| Title： |
Taiwan Stock Exchange Corporation Guidelines Governing the Particulars to be Recorded in a Public Offering Prospectus for Call (Put) Warrants(2009.09.21) |
| Date： |
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Chapter 1 General Principles
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| Article 1 | These Guidelines are adopted pursuant to Article 13 of the Regulations Governing Applications for Issuance of Call (Put) Warrants by Issuers and Article 9 of the Taiwan Stock Exchange Corporation (TWSE) Rules Governing the Review of Warrants Listings. |
| Article 2 | The basic principles governing the preparation of a public offering prospectus are as follows:
1. All of the content recorded in a prospectus shall be detailed, truthful, and clear and unambiguous. The wording shall be concise and easy to understand, and may not contain misrepresentations, nondisclosures, or omissions.
2. Information published in a prospectus shall be timely and up to date. Trades or other significant events occurring prior to printing that could influence the judgment of beneficial owners shall be disclosed. |
| Article 3 | The following items shall be printed in the order below on the cover of a public offering prospectus:
1. Issuing company name and seal.
2. This public offering prospectus is prepared for the purpose of issuing call (put) warrants.
3. The following items in summary description:
(1) The date of issuance and duration of the warrants.
(2) Detailed information on the underlying index, underlying securities or basket of securities.
(3) The type of call (put) warrants, units issued, and the issue's total value.
(4) Terms and conditions of issuance (with the following conditions set off in a distinctive typeface: the issuance price, strike price or strike index, and exercise period; for knock-out call warrants or knock-out put warrants, conditions regarding upper and lower price or index caps and the fact that the date on which the closing price of the underlying security/securities or the closing index of the underlying index reaches the upper or lower price or index cap will be deemed the final trading day for the warrants, which will mature on the second following business day, requiring automatic settlement exclusively in cash at the closing price of the underlying security/securities or the closing index of the underlying index on the warrants' final trading day). For a call warrant, the abovementioned strike price or strike index may not exceed 150 percent of the underlying security's closing price or the underlying index's closing index on the date of application; for a put warrant, the strike price or strike index may not be lower than 50 percent of the underlying security's closing price or the underlying index's closing index on the date of application, provided that the above ratios may be exceeded when the strike price and the closing price of the underlying security or securities differ by less than NT$30. A reasonable cause and explanation for any terms of issuance not conforming to the above standards must exist and must be fully disclosed to investors.
(5) The method of calculating the issuance price, including the price of the underlying security or underlying index, strike price or strike index, duration of the warrants, interest rate, volatility, and other reference factors, and a comparison table showing other warrants in the preceding year with the same listed underlying security or index.
(6) Detailed information on the guarantor and the guaranty agreement or collateral.
(7) The leverage effect and premium.
(8) The number of shares (or beneficial interest units, or depositary receipt units, or index points) represented by each issuance unit.
4. The following statements shall be set off in a distinctive typeface:
(1) Call (put) warrants involve a high degree of risk. Purchasers should understand that call (put) warrants may have no value at maturity, and should be prepared for the possibility of losing the subscription price.
(2) An issuer may not use the fact of having obtained approval of qualification for issuance of call (put) warrants or TWSE approval for listing of its planned call (put) warrants issue in any promotion as proof of the matters under application or as a guarantee of the value of the call (put) warrants.
(3) The issuer, the issuer's responsible person, and other persons whose seal or signature appear on the prospectus bear legal liability for any misrepresentation or nondisclosure within the prospectus.
5. The printing date. |
| Article 4 | Items related to a particular issue, as follows, shall be printed in order on the inside front cover of the prospectus:
1. The plan for distribution of the prospectus, information on where it will be displayed, how it will be distributed, and how it can be obtained upon request.
2. The name, address, and telephone number, if any, of the call (put) warrant underwriter.
3. The issuer's name, address, and telephone number.
4. The name, address, and telephone number of the credit rating institution.
5. The name of the attorney, and the name, address, and telephone number of his/her firm.
6. The name of the CPA who certified the annual financial report for the most recent fiscal year, and the name, address and telephone number of the CPA's accounting firm.
7. The name, address, and telephone number, if any, of the guarantor. |
| Article 5 | The back cover of the prospectus shall be signed or seal-stamped by the responsible person of the issuer. When an underwriter duly performs call (put) warrant underwriting in accordance with regulation, the underwriter and its responsible person shall sign or seal-stamp the sections of the prospectus for which they are responsible. |
| Article 6 | A public offering prospectus shall include the following items:
1. Details of the plan for issuance of the call (put) warrants.
2. A CPA's audit opinion.
3. A lawyer's opinion on the legality of the issue.
4. The issuer's and guarantor's credit ratings.
5. Information on the underlying indexes, underlying securities or basket of securities.
6. The governing law for all disputes arising from the call (put) warrant issue shall be the law of the Republic of China.
7. In the event of legal action, the Taiwan Taipei District Court shall be the court of competent jurisdiction; where arbitration is stipulated, the terms and conditions governing the arbitration shall control.
8. Other important stipulations.
9. Other items required by the competent authority or the TWSE. |
| Article 7 | A public offering prospectus shall include all the content prescribed in these Guidelines and shall be published with a paginated table of contents and a summary. If required information is not available or the TWSE approves an omission, the notations "not available" or "omitted" shall be added after the respective items.
When items to be recorded in the prospectus are repeated, they need be printed in one place only, with page reference notations used in other places. |
Chapter 2 Content of the Prospectus
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Section 1 Issuance Plan for Call (Put) Warrants
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| Article 8 | The issuance plan shall list the following items:
1. The date of issuance and duration of the warrants.
2. Detailed information on the underlying indexes, underlying securities or basket of securities (including, in the case where the underlying securities of the warrants are stocks, a CPA audited or reviewed financial report for the most recent period that shows no losses, and a statement of the reason for issuing warrants on the underlying securities).
3. The type of call (put) warrant, units issued, and total value of the issue.
4. Terms and conditions of issuance (including issuance price, strike price or strike index, duration, and the number of shares (or beneficial interest units, or depositary receipt units, or index points) represented by each issuance unit; for knock-out call warrants or knock-out put warrants, conditions regarding upper and lower price caps and the fact that the date on which the closing price of the underlying security/securities or the closing index of the underlying index reaches the upper or lower price or index cap will be deemed the final trading day for the warrants, which will mature on the second following business day, requiring automatic settlement exclusively in cash at the closing price of the underlying security/securities on the warrants' final trading day, with such conditions set off in a distinctive typeface). For a call warrant, the abovementioned strike price or strike index may not exceed 150 percent of the underlying security's closing price or underlying index's closing index on the date of application; for a put warrant, the strike price may not be lower than 50 percent of the underlying security's closing price or the underlying index's closing index on the date of application, provided that the above ratios may be exceeded when the strike price and the closing price of the underlying security or securities differ by less than NT$30. A reasonable cause and explanation must exist for any terms of issuance not conforming to the above standards and must be fully disclosed to investors.
5. The method of calculating the issuance price, including the price of the underlying security or the underlying index, strike price or strike index, duration of the warrants, interest rate, volatility, and other reference factors, and a comparison table showing other warrants in the preceding year with the same listed underlying security.
6. Detailed information on the guarantor and the guaranty agreement or collateral.
7. The required particulars as specified in Article 8 of the TWSE Operating Rules Governing Liquidity Providers for Call (Put) Warrants.
8. Procedures for exercising the warrants, and the terms requiring cancellation of call (put) warrants when surrendered for exercise.
9. Procedures for exercise/delivery when the warrant holder exercises the option. When the issuer may opt for cash settlement of call warrants to be paid in securities, or when the warrant holder may opt for cash settlement of put warrants to be paid in securities, the conditions shall be set off in a distinctive typeface.
10. Strategies for offsetting foreseeable risks.
11. Stipulations regarding adjustment of the strike price of the call (put) warrants and related matters by the issuer of the underlying securities due to distributions of dividends or bonuses, increases or decreases in capital, stock splits or consolidations, and related matters, or the distribution of dividends on underlying exchange-traded funds by the securities investment trust enterprise (SITE), or underlying offshore exchange-trade funds by the offshore fund manager or its designated institution, and related matters. If the issuer's adjustments are not made according to the TWSE reference formula (see attachment), that fact shall be noted in a distinctive typeface in the public offering prospectus.
12. The methods for handling a merger by the issuer of the underlying securities, alteration of the securities' trading method, suspension of sale or de-listing of the securities, or the de-listing of the exchange-traded funds as a result of dissolution or bankruptcy of the SITE or a voidance of the approval, or the delisting by the TWSE, after it has reported to and obtained approval from the Competent Authority, of the beneficial certificates, fund shares, or investment units of an underlying offshore exchange-traded fund.
13. The methods for handling the listing of the call (put) warrants or the de-listing or suspension of sale of the warrants by the stock exchange.
14. Clarification regarding whether or not there are plans for a reverse issue of call (put) warrants against the same underlying securities within the coming three months.
15. Other items required by the competent authority or the TWSE. |
Section 2 Matters Regarding the Issuer
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| Article 9 | The prospectus shall list the following items in regard to the issuer:
1. The issuer's date of incorporation.
2. The address and telephone number of the issuer's headquarters and branch offices.
3. The names, any positions concurrently held in other companies, and the dates on which their positions were assumed for the general manager, assistant general manager, directors and supervisors, and heads of all departments and divisions.
4. The issuer's principal lines of business and the share of each as a percentage of the issuer's total business.
5. Any pending litigious or non-litigious matters or administrative suits of a material nature involving the issuer, for which the facts of the dispute, the date proceedings commenced, the main parties to the dispute, and the current status of the proceedings shall be disclosed.
6. Condensed balance sheets and income statements for the most recent two years.
7. The financial analysis shall at least include the following items:
(1) Financial structure
1. The debt/asset ratio.
2. The long-term capital/fixed asset ratio.
(2) Solvency
1. The current ratio.
2. The quick ratio.
3. The interest coverage ratio.
(3) Cash flow
1. The cash flow ratio.
2. The cash flow adequacy ratio.
3. The cash flow reinvestment ratio.
8. Operations involving off-balance-sheet financial instruments and other essential information.
When the issuer is a foreign institution, it may adjust the information in its prospectus required by the subparagraphs of the preceding paragraph, with the approval of the TWSE, pursuant to the laws of its home country. |
Section 3 Information on the underlying index and underlying securities |
| Article 10 | The prospectus shall list the following items related to the underlying index and underlying securities:
1. A company profile when the underlying object is not an index (when the underlying is an exchange-traded fund or an offshore exchange-traded fund as announced by the TWSE, the name of the component companies of the fund shall be listed).
2. Information on the price of the underlying securities or index (to include trading volumes, highest and lowest prices, and monthly closing prices for the most recent year; if the underlying object is an index, include the highest and lowest prices, and monthly closing indexes for the most recent year).
3. Condensed balance sheets and income statements for the underlying securities for the most recent two years, except for exchange-traded funds, offshore exchange-traded funds, and indexes as announced by the TWSE. |
| Article 11 | These Guidelines and any subsequent amendments shall come into force upon approval by the competent authority. |