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Article 3
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The Executive Yuan's Financial Supervisory Commission (FSC) shall supervise the offering and issuance, secondary distribution, and retroactive handling of public issuance procedures, issuance of new bonus shares, and capital reductions through effective registration or application for approval.
The terms "registration" and "effective registration" mean submission by the issuer of relevant documents to the FSC in accordance with law. Unless the documents are rejected by the FSC due to insufficient information contained in the said documents, or for the purpose of protecting the public interest, the registration will become effective after a designated number of business days from the date when the FSC or its designated institution receives the submission.
The terms "application for approval" and "approval of application" mean that the FSC will review and examine the documents furnished by the issuer. If nothing unusual is found, the FSC shall approve the offering and issuing plan.
The fact of effective registration or approval of application for the items set forth under paragraph 1 may not be cited as proof of the veracity of registration or application particulars, or to guarantee the value of the securities.
The term "business day" as used in Paragraph 2 means a day on which transactions are conducted in the securities market.
The term "company traded on an OTC market" as used in these Regulations means a company whose stock has been approved for trading on an OTC market in accordance with Article 3 or Article 3-1 of the GreTai Securities Market Regulations Governing Review of Securities Traded on Over-the-Counter Markets.
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Article 5
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When any significant events prescribed under Subparagraph 2 of Paragraph 2 of Article 36 of the Act which have great impact on the rights of shareholders and the value of stocks occur between the date of the issuer's submission of latest financial report and balance sheets and that when the registration becomes effective or the application for approval is granted, the issuer shall disclose this incident to the public and report to the FSC within two days after the occurrence of such event. In addition, the issuer shall provide to the FSC expert opinion on such occurrence based on the nature of the event involved and the evaluation from the certifying accountant regarding the impact of such event on the financial report.
From the date of reception of the registration (application) documents by the FSC and its appointed agency until the registration has become effective or the application has been approved, announced information shall be limited to the disclosure of facts, and shall not serve to announce financial forecast information.
If the issuer externally disseminates any information not in conformance with the registration (application) documents, it shall correct the relevant information and submit it to the FSC.
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Article 8
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Where an issuer conducts an offering and issuance of securities as contemplated under paragraph 2 of Article 6, the FSC may reject or disapprove the registration or application upon the occurrence of any one of the following events:
1. Fifty percent of the original directors have changed during the year of registration/application or during the previous two years, and a shareholder has obtained its shares in violation of the provisions of Article 43-1 of the Act. However, this provision shall not apply where corrections have been made prior to the registration (application) date.
2. Any one of the events set forth under Paragraph 1 of Article 156 of the Act applies to a listed or OTC company. However, this restriction shall not apply to any company upon which restrictions have been imposed, in accordance with the provisions of Paragraph 2 of Article 139 of the Act, with respect to the trading of its shares on a stock exchange.
3. The offering and issuance plan in question is unfeasible, unnecessary, or unreasonable.
4. Any one of the following events has occurred in the implementation of a previous plan for the offering and issuance of securities, and the situation has not been improved:
(1) The process of implementation is seriously delayed without legitimate reason 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 registration (application) date and the actual completion date of the plan.
(3) The plan has undergone substantial change, but said change has not yet been reported to a shareholders' meeting for approval.
(4) The company has failed in the most recent year to observe the regulations prescribed under subparagraphs 4 through 9 of paragraph 1 of Article 9, or under Article 11 of the Regulations Governing the Offering and Issuance of Overseas Securities by Issuers.
(5) No reasonable benefit derived and no legitimate 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. An important part of the plan for the current offering and issuance of securities (such as issuance rules, source of funds, particulars of the plan, implementation schedule, and expected returns) has not been placed on the agenda of a board meeting or shareholders meeting in accordance with the Company Act and the issuer's articles of incorporation, or has not been adopted by resolution at such a meeting.
6. The company has lent a large amount of money to another party for purposes other than financing needs arising from a business transaction with another company or business firm, has not yet rectified the situation, and now intends to conduct a cash capital increase or issue corporate bonds.
7. The company has entered into an irregular transaction of material significance, and has not yet rectified the situation.
8. The company intends to conduct a cash capital increase or issue corporate bonds, but it holds short-term investments, idle assets, or idle real property, has no plan to actively dispose of or develop such holdings, and their total value is equivalent to either: (1) 40 percent or more of shareholders' equity in the most recent financial report audited and attested (or reviewed) by a CPA, or (2) 60 percent of the total amount of funds to be raised through the cash capital increase or corporate bond issue that the company is registering (or applying for). However, this provision shall not apply when the funds to be raised will be used to purchase fixed assets and there is a concrete plan for fund raising evidencing the need to raise the funds.
9. Proceeds from the cash capital increase or corporate bond issuance are to be used to invest in a company engaged primarily in the trading of securities, or to establish a securities firm or a securities service enterprise.
10. The company has failed to prepare its financial statements in accordance with relevant acts or regulations, or with generally accepted accounting principles, and such violations are of material significance.
11. The company has violated the provisions of Article 5, paragraph 2.
12. The internal control system is seriously deficient in design or implementation.
13. The company's share price fluctuated abnormally during the month prior to the date of registration (application).
14. Any one of the following descriptions applies to the shareholdings of the entire body of the company's directors or supervisors:
(1) The percentage of their equity stake is in violation of Article 26 of the Act and the FSC has notified them to make up for the shortfall but they have not yet done so.
(2) The percentage of their equity stake still does not meet the required equity stake set forth under Article 26 of the Act even after accounting for the share issue that the company is now registering (or applying for); provided, however, that this shall not apply where the entire body of the company's directors or supervisors pledges to make up for the shortfall upon completion of the offering.
(3) During the fiscal year in which the registration (application) is made, or during the preceding fiscal year, the entire body of the company's directors or supervisors did not honor a promise to make up for a shortfall in their equity stake.
15. The issuer or its current chairperson or general manager, or a de facto responsible person, has received a fixed sentence or a heavier punishment from a court in the past three years.
16. The court has decided that the issuer has an obligation for damages under the Act and the issuer has not met that obligation yet.
17. 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.
18. There is an issue of new shares due to a merger, or an issue of new shares for the purpose of acquiring the shares of another company, or an issue of new shares for the purpose of an acquisition or split conducted in accordance with law, and any one of the following descriptions obtains:
(1) There has been a material violation of the provisions of Chapter 2, Section 5 of the Regulations Governing the Acquisition and Disposal of Assets by Public Companies.
(2) The assigned or purchased shares are not the newly issued shares of another company, the long-term holdings of another company, or previously issued shares held by the shareholders of another company.
(3) The ownership rights over the assigned shares or the acquired business or assets are not impaired or encumbered in any way, such as through the creation of pledge thereupon or placing of restrictions on the purchase or sale thereof.
(4) There has been a violation of Article 167 paragraph 3 or 4 of the Company Act.
(5) An audit report with unqualified opinion was not issued by a CPA for a financial report of an absorbed company for the most recent fiscal year; provided, that this provision does not apply where an audit report with qualified opinion was issued together with an unqualified opinion regarding the balance sheet.
19. The event prescribed in Article 12, paragraph 1, subparagraph 3, item 6 occurs, and the directors, supervisors, and shareholders who hold 10% or more of total issued shares of the issuer fail to undertake to place a certain percentage of their shares under the custody of a centralized securities depository enterprise.
20. The FSC deems it necessary, in to protect the public interest, to reject or disapprove the issuer's application.
The term "company engaged primarily in the trading of securities" as referred to in subparagraph 9 of the preceding paragraph shall mean a company in which the issuer has directly invested, or in which a subsidiary of the said issuer has invested under the equity method, provided that its cash, cash equivalents, short-term investments, and securities issued by the issuer account for 50% or more of the total assets value of such company, and the revenue or profit/loss respectively from trading or holding of the aforesaid assets account for 50% or more of the revenue or profit/loss of such company.
If the issuer is a securities, futures, or financial enterprise, it is not required to include short-term investments in its calculations when totaling the value of the assets set forth under subparagraph 8 of paragraph 1. The provisions subparagraph 9 of paragraph 1 need not apply if the issuer is an insurance enterprise, or if it is an emerging stock company conducting a cash capital increase through a new share issue in accordance with the provisions of Article 6, paragraph 2, subparagraph 2.
The provisions prescribed in subparagraphs 8 of paragraph 1 need not apply where an issuer, for the purpose of enjoying tax incentives, conducts a cash capital increase to raise funds not greater in amount than the upper limit set by the competent authority or NT$100 million.
With respect to the 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 an acquisition or split conducted in accordance with the law, the following parts of paragraph 1 need not apply: subparagraph 1, those provisions of subparagraph 4 that relate to implementation of a previous plan for cash capital increase or the issuance of corporate bonds, and subparagraphs 13, 15, and 19.
The provisions of subparagraphs 1, 13 and 19 of paragraph 1 need not apply where an issuer has engaged a securities underwriter to publicly underwrite its ordinary corporate bonds.
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Article 9
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After the registration of (application for) a planned offering and issuance of securities has become effective (been approved), the issuer shall act in accordance with the following regulations:
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 Act.
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 split conducted in accordance with law, issuance of ordinary corporate bonds, and issuance of employee stock option certificates, an issuer shall retain a financial institution to collect payments and deposit them in the designated account opened by the issuer, and shall, prior to collecting payments, respectively enter into a payment collection agreement with the retained financial institution and an agreement for deposit in the designated account with the bank thereof, and within two days from the signing of such agreements shall enter the name of the financial institution and the date of the agreement into the website specified by the FSC for reporting of information. The collection of payments and deposit thereof in a 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. Within two days after receipt of all the money due, the issuer shall enter the information on full collection of the proceeds into the website specified by the FSC for reporting of information.
3. Except where otherwise provided for by the FSC, 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 the Regulations Governing Certification of Corporate Stock and Bond Issues 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 the Regulations Governing Certification of Corporate Stock and Bond Issues by Public Companies.
4. Before issuing corporate bonds, the issuer shall enter into a contract with a centralized securities depository enterprise, agreeing therein to provide information related to the issue, and to lend its cooperation when asked to help with cancellation of the previous owner, repayment of principal, and payment of interest.
5. Before the utilization plan of the cash capital increase or corporate bond issuance is completed, the company having cash capital increase 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 specified by the FSC for reporting of information.
6. Within ten days after the end of each quarter, the quarterly report on the plan for cash capital increase or corporate bond issuance and capital utilization shall be posted to the website specified by the FSC for reporting of information in accordance with FSC regulations.
7. Where a listed or OTC company conducts a cash capital increase or corporate bond issue, it shall contact the original underwriter or the certifying CPA to comment on the reasonableness of the progress made regarding capital utilization and of the purposes for unused capital, and on whether there has been any departure from the capital utilization plan, and within ten days after the end of each quarter shall post this information together with the information referred to in the preceding subparagraph to the information reporting website specified by the FSC.
8. Listed or OTC 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 split conducted in accordance with law, shall, within ten days after the end of each quarter during the first year after completion and registration of the merger, acquisition of shares of another company, or acquisition or split, 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 website specified by the FSC for reporting of information.
8. In the event of a change to an item in the plan for cash capital increase or corporate bond issuance or if the monetary amount of a particular item is changed, thus causing the total amount required for the original item to either decrease or increase by an amount equivalent to 20% or more of the funds that need to be raised, the company shall amend the plan and, within two days after the amendment has been ratified by resolution of the board of directors, make a public announcement and submit the amendment to a shareholders' meeting for ratification. If the company is a listed or OTC company, upon such amendment and thereafter within ten days after the end of each quarter, the listed or OTC 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 subparagraph 6 into the website specified by the
FSC for reporting of information.
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 FSC and be put in public announcement.
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Article 11
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The FSC 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 FSC.
2. Any one of the events prescribed under Paragraph 1 of Article 251 or Paragraph 1 of Article 271 of the Company Act occurs.
3. The issuer is in violation of Paragraph 1 of Article 20 of the Act.
4. The issuer is in violation of Article 5.
5. Where the issuer violates or fails to execute its undertakings as submitted to the FSC upon registration (application) for public offering or issuance of securities and the situation is serious.
6. The issuer is in violation of these Regulations or the restrictions or prohibitions effective at the time when the FSC notifies the issuer that its registration has become effective or application has been approved.
In the event a holder of securities makes a secondary distribution to unspecified persons, the FSC may revoke the registration when the situation prescribed under the aforementioned Subparagraphs 3, 5 or 6 occurs after the registration with it has become effective.
From the date on which the registration becomes effective or the application is approved until the date of completion of the securities offering, if the content of a publicly disclosed financial forecast or other released information is at variance with the registration or application documents, and where the securities prices or shareholders' rights and interests have been effected substantially, the FSC 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 ten days upon receipt of the cancellation notice from the FSC and be responsible for damages.
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Article 12
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In the event the issuer conducts an offering or issue as listed below, it shall be allowed to do so only after it duly fills out the appropriate application form (attachments 2 to 4), submits all relevant documents, and obtains approval of application from the FSC:
1. establishment by offering;
2. any one of the types of share issue set forth under subparagraphs 1 and 3 of paragraph 2 of Article 6, where any one of the following circumstances obtains:
(1) An issue conducted in accordance with paragraph 2 of Article 6 has been previously rejected, disapproved or revoked by the FSC. However, this restriction need not apply where, since the registration took effect or upon arrival of notification of approval, the issue has not been fully subscribed and payment therefor has not been fully collected in cash while the case has been rejected or revoked by the FSC.
(2) The issuer has been sanctioned two or more times by the FSC in accordance with Article 178 of the Act for violating the Act or other relevant acts and regulations during the fiscal year when the application was filed or during the previous fiscal year.
(3) 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.
(4) The issuer is required to allocate special reserve for its non-arm's length transactions and such reserve is not canceled yet;
(5) An event set forth under Article 185 of the Company Act 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;
(6) A material change has occurred among the company's governance personnel or top 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 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 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 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 FSC 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 FSC 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 split 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 statement based on the nature of its application. It shall also provide the necessary information and register with FSC 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 FSC or its designated institution. However, where an issuer other than a financial holding company, bank, bill finance enterprise, credit card enterprise, or insurance enterprise conducts any of the share issues listed below or within the past year has obtained a credit rating from an FSC-approved or -recognized credit rating institution, the time required for effective registration will be reduced to seven business days:
1. Those emerging stock companies or unlisted or non-OTC companies conducting cash capital increase 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 companies who issue new shares due to merger or issuance of new shares due to acquisition or split 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 a registration statement (attachments 12, 13), duly filled out, together with any required documents. The statement must be submitted to the FSC on the same day. The registration statement shall become effective 12 business days from the date of their reception by the FSC or its designated agency.
If the registration statement 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 a stop order from the FSC regarding its registration, its registration shall become effective upon the expiration of the time period starting from the date when the FSC 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 FSC 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 14
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When an issuer issues preferred stocks with warrants, the preferred stocks and warrants shall not be separable.
For issuance of preferred stocks with warrants, the terms and conditions shall provide for the following items:
1. issue date;
2. class of the preferred stocks and total issue amount;
3. the number of warrant units represented by each preferred share with warrant;
4. The listing or trading at the places of business of securities firms of the preferred stocks with warrants of a listed or OTC company;
5. criteria for setting conditions for exercising the warrant (including exercise price, exercise period, type of the share for warrant exercise, and the number of shares represented by each warrant);
6. the adjustment of exercise price;
7. procedure of request for exercising the warrant and method of paying for stock price. The method of paying for stock price shall be conducted by means of a choice of payment of cash or an offset of preferred stocks from the given offering;
8. the rights and obligations after exercising warrant;
9. shares for performance of contract shall be restricted to the issuance of new shares;
10. the number of times and date for the stockholder to acquire new stocks by submitting the certificate of payment for stock price;
11. procedure for obtaining the preferred stocks with warrants;
12. other important agreements.
The subscription price for shares in an emerging stock company, an unlisted company, or a company not traded on an OTC market shall not be lower than its net value per share as reported in the financial report for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issue price.
Paragraph 2 of Article 44, and Articles 45 through 51 shall apply mutatis mutandis to issuance of preferred stocks with warrants by an issuer.
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Article 17
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When a listed company or OTC company handles an issuance of new shares in a cash capital increase, unless those who are prohibited from trading stocks in the market under Paragraph 2 of Article 139 of the Act, the issuer shall allocate 10% of the aggregate number of new shares for public offering at market price and is exempted from Paragraph 3 of Article 267 of the Company Act which prescribes that the current shareholders shall be entitled to subscribe the new shares in proportion to the percentage of their respective shareholding. However, if the shareholder meeting decides to have a higher percentage, its resolution should be observed.
The provisions of the preceding paragraph shall apply mutatis mutandis to a cash offering of new shares by an emerging stock company as the public offering [prior to] initial listing on the stock exchange or OTC listing.
Offer of new shares for cash capital increase by a company whose shares are listed or traded at the places of business of securities firms, in addition to allocation of a certain percentage of the aggregate number of new shares for public offering pursuant to the preceding two paragraphs, shall be handled in accordance with Paragraph 3 of Article 267 of the Company Act.
Where the issuer allocates shares for public offering at market price in accordance with Paragraphs 1 and 2, the prices the employees of the issuer or the original shareholders pay for the new shares in the same issuance shall be the same as the price set for public offering.
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Article 18
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(Deleted)
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Article 19
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If the number of registered shareholders holding 1,000 shares or more of an unlisted company or of a company whose shares are not traded in the business places of securities firms does not reach 300, or the company fails to reach the shareholding dispersion standard prescribed by the competent authorities, upon conducting cash offering of new shares, the company shall allocate 10% of the new shares for public offering and is exempted from Paragraph 3 of Article 267 of the Company Act which prescribes that the current shareholders shall be entitled to subscribe the new shares in proportion to their respective shareholding percentage, unless any one of the following events occurs. However, if the shareholder meeting decides to set a higher percentage, its resolution shall be applicable:
1. It conducts the initial public offering.
2. It has been incorporated for less than 3 complete fiscal years.
3. The company's final operating profit and pre-tax income as ratios of paid-in capital as reported in the individual financial statements and the consolidated financial report compiled in accordance with the Statement of Financial Accounting Standards No. 7, fail to meet any of the below conditions. However, the profitability as reported in the said consolidated financial report does not take into account the effects on the company of net income (loss) on its minority shareholdings.
(1) the said ratios for the most recent fiscal year reach four percent or more, and the company has no accumulated losses for the most recent accounting period;
(2) the said ratios for the most recent two fiscal years reach two percent or more;
(3) the average of the said ratios for the most recent two fiscal years reaches two percent or more, and the profitability of the company for the most recent fiscal year is more favorable than that for the previous fiscal year.
4. The number of shares allocated for public offering in accordance with the 10% requirement or the percentage set by the resolution of the shareholders meeting does not reach 500,000.
5. Preferred stocks with warrants are issued.
6. Any situation where the FSC considers the public offering is unnecessary or inappropriate.
Where a company is a major national economic enterprise as determined and certified by the competent authority for the enterprise, the provisions of Subparagraphs 1 through 3 of the preceding Paragraph shall not be applicable.
Where an issuer publicly offers its securities in accordance with Paragraph 1, the prices the employees of the issuer or the original shareholders pay for the new shares in the same issuance shall be the same as the price set for public offering, and it shall be noted in the prospectus and subscription form that its shares are not listed on the Stock Exchange or not traded on any OTC market.
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Article 20
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(Deleted)
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Article 23
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A public company may issue corporate bonds only after it has submitted the Registration Statement for Issuing Corporate Bonds (attachments 14 and 15), provided all information required therein and sent the registration statement along with relevant documents to the FSC and obtained an effective registration.
In the event the public company registers with the FSC or its designated institution in accordance with the preceding Paragraph, its registration shall become effective 7 business days after the Registration Statement for Issuing Corporate Bonds is received by the FSC or its designated institution. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
The provisions of Paragraph 4 of Article 13, Article 15, and Article 16 shall apply mutatis mutandis to public companies that file for registration in accordance with Paragraph 1.
After registering for issuing corporate bonds, if the public company changes the terms of issuance or the interest rate and then submits the modified relevant documents to the FSC or its designated institution before the original registration becomes effective, its registration will become effective in accordance with the time frame prescribed in the preceding Paragraph.
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Article 24
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In the event the issuer meets all the following conditions simultaneously, it may submit the Shelf Registration Statement for Issuing Corporate Bonds (attachment 16), provide all information required therein, along with all required documents to the FSC for effective registration and complete the issuance within the expected issue period.
1. Its stocks have been listed in the stock exchange market or OTC for a combined period of three years or more. However, this provision shall not apply under the following circumstances:
(i) Where the issuer is a government-owned enterprise;
(ii)Where the issuer is a financial holding company conforming to Article 4 paragraph 4 of the Financial Holding Company Act providing that the subsidiary bank, subsidiary insurance company, or subsidiary securities firm be listed or its shares be traded in the business places of securities firms for a total of three years.
2. It has periodically or non-periodically disclosed its financial information to the public in accordance with Article 36 of the Act or other relevant laws for the past 3 years.
3. No occurrence of rejection, disapproval, or withdrawal by the FSC with regard to the registration or application for offering and issuing securities for the past three years. 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 and the case has been rejected or revoked by the FSC.
4. The cash capital increase or corporate bond issuance plans approved or effectively registered with FSC for the past three years have been implemented in accordance with the schedules and no material changes have occurred.
5. Within the past year, a credit rating institution approved or recognized by the FSC has rated the issuer or the corporate bonds as up to or above a certain level.
6. The certified public accountants retained by the issuer have not received a warning or more severe sanctions for their handling of securities offering and issuance within the last 3 years.
7. The lead underwriter retained by the issuer has not been punished in accordance with Subparagraph 2 of Paragraph 66 of the Act to discharge its director, supervisor, or manager or with more severe sanctions in connection with handling of securities offering and issuance within the last 3 years.
Paragraph 4 of Article 13, Articles 15 and 16, and Paragraphs 2 and 4 of the preceding article shall apply mutatis mutandis to the issuer that registers with the FSC in accordance with the preceding Paragraph.
The expected issuance period referred to in Paragraph 1 shall not exceed two years counting from the date of effective registration. The issuer shall set the said period at the time of registering with the FSC.
Where an issuer issues corporate bonds during the expected issuance period, it shall consign an underwriter to underwrite the issuance on a firm commitment basis.
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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 Act 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 FSC 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 FSC 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 28
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A public company may issue exchangeable corporate bonds whose repayment subject is the stocks, held by the public company for more than two years, 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 GreTai Securities Market Regulations Governing Review of Securities Traded on Over-the-Counter Markets.
A public company may issue exchangeable corporate bonds only after it has submitted the Registration Statement for Issuing Exchangeable Corporate bonds (attachment 18), provided all information required therein, along with required documents to the FSC, and after such registration becomes effective.
Paragraph 4 of Article 13, Articles 15 and 16, and Paragraphs 2 and 4 of Article 23 shall apply mutatis mutandis to the public company registering with the FSC in accordance with the preceding Paragraph. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
When issuing exchangeable corporate bonds, the issuer shall set out the following items in the terms of issuance and exchange:
1. Subparagraphs 1 through 8, 10, 11, 13, and 17 of Article 32 shall apply mutatis mutandis;
2. the procedures for requesting exchange and the ways of payment;
3. the deposit procedures for the underlying objects of exchange.
The aforementioned deposit procedure shall be conducted by a centralized securities depository enterprise. During the period of deposit, the objects of exchange shall not be pledged or retrieved.
The bondholder who requests for exchange shall fill out the Exchange Request Form and submits the form along with the bonds in question to the issuer or its agent. The exchange becomes effective at the time of receipt of the aforementioned documents. After receiving the exchange request from the bondholder, the issuer or its agent shall deliver the exchange underlying stock to the bondholder within the next business day. If the exchange results in odd-lot units of less than 1,000 shares, the stocks can be delivered within 5 business days.
When issuing exchangeable corporate bonds, the issuer shall engage securities underwriter(s) to handle a public offering of the entire issue, to which the provisions of Article 33, Paragraph 1 of Article 35, and Articles 38 and 40 shall apply mutatis mutandis.
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Article 29
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Listed or OTC companies issuing convertible bonds and having any one of the situations prescribed under Subparagraph 2 of Paragraph 1 of Article 12 shall submit the Application Form for Issuing Convertible Bonds (attachment 19), provide all information required therein, along with required documents to the FSC for approval. They can commence issuing the said bonds only after being approved by the FSC.
In the event the application forms and materials provided by the listed or OTC companies are incomplete or the information contained therein insufficient, the FSC may demand them to make supplement or correction within a certain period. If they fail to do so within the prescribed time, the FSC may reject their applications.
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Article 30
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In addition to complying with the procedures described in the preceding Article, listed or OTC companies shall submit the Registration Statement for Issuing Convertible Bonds (attachments 20 and 20-1), provide all information required therein, along with required documents to the FSC for registration. The companies can commence issuing convertible bonds only after the registration becomes effective.
The registration filed by a listed company or OTC company in accordance with the previous Paragraph shall become effective 12 business days after being received by the FSC or its designated institution, and Paragraph 4 of Article 13, Articles 15 and 16, and Paragraph 4 of Article 23 shall apply mutatis mutandis. However, with the exception of financial holding, bill finance, or credit card enterprises, the waiting period for effective registration will be shortened to seven business days in the event the issuer or its corporate bond issue has within the last year been graded by a credit rating institution approved or recognized by FSC.
An emerging stock company or a company not listed or traded at the places of business of securities firms that submits a registration in accordance with Paragraph 1 shall submit with the registration a credit rating report on the subject issue produced by a credit rating agency approved or recognized by the FSC. The Registration Statement for Issuing Convertible Bonds will become effective seven business days after its receipt by the FSC and FSC-designated agencies, and Paragraph 4 of Article 13, Articles 15 and 16, and Paragraph 4 of Article 23 shall apply mutatis mutandis. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
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Article 31
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(Deleted)
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Article 36
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The conversion of convertible bonds to stocks shall not be subject to Article 140 of the Company Act providing that the issue price of the stocks may not be below par value.
The issuing and conversion price for convertible bonds issued by an emerging stock company, an unlisted company, or a company not traded on an OTC market shall not be lower than the company's net value per share as reported in the financial report for the most recent fiscal period, audited and attested (or reviewed) by a CPA, and a CPA shall be retained to give an opinion on the reasonableness of the issue price.
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Article 41
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For an issuer issuing corporate bonds with equity warrants, the corporate bond and the warrant shall not be separable.
A listed or OTC company with any condition as prescribed under Subparagraph 2 of Paragraph 1 of Article 12 may only issue convertible bonds after it has submitted the Application Form for Issuing Corporate Bonds with Equity Warrants (attachment 21) and provided all information required therein, along with required documents, to the FSC, and has obtained approval from the FSC.
In the event that the application forms and materials provided by the listed or OTC companies are incomplete or the information contained therein insufficient, the FSC may demand them to make supplement or correction within a certain period. If they fail to comply within the prescribed time, the FSC may reject their applications.
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Article 42
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In addition to complying with the procedures prescribed in the preceding Article, a listed or OTC company may only issue corporate bonds with equity warrants after it has submitted the Registration Statement for Issuing Corporate Bonds with Equity Warrants (attachments 22 and 22-1), and provided all information required therein, along with required documents to the FSC for registration, and the registration has become effective.
The registration filed by a listed or OTC company in accordance with the preceding Paragraph shall become effective 12 business days after being received by the FSC or its designated institution, and Paragraph 4 of Article 13, Articles 15 and 16, and Paragraph 4 of Article 23 shall apply mutatis mutandis. However, with the exception of financial holding, bill finance, or credit card enterprises, the waiting period for effective registration will be shortened to seven business days if a credit rating institution approved or recognized by the FSC has in the past year rated the issuer, or the corporate bonds issued by it.
An emerging stock company or a company not listed or traded at the business places of securities firms that submits a registration in accordance with Paragraph 1 shall submit with the registration a credit rating report on the subject issue produced by a credit rating agency approved or recognized by the FSC. The Registration Statement for Issuing Convertible Bonds will become effective seven business days after its receipt by the FSC and FSC-designated agencies, and Paragraph 4 of Article 13, Articles 15 and 16, and Paragraph 4 of Article 23 shall apply mutatis mutandis. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
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Article 44
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The face value of a corporate bond with warrant is limited to NT$100,000 or multiples thereof.
In cases where it is necessary to issue new shares due to exercise of warrants, the total number of new shares multiplied by the exercise price per share shall not exceed the total issued amount, in terms of face value, of the subject corporate bonds.
The subscription price for shares in an emerging stock company, an unlisted company, or a company not traded on an OTC market shall not be lower than its net value per share as reported in the financial report (audited and attested [or reviewed] by a CPA) for the most recent fiscal period,, and a CPA shall be retained to give an opinion on the reasonableness of the issue price.
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Article 57
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An issuer issuing employee stock options shall submit a report on the issuance (attachment 23) documenting all required items, together with all required documents, to apply to the FSC, and subsequently obtains the approval of the FSC.
The aforesaid report shall become effective 7 business days after its receipt by the FSC or its designated institution, and Paragraph 4 of Article 13, and Articles 15 and 16 shall apply mutatis mutandis. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
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Article 63
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In the event the holder of securities conducts a secondary distribution to unspecified persons in accordance with Paragraph 3 of Article 22 of the Act, it shall submit the Registration Statement For Secondary Distribution of Securities (attachment 24), provide all information required therein, along with required documents to the FSC. The said holder can proceed with the secondary distribution only after the registration with the FSC becomes effective.
In the event a holder intends to register with the FSC for a secondary distribution to unspecified persons of securities that were not publicly issued in accordance with the Act, the holder shall request the issuer of the securities to file retroactively with the FSC for a review of its public issuance. Before the registration with the FSC becomes effective, the holder cannot proceed with the secondary distribution.
In the event a holder of securities registers in accordance with Paragraph 1, such registration will become effective seven business days after the receipt of the Registration Statement for Secondary Distribution of Securities by the FSC or its designated institution, and the provisions of Paragraph 4 of Article 13, and Articles 15 and 16 shall apply mutatis mutandis.
The provisions of Paragraphs 1 and 2 shall not apply to an auction or sale procedure conducted in accordance with laws.
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Article 68
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In the event that the issuer conducts initial public offering in accordance with Paragraph 1 of Article 42 of the Act and Paragraph 4 of Article 156 of the Company Act, it shall submit the registration statement (attachment 25) to the FSC, providing the necessary information and annexing the relevant documents such as the stock issue prospectus. The registration will become effective 12 business days after the receipt of the registration statement by the FSC or its designated institution.
The Regulations Governing Information to be Published in Public Offering and Issuance Prospectuses and the Regulations Governing Information to be Published in Financial Industry Prospectuses for Offering and Issuance of Securities shall apply mutatis mutandis to the information to be provided in the stock issue prospectus under the preceding paragraph.
Article 5, Paragraph 4 of Article 13, Article 15, and Article 16 shall apply mutatis mutandis to submission of the registration statement under Paragraph 1.
If, after effective registration for initial public offering under Paragraph 1, any circumstance set forth in Subparagraphs 3, 4, or 6 of Paragraph 1 of Article 11 is discovered to exist, the FSC may revoke or void the effective registration.
A company conducting an initial public offering of stock under Paragraph 1 shall concomitantly conduct an initial public offering of employee stock option certificates previously issued under Article 167-2 of the Company Act.
A company conducting an initial public offering of stock under Paragraph 1 may concomitantly conduct an initial public offering of ordinary corporate bonds previously privately placed under Article 248 of the Company Act, after three years have elapsed from the delivery date of the privately placed ordinary corporate bonds.
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Article 70
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For the below-listed securities privately placed by a public company in accordance with law and securities subsequently distributed, converted, or subscribed, the public company must arrange with the FSC for a public offering, at least three full years after the delivery date of the privately placed securities, before it may apply to the Stock Exchange or the GreTai Securities Market for listing or for trading at the places of business of securities firms:
1. Stocks privately placed under Article 43-6 of the Act and shares subsequently obtained as bonus shares thereof.
2. Ordinary corporate bonds privately placed in accordance with law.
3. For employee stock option certificates privately placed under Article 43-6 of the Act, subsequently subscribed certificates of payment of shares, shares, and shares obtained as bonus shares thereof.
4. For preferred shares with warrants, corporate bonds with warrants, and convertible corporate bonds privately placed in accordance with Article 43-6 of the Act, the privately placed preferred stock with warrants, corporate bonds with warrants and convertible corporate bonds, and the subsequently subscribed certificates of payment of shares, certificates of entitlement to new shares from convertible bonds, shares, and shares obtained as bonus shares.
5. For private placement of overseas corporate bonds, overseas stocks, and participation in the private placement of overseas depositary receipts in accordance with Article 43-6 of the Act, the shares that obtained through redemption, conversion, or subscription, or obtained as bonus shares.
A filing for registration to conduct a public offering under the preceding paragraph shall be submitted to the FSC with a Registration Statement (attachments 26 to 31-1) specifying all required information and with the required documents attached. The registration shall become effective seven full business days after the Registration Statement is received by the FSC or its designated institution, and the provisions of Article 5, Paragraph 4 of Article 13, Article 15, and Article 16 shall apply mutatis mutandis. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
If, after effective registration for public offering under Paragraph 1, any circumstance set forth in Subparagraphs 3 to 6 of Paragraph 1 of Article 11 is discovered to exist, the FSC may revoke or void the effective registration.
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Article 73
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A listed or OTC company intending to carry out a capital reduction shall be allowed to do so only after it duly fills out the required information on the appropriate application forms in accordance with the nature of its application (attachment 32) and submits them with all relevant documents to the FSC for approval. However, this shall not apply where the reduction is conducted due to split.
If the application documents submitted by the listed or OTC company are incomplete or are deficient in content and the applicant fails to supplement them by a deadline set by the FSC, the FSC may reject the application.
If, after approval of an application for capital reduction by a listed or OTC company, any circumstance in Subparagraphs 3 to 6 of Paragraph 1 of Article 11 is discovered to exist, the FSC may revoke or void the approval.
Article 5 shall apply mutatis mutandis to cases handled under the provisions of Paragraph 1.
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Article 74
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A public company conducting a case listed below shall submit a filing for registration to the FSC with a registration statement specifying all required information and with the required documents attached. The registration shall become effective seven full business days after the registration statement for issuance of new shares is received by the FSC or its designated institution. However, the waiting period for effective registration is 12 business days in the case of a financial holding, bill finance, or credit card enterprise.
1. Issuance of new bonus shares (attachment 33).
2. Capital reduction by an emerging stock company or a company that is unlisted or whose shares are not traded at the business places of securities firms (attachment 34).
The provisions of Article 5, Paragraph 4 of Article 13, Article 15, and Article 16 shall apply mutatis mutandis to cases handled under the preceding paragraph.
If, after effective registration pursuant to Paragraph 1, any circumstance in Subparagraphs 3 to 6 of Paragraph 1 of Article 11 is discovered to exist, the FSC may revoke or void the effective registration.
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Article 75
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A listed or OTC company carrying out a capital reduction because of a split shall submit a filing for registration to the FSC with a registration statement (attachment 35) specifying all required information and with the required documents attached. The registration shall become effective 12 full business days after the registration statement for issuance of new shares is received by the FSC or its designated institution.
The provisions of Article 5, Paragraph 4 of Article 13, Article 15, and Article 16 shall apply mutatis mutandis to cases handled under the preceding paragraph.
If, after effective registration pursuant to Paragraph 1, any circumstance in Subparagraphs 3 to 6 of Paragraph 1 of Article 11 is discovered to exist, the FSC may revoke or void the effective registration.
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Article 76
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In any of the following circumstances, the FSC may reject or decline to approve a filing for issuance of bonus shares and capital reduction by a public company:
1. The certifying CPA issues an adverse opinion or disclaimer of opinion in the audit report.
2. The certifying CPA issues a qualified opinion in the audit report, and such qualified opinion has an impact on the fairness of presentation of the financial report.
3. The case review forms prepared by the issuer and reviewed by the certifying CPA show violations of laws or regulations or the articles of incorporation, where the violation is serious.
4. Any of the following circumstances exist with respect to a report of capitalization of earnings:
(1) the balance after statutory allocation of special reserves from undistributed earnings in accordance with Paragraph 1 of Article 41 of the Act is inadequate for distribution;
(2) the listed company or company whose shares are traded at the business places of securities firms fails to prescribe a concrete dividend policy in the articles of incorporation;
(3) in the current capitalization of earnings that the listed or OTC company has reported, the entire amount of the capitalization is being accomplished through distribution of employee bonuses;
(4) the total amount of a listed or OTC company's employee bonuses paid out in cash and distributed as new shares (valued at market price) exceeds 50 percent of net income for the current period or 50 percent of distributable earnings (less legal reserve, special reserve, and balance of reserves after withdrawals).
5. A reporting of capitalization of capital reserves, where losses have been incurred in the most recent two consecutive years.
6. Violation of or failure to perform commitments made at the time of application for listing or trading at the business places of securities firms, where the circumstances are serious.
7. The FSC discovers any violation of law or regulation, where the circumstances are serious.
The term "market price" in subparagraph 4, item 4 of the preceding paragraph means the average closing price for the final month of the accounting period.
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Article 79
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These Regulations shall become effective on the date of promulgation.
The amended portions of these Regulations shall enter into force from the date of their promulgation, with the exception of Articles 12, 13, 23 to 25, 28 to 30, 41, 42, 57, 68, 70, and 73 to 75, which shall enter into force from 1 January 2005.
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