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Criteria Governing the Offering and Issuance of Securities by Securities Issuers(2003.12.31) |
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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 or 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 (attachments 9 and 9-1).
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).
3. Those emerging stock companies carrying out cash capital increase through the issue of new shares in accordance with the provisions of Subparagraph 2 of Paragraph 2 of Article 6.
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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