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 warrants: 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.
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. Fees and charges related to the current issue:
(1) Underwriting fees.
(2) Other fees and charges, including such other fees and charges as related to certified public accountants and attorneys (no itemization is required).
5. The following statements shall be printed in a conspicuous manner:
(1) The effective registration of the securities may not be cited in an advertisement as proof of the veracity of registration 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.
6. Publication date.
A prospectus prepared in order to register 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.
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 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."
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 held through nominees; and the acquisition of employee stock warrants.
(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 held through nominees, 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 its 10 largest shareholders (and the holding percentage of each) shall be noted. If any of those 10 largest shareholders is a corporate shareholder, the name of the corporate shareholder and the names of its 10 largest shareholders (and the holding percentage of each) 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.
(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 paid to directors, supervisors, the general manger, and assistant general managers during the most recent fiscal year:
(i) The company may opt either to disclose aggregate remuneration information, with the name(s) indicated for each remuneration range, or to disclose the name of each individual and the corresponding remuneration amount.
(ii) If any of the following applies to the company, it shall disclose the remuneration paid to each individual director and supervisor:
(a) A company that has had consecutive after-tax deficits in the most recent two fiscal years shall disclose the remuneration paid to individual directors and supervisors.
(b) A company that has had an insufficient director shareholding percentage for three consecutive months or longer during the most recent fiscal year shall disclose the remuneration of individual directors; one that has had an insufficient supervisor shareholding percentage for three consecutive months or more during the most recent fiscal year shall disclose the remuneration of individual supervisors.
(c) A company that has had an average ratio of share pledging by directorsor supervisors in excess of 50% in any three months during the most recent fiscal year shall disclose the remuneration paid to each individual directoror supervisor having a ratio of pledged shares in excess of 50% for each such month.
(2) 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 and future risk exposure.
"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.
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:
(1) A description of 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 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.
(2) If a private placement, such fact shall be prominently indicated, and information shall be furnished on the status of any private placement of common shares during the three most recent fiscal years up to the date of printing of the prospectus, disclosing the date on which the private placement was approved at a shareholders meeting and the amount thus approved; the basis for and reasonableness of the pricing; the manner in which the specified persons were selected (where the offerees have already been arranged, the names of the offerees and relationship between the offerees and the company shall also be described); the reasons why the private placement was necessary; the targets of the private placement, their qualifications, subscription amounts, subscription price, relationship with the company, participation in the operations of the company, actual subscription price, the difference between the actual subscription price and the reference price; the effect of the private placement on shareholders' equity; and for the period from receipt of payment in full to the completion of the related capital allocation plan, the status of use of the capital raised through the private placement of common shares, the implementation progress of the plan, and the realization of the benefits of the plan. (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)
(6) relationship information, if among the 10 largest shareholders any one is a related party, as defined in the Statement of Financial Accounting Standards No. 6, or is the spouse or a relative within the second degree of kinship of another. (Schedule 13-1)
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) the basis for estimating the amount of employee bonuses and director/supervisor compensation, for calculating the number of shares to be distributed as stock bonuses, and the accounting treatment of the discrepancy, if any, between the actual distributed amount and the estimated figure, for the current period.
(3) 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. If there is any discrepancy between such a value and the estimated figure for the year these expenses are recognized, the discrepancy, its cause, and the status of treatment shall be disclosed;
(ii) the value of any employee stock bonus proposal approved by the board of directors, and the size of such value as a percentage of the sum of the current after-tax net income and total employee bonuses; and
(iii) the effect upon imputed earnings per share of any proposed distribution of employee bonuses and director/supervisor compensation.
(4) 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. If there is any discrepancy between such a value and that of the distribution proposal approved by the board of directors, the discrepancy, its cause, and the status of treatment shall be disclosed;
(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.
(5) the actual distribution of employee bonuses and director/supervisor compensation for the previous fiscal year (with an indication of the number, value, and stock price, of the shares distributed), and, if there is any discrepancy between the actual distribution and the recognized employee bonuses and director/supervisor compensation, additionally the discrepancy, cause, and how it is treated.
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)
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 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.
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, 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, compare and describe the fixed assets, operating income, operating expenses and operating profits, etc..
(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, compare and describe 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.
The plan for the current cash capital increase, issuance of corporate bonds, or issuance of employee stock warrants 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 Rules 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 warrants are to be issued, disclose the rules governing the issuance and exercise of employee stock warrants.
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 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 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 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.
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 and the preceding year shall be set forth, and the estimated sales of completed but not yet sold projects shall be described.
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 the offering and issuance of securities. If the time when the issuer registers 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. The consolidated financial statements for the parent company and its subsidiaries for the most recent fiscal year, audited and attested by a CPA. If the time when the issuer registers the offering and issuance of securities is more than eight months after the beginning of that year, the consolidated financial statements for the first half of that year shall also be included.
3. During the period after the issuer has registered 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.
The section on "special items to be included" shall set forth the important contents of the registration 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 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. 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.
11. 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.
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 operations of the board of directors: Number of meetings; attendance rate of each director; an evaluation of targets for strengthening of the functions of the board during the current and immediately preceding fiscal years, and measures taken toward achievement thereof; and any other matters that require reporting. (Schedule 56)
2. The state of operations of the audit committee or the state of participation in board meetings by the supervisors: Number of meetings; rate of attendance (or of attendance as a non-voting participant) of each independent director or supervisor; and any other matters that require reporting. (Schedule 56-1, Schedule 56-1-1)
3. 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. (Schedule 56-2)
4. If the company has a compensation committee in place, the composition, duties, and operation of the compensation committee shall be disclosed.
5. The state of the company's performance of social responsibilities: systems and measures that the company has adopted with respect to environmental protection, community participation, contribution to society, service to society, social and public interests, consumer rights and interests, human rights, safety and health, and other social responsibilities and activities, and the state of implementation.
6. If the company has adopted corporate governance best-practice principles or related bylaws, it shall disclose how these are to be searched.
7. A summary of resignations and dismissals, during the most recent fiscal year and up to the date of printing of the prospectus, of persons connected with the company's financial report (including the chairman of the board of directors, general manager, principal accounting officer, and chief internal auditor).
8. 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. (Schedule 56-3)
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.
Where a company registers 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. Taiwan 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 ordinary 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 the public offering and issuance of securities.
3. The party is a company not listed on a 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 warrants.