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Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses(2006.01.11) |
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Article 9
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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.
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Article 10
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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.
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Article 11
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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)
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Article 16
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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).
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Article 17
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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.
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Article 26
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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)
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Article 31
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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.
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