonds.
    If a company that has publicly issued stock under the Act does not continue to publicly issue stock, any securities that it has privately placed under Article 43-6 of the Act are not eligible to be included together with its stock under an application to the FSC for initial public offering until 3 years have elapsed from the delivery date of the privately placed securities.
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Article 67    In any of the following circumstances, the FSC may reject an application for approval of an initial public offering filed under Article 42, paragraph 1 of the Act or Article 156-2 of the Company Act:
  1. The attesting CPA issues an adverse opinion or disclaimer of opinion in the audit report.
  2. The attesting CPA issues a qualified opinion in the audit report, and such qualified opinion has an impact on the fairness of presentation of the financial reports.
  3. The Case Review Form prepared by the issuer and reviewed by the attesting CPA reveal any violation of laws or regulations or the articles of incorporation, where the violation is serious.
  4. The applicant has failed to institute an internal control system including and adopt internal audit implementation rules and have them passed by the board of directors pursuant to the Regulations Governing Establishment of Internal Control Systems by Public Companies.
  5. Any of the following circumstances arise in the CPA project audit of the efficacy of the internal control system design or implementation:
    1. The audited company fails to provide a Statement regarding the efficacy of the internal control system design or implementation.
    2. The CPA report indicates material deficiencies in the design or implementation of the audited company's internal control system and failure to improve them, or the report is a disclaimer of opinion.
  6. Employee stock option certificates have previously been issued under Article 167-2 of the Company Act, but a concomitant initial public offering is not conducted for the certificates along with that for the stock.
  7. The FSC discovers a violation of laws or regulations, where the violation is serious.
    Where conducting an initial public offering for privately placed straight corporate bonds under paragraph 6 of the preceding Article and 3 years have not elapsed since the delivery date of the privately placed straight corporate bonds, the FSC may reject the application.
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Article 68    For the below-listed securities privately placed by a public company in accordance with laws and securities subsequently distributed, converted, or subscribed, the public company must arrange with the FSC for a public offering, at least 3 full years after the delivery date of the privately placed securities, before it may apply to the Stock Exchange or the Taipei Exchange for listing or for trading at the places of business of securities firms:
  1. Stocks privately placed under Article 43-6 of the Act and shares subsequently obtained as stock dividends thereof.
  2. Ordinary corporate bonds privately placed in accordance with laws.
  3. For employee stock option certificates privately placed under Article 43-6 of the Act, subsequently subscribed certificates of payment of shares, shares, and shares obtained as stock dividends thereof.
  4. For preferred shares with warrants, corporate bonds with warrants, and convertible corporate bonds privately placed in accordance with Article 43-6 of the Act, the privately placed preferred stock with warrants, corporate bonds with warrants and convertible corporate bonds, and the subsequently subscribed certificates of payment for shares, certificates of entitlement to new shares from convertible bonds, shares, and shares obtained as stock dividends.
  5. For private placement of overseas corporate bonds, overseas stocks, and participation in the private placement of overseas depositary receipts in accordance with Article 43-6 of the Act, the shares that obtained through redemption, conversion, or subscription, or obtained as stock dividends.
    A filing for registration to conduct a public offering under the preceding paragraph shall be submitted to the FSC with a Registration Statement (Attachments 25 to 31) specifying all required information and with the required documents attached. The registration shall become effective 7 full business days after the Registration Statement is received by the FSC and FSC-designated institutions, and the provisions of Article 5, paragraph 2 of Article 12, Article 15, and Article 16 shall apply mutatis mutandis. However, the waiting period for effective registration is 12 business days in the case of a financial holding, banking, bill finance, credit card, or insurance enterprise.
    If, after effective registration for public offering under paragraph 1, any circumstance set forth in Article 11, paragraph 1, subparagraphs 4 to 7 is discovered to exist, the FSC may revoke or void the effective registration.
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Article 69    When an issuer files registration for the retroactive handling of public issuance procedures for privately placed securities, it shall submit a prospectus for the retroactive handling of public issuance procedures clearly recording the matters listed below:
  1. Status of matters conducted in accordance with the Directions for Public Companies Conducting Private Placements of Securities.
  2. Results of the implementation of the private placement plan for the securities.
  3. Financial reports audited and certified by a CPA, and the CPA audit report, for the most recent fiscal year. Where the filing date falls after the deadline for public disclosure and filing of the financial report for a given quarter, the issuer shall additionally include the financial report for the most recent quarter, audited and certified or reviewed by a CPA, and the CPA audit or review report.
  4. Other matters as required by the FSC.
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Article 70    In any of the following circumstances, the FSC may reject a filing by a public company for registration to conduct cases set forth in Article 68:
  1. Less than 3 years have elapsed since the delivery date of the privately placed securities.
  2. A lawful resolution has not been adopted by a shareholders meeting or board of directors meeting in accordance with Article 43-6 of the Act. However, this restriction may not apply where a final judgment of guilty has been handed down, the full term of the sentence has been served, and post-approval of the shareholders meeting or board of directors has been submitted.
  3. The placees and their number do not comply with the provisions of Article 43-6 of the Act. However, this restriction may not apply where a final judgment of guilty has been handed down, the full term of the sentence has been served, and post-approval of the shareholders meeting or board of directors has been submitted.
  4. A report is not submitted within 15 days to the competent authority for recordation in accordance with Article 43-6, paragraph 5 of the Act, or there is failure to input information regarding the private placement of securities into the information reporting website designated by the FSC in accordance with the Directions for Public Companies Conducting Private Placements of Securities. However, this restriction may not apply where a sanction has duly been imposed and an administrative fine has been paid and the report has subsequently been submitted.
  5. Prior to carrying out a private placement of securities, failure to enumerate and explain the relevant matters in the notice of reasons for convening of the shareholders meeting or the meeting notice the relevant matters in accordance with Article 43-6, paragraph 6, of the Act and the Directions for Public Companies Conducting Private Placements of Securities, or prior to carrying out multiple issues, failure to enumerate or explain in advance the relevant matters in the notice of reasons for convening of the shareholders meeting. However, this restriction shall not apply where a sanction has duly been imposed, an administrative fine has been paid, the required matters have been enumerated and explained in a notice of reasons for convening of a shareholders meeting, and the case has been approved at the shareholders meeting.
  6. Failure to submit for resolution by the shareholders meeting the pricing basis and reasonableness of and related expert opinions on the private placement of securities in accordance with the Directions for Public Companies Conducting Private Placements of Securities, and the circumstances are serious, provided that this restriction shall not apply if the same have already subsequently been submitted and been approved by the shareholders meeting.
  7. A subscription to the current private placement of securities by an insider or a related party of the issuing company fails to comply with the provisions under the Directions for Public Companies Conducting Private Placements of Securities, and the circumstances are serious. However, this restriction does not apply if a letter of approval issued by the Taiwan Stock Exchange or the Taipei Exchange has been obtained.
  8. When resolution for a private placement of securities is passed by a shareholders meeting of a company that had a net profit and no accumulated deficit in the preceding fiscal year, and the company fails to comply with the requirements of the Directions for Public Companies Conducting Private Placements of Securities, and the circumstances are serious in nature. However, this restriction does not apply if a letter of approval issued by the Taiwan Stock Exchange or the Taipei Exchange has been obtained.
  9. Failure to have the price of the shares or subscription paid up in full within the time period prescribed in the Directions for Public Companies Conducting Private Placements of Securities.
  10. Implementation of the plan for the private placement of securities is seriously behind schedule without legitimate reason, and that plan has not been completed, has undergone a material change, or cannot yield reasonable results, provided that this restriction may not apply where more than 5 years has already elapsed from the date of payment for the privately placed securities to the time of filing.
  11. Securities trading has been restricted under Article 139, paragraph 2 of the Act and the FSC has not yet lifted the restriction.
  12. The attesting CPA issues a disclaimer of opinion or an adverse opinion in the audit report.
  13. The attesting CPA issues a qualified opinion in the audit report, where such qualified opinion would affect the fair presentation of the financial reports.
  14. The Case Review Form prepared by the issuer and reviewed and issued by the attesting CPA reveal any violation of laws or regulations or the company's articles of incorporation, where the violation is serious.
  15. Less than 3 full years have elapsed since delivery of privately placed convertible corporate bonds there has been an exercise of conversion rights.
  16. The FSC discovers any violation of laws or regulations, where the violation is serious.
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Article 71    A public company that has obtained FSC approval for public issuance of securities that it previously had duly privately placed shall reissue the securities within 30 days from the date upon which it receives FSC notification of effective registration, and shall make a public announcement on the information reporting website designated by the FSC prior to carrying out the reissuance.
    Where for the subject securities of retroactive handling of public issuance procedures referred to in the preceding paragraph, an application is subsequently filed with a securities exchange or the Taipei Exchange for listing or OTC trading, the securities shall be delivered by book-entry transfer in scripless form, and need not be certified pursuant to the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.