General Principles
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| Article 1 | These Regulations 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 cited in an advertisement as proof of the veracity of registration (application) particulars, or to guarantee the value of the securities.
(2) If the 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) Investors must carefully read the content of the prospectus and take note of the company's risks. The page number in the prospectus where these are set forth in full must be separately noted.
(4) The web addresses for enquiry about the prospectus, including the address of the information reporting website designated by the Financial Supervisory Commission, Executive Yuan (“FSC”) and the web address used by the company to disclose information relating to the prospectus.
5. Publication date.
A prospectus prepared in order to register (apply) for public offering and issuance of securities shall note on its front cover that it is a draft version for the purpose of such registration (application).
Where any of the following occurs, the company shall make a statement to that effect in bold typeface on the cover of the prospectus:
1. Where there has been a change in the common stock code referred to in the preceding paragraph, both the original stock code and the new stock code shall be printed in the fiscal year in which such change occurred and in the two consecutive fiscal years thereafter.
2. Where there has been a change in the company name as referred to in the first paragraph, the change shall be disclosed by printing the new and old names adjacently in the fiscal year in which such change occurred and in the two consecutive fiscal years thereafter.
3. If stabilization operations are proposed in connection with cash capital increase in accordance with the relevant regulations, the following statement shall be noted: "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."
4. Where an issuer is registering (applying) to issue shares at below par value, it shall also note that the company is issuing the new shares at a discount.
5. 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.
6. 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 shall also be noted: "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 in connection with a 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. Name, address, website, and telephone number of the reviewing attorney.
12. Names, titles, contact telephone numbers, and e-mail addresses of the spokesperson and deputy spokesperson.
13. Company website URL. |
| Article 5 | The back cover of the prospectus shall be signed or sealed by more than half of the company's directors and by its general manager, or by the preparatory office's representative.
The securities underwriter and its responsible person, accountant, attorney, and other experts shall sign or seal the prospectus indicating their endorsement of the part for which they are responsible. |
| Article 6 | The content of a prospectus, unless otherwise regulated by Chapter III ("Simplified Prospectus") or Chapter IV ("Prospectus For Establishment by Offering"), shall include the following items:
1. Company summary: Including brief description of the company, its risks, 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, other companies that it has invested in, 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 in connection with assignment of another company's shares, or current issue of new shares in connection with merger or acquisition.
4. Financial summary: Including the summary 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.
5. Special items to be included: Including the state of corporate governance and other special items to be included.
6. Important resolutions.
If the FSC 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. |
| Article 7 | The items required under these Regulations 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 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 instances of plant expansion, introduction of new products, cases where a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands, 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 following risks shall be noted:
1. Risk factors: The prospectus shall analyze and assess the following matters during the most recent fiscal period and up to the date of printing of the prospectus:
(1) the impact upon the company's balance sheet of inflation and changes in interest and exchange rates, and the measures the company plans to adopt in response;
(2) high-risk investments, highly leveraged investments, loans to other parties, endorsements, guarantees, and derivatives transactions; the main reasons for the profits/losses generated thereby; and response measures to be taken in the future.
(3) future research and development projects, and expenditures expected in connection therewith;
(4) the impact upon the company's financial operations of important policy and legal developments at home and abroad, and the measures the company plans to adopt in response;
(5) the impact on the company's financial operations of developments in science, technology, and industry, and the measures the company plans to adopt in response;
(6) the impact of changes in the company's image upon its crisis management, and the measures the company plans to adopt in response;
(7) the expected benefits and potential risks of any merger or acquisition, and measures to be adopted in response;
(8) the expected benefits and potential risks of any plant expansion, and measures to be adopted in response;
(9) the risks associated with any consolidation of sales or purchasing operations, and measures to be adopted in response;
(10) effect upon and risk to the company if a major quantity of shares belonging to a director, supervisor, or shareholder holding greater than a 10 percent stake in the company has been transferred or has otherwise changed hands, and measures to be adopted in response;
(11) effect upon and risk to the company associated with any change in governance personnel or top management, and measures to be adopted in response; and
(12) other important risks and measures to be adopted in response.
2. Litigious and non-litigious matters:
(1) If there has been any substantial impact upon shareholders' equity or prices for the company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving the company that was finalized or remained pending during the most recent two fiscal years or during the current fiscal year up to the printing date of the prospectus, the prospectus shall disclose the facts in dispute, amount in dispute, commencement date, main parties involved, and current status of the case.
(2) If there has been any substantial impact upon shareholders' equity or prices for the company's securities as a result of any litigation, non-litigious proceeding, or administrative dispute involving a company director, supervisor, general manager, de facto responsible person, or major shareholder with a stake of more than 10%, and the matter was finalized or remained pending during the most recent two fiscal years or during the current fiscal year up to the printing date of the prospectus, the prospectus shall disclose the information set forth in sub-subparagraph (1) above.
(3) The prospectus shall note the occurrence of any event set forth under Article 157 of the Securities and Exchange Act that involves a company director, supervisor, its general manager, or any major shareholder with a stake of more than 10%, provided the event occurred in the most recent two years or during the current fiscal year up to the printing date of the prospectus. The prospectus shall also note how the company is currently handling the matter.
3. If a company director, supervisor, its general manager, or a major shareholder with a stake of more than 10% has experienced financial difficulties or lost creditworthiness within the most recent two fiscal years or during the current fiscal year up to the printing date of the prospectus, the prospectus shall note the effect on the company's financial status.
4. The prospectus shall note any other important matters. |
| Article 10 | The section on 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, assistant general manager(s), deputy assistant general manager(s), 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 assistant general manager within the second degree of kinship, they shall also set forth their corporate position, name and relationship to the general manager or assistant 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 of kinship 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 assistant general manager(s) (Schedules 5 and 6):
(1) Remuneration and transportation allowances paid to directors and supervisors for the most recent fiscal year; if a director concurrently acts as an employee, his remuneration shall be disclosed separately according to position.
(2) The total sum of the compensation, rewards, special allowance and bonus paid to the general manager and assistant general manager(s) 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 assistant general manager(s), 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.
(4) Compare, describe, and analyze respectively the ratio of total-remuneration-to-net-income for remuneration paid by the company and by all companies on the consolidated financial statements for the most recent two fiscal years to company directors, supervisors, general manager, and assistant general manager(s), and describe the policies, standards, and packages for payment of remuneration, the procedures for determining remuneration, and its linkage to business performance.
"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 11 | The section on "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 7)
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 8)
3. Status of recent dispersal of shareholding:
(1) shareholder structure: setting forth statistics of all types of the shareholders and the ratio thereof. (Schedule 9)
(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 10)
(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 11)
(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 12)
(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 13)
4. The per share market price, net worth, profit, dividend and relevant information for the past two fiscal years. (Schedule 14)
(1) the highest, lowest and the average market price per share: Setting forth the highest and lowest market price per share of common stock for 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 15) |
| Article 12 | 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 FSC-approved or FSC-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 16)
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 17)
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 18)
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 19)
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 20)
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 21) |
| Article 13 | 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 22)
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 23)
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 24) |
| Article 14 | The description of the status of participation in the issue and private placement of "overseas depositary receipts" shall include the following items: (Schedule 25)
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 26) |
| Article 15 | 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 27)
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 28)
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 29) |
| Article 16 | 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 in process:
(1) purpose of the merger or acquisition;
(2) plan for integration of finances, business, personnel, and information following the merger or acquisition, and anticipated benefits;
(3) share conversion rates and the basis upon which they were calculated;
(4) proposed schedule for the merger;
(5) matters related to the assumption of rights and obligations of the extinguished company (including principles for handling treasury shares and already-issued equity securities);
(6) 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. The following particulars shall be disclosed for all split plans in process:
(1) purpose of the split;
(2) estimated value of the operations and assets planned to be assigned to the existing company or new company;
(3) share conversion rates and the basis upon which they were calculated;
(4) 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). |
| Article 17 | The following particulars shall be disclosed for any issue of new shares in connection with any acquisition of shares of another company, where still in process:
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. Conditions and restrictions on future transferal of the acquired shares;
5. 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;
6. Share swap cooperation agreement. |
Section II Operation Summary
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| Article 18 | The description of the "operation of the company" shall include the following particulars:
1. Business content:
(1) Scope of business: Setting forth the main line(s) of 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, 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 registration (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 30, 31)
(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 32, 33)
(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 34)
(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 35)
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 36)
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 37)
(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 19 | For fixed assets and other real properties , 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 million or more. The status of the fixed assets' use, insurance, encumbrances and any other restriction of rights shall also be disclosed. (Schedule 38)
(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 39)
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 40)
3. Each factory's current condition and facility productivity ratio for most recent two years. (Schedules 41, 42) |
| Article 20 | The section on "investments in other companies" shall include the following items:
1. A general description of companies that have been invested in, including:
(1) The names of the investees, their line(s) of business, the cost of investment associated with the company's investment in the other companies, book value, number of shares held, percentage of stake, net equity value, accounting practices, gain (loss) on investments for the most recent year, distributed cash dividends, and the number of the company's shares held by the companies in which it has invested. If there is market value available on the re-invested business, such market value information shall also be included. (Schedule 43)
2. Consolidated stake: Setting forth the following information of each company invested in: 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 invested in a single company which are held by the entities directly or indirectly controlled by the company, and calculating the consolidated shareholding percentage of the above categories. (Schedule 44)
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 45)
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.
The definition of the term "subsidiary" as used in the subparagraphs 3 and 4 of the preceding paragraph and in subparagraph 2 of Article 27 is as set forth in Statement of Financial Accounting Standards No. 5 and No. 7, published by the Accounting Research and Development Foundation of the Republic of China. |
| Article 21 | The section on "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) |
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 in connection with the 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 in connection with 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 in connection with 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 registration (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 FSC 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 investments in other companies, the prospectus shall describe the operation status of the company invested in and its impact on the company's investment profit/loss.
(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. 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, the method for raising the bond redemption funds, and the method for custody of the funds, shall be disclosed in accordance with Article 248 of the Company Act. If an FSC 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 new shares are issued by a company that has received approval (in accordance with the provisions of Article 5 of the "GreTai Securities Market Regulations Governing Review of Emerging Stocks Traded on Over-the-Counter Markets") for its shares to be traded on OTC markets, the company shall describe its futures plans for listing its shares (or trading them on an OTC market).
6. Where employee stock option certificates are issued, the fact of such issue and the attendant subscription rules shall be disclosed.
7. 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 registration (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.
8. Explanation of the mechanism for setting the current issue price, conversion price, exchange price, or subscription price.
9. 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 investing in companies 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 registration (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 registration (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 in connection with acquisition of another company's shares, the following particulars shall be specified:
1. Name and quantity of the acquired shares, and counterparty;
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 in connection with 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) Where the merged company is not a public company, if assets listed among the merged company's major assets during the most recent two fiscal years or during the current period up to the printing date of the prospectus are bought/sold in an amount equivalent to 20 percent of the company's paid-in capital, or if such amount reaches 300 million New Taiwan Dollars or more, any endorsements, guarantees, or loans made to other parties shall be set forth. (Schedules 49 to 51)
(3) In accordance with subparagraph 1 of Article 20, a summary of the merged company's investments in other companies shall be set forth.
(4) In accordance with Article 21, 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 2 of Article 9, 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 section on "summary financial data for the most recent 5 fiscal years" shall include the following items:
1. Condensed balance sheet and income statement: Setting forth the condensed balance sheet and income statement information for the most recent five years. Listed and OTC-traded companies shall also set forth the condensed balance sheet and income statement information up to the quarter immediately preceding the prospectus' printing date. For those who have been notified by the FSC to revise their financial information, all the figures/numbers used shall be the revised ones, and the status and reasons for such revision shall be noted. Those who are notified by FSC to make the corrections by themselves shall make note of the status and reasons for the corrections. (Schedule 52)
2. Matters of material significance which affected the comparability of 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 below-listed items, and explanations shall be given of the causes of changes in the financial ratios for the preceding two fiscal years. If the company has prepared consolidated financial statements, it may disclose its analysis of the consolidated financial ratios together therewith: (Schedule 53)
(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 income 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 54) |
| Article 27 | The section on "financial statements" shall include the following items:
1. The financial statements and a certified public accountant audit report for the two years preceding 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 after the beginning of that year, the financial statements for the first half of that year shall also be included.
2. A consolidated financial statement for the parent company and its subsidiaries for the most recent fiscal year and the most recent fiscal period, audited and attested (or reviewed) by a CPA.
3. 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. |
| Article 28 | The section on "financial summary and other important matters" shall include the following items:
1. If the company or an affiliated enterprise has encountered any financial difficulties in the most recent two years or during the current fiscal year up to the date of the prospectus's printing, the impact on the company's financial condition shall be set forth.
2. If any of the events in Article 185 of the Company Act has occurred within the most recent two years or 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.
3. 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 matter of material significance occurs which is likely to impact the financial condition and operating results, it shall be properly disclosed and its impact explained.
4. Other matters. |
| Article 29 | The section providing review and analysis of financial condition and operating results shall describe the following:
1. financial condition: The prospectus shall explain the reason for, and impact of, any material change over the most recent two years in the company's assets, liabilities, or shareholders' equity. Where the impact is of material significance, the prospectus shall further describe how the company plans to respond.
2. operating results: The prospectus shall: (1) explain the reasons for any material 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 material capital expenditures over the most recent fiscal year upon the company's financial and operating condition;
5. the company's policy for the most recent fiscal year on investments in other companies, the main reasons for profit/losses resulting therefrom, plans for improvement, and investment plans for the coming year;
6. other important matters. |
Section V Special Items to be Included
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| Article 30 | The section on "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 an FSC-approved or -recognized credit rating institution to conduct a credit rating/evaluation shall disclose the credit rating/evaluation report issued by the credit rating institution.
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 registered (or applied for approval of) the previous offering and issuance of securities the FSC had notified it to make self-correction on certain items.
7. The items notified to be further disclosed, if at the time the company registered (or applied for approval of) the current offering and issuance of securities the FSC 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); and the reasons necessitating the private placement. (Schedule 55)
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.
If the issuer, in consideration of the nature of the business engaged in, has retained experts with special professional knowledge and experience in technical, operational, or financial areas to undertake an analytical comparison of the issuer's current business operational status against the future development after the current issuance of securities, and to provide an opinion regarding said issuance, the evaluation and opinion of such experts shall be disclosed. |
| Article 31 | 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).
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 Regulations
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| Article 32 | The section on "important resolutions" shall include resolutions relevant to the current issuance of securities (including a comparison chart on the newly amended and the old clauses of the articles of incorporation and a profit distribution schedule). |
Chapter III Simplified Prospectus
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| Article 33 | Where a company registers (or applies) to offer and issue securities in accordance with the provisions of paragraph 2 of Article 6 of the Regulations 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 FSC) to the information reporting website designated by the FSC and has been provided in printed 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 FSC-approved or FSC-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 in connection with merger or acquisition, or new shares in connection with acquisition of another company's shares, or is a public company issuing employee stock option certificates. |
| Article 34 | 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, Article 9, Article 10 (subparagraphs 2 and 4 of paragraph 1), and Article 11 (subparagraph 2, and items 3 and 4 of subparagraph 3).
2. Summary of the issuer's operating condition: the items required under Article 18 (items 1 to 3 of subparagraph 1, and items 1 and 4 of subparagraph 2), Article 20 (subparagraph 3), and 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 Article 26 (subparagraph 4), Article 27 (not including notes or figures appended to the financial statements), Article 28 (subparagraph 2), and Article 29.
5. Special items: items required under Article 30, paragraph 1 (subparagraph 1, item 2; and subparagraphs 2, 3, 4, 5, 7, and 9) and the provisions of Article 31.
Public 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 35 | For cases of establishment by offering, the following items shall be included:
1. Process of company incorporation: description of the reason for establishment by offering, a register of promoters, and the names, experience, number of shares subscribed, types of capital contribution of the promoters whose share subscription percentage is among the top ten, and whether the promoters meet the qualifying criteria under the relevant acts; share dispersal and status of related enterprises holding shares shall also be disclosed.
2. Minutes of promoters meeting.
3. The condition of the market in which the promoter's enterprise belongs and future expandability.
4. The contents of the promoters' business plan:
(1) Scope of business: setting forth the main products or businesses.
(2) Operating principles and strategies: setting for the principles and strategies for each aspect of operation.
(3) Plan for business development: setting forth long and short-term business development plans, the main target market, and competitive strategies.
(4) Concrete plan for execution:
(i) Facilities at the operation location: setting forth the factors taken into consideration in choosing the operation location and factory address, and the method for deciding the transaction price.
(ii) Setting forth the educational background of the principal managers.
(iii) Organizational system: setting forth the structure of the organization and the purposes, duties, and responsibilities of each of the main departments.
(iv) Human resources plan: setting forth the need for human resources, the method for hiring employees, nurturing, training, promotion and relocation, evaluation, salary system, and employee fringe benefits.
(iv) Setting forth the items in the plan for allocation of finances and use of capital.
(5) Setting forth the operating plan and the production and sale plan for the forthcoming year.
(6) Setting forth, item by item, whether there was any trade in major assets, financing, or guaranty conditions (Schedule 57), or other aspects of trade between the promoters and their related persons within the most recent year.
5. The name and address of the bank authorized to collect the payment for the subscribed share, and the proof that the promoters have paid their share subscription price pursuant to the relevant regulations.
6. Shares subscribing prospectus.
7. The securities underwriter's summary evaluative opinion.
8. The authority in charge of the enterprise, and major laws and regulations applicable to the enterprises.
9. Any other documentation required to be included by the competent government authority.
If the FSC has promulgated separate rules/regulations for special industries like banks, bill financing, securities, futures, insurance, financial holdings, and trust and investment, those rules/regulations shall be complied with. |
Chapter V Supplementary Provisions |
| Article 36 | The draft prospectus shall be posted, as an electronic file in the format prescribed by the FSC, to the information reporting website specified by the FSC and, within thirty (30) days from the date of effective registration or receipt of the FSC's notice of approval of application, the final amended/revised prospectus s shall be posted, as an electronic file in the format prescribed by the FSC, to the information reporting website specified by the FSC. |
| Article 37 | These Regulations shall enter into force from the date of promulgation. |