Chapter I General Provisions
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| Article 1 | These Criteria are prescribed in accordance with Article 30, paragraph 2 of the Securities and Exchange Act. |
| Article 2 | The basic principles for preparing a prospectus are as follows:
1. The content of the prospectus shall be detailed, truthful, clear, and unambiguous. The wordings and descriptions shall be easy to understand. No false information or omission is allowed therein.
2. The content of the prospectus must be updated in a timely manner. All transactions or other events occurring before the printing of the prospectus which are sufficient to affect interested parties' judgment shall be disclosed. |
| Article 3 | On the front cover of the prospectus, the common stock code shall be printed in the upper right hand corner, and the following particulars shall be printed in sequential order:
1. The name and seal of the company or preparatory office.
2. Where the prospectus is prepared for the purpose of issuing the following securities:
(1) Issuance of New Shares: the source of this new issue, types of new shares, number of shares, value, conditions of the issue, the public underwriting ratio, and manner of underwriting and sale allocation. If there are specially agreed conditions for preferred shares, the page number in the prospectus where these are set forth in full shall be separately noted.
(2) Issuance of Corporate Bonds: types, value, interest rate, conditions of issue, the public underwriting ratio, and manner of underwriting and sales allocation. If there are conversion or subscription features, the page number in the prospectus where these are set forth in full shall be separately noted.
(3) Issuance of Employee Stock Option Certificates: number of units issued, number of shares subscribable per stock option certificate, option exercise conditions, and method of performance. For option exercise conditions, readers may be referred simply to the page number in the prospectus where such conditions are listed in full.
(4) Establishment by Public Offering: authorized capital amount, source of the current issue of new shares, types of new shares, number of shares, value, conditions of issue and the number of shares subscribed by the promoters.
(5) Other.
3. Summary of the purpose of the capital application plan and the projected possible effect thus created. The page numbers in the prospectus where this is set forth in full shall also be noted.
4. The following statements shall be printed in a conspicuous manner:
(1) The effective registration (approval) of the securities may not be used to advertise the verification of the registration (application) items or the guarantee of the value of the securities.
(2) If this prospectus contains false or omitted information, the issuer and its responsible person and all other persons who sign or affix their seal on the prospectus shall be held liable in accordance with laws.
(3) The web addresses for enquiry about the prospectus, including the address of the information reporting website designated by the Securities and Futures Commission, Ministry of Finance (“SFC”) and the web address used by the company to disclose information relating to the prospectus.
5. Publication date.
Where there is a change in the common stock code referred to in the preceding paragraph, in the fiscal year that such change occurs and for the two consecutive fiscal years thereafter, the original stock code shall be printed in addition to the new stock code.
Where there is a change in the company name as referred to in the first paragraph, in the fiscal year that such change occurs and for the two consecutive fiscal years thereafter, the change shall be disclosed by printing the new and old names adjacently.
The prospectus prepared for the registration (application) for public offer and/or issue of securities shall note in its front cover that it is a draft version for such registration (application) purpose.
If stabilization operations are proposed in connection with cash capital increase in accordance with the relevant regulations, the following statement shall also be noted in the prospectus' front cover in a conspicuous type print: "To deal with price fluctuations in the stock market, the underwriter may proceed with stabilization operations regarding the issued shares of the current right issue if necessary."
Where an issuer is reporting (applying for) an issue of shares at below par value, it shall also note in a prominent font on the prospectus cover that the company is issuing the new shares at a discount.
Where new shares are issued upon merger or acquisition (including merger or consolidation, acquisition, or split) or acquisition of another company's shares, if there are any restrictions on transfer or pledge of the issued shares, such restrictions shall be noted in a prominent font on the cover of the prospectus. For cases of establishment by offering and of public offerings by companies whose shares are neither listed on the stock exchange (hereinafter, are "unlisted") nor traded on an over-the-counter (OTC) market, the following statement shall also be noted on the prospectus' front cover in a prominent font: "The shares are neither listed on the stock exchange nor traded on an OTC market." |
| Article 4 | The inside cover of the prospectus shall be printed with the following items relevant to the current issue in sequential order:
1. Sources of the paid-in capital before the current issue, including cash capital increase, capital increase through capitalization of retained earnings, capital increase through capitalization of capital reserve, capital increase because of merger, and other sources of funds, and the respective ratio thereof compared with the paid-in capital amount.
2. The prospectus distribution plan: describing the places for displaying the prospectus, ways of distribution, and methods for requesting and obtaining the prospectus.
3. Name, address, website uniform resource locator (URL), and telephone number of the securities underwriter.
4. Name, address, website URL, and telephone number of the corporate bonds guarantor.
5. Name, address, website URL, and telephone number of the corporate bonds trustee.
6. Name, address, website URL, and telephone number of share or corporate bonds certification institution.
7. Name, address, website URL, and telephone number of the entity handling shares transfer and recordation.
8. Name, address, website URL, and telephone number of the credit rating institution.
9. Firm names, addresses, website URLs, telephone numbers, and the names of the certifying lawyer and certified public accountant for the corporate bonds.
10. Firm name, address, website URL, telephone number, and the name of the certified public accountant who attested the most recent year's financial report.
11. Names, titles, contact telephone numbers, and e-mail addresses of the spokesperson and deputy spokesperson.
12. Company website URL. |
| Article 5 | The back cover of the prospectus shall be signed or sealed by the Company's responsible person or the preparatory office's representative. When processing securities underwriting according to the regulations, the securities underwriter and its responsible person shall sign/seal the part for which they are responsible in the prospectus. |
| Article 6 | The content of a prospectus, unless otherwise regulated by Chapter III on the simplified prospectus or Chapter IV on the prospectus for establishment by offering, shall include the following items:
1. Company Summary: Including brief description of the company, company organization, capital and shares, status of issue of corporate bonds, preferred shares, overseas depositary receipts, employee stock option certificates, and mergers and acquisitions and assignments of shares of other companies.
2. Operation Summary: Including the operation of the company, fixed assets and other real properties, re-invested business, important contracts and any other items required to be described or supplemented.
3. Issuance plan and implementation status: Including analysis of the fund application plan for the previous cash capital increase, merger or acquisition, assignment of another company's shares, or issue of corporate bonds; analysis of the fund application plan for the current cash capital increase or issue of corporate bonds; and status of the current issue of new shares due to assignment of another company's shares, or current issue of new shares due to merger or acquisition.
4. Financial Summary: Including the summarized financial data for the most recent 5 years, financial statements, a financial summary, and other important matters, as well as review and analysis of financial condition and operating results, and an overview of the company's risk management.
5. Special Items to be Included: Including the state of corporate governance and other special items to be included.
6. Important Resolutions, the articles of incorporation, and relevant laws and regulations.
If the SFC has promulgated separate rules/regulations for special industries like banks, bill financing, securities, futures, insurance, financial holding, and investment trust, those rules/regulations shall be complied with.
Where applicable legal provisions exist, matters shall be handled in compliance therewith. |
| Article 7 | The items required under these Criteria shall all be included in a prospectus, which shall also contain an index, page references and summary (Schedule 1). If any required information is unavailable or is omittable per SEC's approval, "None" or "N/A" shall be marked following that item.
If noting of any required information would be repeated, such information may be noted just at one item/place. The referenced page shall be noted at all other items/places. |
Chapter II Content
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Section I Company Summary
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| Article 8 | The "brief company description" shall include the following items:
1. Date of Incorporation.
2. Addresses and telephone numbers of the head office, branches and factories/plants.
3. Company history: disclosure of status of mergers and acquisitions for the most recent 5 years and up to the date of printing of the prospectus, important expansion of factories/plants, introduction of new products, significant number of shares transfer by or changes of directors, supervisors or the major shareholder who holds more than 10% of the outstanding shares, changes of management control and any other important incidents which are likely to affect investors' interests, and the influence thereof to the company, and if early years' information of the company is critical for understanding the development of the company, such information shall also be disclosed. |
| Article 9 | The "company organization" shall include the following items:
1. Organization system: setting forth the Company's organizational structure and the business in which each major department engages.
2. Chart of Affiliated Enterprises: setting forth the relationship between the Company and its affiliated enterprises, cross-shareholding ratios, numbers of shares held, and actual investment amounts.
3.General manager, vice general manager, assistant vice general manager, and the manager of each department and branch institution: (Schedule 2)
(1) Name, work experience (educational background), amount and nature of shareholdings: setting forth the names; major work experience (educational background); positions concurrently held with other companies; job commencement date; number of shares held by them, their spouses, minor children, and under the name of other parties; and the acquisition of employee stock option certificates.
(2) For those who are the spouses of or are related to the general manager or vice general manager within the 2nd degree, they shall also set forth their corporate position, name and relationship to the general manager or vice general manager.
4. Directors and Supervisors: (Schedules 3 and 4)
(1) Name, work experience (educational background), amount and nature of shareholdings: setting forth the names; major work experience (educational background); positions concurrently held with this and other companies; appointment date and term; date of initial appointment; number of shares held by them at the time of appointment and those held presently by them, their spouses, minor children, and under the name of other parties, and the possession of professional knowledge. In the case of the representative of a corporate shareholder, the name of the corporate shareholder, and the names of the shareholders who hold more than 10% of the shares of such corporate shareholder, or those who rank in the top 10 in shareholdings, shall be noted.
(2) For those who are the spouses of or are related within the second degree to other managers, the directors or supervisors, they shall also set forth their corporate position, name and relationship to those other managers, the directors or supervisors.
5. Promoters:
(1) For companies established for less than one year, relevant information of promoters whose shareholding percentage is among the top ten of the Company shareholders shall be disclosed as pursuant to the previous subparagraph.
(2) For companies established for less than three years, disclosure shall be made according to the provisions under No. 6 of the ROC Statements of Financial Accounting Standards, where all the important transactions (including property transactions and financing of funds) between the promoters and the Company since incorporation, other than the normal business transactions, shall be disclosed. For property transactions, the nature and location of the transacted item and the method for determining the transaction price shall also be disclosed. For properties purchased from a promoter, if the promoter bought the properties less than two years before selling them out, the promoter's purchasing costs shall also be explained.
6. Remuneration to Directors, Supervisors, General Manager, and Vice General Manager (Schedule 4-1):
(1) Remuneration and transportation allowances paid to each director and supervisor for the most recent fiscal year; if a director concurrently holds a managerial position, his remuneration shall be respectively disclosed pursuant to his titles/positions.
(2) The total sum of the compensation, rewards, special allowance and bonus paid to the general manager and vice general manager for the most recent fiscal year.
(3) For remuneration other than those specified in the above two sub-paragraphs paid to the directors, supervisors, general manager and vice general manager, such as payments relating to provision of car, house/apartment and other exclusive personal expenses, the following information shall be disclosed: name, position, nature and cost of the provided property/asset, the actual or fair-market-value-calculated rental, and any other payments.
"Affiliated enterprise" in subparagraph 2 of the preceding paragraph refers to an affiliated enterprise meeting the requirements in Article 369-1 of the Company Act. |
| Article 10 | The "capital and shares" shall include the following items:
1. Types of Shares: describing the types of the currently outstanding issued shares of the company. (Schedule 5)
2. Formation of Capital: describing the capital changes of the company for the most recent five years and up to the date of printing of the prospectus. If the paid-in capital has been increased, the prospectus shall note the sources of capital, the approval (effective) date for the current capital increase, the approval letter reference number and the amount. If shares are issued at less than par value, such information shall be prominently indicated. If monetary claims against the company, or technology or commercial goodwill needed by the company, are offset against share payments, such information shall be specified, and the type and amount of such offset shall also be noted. If a private placement, such information shall be prominently indicated, and the targets of private placement during the most recent fiscal year and the period up to the day of printing of the prospectus, and their qualifications, subscription quantities, subscription price, and relationship to the company, shall be disclosed.
(Schedule 6)
3. Status of Recent Dispersal of Shareholding:
(1) structure of shareholders: setting forth statistics of all types of the shareholders and the ratio thereof. (Schedule 7)
(2) status of dispersal of shareholding: setting forth the statistics of number of shareholders for each category of shareholder classified by various number of shares held by the shareholders, and the ratio between the number of the held shares to the total outstanding issued shares. (Schedule 8)
(3) list of major shareholders: setting forth the names, number of owned shares and the shareholding percentage of those who own 5% or more of the total issued shares or whose shareholding percentage is among the top ten of all the shareholders. (Schedule 9)
(4) the status that directors, supervisors and shareholders holding more than 10% of outstanding shares had waived their subscription right to the cash capital increase during the past two years and in the current year. If the subscription to the cash capital increase being waived was subscribed by related person who was designated for such subscription, the name of such related person, its relationship with the company, directors, supervisors and shareholders holding more than 10% of outstanding shares, and the number of the shares thus subscribed shall also be disclosed. (Schedule 10)
(5) the status of changes that directors, supervisors and shareholders holding more than 10% of outstanding shares had transferred and pledged their shares during the past two years and up to the prospectus' publishing date. If the counter party of such transfer or pledge of shares is a related person, the name of such counter party, its relationship with the company, directors, supervisors and shareholders holding more than 10% of outstanding shares, and the number of the shares thus acquired or pledged shall also be disclosed. (Schedule 11)
4. The per share market price, net worth, profit, dividend and relevant information for the past two fiscal years. (Schedule 12)
(1) the highest, lowest and the average market price per share: Setting forth the highest and lowest market price of each year. And calculating each year's average market price based upon each year's actual transaction prices and volume.
(2) net worth per share: Using the number of the outstanding issued shares at year end as the basis to calculate the respective net worth per share (shareholder's equity) before and after the distribution.
(3) earnings per share.
(4) dividend per share: Setting forth the respective cash dividend and stock dividend of each year. If there are any cumulated and unpaid dividends, their amount shall also be disclosed.
(5) price-earnings (P/E) ratio
(6) price-dividend (P/D) ratio
(7) cash dividend yield.
5. Company dividend policy and implementation status: Shall disclose the dividend policy set forth in the company's Articles of Incorporation and status of dividend distributions contemplated (decided) in the current fiscal year.
6. The effect of dividend distributions contemplated for the current fiscal year on company operating performance and earnings per share.
7. Employee bonuses and compensation of directors and supervisors, including:
(1) the percentages or ranges with respect to employee bonuses and director/supervisor compensation, as set forth in the company's articles of incorporation;
(2) where a profit distribution proposal has been approved by the board of directors but not yet passed by shareholders' meeting, the prospectus shall indicate:
(i) the value of any employee cash/stock bonuses and director/supervisor compensation proposals approved by the board of directors;
(ii) the number of shares to be distributed in any employee stock bonus proposal approved by the board of directors, and the size of such distribution as a percentage of capital increase through capitalization of retained earnings; and
(iii) the effect upon imputed earnings per share of any proposed distribution of employee bonuses and director/supervisor compensation.
(3) where a profit distribution proposal has already been passed by shareholders' meeting, the prospectus shall indicate:
(i) the value of any employee cash/stock bonuses and director/supervisor compensation to be distributed pursuant to shareholders' resolution;
(ii) the number of shares to be distributed in any employee stock bonus to be distributed pursuant to shareholder's resolution, and the size of such distribution as a percentage of capital increase through capitalization of retained earnings; and
(iii) the effect upon imputed earnings per share that will result from distribution of the employee bonuses and director/supervisor compensation.
(4) where employee bonuses and director/supervisor compensation are paid out of earnings from the previous fiscal year, the prospectus shall disclose: (i) actual distributions of employee bonuses and director/supervisor compensation at the time of the preceding fiscal year's profit distributions; (ii) the amount of such distributions as set forth in the proposal adopted at the director's meeting; and (iii) the degree of discrepancy between the two.
8. Status of company buyback of corporate stocks: companies shall describe, for the three most recent fiscal years and the period up to the date of printing of the prospectus, the purpose of the application for buyback of corporate stocks, the time period of buying back stocks, the price range for buybacks, the categories, number, and dollar amount of stocks that have already been bought back, the number of stocks that have already been canceled and transferred, the accumulated number of corporate stocks, and the ratio of the accumulated number of corporate stocks to the total number of issued stocks. (Schedule 13) |
| Article 11 | The description of the status of issue and private placement of "corporate bonds" (including overseas corporate bonds) shall include the following items:
1. For all unredeemed corporate bonds and corporate bonds undergoing private placement, items to be disclosed shall be in accordance with Article 248 of the Company Act. If an SFC-approved or SFC-recognized credit rating institute has been engaged to conduct credit rating thereof, the name of the credit rating institute, the date of the rating and the credit rating result on the corporate bonds shall also be disclosed. If they are attached with conversion, exchange, or subscription rights, the issuance and conversion, exchange, or subscription rules, the possible dilution conditions and influence on shareholders' interests caused by the terms of issuance, and the monetary amount already converted, exchanged, or subscribed up to the prospectus' publishing date shall also be disclosed. (Schedule 14)
2. Corporate bonds maturing within one year: The redemption rules and the monetary amount for the corporate bonds to be matured in one year shall be disclosed.
3. For the issued convertible corporate bonds which are convertible to shares, overseas depositary receipts or any other securities, the issuance date, the conversion price at the time of issue and the conversion method, and the highest and lowest market and conversion price for the past two years and up to the prospectus' publishing date of each convertible corporate bond shall be disclosed respectively. (Schedule 15)
4. For the issued exchangeable corporate bonds, the issue date, the exchanged items, the exchange price at the time of issue, the highest and lowest market price and exchange price and the number of the exchanged items held by the company for the past two years and up to the prospectus' publishing date of each exchangeable corporate bond shall be disclosed respectively. (Schedule 16)
5. If the company adopts the categorical reporting method for the raising and issue of common corporate bonds, relevant information concerning the projected total issue amount, the already issued total amount and the balance amount for the categorical reporting shall be disclosed. (Schedule 17)
6. If the company has already issued corporate bonds with warrants, a separate listing of the issuance date of each corporate bond attached with warrants, the category and number of bonds issued with warrants attached, the restricted subscription time period, the method of fulfilling the agreement, the stock subscription price, the number that have not been subscribed up to the date of the prospectus's printing, and the ratio of the number that have not been subscribed to the total number of issued stocks. (Schedule 18)
7. Status of private placements of corporate bonds in the three most recent fiscal years: Shall disclose the types of corporate bonds; dates and quantities passed by shareholders or board of directors meeting; basis and reasonableness of the setting of price; means of selecting the specified persons (where the offerees have already been arranged, the names of the offerees and the relationship between the offerees and the company shall also be described); the reasons necessitating the private placement; and the status of implementation as of the day of printing of the prospectus. (Schedule 19) |
| Article 12 | The description of the status of issue and private placement of "preferred shares" shall include the following items:
1. For all outstanding preferred shares and preferred shares undergoing private placement, the par value per share, issue price, the effect of issuance terms on preferred share shareholders' equity, possible conditions of dilution, effect on shareholders' equity, and items provided under Article 157 of the Company Act shall be disclosed. If they are attached with conversion or subscription rights, the issuance and conversion rules or subscription rules (including enjoyment and assumption, after the compulsory conversion of the original preferred shares, of rights and obligations existed on the original preferred shares before conversion, such as dividends that have not yet been distributed) and the monetary amount already converted or subscribed up to the prospectus' publishing date shall also be disclosed. (Schedule 20)
2. For already issued preferred shares attached with warrants, a separate listing of the issuance date of each corporate bond attached with warrants, the category and number of bonds issued with warrants attached, the restricted subscription time period, the method of fulfilling the agreement, the stock subscription price, the number that have not been subscribed up to the date of the prospectus's printing, and the ratio of the number that have not been subscribed to the total number of issued stocks. (Schedule 21)
3. For preferred shares already listed on the stock exchange or traded on an OTC market, the highest and lowest market price of those shares for the past two years and up to the prospectus' printing date shall be set forth.
4. Where a company listed on the stock exchange or traded on an OTC market issues preferred stocks that are not listed or not OTC-traded, the purpose of issuance, the reason for not being listed or OTC-traded, the effect on current shareholders' and investors' interests, and whether there is any plan for applying for listing or OTC trading in the future.
5. Status of private placements of preferred shares in the three most recent fiscal years: Shall disclose the types of preferred shares; dates and quantities passed by the shareholders meeting; basis and reasonableness of the setting of price; means of selecting the specified persons (where the offerees have already been arranged, the names of the offerees and the relationship between the offerees and the company shall also be described); the reasons necessitating the private placement; and the status of implementation as of the day of printing of the prospectus. (Schedule 22) |
| Article 13 | The description of the status of participation in the issue and private placement of "overseas depositary receipts" shall include the following items: (Schedule 23)
1. For the participated and issued but not yet entirely redeemed overseas depositary receipts and depositary receipts undergoing private placement, the following items shall be noted:
(1) issue date, and place of issue and trading.
(2) total monetary amount issued, the unit issued price and total units issued.
(3) the securities represented by the overseas depositary receipts, as well as their sources and amount.
(4) rights and obligations of the holders of the overseas depositary receipts.
(5) the trustee, the depositary institution, and the custodian institution.
(6) the unredeemed balance amount of the overseas depositary receipts.
(7) the allocation methods on the relevant costs incurred as a result of the issuance and during the effective period.
(8) the important items agreed in the depository and the custodian contracts.
2. The companies who have participated in the issuance of overseas depositary receipts shall set forth the highest and lowest market price of those overseas depositary receipts for the past two years and up to the prospectus' publishing date.
3. Status of private placements of overseas depositary receipts in the three most recent fiscal years: Shall disclose the dates and quantities passed by the shareholders meeting; basis and reasonableness of the setting of price; means of selecting the specified persons (where the offerees have already been arranged, the names of the offerees and the relationship between the offerees and the company shall also be described); the reasons necessitating the private placement; and the status of implementation as of the day of printing of the prospectus. (Schedule 24) |
| Article 14 | The description of the status of issue and private placement of employee stock option certificates shall include the following items:
1. For employee stock option certificates issued by the Company but not yet mature, the date of the competent authority's approval of the certificates; issue date, number of units issued; ratio of subscribable shares to total issued shares; subscription period, exercise method; period and ratio in which subscription is restricted; number of shares that have been obtained through exercise of subscription rights, NT dollar amount of the shares subscribed, number of shares that have not been subscribed, subscription price per share of the unsubscribed shares, and ratio of the number of unsubscribed shares to the number of issued and outstanding shares up to the date of printing of the prospectus, and effect on shareholders' equity. (Schedule 25)
2. Names and subscription status of managerial officers who have obtained employee stock option certificates and of employees who rank among the top ten in terms of the number of shares to which they have subscription rights through employee stock option certificates acquired, and whose total such subscription rights are NT$30 million or more, cumulative to the date of printing of the prospectus. (Schedule 26)
3. Status of private placements of employee stock option certificates in the three most recent fiscal years: Shall disclose the dates and quantities passed by the shareholders meeting; basis and reasonableness of the setting of price; means of selecting the specified persons (where the offerees have already been arranged, the names of the offerees and the relationship between the offerees and the company shall also be described); the reasons necessitating the private placement; and the status of implementation as of the day of printing of the prospectus. (Schedule 27) |
| Article 15 | The description of the status of mergers and acquisitions shall include the following particulars:
1. The following particulars shall be disclosed for all merger or acquisition cases not yet consummated:
(1) Content of the merger or acquisition case: shall include the purpose of the merger or acquisition; plan for integration of finances, business, personnel, and information following the merger or acquisition, and anticipated benefits; share conversion rates and the basis upon which they were calculated; proposed schedule for the merger; effect of the merger on net value per share and earnings per share; matters related to the assumption of rights and obligations of the extinguished company (including principles for handling treasury shares and already-issued equity securities); and the basic information of the company to be merged or acquired (including company name, principal lines of business, current products and their uses, or service items).
(2) Implementation status: Analysis of the implementation of the merger or acquisition up to the quarter preceding the printing of the prospectus; for example, if the case has fallen behind schedule, a concrete explanation of the reasons, effects on shareholder equity, and plans for improvements shall be given.
2. The following particulars shall be disclosed for all split plans not yet consummated:
(1) Content of the split plan: the purpose of the split; estimated value of the operations and assets planned to be assigned to the existing company or new company; share conversion rates and the basis upon which they were calculated; the total number and the types and quantities of the shares to be acquired by the split company or its shareholders; matters related to assumption by the existing company or new company of rights and obligations of the split company (including principles for handling treasury shares and already-issued equity securities); matters related to the reduction, if any, in capital of the split company; anticipated benefits of the split.
(2) Implementation status: Analysis of the split plan up to the quarter preceding the printing of the prospectus; for example, if the case has fallen behind schedule, a concrete explanation of the reasons, effects on shareholder equity, and plans for improvements shall be given. |
| Article 16 | The description of the status of issues of new shares due to acquisition of shares of another company shall include the following particulars:
1. The following particulars shall be disclosed for any uncompleted issue of new shares due to acquisition of shares of another company:
(1) Names, quantities, and counterparts of the acquired shares;
(2) Proposed progress schedule;
(3) share conversion rates and the basis on which they were calculated;
(4) Opinion of an independent professional (e.g. a certified public accountant, lawyer, or securities underwriter) on the reasonableness of the share conversion rates;
(5) conditions and restrictions on future transferal of the acquired shares;
(6) anticipated possible benefits;
(7) If the counterpart of the acquisition of the shares of another company is an affiliated enterprise or related person, the relationship with the affiliated enterprise or related person shall also be specified, as well as the reason for the selection of the affiliated enterprise or related person, and an opinion appraising whether shareholders' equity would be affected;
(8) Share swap cooperation agreement.
2. Implementation status: Analysis up to the quarter preceding the printing of the prospectus; for example, if the case has fallen behind schedule, a concrete explanation of the reasons, effects on shareholder equity, and plans for improvements shall be given. |
Section II Operation Summary
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| Article 17 | The description of the "operation of the company" shall include the following particulars:
1. Business Content:
(1) Scope of Business: Setting forth the major business engaged in by the company and its percentage out of the entire company business, company's current products (services), and the new products (services) planned to be developed.
(2) Industry Summary: Describing the industry's current condition and development, relations with industries upstream, downstream and at the same level, various trends of product development and competition status.
(3) Technology and Research & Development Summary: Setting forth the technological arrangement in business operations, research & development, personnel involved in research & development and their educational background and employment history, along with their invested research costs each year for the last 5 years and any successfully developed technologies or products.
(4) Long and Short Term Plans for Business Development.
2. Summary of Market and Production/Sales
(1) Market Analysis: Analyzing the areas/regions of sales (supply) of the Company's major products (services), market share, market's future supply/demand conditions and development potential, anticipated sales volumes and basis therefor, competitive niche, and the advantageous and disadvantageous factors for future development and policies for dealing with them.
(2) Important use and production process for the major products.
(3) Supply status of the major raw materials.
(4) Description of major gross profit margin changes by each department classification or major product classification for the most recent two years: When the gross profit margin fluctuates over 20% from the previous year's rate, analysis of the key factors causing the price/volume changes and their impact on the gross profit margin shall be made. For construction companies or companies with construction departments, setting forth an analysis on the estimated recognized income and gross profit for each construction project during the year of report (application) and the preceding year, and describing whether there are any unusual events involved in the gross profit margin of each construction project and the expected sales for projects that have been completed but not yet sold. (Schedules 28, 29)
(5) List of principal suppliers and clients: Setting forth the names of any suppliers (clients) that have supplied (sold) 10% or more of the company's procurements (sales) in either of the preceding two years, and the monetary amount and the proportion of such procurements (sales) as a percentage of total procurements (sales), and explaining the reason for any change in the amount; provided however, that Where the company is prohibited by contract from revealing the name of a trading counterpart, or where a trading counterpart is an individual person who is not a related party, a code may be used in place of such trading counterpart's actual name. (Schedules 30, 31)
(6) Production for the most recent two years: Setting forth production by volume, production by value, and production capacity for the most recent two years by each department classification or major product classification, and an analysis of any changes. (Schedule 32)
(7) The sales volume and value for the most recent two years: Setting forth the sales volume and sales value for the most recent two years by each department classification or major product classification, and an analysis of any changes. (Schedule 33)
3. Number of employees for the most recent two years: Documenting the employees information for the past two years and up to the prospectus' publishing date of the current year. Such information shall be categorized by the nature of the works performed to include the statistics on the number of employees, average age, average years of service and the educational background breakdown. (Schedule 34)
4. Information on environmental protection expenditures:
(1) According to laws and regulations if it is required to apply for a permit for installing anti-pollution facilities, or permit of pollution drainage, or to pay anti-pollution fees, or to organize and set up an exclusively responsible unit/office for environmental issues, the description of the status of such applications, payment or establishment shall be made.
(2) Setting forth the company's investment on the major anti-pollution facilities, the use purpose of such facilities and the possible effects to be produced. (Schedule 35)
(3) Describing the process undertaken by the company on environmental pollution improvement for the most recent two years and up to the prospectus' publishing date. If there had been any pollution dispute, its handling process shall also be described.
(4) Describing the loss (including damages compensation paid) suffered by the company due to environmental pollution incidents occurred in the most recent two years and up to the prospectus' publishing date, the total penalty/fine amount, as well as disclosing its future preventive policies (including improvement measures) and possible expenses to be incurred (including possible loss if no preventive measures are taken, and the penalties and estimated damage compensation amount; if reasonable estimation cannot be made, explanation on the facts why it cannot be made shall be stated.)
(5) Explaining the current condition of pollution and the impact of its improvement to the profits, competitive position and capital expenditures of the company, as well as the projected major environment-related capital expenses to be made for the coming two years.
5. Labor relations:
(1) Setting forth all employee benefits, continuing education, training, retirement systems, and the status of their implementation, as well as the status of agreements between labor and management, and all measures aimed at preserving the rights and interests of employees.
(2) Describing the loss suffered by the company due to labor disputes occurring in the most recent two years and up to the prospectus' publishing date, and disclosing the estimated amount expected to be incurred for the present and future as well as the preventive measures. If a reasonable estimate cannot be made, an explanation of why it cannot be made shall be provided. |
| Article 18 | Where fixed assets and other real properties or major assets are bought or sold, the following items shall be recorded:
1. Self-owned Assets:
(1) Setting forth the names, number, acquisition dates, acquisition cost, revaluation gains and non-depreciated balance amount of the fixed assets if the acquisition cost is 10% or more of the paid-in capital or NT$100,000,000 or more. The status of the fixed assets' use, insurance, encumbrances and any other restriction of rights shall also be disclosed. (Schedule 36)
(2) Setting forth the names, lot size, premises locations, acquisition dates, acquisition costs, revaluation gains, non-depreciated balance amount, published value or house/apartment's appraised value and the proposed future disposition or development plans of the idle real properties and the real properties which have been held for five years or more for investment purposes. (Schedule 37)
2. Rental properties:
(1) Capital lease: The standards and items to be disclosed are identical with item (1) of the previous subparagraph.
(2) Operating lease: For all the operating lease assets the rent amount of which exceeds NT$5 million a year, their names, number, lease term, annual lease amount, names of lessors, and the current status of use shall be set forth. (Schedule 38)
3. Status of major asset buy/sale transactions: Setting forth the buy/sale information of the company and the subsidiary company for the most recent two years and up to the prospectus' publishing date if the transaction price is 20% or more of the paid-in capital or NT$300,000,000 or more. The information shall include the transaction price, disposition profit or loss, the trading counter party (buyer or seller) and their relationship with the company. (Schedule 39)
4. Each factory's current condition and facility productivity ratio for most recent two years. (Schedule 40, 41)
The definition of a subsidiary company for subparagraph 3 of the preceding paragraph, subparagraph 4 of Article 19, and subparagraph 3 of Article 27, is prescribed in Number 5 and 7 of the Statement of Financial Accounting Standards promulgated by the Accounting Research and Development Foundation. |
| Article 19 | The "re-invested business" shall include the following items:
1. The re-invested business summary:
(1) Describing the name of the re-invested business, the business engaged in, the company's investment cost into such re-invested business, book value, number of shares held, percentage of shareholding, net worth of share, accounting principles, book investment profit and loss for the most recent year, distributed cash dividends and the number of the company's shares held by the re-invested business/entity. If there is market value available on the re-invested business, such market value information shall also be included. (Schedule 42)
(2) If having a major influence on investee enterprise and using the company's resources or technology, setting forth the conditions of payment or remuneration for use of resources or technology.
(3) If having the power to control the investee enterprise, setting forth purchase and selling transactions with the company within the last year, the credit policy, transaction terms, and the status of the payment under account receivables.
2. Consolidated shareholding percentage: Setting forth the following information of each re-invested business: the number of shares held by the company, the number of shares held by the company's directors, supervisors, the personnel whose positions are managerial or higher, and the number of shares of the same re-invested business which are held by the entities directly or indirectly controlled by the company, and calculating the consolidated shareholding percentage of the above categories. (Schedule 43)
3. The status of those subsidiaries of companies listed on the stock exchange or traded on an OTC market who held or disposed of shares of this company during the most recent two years and up to the prospectus' publishing date and the status of the shares pledged, and setting forth the origin of capital and other influences on the company's operation results and financial condition. (Schedule 44)
4. Any occurrences of the situations of Article 185 of the Company Act, or transferring part of the business operation or results of the research and development to a subsidiary during the most recent two years and up to the prospectus' publishing date, the status of waiving subscription rights to the cash capital increase in the subsidiary company, the name of the subscribing counter party, and the relationship with the company, the directors, supervisors and shareholders who hold more than 10% of the outstanding shares, and the number of the subscribed shares shall be disclosed.
5. For those who have or are planning to engage in indirect investments in mainland China, in addition to the information required in the sub-paragraphs 1 and 2 above, the following information shall also be disclosed: (Schedule 45)
(1) The approval dates and the approved investment amount of each and every resolution of a shareholders meeting or the board of directors.
(2) The approval dates and the approved investment amount of each and every approval made by the Investment Commission of the Ministry of Economic Affairs (MOEA), and the already and yet to be invested amount and its reasons.
(3) The profit and loss amount and the amount of the profit remitted back in relation to the investment made in the mainland which were recognized during the most recent two years.
(4) The invested mainland Chinese company name, the major business items, paid-in capital, net worth under the most recent annual financial statement, status of profit and loss, ways of investment by the company, and the shareholding percentage and amount up to the prospectus' publishing date.
(5) The above disclosure requirements also apply to those whose subsidiaries have also invested in the mainland.
6. If the re-investment ratio exceeds 40% of the paid-in capital, explanation on whether the re-investment has been passed by the shareholders meeting or is authorized under the Articles of Incorporation. |
| Article 20 | The "important contracts" shall include all supply/sales contracts, technologies cooperation contracts, construction contracts, long-term loan agreements, and all other important contracts which are likely to impact the investors' rights, whether they are currently effective or have expired in the most recent year, and shall include the parties, major content, restrictive provisions and the commencement and termination dates of the contracts. (Schedule 46) |
| Article 21 | Operation summary and other necessary items to be supplemented:
1. Litigious and non-litigious matters:
(1) For all the finalized or pending litigations, non-litigious proceedings or administrative disputes of the company occurring during the most recent two years and up to the prospectus' publishing date, and if the outcome of such proceedings may have substantial impact on the shareholders' equity or securities prices, the facts in dispute, amount in dispute, commencement date, major parties involved and current status shall be disclosed.
(2) For all finalized or pending litigation, non-litigious proceedings or administrative disputes involving the company's directors, supervisors, general manager, actual responsible persons, and major shareholders whose shareholding represents more than 10%, that have occurred during the most recent two years and up to the prospectus' publishing date, if the outcomes of such proceedings may significantly impact the shareholders' rights or securities prices, the information to be disclosed shall be the same as those set forth in sub-subparagraph (1) above.
(3) All events regulated by Article 157 of the Securities and Exchange Act, involving the company's directors, supervisors, general manager and the major shareholders whose shareholding represents more than 10%, that have occurred in the most recent two years and up to the prospectus' publishing date, and the status of the company's handling of the event(s) thus far.
2. In the event that the company's directors, supervisors, general manager and the major shareholders whose shareholding represents more than 10%, have encountered financial difficulties or lost credit worthiness within the most recent two years and up to the prospectus' publishing date, the effect on the company's financial status.
3. Others. |
Section III Issuance Plans and Implementation Status
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| Article 22 | In the analysis of the previous cash capital increase, merger or acquisition, issue of new shares due to acquisition of shares of another company, or plan of utilization of capital from issuance of corporate bonds, the following particulars shall be specified:
1. Contents of the plan: for the previous cash capital increase, merger or acquisition, issue of new shares due to acquisition of shares of another company, or corporate bond issue plan, and, as of the quarter preceding the date on which the prospectus was printed, for every preceding cash capital increase, merger or acquisition, issue of new shares due to acquisition of shares of another company, or corporate bonds issue plan that has not yet been completed or the actual completion date of which was no more than three years from the date of the report (application), a detailed explanation shall be given of the specific content of each such plan, including the content of each and every changed plan, the source of capital and its usage, reasons for the change, the effects before and after the change, the date that the changed plan was proposed to the shareholders meeting, and the date on which the above information was posted to the information reporting website designated by the SFC shall also be published.
2. Implementation status: Analyzing, item by item up to the quarter immediately preceding the prospectus' publishing date, the status of the plans' implementation and the comparison with the originally projected effects based on the purpose of each of the above-mentioned plans. If the implementation progress or effect does not reach the projected target, a concrete explanation on the causes, impact on the shareholders' equity and improvement plans shall be made. If the content of any of the plans referred to in the preceding subparagraph is as set forth in the following sub-subparagraphs, the information set forth herein below shall also be disclosed:
(1) For acquiring or merging with, or taking assignment of, other companies, or expanding or newly constructing fixed assets, a comparison description on the fixed assets, operating income, operating expenses and operating profits, etc. shall be made.
(2) For re-investing in other companies, description of the re-invested business' operation status and its impact to the company's investment profit/loss shall be made.
(3) For strengthening the operating capital or paying off liabilities, a comparison description on the increase and decrease of current assets, current liabilities, total liabilities, interests payments, operating revenues, and the retained earning per share etc. as well as financial structure analysis shall be made. |
| Article 23 | The plan for the current cash capital increase, issuance of corporate bonds, or issuance of employee stock option certificates shall specify the following particulars:
1. Sources of capital: Description of whether a cash capital increase or issue of corporate bonds is the capital source for the current plan. If the capital is used to acquire or to invest in other companies, or to expand or newly construct fixed assets, the prospectus shall set forth the total amount of the plan shall be specified. If the funds from the current offering are insufficient, the fund raising methods and sources shall also be described.
2. For the current issue of corporate bonds, relevant particulars shall be disclosed in accordance with Article 248 of the Company Act. If an SFC approved or recognized credit rating institution has been engaged to conduct a credit rating of the bonds, the prospectus shall set forth the name of the credit rating institution, the date of the rating, and the credit rating results shall also be disclosed. If conversion, exchange, or subscription rights are attached to the bonds, the issuance and conversion, exchange, or subscription rules, possibility of dilution of equity under the terms and conditions of issuance, and effect on shareholder equity shall be disclosed.
3. For the current issue of preferred shares, the prospectus shall set forth the par value per share, issue price, effect of issuance terms and conditions on preferred share shareholders' equity, possible conditions of dilution, effect on shareholder equity, and items provided under Article 157 of the Company Act shall be disclosed. If conversion or subscription rights are attached to the shares, the prospectus shall set forth the issuance and conversion rules or subscription rules (including enjoyment and assumption, after the compulsory conversion of the original preferred shares, of rights and obligations existing on the original preferred shares before conversion, such as dividends that have not yet been distributed) shall be disclosed.
4. For unlisted preferred shares or preferred shares not to be traded on an OTC market issued by a listed company listed on the stock exchange or traded on an OTC market, the prospectus shall set forth the purpose of the issue, reasons why such shares are not to be listed or traded on an OTC market, the effect on existing shareholders and potential investors, and whether there is any plan to apply for listing or trading on an OTC market shall be disclosed.
5. Where employee stock option certificates are issued, the fact of such issue and the attendant subscription rules shall be disclosed.
6. Explanation of the feasibility, necessity, and reasonableness of the current plan and an analysis of the influence of each type of funding on the dilution of earnings per share for the year of the company's report (application) and the following year. For issuance of stock at below par value, the prospectus shall set forth the necessity and reasonableness of issuing new shares at a discount shall be explained, as well as the reasons for not using other capital raising methods and the reasonableness thereof, and amount of offsets against capital reserves or retained earnings.
7. Explanation of the mechanism for setting the current issue price, conversion price, exchange price, or subscription price.
8. Capital utilization estimates and possible resulting effects: Explanation of the progress of the capital utilization and the projected resultant effects after the completion of the current plan.
(1) If acquiring other companies or expanding or newly constructing fixed assets, the prospectus shall set forth the projected possible increased production/sales volume, value, cost structure (including total cost and unit cost), changes of profitability, improvement of product quality and other potential effects upon the completion of the current plan shall be described.
(2) If investing in other enterprises, the following items shall be set forth:
(i) The after-tax net profit of the invested company for the most recent two years, purposes of the investment, planned use of the funds and the relatedness of the enterprise's operations to the company's line of business, and the loss/profits from investment and its impact on the company's operations. If 20% or more of the investee enterprise's common shares are held, the prospectus shall set forth the projected schedule for fund use by the investee enterprise, the number of years within which the invested funds are to be recovered, the projected effect each year before recovery of the funds, and its influence on the company's profitability and earnings per share.
(ii) If re-investing in enterprises where special approval is required, the prospectus shall set forth the status of approval or permission from the competent authority in charge of such special permit enterprises, and whether any terms or conditions attached to the approval or permission have an effect on this offering and issuance of securities.
(3) If replenishing operating capital or paying off liabilities, the following items shall be set forth:
(i) The amount of debt matured annually, repayment plan, status of projected relief of financial burden, current capital utilization status, amount of needed capital and proposed usage plan, and each month's projected schedule of cash receipts and expenditures for the year of the report (application) and the coming one year. (Schedule 47)
(ii) The policy for collection of accounts receivable and payment of accounts payable, capital expenditure plan, and the financial leverage and debt ratio (or the self-provided capital and risk capital ratio) for the year of the report (application) and the coming one year, and the reasons for paying off liabilities or enriching operating capital.
(iii) If the capital increase plan involves paying off liabilities, the prospectus shall set forth the purpose for borrowing funds and the effect achieved in doing so. If the funds were borrowed for purchasing land for construction or to pay for construction costs, the prospectus shall set forth the estimated total amount needed for the completion of project, the source of extra capital needed, the capital for each stage of construction and the progress of the construction, the original reason for borrowing funds, and the timing and amounts for recognizing any profits/losses and the anticipated possible effects of such recognition and the status of realization thereof.
(4) If buying land for construction or paying construction costs, the prospectus shall set forth the estimated total amount needed for completion of the construction, the source of extra capital needed, the capital for each stage of construction and the progress of the construction, the original reason for borrowing funds, and the timing and amounts for recognizing any profits/losses and the anticipated possible effects of such recognition and the status of realization thereof.
(5) If purchasing an unfinished project and assuming the burden of the seller's unfulfilled contract, the prospectus shall set forth the buyer's reason for the transfer, the basis on which the acquisition price was determined, and the effect of the process of acquisition on the rights and obligations of the parties to the contract. |
| Article 24 | For the current issue of new shares due to acquisition of another company's shares, the following particulars shall be specified:
1. Name, quantity, and counterpart of the acquired shares;
2. Proposed progress schedule;
3. Share conversion rates and the basis on which they were calculated;
4. Opinion of an independent professional on the reasonableness of the share conversion rates;
5. Conditions and restrictions on future transferal of the acquired shares;
6. Anticipated possible benefits;
7. If the counterpart of the acquisition of the shares of another company is an affiliated enterprise or related person, the relationship with the affiliated enterprise or related person shall also be specified, as well as the reason for the selection of the affiliated enterprise or related person, and an opinion appraising whether shareholders' equity would be affected;
8. Share swap cooperation agreement. |
| Article 25 | For the current issue of new shares due to acquisition or merger, the following particulars shall be specified:
1. Plan content:
(1) Content of the merger or acquisition plan: including the purpose of the merger or acquisition; the integration plan for financial, business, personnel, information, etc. affairs after the merger or acquisition and anticipated benefits; the share conversion ratio and the basis upon which it was calculated; proposed schedule; items that materially affect the share conversion ratio after the public announcement of the merger or acquisition; effects on net value per share and earnings per share; matters related to the assumption of rights and obligations of the extinguished company (including principles for handling treasury shares and already-issued equity securities), and the basic identifying information of the company to be merged or acquired (Schedule 48).
(2) Content of the split plan: the purpose of the split; estimated value of the operations and assets planned to be assigned to the existing company or new company; share conversion rates and the basis upon which they were calculated; the total number and the types and quantities of the shares to be acquired by the split company or its shareholders; matters related to assumption by the existing company or new company of rights and obligations of the split company (including principles for handling treasury shares and already-issued equity securities); matters related to the reduction, if any, in capital of the split company; anticipated benefits of the split.
2. Merger or acquisition contract.
3. Opinion of an independent professional on the reasonableness of the share conversion rate of the merger or acquisition plan.
4. Any restrictions on future transfer or pledge of new shares issued due to the merger or acquisition.
5. The projected consolidated balance sheet as of the record date for calculating the share conversion ratio between the merging and merged companies.
6. Financial statements of the merged company for the most recent two fiscal years, audited and attested by a certified public accountant(s). (If the merged company is not a publicly issued company, its financial statement may be audited/certified by a single certified public accountant.)
7. Minutes of the shareholders meeting of the merged company at which the resolution for merger was passed; however, this restriction shall not apply where any act or regulation provides otherwise.
8. Summary of the merged company's financial and business conditions:
(1) The main content of the merged company's business operations, current products and their uses or current services, the condition of the supply of the main raw materials, and the sales areas for the main products or services shall be set forth.
(2) In accordance with subparagraph 3 of paragraph 1 of Article 18 and subparagraph 1 of Article 28, the buying/selling of the merged company's major assets, the endorsement guaranty, loans made, and other conditions shall be set forth.
(3) In accordance with subparagraph 1 of Article 19, a summary of the merged company's re-investment enterprises shall be set forth.
(4) In accordance with Article 20, important contracts signed by the merged company shall be set forth and the effect on the company's financial and business conditions after the merger shall be described.
(5) In accordance with subparagraph 1 of Article 21, major litigation, non-litigation, and administrative disputes of the merged company and related companies shall be set forth and the effect on the company's financial and business conditions after the merger shall be described.
(6) If the merged company is a construction company or has a construction department, the estimated income and gross profit for each construction project during the year of registration (application) and the preceding year shall be set forth, and the estimated sales of completed but not yet sold projects shall be described. |
Section IV Financial Summary
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| Article 26 | The "summarized financial data for the most recent 5 years" shall include the following items:
1. Summarized balance sheet and profit and loss statement: Setting forth the summarized balance sheet and profit and loss statement information for the most recent five years. Listed and OTC-traded companies shall also set forth the summarized balance sheet and profit and loss statement information up to the quarter immediately preceding the prospectus' printing date. For those who have been notified by SFC to re-prepare/re-edit their financial information, all the figures/numbers used shall be the post-re-prepared/re-edited ones, and the status and reasons for such re-preparation/re-editing shall be noted. Those who are notified by SFC to make the corrections by themselves shall make note of the status and reasons for the corrections. (Schedule 49)
2. The important items which affected the making of uniform comparison on the above-mentioned financial statements, such as accounting changes, corporate mergers, or suspension of work in the operating departments etc., and the impact of these events on the then current financial statements.
3. The names and auditor's opinions of the attesting certified public accountant for the most recent five years:
(1) Setting forth the names and audited opinions of the attesting certified public accountant for the most recent five years. Except for those audited reports with an unqualified opinion, the contents of the opinion shall be fully described.
(2) If there was change/replacement of the certified public accountant within the most recent five years, explanation made by the company's previous and current certified public accountant over the causes for such change/replacement shall be set forth.
4. Financial analysis: Consolidated analysis of the financial data for the most recent five years shall be made. Listed and OTC-traded companies shall include in such analysis the then current financial data up to and until the quarter immediately preceding the prospectus' printing date. The financial analysis shall at least include the following items: (Schedule 50)
(1) Financial structure:
(i) Ratio of liabilities to assets.
(ii) Ratio of long-term capital to fixed assets.
(2) Debt service ability:
(i) Current ratio.
(ii) Quick ratio.
(iii) Interest coverage folds.
(3) Operating ability:
(i) Account receivables' turnover rate.
(ii) Average days for cash receipts.
(iii) Inventory's turnover rate.
(iv) Payables turnover rate.
(v) Average days for sale of goods.
(vi) Fixed assets' turnover rate.
(vii) Total assets' turnover rate.
(4) Profitability:
(i) Assets return ratio.
(ii) Shareholder's equity return ratio.
(iii) Net profit ratio.
(iv) Earning per share.
(5) Cash flow:
(i) Cash flow ratio.
(ii) Cash flow sufficiency ratio.
(iii) Cash re-investment rate.
(6) Leverage
(i) Operational leverage.
(ii) Financial leverage.
5. Description of major variations of accounting items: Comparing the most recent two years' accounting items in the balance sheets and profit and loss statements; if there is a 10% or more variation in the monetary amounts, and if such sum has reached 1% of the total assets value of the then current year, a detailed analysis of the causes for such changes shall be made. (Schedule 51) |
| Article 27 | The "financial statement" shall include the following items:
1. The financial statements and certified public accountant audit report for the then past two years at the time when the issuer registered (or applied for) the offering and issuance of securities. If the time when the issuer registers (or applies for) the offering and issuance of securities is more than eight months from the beginning of that year, the financial statement for the first half of that year shall also be included.
2. When a company reports (or applies for approval of) the offering and issuance of securities, if the company is required under the provisions of the Criteria Governing the Offering and Issuance of Securities by Securities Issuers to prepare a financial forecast, a financial forecast reviewed by the certified public accountant shall be disclosed. If more than nine (9) months have passed from the closing of the business fiscal year when the registration (application) is made, the financial forecast for the following year shall further be disclosed.
3. The certified public accountant audited/attested consolidated financial statements for the parent and subsidiary companies for the most recent one year.
4. During the period after the issuer has registered (or applied for) the offering and issuance of securities and until the prospectus' printing date, if there exists any updated certified public accountant audited/attested financial statement, it shall also be disclosed.
5. The estimated and achieved financial condition for the most recent 3 years shall be set forth, and the reason for any difference between the original estimated amounts (including dates of updates [corrections], New Taiwan dollar amounts of updates [corrections], reasons for updates [corrections]) and the actual achieved amounts shall be described. (Schedule 52). Where a penalty was imposed by the Taiwan Stock Exchange Corporation, the GreTai Securities Market, or the SFC, the reason for the penalty shall be specified. |
| Article 28 | The "financial summary and other important matters" shall include the following items:
1. Companies shall disclose the status of extension of endorsements and guarantees and monetary loan to others conducted in the most recent two years and up to the prospectus' publishing date. (Schedules 53, 54)
(1) Setting forth the name of the company being guaranteed, its relationship with the company, the amount guaranteed (the yearly highest amount and the year-end balance amount), reasons for the guarantee, date or conditions for the guaranteed obligations to be relieved, contents and value of the collateral, the capital amount, and the cumulated profit and loss amount in the most recent financial statement of the company being guaranteed.
(2) Setting forth the person to which/whom the monetary loan is extended, its relationship with the company, current account titles, the loan amount (the yearly highest amount and the year-end balance amount), nature of the loan, volume of business with the person, reason for the need of short-term financing, amount designated as allowance against uncollectable accounts; loan period, interest rate collar and method for calculating interest, name and value of the collateral, ceilings on monetary loans to specific persons, aggregate ceiling on all monetary loans, the capital amount, and the cumulated profit and loss amount in the most recent financial statement of the person to which/whom the loan is extended.
(3) If subsidiary companies engage in extension of endorsements and guarantees and monetary loan to others, they shall also make disclosure of the status thereof in accordance with the provisions provided under subparagraph (1) and the preceding subparagraph.
2. Companies shall disclose the relevant information and contents of the transactions of the derivatives products they have conducted in the most recent two years and up to the prospectus' publishing date. (Schedule 55)
(1) For transactional purpose: types of products, total contract amount (the yearly highest amount and the year-end un-offset balance amount) and the realized profit/loss.
(2) For non-transactional purpose:
(i) For hedging the risks of the held assets and liabilities: the types of the derivatives products used, total contract amount (the yearly highest amount and the year-end un-offset balance amount), the amount of the held assets and liabilities being hedged, the profit/loss amount already being recognized and expressly deferred as a result of the hedging.
(ii) For hedging the risks of the expected transactions: the types of the derivatives products used, total contract amount (the yearly highest amount and the year-end un-offset balance amount), the amount of the expected transactions being hedged, the profit/loss amount being expressly deferred as a result of the hedging.
(iii) When the purpose of conducting derivatives transactions is changed from non-business-transactional to business-transactional or is changed from business-transactional to non-business-transactional due to the changes of the objective environment, the causes of the changes and their impact upon profit and loss shall be disclosed.
(iv) If subsidiary companies conduct transactions of derivatives products, they shall also make disclosure of the status thereof in accordance with the provisions provided under subparagraph (1) through the preceding subparagraph.
3. If the company or related enterprises have encountered any financial difficulties in the most recent two years and up to the date of the prospectus's printing, the impact on the company's financial condition shall be set forth.
4. If any of the events in Article 185 of the Company Act has occurred within the most recent two years and up to the date of the prospectus's printing, the following items shall be disclosed:
(1) The cost, payment terms, conditions of payment, and long-range development perspective of accepting transfer (assumption) of business (assets).
(2) After accepting transfer (assumption) of a portion of the other company's operations and research & development results, the current and future operating plan and the effect on the company's research & development, technology, sales profitability and productivity.
5. Subsequent events: During the period after the certified public accountant has completed the most recent year's or the half-year's audited report and until the prospectus' printing date, if any major incident occurs which is likely to impact the financial condition and operating results, it shall be properly disclosed and its impact explained.
6. Others. |
| Article 28-1 | The company shall review and analyze its financial condition and operating results, and shall explain its risk management practices, and in so doing shall describe the following: (Schedule 55-1)
1. financial condition: The prospectus shall explain the reason for, and impact of, any significant change over the most recent two years in the company's assets, liabilities, or shareholders' equity. Where the impact is significant, the prospectus shall further describe how the company plans to respond.
2. operating results: The prospectus shall: (1) explain the reasons for any significant changes over the most recent two fiscal years in operating revenue, operating income, and income before tax; (2) forecast the company's expected sales volume and provide the basis for the forecast; and (3) describe the possible impact of such changes upon the company's financial condition, and how the company plans to respond.
3. cash flows: The prospectus shall: (1) analyze and explain any changes over the most recent fiscal year in the company's cash flows; (2) describe how the company plans to address any illiquidity problems; and (3) provide an analysis of the company's cash liquidity for the coming year.
4. the impact of any major capital expenditures over the most recent fiscal year upon the company's financial and operating condition;
5. the company's reinvestment policy for the most recent fiscal year, the main reasons for profit/losses resulting therefrom, plans for improvement, and investment plans for the coming year;
6. risk management, including analysis and assessment of the following particulars:
(1) the impact upon the company's balance sheet of inflation and changes in interest and exchange rates over the most recent fiscal year, and what measures the company plans to adopt in response;
(2) the company's policy in the most recent fiscal year regarding high-risk, highly leveraged investments, loans to other parties, endorsements and guarantees, and derivatives trading; the main reasons for profits/losses resulting therefrom; and measures to be taken in response;
(3) the company's research and development projects for the most recent fiscal year, degree of progress on research and development projects currently underway, required expenditures, time expected for such projects to go to mass production, and the main factors affecting the success of research and development activities;
(4) the impact of important policies and enactments in Taiwan and overseas during the most recent fiscal year upon the company's financial and operating condition, and the company's response;
(5) the impact of changes in science and technology during the most recent fiscal year upon the company's financial and operating condition, and the company's response; and
(6) the impact of changes in the company's corporate image during the most recent fiscal year upon the company's crisis management, and the company's response; and
7. other important matters. |
Section V Special Items to be Included
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| Article 29 | The "special items to be included" shall set forth the important contents of the registration (application) statement, including:
1. Summary of the internal control system: The prospectus shall set forth the certified public accountant's suggestions for improving the internal control system and improvements to major flaws discovered through internal auditing in the most recent three fiscal years, and shall also disclose the following items:
(1) Internal control statement.
(2) Where the company has retained certified public accountants to exclusively review its internal control systems, the prospectus shall set forth the reason for doing so, the certified public accountants' review opinions, measures the company has taken for improvement, and the condition of improvement on lacking items.
2. Those who have retained the SFC approved or recognized credit rating institutions to conduct credit rating/evaluation shall disclose the credit rating/evaluation report issued by the credit rating institutions.
3. Summary opinion from the securities underwriter's assessment.
4. Attorney's legal opinion.
5. Summary opinion stated in the case checklist schedule written by the issuer and reviewed by a certified public accountant.
6. The improvement status of the items notified to be corrected, if at the time the company applied for effective registration (or approval) of the previous offering and issuance of securities the SFC had notified it to make self-correction on certain items.
7. The items notified to be further disclosed, if at the time the company applied for effective registration (or approval) of the current offering and issuance of securities the SFC had notified it to make supplemental disclosure on certain items.
8. The statement or promised items disclosed in the prospectus from the company's registration (application) for offering and issuance of securities for the first time, the preceding time, and within the most recent three years, and the current state of fulfillment of such.
9. The major content of any dissenting opinion of any director or supervisor regarding any material resolution passed by the board of directors, where there is a record or written statement of such opinion, for the most recent five years and up to the date of printing of the prospectus.
10. Status of private placements of common shares in the three most recent fiscal years: Shall disclose the dates and quantities passed by the shareholders meeting; basis and reasonableness of the setting of price; means of selecting the specified persons (where the offerees have already been arranged, the names of the offerees and relationship between the offerees and the company shall also be described); the reasons necessitating the private placement. (Schedule 56)
11. Any legal sanctions against the company or its internal personnel, or any disciplinary action taken by the company against its own personnel for violation of internal controls, during the most recent fiscal year or during the current year up to the date of printing of the prospectus; and a description of the main shortcomings in the company's internal control system as well as an indication of measures for improvement.
12. Other necessary items to be supplemented and explained.
When the issuer, depending on the nature of the business engaged in, has retained experts who have specialized knowledge and abundant experiences in the technology, business, finance and etc. areas to conduct certain comparative analysis over the issuer's current business operational status against the future development after the current issuance of securities, the evaluation and opinion of such experts shall be disclosed. |
| Article 29-1 | A company listed on the stock exchange or traded on an OTC market shall record the following matters relating to the state of its implementation of corporate governance:
1. The state of the company's implementation of corporate governance, any departure of such implementation from the Corporate Governance Best-Practice Principles for TSEC/GTSM Listed Companies, and the reason for any such departure (see Schedule 56-1);
2. If the company has adopted corporate governance best-practice principles or related bylaws, it shall disclose how these are to be searched.
3. Any other material information that would afford a better understanding of the status of the company's implementation of corporate governance may also be disclosed.
The provisions of the preceding paragraph shall also apply to any securities firm, securities investment trust enterprise, securities investment consulting enterprise, or futures commission merchant that is a public company. |
Section VI Important Resolutions, Articles of Incorporation, and Relevant Laws and Regulation
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| Article 30 | The "important resolution" shall include the following items:
1. important resolutions adopted at meetings of the board of directors, general shareholders' meetings, and special shareholders' meetings held during the most recent two years, as well as resolutions relevant to the current issuance of securities (including the comparison chart on the newly amended and the old clauses of the Articles of Incorporation and the profit distribution schedule);
2. procedures for acquiring or disposing of assets;
3. procedures for lending funds to, or making endorsements or guarantees for, others; and
4. other procedures or rules that shall be included pursuant to SFC regulations.
Subparagraphs 2 to 4 of the above paragraph shall be published based on the most recent amended information of the company. |
| Article 31 | The "articles of incorporation" and "relevant laws and regulations" shall include the following items:
1. Articles of incorporation: Setting forth the most recently amended version of the articles of incorporation.
2. Relevant laws and regulations:
(1) Articles 40, 20, 31, 32, and 174 of the Securities and Exchange Act.
(2) Articles 41, 39, 40 of the Certified Public Accountant Act, and paragraph 2 of Article 37 of the Securities and Exchange Act.
(3) Article 36 of the Securities and Exchange Act, paragraph 2 of Article 273 of the Company Act and paragraph 3 of Article 37 of the Securities and Exchange Act. For listed companies, paragraph 2 of Article 139 of the Act shall also be included. |
Chapter III Simplified Prospectus
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| Article 32 | Where a company reports (or applies for approval of) the offering and issuance of securities in accordance with the provisions of paragraph 2 of Article 6 of the Criteria Governing the Offering and Issuance of Securities by Securities Issuers, if the prospectus for companies listed on the stock exchange or traded on an OTC market, written in accordance with Chapter II, has been posted (in the form of electronic files, prepared in the format prescribed by the SFC) to the information reporting website designated by the SFC and has been provided in printed book format at the following places for investors to read, a simplified version of the prospectus may be used for delivery to the subscribers and offerees:
1. Taiwan Stock Exchange Corporation
2. GreTai Securities Market
3. Securities & Futures Institute
4. Chinese Securities Association
5. The head office of the lead underwriter and co-underwriter for this offering and issuance.
Any party to which the following circumstances apply shall not be restricted by the regulations of the preceding paragraph and may directly deliver the simplified version of its prospectus to subscribers or offerees:
1. The party is preparing to issue common corporate bonds and, within the last year, has obtained a rating report from an SFC-approved or SFC-recognized rating institution or a guaranty from a financial institution.
2. The party has handled a public offering and issuance of securities during the same accounting year in accordance with the regulations of the preceding paragraph, and is once again registering (or applying for approval of) the public offering and issuance of securities.
3. The party is a company not listed on the stock exchange or traded on an OTC market issuing new shares in connection with a cash capital increase (in which case it is exempt from public offering requirements), corporate bonds with warrants, convertible corporate bonds, new shares due to merger or acquisition, or new shares due to acquisition of another company's shares, or is a public company issuing employee stock option certificates. |
| Article 33 | In addition to the descriptions required on the front of the cover, inside the cover, and on the back of the cover of the simplified version of the prospectus in accordance with Articles 3 to 5, the front of the cover shall have a label stating simplified version of the prospectus in prominent type, and inside the cover, there shall be additional information on the web site and locations where investors can find the prospectus written in accordance with Chapter II.
The contents of the simplified version of the prospectus shall include the following:
1. Summary of the condition of the company: the items required under Article 8; subparagraphs 2 and 4 of paragraph 1 of Article 9; subparagraphs 2, 4 and 7 of Article 10; and sub-subparagraphs 3 and 4 of subparagraph 3 of Article 10.
2. Summary of the condition of operation: the items required under sub-subparagraphs 1 to 3 of subparagraph 1 and sub-subparagraphs 1 and 4 of subparagraph 2 of Article 17, subparagraph 3 of paragraph 1 of Article 18, subparagraphs 1 and 3 of Article 19, Article 20, and subparagraph 1 of Article 21.
3. Issuance plan and implementation status: the items required under Article 23, Article 24, and subparagraphs 1 to 5 of Article 25.
4. Summary of Financial Affairs: items required under subparagraph 4 of Article 26, Article 27 (not including notes to the financial statements and appended figures), subparagraph 4 of Article 28, and Article 28-1.
5. Special items: items required under sub-subparagraph 2 of subparagraph 1 of paragraph 1 of Article 29, subparagraphs 2, 3, 4, 5, 7, and 9 of paragraph 1 of Article 29, and the provisions of Article 29-1.
Publicly issued companies satisfying the criteria of subparagraph 2 of paragraph 2 of the preceding Article shall, in the simplified version of their prospectus for the current offering and issuance of securities, in addition to following the regulations in the preceding paragraph, disclose the contents of any changes or additions made to the previous prospectus. |
Chapter IV Prospectus For Establishment by Offering
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| Article 34 | Chapter IV Prospectus For Establishment by Offering
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起迄 |
Chapter V Supplementary Provisions |
| Article 35 | The draft prospectus shall be posted, as an electronic file in the format prescribed by the SFC, to the information reporting website specified by the SFC and, within thirty (30) days from the date of effective registration or receipt of the SFC's approval notice, the final amended/revised prospectus shall be shall be posted, as an electronic file in the format prescribed by the SFC, to the information reporting website specified by the SFC. |
| Article 36 | These Criteria shall enter into force from the date of promulgation. |