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Criteria Governing the Offering and Issuance of Securities by Securities Issuers(2002.05.22) |
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Article 6
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An issuer registering or applying for approval to offer and issue securities shall submit a prospectus.
If any one of the following events occurs when the issuer has registered with or applied for approval, the issuer shall ask the lead securities underwriter to evaluate the situation and the lawyer to review the relevant legal issues. The above-mentioned underwriter and lawyer shall provide evaluation report and legal opinions in accordance with regulatory requirements:
1. The cash injection by issuing new shares, issuance of new shares due to merger, issuance of new shares due to an acquisition of shares from another company, or issuance of new shares due to an acquisition or split conducted in accordance with law, by a public company whose stocks have been listed on a stock exchange (hereinafter referred to as "listed") or by an OTC company.
2. Public sale of stock of a company whose stock is approved for trading in the business places of securities firms in accordance with Article 5 of the ROC Over-The-Counter Market Rules Governing Trading of Emerging Stocks in the Over-The-Counter Markets by Securities Firms (hereinafter referred to as an "emerging stock company"), after the listing or OTC listing contract for the stock has been approved for record by the SFC, and before the company has issued new shares for cash and engaged a securities underwriter or recommending securities firm to handle the initial listing or OTC listing.
3. Companies whose stocks have not been listed on a stock exchange (hereinafter referred to as "unlisted") or whose stocks have not been traded in the business places of securities firms which have conducted cash offering of new shares and have allocated a certain percentage of their aggregate new shares to be publicly offered in accordance with Article 19.
4. The offering is used to establish a company.
5. The corporate bonds are to be offered publicly through a securities underwriter. If the issuer issues ordinary corporate bonds, it can be exempted from providing a securities firm evaluation report and legal opinion.
If the securities firms have obtained reports from the credit rating institutions approved or recognized by the SFC in the past year, they can be exempted from the requirement that the lead underwriter must issue an evaluation report.
The legal opinions in paragraph 2 and the preceding paragraph, and concluding opinions of the evaluation reports or rating report, shall be provided in the prospectus.
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Article 8
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Where the issuer has filed an application under Paragraph 2 of Article 6, the SFC may reject or disapprove its application upon the occurrence of any one of the following events:
1. Fifty percent of the original directors have changed in the registration/application year and the previous two years. In addition, its shareholders are in violation of Paragraph 1 of Article 43 of this Law with regard to the acquisitions of their shares. However, this provision shall not apply where corrections have been made prior to the reporting (application) date, and where there is conformance to any one of the following events:
(1) Where, before the public offering of the company's stocks, ten percent or more of the total number of shares issued by the public company have been obtained individually or collectively by the shareholders. After the public offering of the shares, in accordance with Article 25 of the Law, the [issuer] has effected announcement and reporting of the directors and supervisors, and the shareholders having a shareholding of ten percent or more, and any extraordinary changes thereto.
(2) Where, when ten percent or more of the total number of shares have been obtained individually or collectively by the shareholders and, in accordance with Article 43-1 of the Law, the [issuer] has effected announcement and reporting thereof. However, subsequently, an increase or decrease has not been announced or reported in accordance with regulations, and the amount of the change has not reached ten percent of the total number of shares offered by the public company, and in accordance with Article 25 of the Law, the [issuer] has effected announcement and reporting of the directors and supervisors, and the shareholders with a shareholding of ten percent or more, and any extraordinary changes thereto.
(3) A company in the given application for the raising of funds which can provide concrete evidence in support of the following items, and where the securities underwriter produces a definite appraisal and opinion, and where the SFC imposes restrictions on listed companies or companies whose shares are traded in the business places of securities firms.
(i) The company faces operational difficulties such that there is a definite need for the raising of funds, the company has submitted a comprehensive operating plan, and the appraisal is reasonable and feasible.
(ii) During the period when the shareholders obtain the shareholding, there are no extraordinary changes in the share prices, or upon the provision of evidence, the company's shareholders do not seek to influence the share prices through the obtaining of the shares.
2. The listed or OTC listed company has any one of the events prescribed under Paragraph 1 of Article 156 of this Law, but this restriction shall not apply to those companies which have been prohibited from publicly offering their securities under Paragraph 2 of Article 139 of this Law.
3. The offering and issuing plan in question is not feasible, unnecessary, and unreasonable.
4. Any one of the following events has occurred in the process of implementing the plan of cash injection or of issuing corporate bonds and the situation has not been improved:
(1) The process of implementation is seriously delayed without due reasons and the implementation has not been completed yet.
(2) The plan has undergone substantial change without due reasons and such change has not been completed. However, this provision shall not apply where more than three years have passed between the reporting (application) date and the actual completion date of the plan.
(3) The plan has undergone substantial change but yet to report to the shareholders' meeting for approval.
(4) The company has failed to observe the regulations prescribed under Items 4 through 7 of Paragraph 1 of Article 9.
(5) No reasonable benefit derived and no due reason is provided. However, in the event more than three years have passed since the completion date of the plan till the registration/application date, such restriction shall not apply.
5. Any one of the following events has occurred in the plan of the latest cash injection or corporate bonds issuance:
(1) The important contents of the said plan (such as sources of funds, project items, scheduled progress and the benefits expected to be derived) are not put into the agenda to be discussed by either the board of directors or the shareholders meetings and not adopted as a resolution in accordance with the Company Law and the company's articles of incorporation.
(2) The said plan was not put into or disclosed in the first publicized financial forecast in the year when registration (application) is submitted. However, such restriction shall not apply to cases where, in the quarter prior to the registration (application) date, timely update (adjustment) of financial forecast has been made and information relevant to the said plan disclosed.
(3) In terms of costs of fund or dilution of earnings per share, the said plan compares obviously less favorable with bank loan, bond issuance or other method of raising capital; provided that such restriction shall not apply to those with justifiable and necessary reasons.
6. When the issuing company merged another company to issue new shares, and the event prescribed under Item 1 of the preceding article has been found in the latest financial report of the merged company, or the event prescribed under Item 2 of the same Article has occurred and the accountant certifying its balance sheet does not issue a without-reservation opinion.
7. A large sum of fund has been loaned to others and such lending does not arise out of inter-company or inter-firm business needs. The aforementioned situation has not been improved and the company now intends to conduct cash injection capitalization or issue corporate bonds.
8. Material abnormal transactions are found and have not been improved.
9. The company possesses large quantities of the following:
(1) Cash, equivalent of cash and short-term investment(s). However, the following items may be deducted:
(i) for remaining funds from previous capital-raising plan(s) that are deposited in whole under said category, the amount allocated for expenditure within one year in accordance with the aforesaid plan;
(ii) the amount allocated for use in the payment of cash dividends approved by a resolution of a shareholders' meeting within one year;
(iii) the amount committed for use in repaying principal and interest of corporate bonds to mature within one year or to pay redemptions applied for by holders of such bonds under the terms and conditions of the bond issue.
(iv) In case of the issuance of ordinary corporate bonds, funds committed for use in the purchase of fixed assets within one year.
(2) As listed under the item of long-term investment: If the invested company is primarily engaged in securities trading, the reinvestment amount (including advance payment for shares), loan(s) and encumbered assets for loan guarantee in favor of its invested company or credit guarantee. However, where an invested company is a venture capital company, such restrictions shall not apply.
(3) As listed under the item of long-term investment: amount entered in accounts of bonds, beneficiary certificate(s) and depositary receipt(s).
(4) Loan(s), not business-related, to any other party.
(5) Unused asset(s) or real estate investment(s) not planned for disposal or development.
10. Proceeds from the cash injection or corporate bonds issuance are to be used for investment in any company with major business in trading securities or to establish securities related services.
11. The company is in serious violation of relevant laws or regulations and generally accepted accounting principles in its preparation of financial report.
12. The working drafts of the certifying accountant are seriously defective and as a result it is impossible to determine whether the financial report is appropriately presented.
13. The internal control system is seriously deficient in design or implementation.
14. There is an abnormal variation in the price of its stocks in the past three months prior to the registration or application with the SFC. However, the aforesaid restriction need not apply in case where the most recent annual or semi-annual financial report indicates substantial growth in business revenues, net profits, and pre-tax net earnings year-on-year and quarter-on-quarter, while any of the following conditions is satisfied or where a securities underwriter is committed to underwrite the shares on a firm commitment basis and it is expressly stipulated in the underwriting agreement that 50 percent or more of the shares allocated for underwriting shall be subscribed by the underwriter for its own account:
(1) purchase of fixed asset;
(2) acquisition of 50% or more shares of an enterprise in the same industry or of a manufacturer;
(3) investment in subsidiary which uses its acquired fund to purchase fixed asset.
15. The company's director or supervisor is in violation of Article 26 of this Law and their shares percentage has not been increased to the number required by law after receipt of notice from the SFC.
16. The issuer or the company's current chairperson, general manager or the responsible person in substance has been charged by the prosecutor for their serious violation of the principle of good faith in the past three years.
17. The issuer or the company's current chairperson, general manager or the responsible person in substance has been sentenced by the court for their violation of the principle of good faith in the past three years.
18. The court has decided that the issuer has an obligation for damages under this Law and the issuer has not met that obligation yet.
19. Pledge of company asset(s) as loan guarantee for any third party. However, the restriction shall not apply to loan guarantee for subsidiary due to business necessity.
20. Violation to serious extent of the regulations regarding merger or spin-off of listed companies or OTC listed companies and emerging stock companies, and new shares are to be issued due to merger or spin-off.
21. The plan for the issuance of new share due to acquisition of shares of another company does not comply with any one of the following circumstances:
(1) The acquired shares are the newly issued shares of another company, a long-term investment held by another company or already issued shares held by the shareholders of another company, and no pledges or limitations to trading exist with respect to the acquired shares.
(2) The given plan causes the issuer to produce a substantive benefit with respect to financial business.
(3) The important contents of the given plan are put into the form of an agenda and submitted to a directors' meeting for discussion and approval by resolution. The contents of the said plan shall include no less than the following:
(i) Name, quantity, and counterpart of acquired shares;
(ii)Anticipated degree of progress;
(iii)The decision method and reasonableness of the exchange rate of the related shares;
(iv)The conditions and limitations for future transferal of the acquired shares;
(v)The anticipated possible benefit produced;
(vi)The counterpart of the acquisition of the shares of another company is an affiliated enterprise or an interested party. The relationship between the affiliated enterprise or interested party, the reason for the selection of an affiliated enterprise or interested party, an appraisal of whether shareholders' rights and interests would be affected shall be listed.
(4) No violation of Article 167 paragraphs 3 or 4 of the Company Law.
22. In each of the preceding instances of the issuance of new shares due to merger, issuance of new shares due to acquisition of the shares of another company, or issuance of new shares due to acquisition or spin-off conducted in accordance with law, no reasonable benefit was produced, and no legitimate reason exists. However, this provision shall not apply where more than three years have passed between the actual date of completion of the plan and the time of reporting.
23. Where the event prescribed in Item 9 of Subparagraph 3 of Paragraph 1 of Article 12 occurs, and the directors, supervisors, and shareholders who hold 10% or more of total issued shares of the issuer fail to undertake to place certain percentage of shares to be under the custody of a securities centralized depository enterprise.
24. Where the SFC deems it necessary to reject or disapprove the issuer's application to protect the public interests.
The company with major business in trading securities as referred to in Item 2 of Subparagraph 9 and Subparagraph 10 shall mean a company directly invested by the issuer or by the subsidiary of the said issuer, under the equity method, with its cash, equivalent of cash, short-term investment and securities issued by the issuer accounting for 50% or more of the total assets value of such company, and the revenue or profit/loss respectively from trading or holding the aforesaid assets accounting for 50% or more of the revenue or profit/loss of such company.
The provisions in Sub-subparagraphs 1 and 3 of Subparagraph 9 of Paragraph 1 need not apply if the issuer is a securities, futures, or financial enterprise. The provisions in Sub-subparagraphs 1, 3, and 5 of Subparagraph 9 of Paragraph 1 need not apply if the issuer is an insurance enterprise.
The provisions prescribed in Subparagraphs 9 and 16 of Paragraph 1 need not apply in case where an issuer, for purpose of enjoying tax incentives, conducts a rights issue in the amount not more than the upper limit set by the competent authority or NT$100 million.
Provisions of Subparagraphs 1, 4, 14, 16, 17, and 23 of Paragraph 1 need not apply in case of issuance of new shares due to merger, issuance of new shares due to acquisition of shares of another company, or issuance of new shares due to acquisition or spin-off conducted in accordance with law.
Provisions of Subparagraphs 1, 14 and 23 of Paragraph 1 need not apply in case where an issuer has committed a securities underwriter to offer its ordinary corporate bonds to the public.
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Article 9
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The issuer shall act in accordance with the following regulations in the event that its registration of offering and issuing securities has become effective or the application is approved:
1. Within 30 days after receipt of notice indicating that the registration has become effective or the application has been approved, the issuer shall act in accordance with Articles 252 or 273 of the Company Law.
2. With exception of the issuance of new shares due to merger, issuance of new shares due to acquisition of shares of another company, issuance of new shares due to acquisition or spin-off conducted in accordance with law, issuance of ordinary corporate bonds, and issuance of employee stock option certificates, an issuer shall consign a financial institution to collect price payments and deposit such in the designated account opened by the issuer, and shall, prior to collecting price payments, respectively enter into a payment collection agreement with the consigned financial institution and an agreement for deposit in the designated account with the bank thereof. The payment collection and deposit for designated account shall not be handled by the same business unit in a bank. The financial institution of the designated account shall only allow an issuer to withdraw or use the money after the financial institution has received all the money due. The financial institution shall submit the certificate of deposit to the SFC for recordation, alone with a copy respectively to the Taiwan Stock Exchange Corporation and the Over-the-Counter Securities Exchange.
3. Except where otherwise provided for by the SFC, within 30 days after the receipt of the approval letter for permission of incorporation or the amendment registration certificate of issuing new shares from the Ministry of Economic Affairs, the issuer of public offering shall have the securities certified in accordance with "Rules for Certification of Stocks and Corporate Bonds Issued by Public Companies". The securities shall be delivered to subscribers or offerees and a public announcement shall be made prior to the delivery; provided that in case where physical securities are not printed, certification of stocks and corporate bonds shall be exempt in accordance with "Rules for Certification of Stocks and Corporate Bonds Issued by Public Companies".
4. Before the utilization plan of the cash injection capitalization or corporate bonds issuance is completed, the company having cash injection or issuing corporate bonds shall disclose the progress of the said plan in its annual report. In the case of the issuance of corporate bonds, within two days of the completion of the funds offering and prior to the tenth day of each month during the issuance period of the corporate bonds, information related to the issuance of the corporate bonds shall be input into the website of the agency designated by the SFC.
5. Within 10 days after the end of each quarter, the quarterly report on the plan for capital increase by cash injection or corporate bond issuance and capital utilization" shall be input into the stock market monitoring or the internet information system in accordance with SFC regulations.
6. Where the capital raised by the listed or OTC listed company has been restricted by the SFC for specific purpose(s), the listed or OTC listed company shall contact the original underwriter to comment on the reasonableness of the progress made regarding capital utilization and of the purposes for unused capital, and within 10 days after the end of each quarter, the listed or OTC listed company shall key in such comment in combination with information as referred to in the preceding Paragraph to "the stock market monitoring or the internet information system".
7. Listed or OTC listed companies issuing new shares due to a merger issuance of new shares due to acquisition of shares of another company, or issuance of new shares due to acquisition or spin-off conducted in accordance with law, shall, within one year of completion and registration of the merger, acquisition of shares of another company, or acquisition or spin-off, for the given quarter, ask the original lead underwriter to provide an assessment opinion as to whether any of the aspects of the merger would have an effect on the finances, business, and shareholders' rights and interests of the issuer, and input the same into the stock monitoring system or Internet information system.
8. In the event a material change has been made to the plan of cash injection and corporate bonds issuance, the company shall disclose such information in public announcement and report to the SFC. In addition, it shall submit the change to the shareholders' meeting for ratification. If the company is a listed or OTC listed company, upon such change and thereafter within 10 days after the end of each quarter, the listed or OTC listed company shall contact the original underwriter to comment on the reasonableness of the progress made regarding capital utilization and of the purposes for unused capital, and key in the aforesaid change and comment in combination with information as referred to in Paragraph 5 to "the stock market monitoring or the internet information system".
In the event the issuer conducts a shelf registration to issue corporate bonds, any change to the filed material for the first issuance of corporate bonds occurring within the scheduled issuance date shall be reported to the SFC and be put in public announcement.
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Article 11
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The SFC may revoke or void the registration or approval after the issuer's registration or application for offering and issuing securities has become effective or approved by it if any one of the following events occurs:
1. The subscription payment has not been fully raised and paid in cash after three months from the date of receipt of effective registration or approval of application from the SFC.
2 .Any one of the events prescribed under Paragraph 1 of Article 251 or Paragraph 1 of Article 271 of the Company Law occurs.
3. The issuer is in violation of Paragraph 1 of Article 20 of this Law.
4. The issuer is in violation of Article 5.
5. Where the issuer violates or fails to execute its undertakings as submitted to the SFC upon registration (application) for public offering or issuance of securities and the situation is serious.
6. The issuer is in violation of these Rules or the restrictions or prohibitions effective at the time when the SFC notifies the issuer that its registration has become effective or application has been approved.
In the event the holders of securities make public offering to the unspecific people, the SFC may revoke the registration when the situation prescribed under the aforementioned Items 3, 5 or 6 occurs after the registration with it has become effective. From either the date of effectiveness of the report or the date of approval of the application until the date of completion of the securities offering, where forecast type information has been externally expressed not in conformity with regulations or where announced information is not in conformity with the report (application) documents, and where the securities prices or shareholders' rights and interests have been effected substantially, the SFC may revoke or void the effectiveness of the report or application approval.
After the effective registration or approval is revoked, if the issuer or holder has received money from others for purchasing securities, it shall return such payment with interests as regulated by laws within 10 days upon receipt of the cancellation notice from the SFC and be responsible for damages.
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Article 12
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In the event the issuer processes any one of the following cases, it shall be allowed to do so only after it duly fills out the appropriate application forms in accordance with the nature of its application (attachments 2 to 4) and submit all relevant documents to apply for the SFC's approval:
1. offering made to establish the company;
2. any one of the following events has occurred while processing matters under Subparagraphs 1 to 3 of Paragraph 2 of Article 6:
(1) The case conducted in accordance with Paragraph 2 of Article 6 has been previously rejected, disapproved or revoked by the SFC. However, this restriction need not apply to the case where, since the registration taking effect or upon arrival of notification of approval, the issuance has not been fully subscribed and payment thereof has not been fully collected in cash while the case has been rejected or revoked by the SFC.
(2) The issuer had been sanctioned up to three times by the SFC in accordance with Articles 171 through 178 of this Law for its violation of this Law and other relevant laws and regulations in the year of application and the previous year.
(3) The public financial forecast has been requested to be corrected for two times by the SFC in the year of application and the previous two years, or the financial forecast has been modified more than two times in any year;
(4) The profits or net profits before tax of the issuer show losses in the recent two years or the latest financial report indicates that the net asset value of its shares is lower than its par value. However, this restriction shall not apply where an application has been filed [and approved] for listing of the shares as Class II Securities traded on over-the-counter markets (hereinafter, "Class II Stocks").
(5) The issuer is required to allocate special reserve for its non-arm's length transactions and such reserve is not canceled yet;
(6) The event prescribed under Article 185 of the Company Law has occurred in the year of application or the previous two years or a portion of the business or R&D result is transferred to another company. However, if the business income of those transferred items or the expenses accumulated for R&D does not exceed 10% of the business profit or R&D expenses shown by the financial report of the previous year, such restriction shall not apply;
(7) In the case where the purpose for the previous capital increase by cash injection or issuing new shares to sponsor in GDR issuance by a depository institution was to repay debt, the aggregate debt in the latest financial report decreases than that in the financial report of the year prior to the time such capital was fully paid in by less than 50% of the originally projected decrease and the business income fails to increase by at least 20%. However, if the time when all capital was paid in is more than three years prior to the application date, such restriction shall not apply;
(8) In the case where the purpose for the previous cases conducted in accordance with Paragraph 2 of Article 6 or issuing new shares to sponsor in GDR issuance by a depository institution was to increase working capital, the earning per share in the latest financial report is lower than the retroactively adjusted one in the financial report of the year prior to the time such capital was fully paid in. However, if the time all such capital was paid in is more than three years prior to the application date or the earning per share in the latest annual financial report is one dollar or more, such restriction shall not apply;
(9) A material change has occurred to the management right in the year of application or the previous two years and any one of the following events takes place:
(i) The submitted financial report or forecast indicates an addition to the principal products(meaning that the business income derived from the products accounts for 20 percent or more of the business income of the company) and that the total business income or profit derived from the added principal products accounts for 50% or more of the same respective categories of that year. However, the difference between the business income for the preceding and following periods did not reach 50 percent or more therefore the principal products shall not be counted;
(ii) The submitted financial report or forecast indicates that the issuer has acquired an on-going or completed construction project and the business income or profit from that project has reached 30% of the same respective categories of that year;
(iii) The submitted financial report or forecast indicates that the issuer has been transferred a portion of the business and R&D results of another company and the business income or profit derived from that partial business and R&D result has reached 30% of the same respective categories of that year.
In the event that the submitted documents are incomplete or the information furnished is insufficient, the SFC may demand supplementation or correction from the issuer within a certain period of time. If the issuer fails to do that within the prescribed time, the SFC may reject its application.
Subparagraph 2 of Paragraph 1 need not apply to cases of issuance of new shares due to merger, issuance of new shares due to acquisition of shares of another company, or issuance of new shares due to acquisition or spin-off conducted in accordance with law.
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Article 13
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When offering and issuing stocks, except those applications conducted in accordance with the previous Article, the issuer shall submit relevant registration form based on the nature of its application. It shall also provide the necessary information and register with SFC along with all relevant documents. Only after the registration becomes effective can the issuer proceed with such offering and issuance.
In the event the issuer registers in accordance with the previous Paragraph, the registration will become effective 12 business days after receipt of the application form for issuing new shares (in the form of attachments 5 through 6, and attachments 21 and 26) by the SFC or its designated institution. However, if the registration concerns any one of the following events or the issuer has obtained the rating report from a credit rating institution approved or recognized by the SFC, the time required for effective registration will be cut short to 7 business days:
1. Those emerging stock companies or unlisted or non-OTC listed companies conducting cash injection by means of issuing new stocks who are exempted from the requirement that certain percentage of its new stocks shall be offered to the public (attachment 9).
2. Those emerging stock companies or unlisted or non-OTC listed companies who issue new shares due to merger or issuance of new shares due to acquisition or spin-off conducted in accordance with law (attachments 10 to 11).
An issuer issuing new shares due to acquisition of shares of another company must submit the report document (attachments 12, 13), duly filled out, together with any required documents. These documents must be submitted to the SFC on the same day. The report documents shall become effective 12 business days from the date of their reception by the SFC and its designated agency.
If the registration form is incomplete, the information is incomplete, or any one of the events prescribed under Article 5 occurs, and the issuer makes necessary correction before receiving notice from the SFC indicating that its effective registration shall be stopped, its registration shall become effective upon the expiration of the time period starting from the date when the SFC or its designated institution receives the corrected documents to the time period for becoming effective as prescribed under the preceding two paragraphs.
In cash offering of new shares, where the offering price is changed if the issuer submits all corrected documents to the SFC or its designated institution for the change of issue price prior to the effective date of its original registration, its registration shall become effective in accordance with Paragraph 2. The previous Paragraph shall not apply in such a case.
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Article 20
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The provisions of Article 18 shall apply mutatis mutandis to unlisted companies or companies whose shares are not traded in the business places of securities firms when conducting public offering in accordance with the preceding Article, and it shall be noted in prospectus and subscription form that its shares are not listed in the Stock Exchange or not sold at the business places of securities firms.
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Article 21
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The issuer may conduct a cash offering of new shares at below par value. An issuer reporting (applying for) a cash offering of new shares at below par value shall state its reasons for not using other cash raising methods and the reasonableness thereof, its method for setting the issue price, and any possible effects on shareholders' rights and interests, and shall submits the report to a shareholders' meeting for approval by resolution in accordance with the Company Law or securities laws and regulations.
An issuer reporting (applying for) a cash offering of new shares at below par value shall, upon the effectiveness of the report to the SFC or the approval of the application, using a prominent font, record in the prospectus and the warrant the necessity and reasonableness of issuing the new shares at a discount, and the reasons and reasonability of not using other cash raising methods.
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Article 22
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Where a public company intends to issue corporate bonds, it shall retain a credit rating institution approved or recognized by the SFC to evaluate the bonds to be issued and the said institution shall produce a ratings report as prescribed in the following:
1. the ratings report for the unsecured debenture to be issued;
2. the ratings report for the secured corporate bonds backed by assets;
3. the ratings report for the secured corporate bonds guaranteed by financial institution, or the ratings report for the most recent year for the financial institution.
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Article 25
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When issuing corporate bonds within the expected issue period as referred to in the preceding Article, the issuer shall, on the next business day after it has put such issuance plan in public announcement in accordance with Article 252 of the Company Law and completed payment collection, submit the Supplementary Form for the Shelf Registration for Issuing Corporate bonds (attachment 17) complete with all required information, together with required documents, to the SFC for recordation.
In case of change of accountant or lead underwriter retained by the issuer during the expected issuance period as referred to in the preceding Article, qualifications prescribed in Subparagraphs 6 and 7 of the preceding Paragraph 1 of Article 23 shall apply to the succeeding accountant or lead underwriter.
The SFC may cancel the additional complementary issue of corporate bonds supplemental to the current issuance in case where an issuer violates Articles 7 and 8 and Paragraph 1 of the preceding article during the expected issuance period.
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Article 27
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Except otherwise provided by the law, an issuer applying to issue secured corporate bonds backed by stocks of another company shall comply with the following:
1. The collateral shall be restricted to stocks, owned for one year or more by the issuer, of a listed company or a company whose shares are traded at the business places of securities firms in accordance with Article 3 of the Guidelines for Examination of Securities Traded on Over-the-Counter Markets issued by the ROC Over-the-Counter Securities Exchange. The said collateral shall not be attached with any restriction such as created pledge, restriction on trading in the Stock Exchange market or the OTC market, change of trading method, or cease of trading.
2. The value of the collateral upon application shall not be lower than 150% of the principal and interest to be born by the subject corporate bonds to be issued.
3. Mortgage or pledge shall be created with the collateral for the trustee of creditor, and it shall be noted in the trust contract that during the term of the corporate bond, the trustee shall daily evaluate the collateral on the basis of its closing price on the same day. In case where loss of value of the collateral is to the extent that the collateral maintenance ratio is lower than a certain percentage of the principal and interest to be born by the subject corporate bonds to be issued, the trustee shall promptly notify the issuer to settle the shortfall. The issuer, besides settling the shortfall within 2 business days upon receipt of notification from the trustee, shall state in the trust contract the actions to be taken when the issuer fails to settle the shortfall within the time limit, as well as the responsibilities of the trustee.
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